Leidos Reports Strong Third Quarter 2024 Results and Raises Full-Year Guidance
Leidos (LDOS) reported strong Q3 2024 results with revenues of $4.2 billion, up 7% year-over-year. Net income reached $362 million ($2.68 per diluted share), with a record adjusted EBITDA margin of 14.2%. The company achieved substantial net bookings of $8.1 billion with a book-to-bill ratio of 1.9. Based on strong performance, Leidos raised its FY2024 guidance, projecting revenues of $16.35-16.45 billion and non-GAAP diluted EPS of $9.80-$10.00. The company demonstrated robust cash flow generation with $656 million from operations and returned $254 million to shareholders through dividends and share repurchases.
Leidos (LDOS) ha riportato risultati robusti per il terzo trimestre del 2024, con ricavi pari a 4,2 miliardi di dollari, in aumento del 7% rispetto all'anno precedente. L'utile netto ha raggiunto 362 milioni di dollari (2,68 dollari per azione diluita), con un margine EBITDA rettificato record del 14,2%. L'azienda ha ottenuto prenotazioni nette significative di 8,1 miliardi di dollari con un rapporto book-to-bill di 1,9. Sulla base di una forte performance, Leidos ha rivisto al rialzo le previsioni per l'intero anno 2024, progettando ricavi di 16,35-16,45 miliardi di dollari e un utile per azione non-GAAP diluito di 9,80-10,00 dollari. L'azienda ha dimostrato una solida generazione di flusso di cassa, con 656 milioni di dollari dalle operazioni e ha restituito 254 milioni di dollari agli azionisti attraverso dividendi e riacquisti di azioni.
Leidos (LDOS) informó resultados fuertes para el tercer trimestre de 2024, con ingresos de 4.2 mil millones de dólares, un aumento del 7% interanual. El ingreso neto alcanzó 362 millones de dólares (2.68 dólares por acción diluida), con un margen EBITDA ajustado récord del 14.2%. La compañía logró reservas netas sustanciales de 8.1 mil millones de dólares con un ratio book-to-bill de 1.9. Basándose en un desempeño sólido, Leidos elevó su guía para el año fiscal 2024, proyectando ingresos de 16.35-16.45 mil millones de dólares y un EPS diluido no-GAAP de 9.80-10.00 dólares. La empresa demostró una robusta generación de flujo de efectivo con 656 millones de dólares de operaciones y devolvió 254 millones de dólares a los accionistas a través de dividendos y recompra de acciones.
Leidos (LDOS)는 2024년 3분기 강력한 실적을 보고했으며, 매출은 42억 달러로 연간 7% 증가했습니다. 순이익은 3억 6200만 달러 (희석 주당 2.68달러)에 달했으며, 조정 EBITDA 마진이 14.2%로 기록을 세웠습니다. 회사는 81억 달러의 순주문을 달성했으며, 수주 대 매출 비율은 1.9입니다. 강력한 성과를 바탕으로 Leidos는 2024 회계연도 가이던스를 상향 조정하여 163억 5천만 - 164억 5천만 달러의 매출과 비GAAP 희석 EPS 9.80 - 10.00달러를 예상하고 있습니다. 회사는 운영을 통해 6억 5600만 달러의 견조한 현금 흐름을 창출했으며, 주주에게 2억 5400만 달러를 배당금과 자사주 매입을 통해 반환했습니다.
Leidos (LDOS) a rapporté des résultats solides pour le troisième trimestre 2024, avec des revenus de 4,2 milliards de dollars, en hausse de 7 % par rapport à l'année dernière. Le bénéfice net a atteint 362 millions de dollars (2,68 dollars par action diluée), avec une marge EBITDA ajustée record de 14,2 %. L'entreprise a réalisé des commandes nettes substantielles de 8,1 milliards de dollars avec un ratio book-to-bill de 1,9. Sur la base d'une performance solide, Leidos a rehaussé ses prévisions pour l'exercice 2024, projetant des revenus de 16,35 à 16,45 milliards de dollars et un BPA dilué non-GAAP de 9,80 à 10,00 dollars. L'entreprise a démontré une génération de flux de trésorerie robuste avec 656 millions de dollars provenant des opérations et a retourné 254 millions de dollars aux actionnaires par le biais de dividendes et de rachats d'actions.
Leidos (LDOS) hat starke Ergebnisse für das dritte Quartal 2024 gemeldet, mit Einnahmen von 4,2 Milliarden Dollar, was einem Anstieg von 7% im Jahresvergleich entspricht. Der Nettogewinn erreichte 362 Millionen Dollar (2,68 Dollar pro verwässerter Aktie), mit einer rekordhohen bereinigten EBITDA-Marge von 14,2%. Das Unternehmen erzielte netto Bestellungen von 8,1 Milliarden Dollar mit einem Auftrags-zu-Rechnung-Verhältnis von 1,9. Basierend auf der starken Leistung hob Leidos die Prognose für das Geschäftsjahr 2024 an und prognostiziert Einnahmen von 16,35 bis 16,45 Milliarden Dollar und einen nicht-GAAP verwässerten Gewinn pro Aktie von 9,80 bis 10,00 Dollar. Das Unternehmen demonstrierte eine robuste Cashflow-Generierung mit 656 Millionen Dollar aus dem operativen Geschäft und gab 254 Millionen Dollar durch Dividenden und Aktienrückkäufe an die Aktionäre zurück.
- Revenue growth of 7% YoY to $4.2 billion
- Net income margin improved to 8.6% from -10.1% YoY
- Record adjusted EBITDA margin of 14.2%, up from 11.5%
- Strong bookings of $8.1 billion (1.9 book-to-bill ratio)
- Increased FY2024 guidance for revenue and EPS
- Robust cash flow from operations of $656 million
- 5.3% increase in quarterly dividend
- None.
Insights
The Q3 results showcase exceptional performance with
The robust
Strong cash flow generation of
The significant contract wins, particularly in critical defense and veterans' services, strengthen Leidos' market position. The AGUN and ABMS-DI contracts are strategically important as they align with the military's modernization priorities and the shift toward integrated command and control systems.
The VBA Medical Disability Examinations option year renewal and AIE Next Generation contract demonstrate the company's strong relationship with key government agencies. These long-term contracts provide stable revenue streams and opportunities for margin expansion through operational efficiencies.
The focus on network modernization and cloud-based solutions positions Leidos well in the evolving defense technology landscape, particularly in zero-trust architecture implementation and advanced biometrics, which are becoming increasingly critical in defense infrastructure.
- Revenues of
, up$4.2 billion 7% year-over-year - Net income of
or$362 million per diluted share$2.68 - Adjusted EBITDA (non-GAAP) of
($596 million 14.2% margin) - Non-GAAP Diluted Earnings per Share of
, up$2.93 44% year-over-year - Cash Flows from Operations of
; Free Cash Flow (non-GAAP) of$656 million $633 million - Net Bookings of
(book-to-bill ratio of 1.9 for the quarter and 1.1 for trailing twelve months)$8.1 billion
"Continued improvement in operating performance across all segments drove excellent revenue growth, record margins for net income and adjusted EBITDA, substantial earnings growth, strong cash flow, and robust bookings," said Leidos Chief Executive Officer Tom Bell. "These results demonstrate clearly how our collaborative and innovative workforce is focused on consistent execution for our customers and shareholders. With a healthy balance sheet, improving business development performance, and emerging 'North Star' strategy, Leidos is well positioned to deliver robust and sustainable returns as we move forward."
Summary Operating Results
Three Months Ended | ||||
(in millions, except margin and per share data) | September 27, 2024 | September 29, 2023 | ||
Revenues | $ 4,190 | $ 3,921 | ||
Net income (loss) | $ 362 | $ (396) | ||
Net income (loss) margin | 8.6 % | (10.1) % | ||
Diluted earnings per share (EPS) | $ 2.68 | $ (2.91) | ||
Non-GAAP Measures*: | ||||
Adjusted EBITDA | $ 596 | $ 451 | ||
Adjusted EBITDA margin | 14.2 % | 11.5 % | ||
Non-GAAP diluted EPS | $ 2.93 | $ 2.03 |
* Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Management believes that these non-GAAP measures provide another measure of Leidos' results of operations and financial condition, including its ability to comply with financial covenants. See Non-GAAP Financial Measures at the end of this press release for more information and a reconciliation of our selected reported results to these non-GAAP measures. |
Revenues for the quarter were
With a net income margin of
Adjusted EBITDA was
Cash Flow Summary
In the third quarter, Leidos generated
Investing activities consisted primarily of
On October 25, 2024, the Leidos Board of Directors declared a cash dividend of
Business Development
Net bookings totaled
- Veterans Benefits Administration (VBA) Medical Disability Examinations (MDE) Regions 1-4 Option Year. The VBA MDE Office awarded Leidos the next option year on the existing indefinite delivery, indefinite quantity (IDIQ), firm-fixed price contracts that were originally awarded in November 2018. Leidos QTC Health Services will continue to provide MDE to meet Department of Veterans Affairs (VA) and Department of Defense (DOD) requirements for separating and retired service members.
- Army Global Unified Network (AGUN). The Army Program Executive Office for Command, Control, and Communications-Tactical Global Enterprise Network Modernization (PEO C3T GENM-O) awarded Leidos a five-year,
contract to modernize the$331 million U.S Army's network in alignment with the Army's Network Modernization Strategy and Army Unified Network Plan. Leidos will deploy AGUN to individual Army sites to deliver a standardized, orchestrated modern network architecture that supports the transition to a Zero Trust Architecture and aims to make applications, data, and enterprise services are accessible, trusted and interoperable across the globe. - Advanced Battle Management System-Digital Infrastructure (ABMS-DI) Network. The Department of the Air Force's (DAF) Program Executive Officer Command, Control, Communications and Battle Management (PEO C3BM) awarded Leidos a five-year,
contract to oversee the planning, analysis, and operations for the DAF ABMS-DI network. This contract extends Leidos' collaborative role with the DAF to design, develop, and deploy modern Combined Joint-All Domain Command and Control (CJADC2) capabilities for the Air Force and Space Force.$303 million - Automated Installation Entry (AIE) Next Generation Support. The Army Program Executive Office for Intelligence, Electronic Warfare & Sensors (PEO IEW&S) awarded Leidos the AIE Next Generation contract to enhance security at 92 additional Army and select joint-service installation access control points located around the world. Under the six-year,
contract, Leidos will continue to transform the Army's enterprise physical access control system to a fully extensible, cloud-based solution with advanced biometrics modalities.$249 million
Forward Guidance
Leidos is updating its fiscal year 2024 guidance as follows:
FY24 Guidance | ||
Measure | Current | Prior |
Revenues (billions) | ||
Adjusted EBITDA Margin | High | Approximately |
Non-GAAP Diluted EPS | ||
Cash Flows Provided by Operating Activities (billions) | Approximately | Approximately |
For information regarding adjusted EBITDA margin and non-GAAP diluted EPS, see the related explanations and reconciliations to GAAP measures included elsewhere in this release.
Leidos does not provide a reconciliation of forward-looking adjusted EBITDA margins or non-GAAP diluted EPS to net income due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Because certain deductions for non-GAAP exclusions used to calculate projected net income may vary significantly based on actual events, Leidos is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income at this time. The amounts of these deductions may be material and, therefore, could result in projected net income and diluted EPS being materially less than what may be implied by projected adjusted EBITDA margins and non-GAAP diluted EPS.
Conference Call Information
Leidos management will discuss operations and financial results in an earnings conference call beginning at 8 A.M. eastern time on October 29, 2024. A live audio broadcast of the conference call along with a supplemental presentation will be available to the public through links on the Leidos Investor Relations website (http://ir.leidos.com). An archived version of the webcast will be available on the Leidos Investor Relations website until October 29, 2025.
About Leidos
Leidos is a Fortune 500® innovation company rapidly addressing the world's most vexing challenges in national security and health. The company's global workforce of 48,000 collaborates to create smarter technology solutions for customers in heavily regulated industries. Headquartered in
Forward-Looking Statements
Certain statements in this release contain or are based on "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as "expects," "intends," "plans," "anticipates," "believes," "estimates," "guidance" and similar words or phrases. Forward-looking statements in this release include, among others, estimates of our future growth, strategy and financial and operating performance, including future revenues, adjusted EBITDA margins, diluted EPS (including on a non-GAAP basis) and cash flows provided by operating activities, as well as statements about our business contingency plans, government budgets and the ongoing Continuing Resolution, uncertainties in tax due to new tax legislation or other regulatory developments, strategy, planned investments, sustainability goals and our future dividends, share repurchases, capital expenditures, debt repayments, acquisitions, dispositions and cash flow conversion. These statements reflect our belief and assumptions as to future events that may not prove to be accurate.
Actual performance and results may differ materially from those results anticipated by our guidance and other forward-looking statements made in this release depending on a variety of factors, including, but not limited to: developments in the
These are only some of the factors that may affect the forward-looking statements contained in this release. For further information concerning risks and uncertainties associated with our business, please refer to the filings we make from time to time with the
All information in this release is as of October 29, 2024. Leidos expressly disclaims any duty to update the guidance or any other forward-looking statement provided in this release to reflect subsequent events, actual results or changes in Leidos' expectations. Leidos also disclaims any duty to comment upon or correct information that may be contained in reports published by investment analysts or others.
CONTACTS: | ||
Investor Relations: | Media Relations: | |
Stuart Davis | Alyssa Pettus | |
571.526.6124 | 571.526.6743 | |
LEIDOS HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) | ||||||||
Three Months Ended | Nine Months Ended | |||||||
September 27, | September 29, | September 27, | September 29, | |||||
Revenues | $ 4,190 | $ 3,921 | $ 12,297 | $ 11,458 | ||||
Cost of revenues | 3,428 | 3,334 | 10,192 | 9,809 | ||||
Selling, general and administrative expenses | 247 | 239 | 704 | 709 | ||||
Acquisition, integration and restructuring costs | 3 | 5 | 14 | 14 | ||||
Goodwill impairment charges | — | 599 | — | 599 | ||||
Asset impairment charges | 6 | 88 | 6 | 88 | ||||
Equity earnings of non-consolidated subsidiaries | (10) | (8) | (25) | (21) | ||||
Operating income (loss) | 516 | (336) | 1,406 | 260 | ||||
Non-operating income (expense): | ||||||||
Interest expense, net | (46) | (53) | (146) | (163) | ||||
Other income (expense), net | — | 1 | 4 | (4) | ||||
Income (loss) before income taxes | 470 | (388) | 1,264 | 93 | ||||
Income tax expense | (108) | (8) | (295) | (115) | ||||
Net income (loss) | 362 | (396) | 969 | (22) | ||||
Less: net (loss) income attributable to non-controlling interest | (2) | 3 | (1) | 8 | ||||
Net income (loss) attributable to Leidos common stockholders | $ 364 | $ (399) | $ 970 | $ (30) | ||||
Earnings per share: | ||||||||
Basic | $ 2.72 | $ (2.91) | $ 7.19 | $ (0.22) | ||||
Diluted | 2.68 | (2.91) | 7.13 | (0.22) | ||||
Weighted average number of common shares outstanding: | ||||||||
Basic | 134 | 137 | 135 | 137 | ||||
Diluted | 136 | 137 | 136 | 137 | ||||
Cash dividends declared per share | $ 0.38 | $ 0.36 | $ 1.14 | $ 1.08 |
LEIDOS HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, except share and per share data) | ||||
September 27, | December 29, | |||
Assets: | ||||
Cash and cash equivalents | $ 1,185 | $ 777 | ||
Receivables, net | 2,706 | 2,429 | ||
Inventory, net | 323 | 310 | ||
Other current assets | 451 | 489 | ||
Total current assets | 4,665 | 4,005 | ||
Property, plant and equipment, net | 992 | 961 | ||
Intangible assets, net | 558 | 667 | ||
Goodwill | 6,123 | 6,112 | ||
Operating lease right-of-use assets, net | 459 | 512 | ||
Other long-term assets | 541 | 438 | ||
Total assets | $ 13,338 | $ 12,695 | ||
Liabilities: | ||||
Accounts payable and accrued liabilities | $ 2,287 | $ 2,277 | ||
Accrued payroll and employee benefits | 903 | 695 | ||
Current portion of long-term debt | 592 | 18 | ||
Total current liabilities | 3,782 | 2,990 | ||
Long-term debt, net of current portion | 4,081 | 4,664 | ||
Operating lease liabilities | 467 | 516 | ||
Other long-term liabilities | 341 | 267 | ||
Total liabilities | 8,671 | 8,437 | ||
Stockholders' equity: | ||||
Common stock, 135,766,419 shares issued and outstanding at September 27, 2024, and December 29, 2023, respectively | — | — | ||
Additional paid-in capital | 1,469 | 1,885 | ||
Retained earnings | 3,179 | 2,364 | ||
Accumulated other comprehensive loss | (34) | (48) | ||
Total Leidos stockholders' equity | 4,614 | 4,201 | ||
Non-controlling interest | 53 | 57 | ||
Total stockholders' equity | 4,667 | 4,258 | ||
Total liabilities and stockholders' equity | $ 13,338 | $ 12,695 |
LEIDOS HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) | ||||||||
Three Months Ended | Nine Months Ended | |||||||
September 27, | September 29, | September 27, | September 29, | |||||
Cash flows from operations: | ||||||||
Net income (loss) | $ 362 | $ (396) | $ 969 | $ (22) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operations: | ||||||||
Depreciation and amortization | 71 | 82 | 211 | 248 | ||||
Stock-based compensation | 19 | 20 | 59 | 57 | ||||
Deferred income taxes | (29) | (104) | (96) | (192) | ||||
Goodwill impairment charges | — | 599 | — | 599 | ||||
Asset impairment charges | 6 | 88 | 6 | 88 | ||||
Other | 3 | 19 | 5 | 25 | ||||
Change in assets and liabilities, net of effects of acquisitions: | ||||||||
Receivables | (75) | 14 | (260) | (109) | ||||
Other current assets and other long-term assets | 95 | 92 | 102 | 141 | ||||
Accounts payable and accrued liabilities and other long-term liabilities | 25 | 220 | (149) | 22 | ||||
Accrued payroll and employee benefits | 198 | 137 | 208 | 105 | ||||
Income taxes receivable/payable | (19) | 24 | 38 | (101) | ||||
Net cash provided by operating activities | 656 | 795 | 1,093 | 861 | ||||
Cash flows from investing activities: | ||||||||
Acquisition of a business, net of cash acquired | — | (2) | — | (6) | ||||
Payments for property, equipment and software | (23) | (50) | (63) | (129) | ||||
Net proceeds from sale of assets | — | — | 2 | — | ||||
Other | — | — | 5 | — | ||||
Net cash used in investing activities | (23) | (52) | (56) | (135) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from debt issuance | — | — | — | 1,743 | ||||
Net proceeds from commercial paper | — | (200) | — | — | ||||
Repayments of borrowings | (5) | (5) | (14) | (2,041) | ||||
Payments for debt issuance costs | — | — | — | (7) | ||||
Dividend payments | (51) | (50) | (155) | (150) | ||||
Repurchases of stock and other | (203) | (1) | (500) | (44) | ||||
Proceeds from issuances of stock | 2 | 12 | 28 | 37 | ||||
Net capital distributions to non-controlling interests | — | (5) | (3) | (8) | ||||
Net cash used in financing activities | (257) | (249) | (644) | (470) | ||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | 9 | (3) | 5 | — | ||||
Net increase in cash, cash equivalents and restricted cash | 385 | 491 | 398 | 256 | ||||
Cash, cash equivalents and restricted cash at beginning of period | 941 | 448 | 928 | 683 | ||||
Cash, cash equivalents and restricted cash at end of period | 1,326 | 939 | 1,326 | 939 | ||||
Less: restricted cash at end of period | 141 | 189 | 141 | 189 | ||||
Cash and cash equivalents at end of period | $ 1,185 | $ 750 | $ 1,185 | $ 750 |
LEIDOS HOLDINGS, INC. UNAUDITED SEGMENT OPERATING RESULTS (in millions) | ||||||||
Three Months Ended | Nine Months Ended | |||||||
September 27, | September 29, | September 27, | September 29, | |||||
Revenues: | ||||||||
National Security & Digital | $ 1,865 | $ 1,852 | $ 5,471 | $ 5,400 | ||||
Health & Civil | 1,225 | 1,055 | 3,687 | 3,097 | ||||
Commercial & International | 578 | 552 | 1,648 | 1,588 | ||||
Defense Systems | 522 | 462 | 1,491 | 1,373 | ||||
Total | $ 4,190 | $ 3,921 | $ 12,297 | $ 11,458 | ||||
Operating income (loss): | ||||||||
National Security & Digital | $ 187 | $ 170 | $ 545 | $ 487 | ||||
Health & Civil | 287 | 165 | 816 | 412 | ||||
Commercial & International | 41 | (646) | 64 | (599) | ||||
Defense Systems | 37 | 3 | 92 | 47 | ||||
Corporate | (36) | (28) | (111) | (87) | ||||
Total | $ 516 | $ (336) | $ 1,406 | $ 260 | ||||
Operating income (loss) margin: | ||||||||
National Security & Digital | 10.0 % | 9.2 % | 10.0 % | 9.0 % | ||||
Health & Civil | 23.4 % | 15.6 % | 22.1 % | 13.3 % | ||||
Commercial & International | 7.1 % | (117.0) % | 3.9 % | (37.7) % | ||||
Defense Systems | 7.1 % | 0.6 % | 6.2 % | 3.4 % | ||||
Total | 12.3 % | (8.6) % | 11.4 % | 2.3 % |
National Security & Digital
National Security & Digital revenues of
Health & Civil
Health & Civil revenues of
Commercial & International
Commercial & International revenues of
Defense Systems
Defense Systems revenues of
LEIDOS HOLDINGS, INC.
UNAUDITED BACKLOG BY REPORTABLE SEGMENT
(in millions)
Backlog represents the estimated amount of future revenues to be recognized under negotiated contracts. Backlog value is based on management's estimates about volume of services, availability of customer funding and other factors, and excludes contracts that are under protest. Estimated backlog comprises both funded and negotiated unfunded backlog. Backlog estimates are subject to change and may be affected by several factors, including modifications of contracts, non-exercise of options and foreign currency movements.
Funded backlog for contracts with the
Negotiated unfunded backlog represents estimated amounts of revenue to be earned in the future from contracts for which funding has not been appropriated and unexercised priced contract options. Negotiated unfunded backlog does not include unexercised option periods and future potential task orders expected to be awarded under IDIQ, General Services Administration Schedule or other master agreement contract vehicles, with the exception of certain IDIQ contracts where task orders are not competitively awarded or separately priced but instead are used as a funding mechanism, and where there is a basis for estimating future revenues and funding on future anticipated task orders.
The estimated value of backlog as of the dates presented was as follows:
September 27, 2024 | September 29, 2023 | |||||||||||
Segment | Funded | Unfunded | Total | Funded | Unfunded | Total | ||||||
National Security & Digital | $ 3,323 | $ 16,532 | $ 19,855 | $ 3,146 | $ 14,802 | $ 17,948 | ||||||
Health & Civil | 1,536 | 9,835 | 11,371 | 2,022 | 10,141 | 12,163 | ||||||
Commercial & International | 2,631 | 2,022 | 4,653 | 2,586 | 1,012 | 3,598 | ||||||
Defense Systems | 1,602 | 3,080 | 4,682 | 1,293 | 3,041 | 4,334 | ||||||
Total | $ 9,092 | $ 31,469 | $ 40,561 | $ 9,047 | $ 28,996 | $ 38,043 |
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES
Leidos uses and refers to organic revenue, non-GAAP operating income, non-GAAP operating margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP diluted EPS, non-GAAP free cash flow and non-GAAP free cash flow conversion, which are not measures of financial performance under generally accepted accounting principles in the
Management believes that these non-GAAP measures provide another representation of the results of operations and financial condition, including its ability to comply with financial covenants. These non-GAAP measures are frequently used by financial analysts covering Leidos and its peers. The computation of non-GAAP measures may not be comparable to similarly titled measures reported by other companies, thus limiting their use for comparability.
Organic revenues capture the revenue that is inherent in the underlying business excluding the impact of acquisitions and divestitures made within the prior year; it is computed as current revenues excluding revenues from acquisitions within the last 12 months and divestitures within the current and year-ago periods.
Non-GAAP operating income is computed by excluding the following discrete items from operating income:
- Acquisition, integration and restructuring costs – Represents acquisition, integration, lease termination, severance and retention costs and asset markdowns related to acquisitions and restructuring activities.
- Amortization of acquired intangible assets – Represents the amortization of the fair value of the acquired intangible assets.
- Gain on sale of intangible assets – Represents the gain on sale of intellectual property not used in operations.
- Asset impairment charges – Represents impairments of long-lived intangible assets, right-of-use assets, and other assets related to our facility rationalization effort.
- Goodwill impairment charges – Represents impairments of goodwill due to changes in actual performance against performance projected when the goodwill was acquired.
Non-GAAP operating margin is computed by dividing non-GAAP operating income by revenues.
Adjusted EBITDA is computed by excluding the following items from income before income taxes: (i) discrete items as identified above; (ii) interest expense; (iii) interest income; (iv) depreciation expense; and (v) amortization of internally developed intangible assets.
Adjusted EBITDA margin is computed by dividing adjusted EBITDA by revenues.
Non-GAAP net income is computed by excluding the discrete items listed under non-GAAP operating income and their related tax impacts.
Non-GAAP diluted EPS is computed by dividing net income attributable to Leidos common stockholders, adjusted for the discrete items as identified above and the related tax impacts, by the diluted weighted average number of common shares outstanding.
Non-GAAP free cash flow is computed by deducting expenditures for property, equipment and software from net cash provided by (used in) operating activities.
Non-GAAP free cash flow conversion is computed by dividing non-GAAP free cash flow by non-GAAP net income attributable to Leidos common stockholders; operating cash flow conversion is computed by dividing net cash provided by (used in) operating activities by net income attributable to Leidos shareholders.
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except growth percentages)
The following table presents the reconciliation of revenues to organic revenues by reportable segment and total operations:
Three Months Ended | ||||||
September 27, | September 29, | Percent | ||||
National Security & Digital | ||||||
Revenues, as reported | $ 1,865 | $ 1,852 | 1 % | |||
Health & Civil | ||||||
Revenues, as reported | $ 1,225 | $ 1,055 | 16 % | |||
Commercial & International | ||||||
Revenues, as reported | $ 578 | $ 552 | 5 % | |||
Defense Systems | ||||||
Revenues, as reported | $ 522 | $ 462 | 13 % | |||
Acquisition and divestiture revenues(1) | — | 3 | ||||
Organic revenues | $ 522 | $ 459 | 14 % | |||
Total Operations | ||||||
Revenues, as reported | $ 4,190 | $ 3,921 | 7 % | |||
Acquisition and divestiture revenues(1) | — | 3 | ||||
Organic revenues | $ 4,190 | $ 3,918 | 7 % |
(1) Year ago acquisition and divestiture revenues reflect revenues from assets subsequently divested. For the three months ended September 29, 2023, Defense Systems segment acquisition and divestiture revenues include the divestiture of an immaterial asset that was completed on October 20, 2023. |
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except per share data and margin percentages)
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the three months ended September 27, 2024:
Three Months Ended September 27, 2024 | ||||||||||
As reported | Acquisition, | Amortization of | Asset | Non-GAAP | ||||||
Operating income | $ 516 | $ 3 | $ 37 | $ 6 | $ 562 | |||||
Non-operating expense, net | (46) | — | — | — | (46) | |||||
Income before income taxes | 470 | 3 | 37 | 6 | 516 | |||||
Income tax expense(1) | (108) | (1) | (9) | (2) | (120) | |||||
Net income | 362 | 2 | 28 | 4 | 396 | |||||
Less: net loss attributable to non-controlling interest | (2) | — | — | — | (2) | |||||
Net income attributable to Leidos common stockholders | $ 364 | $ 2 | $ 28 | $ 4 | $ 398 | |||||
Diluted EPS attributable to Leidos common stockholders(2) | $ 2.68 | $ 0.01 | $ 0.21 | $ 0.03 | $ 2.93 | |||||
Diluted shares | 136 | 136 | 136 | 136 | 136 | |||||
Three Months Ended September 27, 2024 | ||||||||||
As reported | Acquisition, | Amortization of | Asset | Non-GAAP | ||||||
Net income | $ 362 | $ 2 | $ 28 | $ 4 | $ 396 | |||||
Income tax expense(1) | 108 | 1 | 9 | 2 | 120 | |||||
Income before income taxes | 470 | 3 | 37 | 6 | 516 | |||||
Depreciation expense | 34 | — | — | — | 34 | |||||
Amortization of intangibles | 37 | — | (37) | — | — | |||||
Interest expense, net | 46 | — | — | — | 46 | |||||
Adjusted EBITDA | $ 587 | $ 3 | $ — | $ 6 | $ 596 | |||||
Adjusted EBITDA margin | 14.0 % | 14.2 % |
(1) Calculation uses an estimated statutory tax rate on non-GAAP adjustments. |
(2) Earnings per share is computed independently for each of the non-GAAP adjustment presented and therefore may not sum to the total non-GAAP earnings per share due to rounding. |
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except per share data and margin percentages)
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the three months ended September 29, 2023:
Three Months Ended September 29, 2023 | ||||||||||||
As reported | Acquisition, | Amortization of | Asset | Goodwill | Non-GAAP | |||||||
Operating (loss) income | $ (336) | $ 17 | $ 50 | $ 88 | $ 599 | $ 418 | ||||||
Non-operating expense, net | (52) | — | — | — | — | (52) | ||||||
(Loss) income before income taxes | (388) | 17 | 50 | 88 | 599 | 366 | ||||||
Income tax expense(1)(4) | (8) | (4) | (12) | (31) | (28) | (83) | ||||||
Net (loss) income | (396) | 13 | 38 | 57 | 571 | 283 | ||||||
Less: net income attributable to non-controlling interest | 3 | — | — | — | — | 3 | ||||||
Net (loss) income attributable to Leidos common stockholders | $ (399) | $ 13 | $ 38 | $ 57 | $ 571 | $ 280 | ||||||
Diluted EPS attributable to Leidos common stockholders(2) | $ (2.91) | $ 0.09 | $ 0.28 | $ 0.41 | $ 4.14 | $ 2.03 | ||||||
Diluted shares | 137 | 138 | 138 | 138 | 138 | 138 | ||||||
Three Months Ended September 29, 2023 | ||||||||||||
As reported | Acquisition, | Amortization of | Asset | Goodwill | Non-GAAP | |||||||
Net (loss) income | $ (396) | $ 13 | $ 38 | $ 57 | $ 571 | $ 283 | ||||||
Income tax expense(1)(4) | 8 | 4 | 12 | 31 | 28 | 83 | ||||||
(Loss) income before income taxes | (388) | 17 | 50 | 88 | 599 | 366 | ||||||
Depreciation expense | 32 | — | — | — | — | 32 | ||||||
Amortization of intangibles | 50 | — | (50) | — | — | — | ||||||
Interest expense, net | 53 | — | — | — | — | 53 | ||||||
Adjusted EBITDA | $ (253) | $ 17 | $ — | $ 88 | $ 599 | $ 451 | ||||||
Adjusted EBITDA margin | (6.5) % | 11.5 % |
(1) Calculation uses an estimated statutory tax rate on non-GAAP adjustments. |
(2) Earnings per share is computed independently for each of the non-GAAP adjustment presented and therefore may not sum to the total non-GAAP earnings per share due to rounding. |
(3) Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the condensed consolidated statements of operations. |
(4) Non-GAAP tax rates were revised from using a blended rate to an individual tax rate for each non-GAAP adjustment, as this approach better reflects the allocation of the tax adjustment. |
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except per share data and margin percentages)
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the nine months ended September 27, 2024:
Nine Months Ended September 27, 2024 | ||||||||||||
As reported | Acquisition, | Amortization | Asset | Gain on sale | Non-GAAP | |||||||
Operating income | $ 1,406 | $ 20 | $ 110 | $ 6 | $ — | $ 1,542 | ||||||
Non-operating expense, net | (142) | — | — | — | (2) | (144) | ||||||
Income before income taxes | 1,264 | 20 | 110 | 6 | (2) | 1,398 | ||||||
Income tax expense(1) | (295) | (4) | (28) | (2) | — | (329) | ||||||
Net income | 969 | 16 | 82 | 4 | (2) | 1,069 | ||||||
Less: net loss attributable to non-controlling interest | (1) | — | — | — | — | (1) | ||||||
Net income attributable to Leidos common stockholders | $ 970 | $ 16 | $ 82 | $ 4 | $ (2) | $ 1,070 | ||||||
Diluted EPS attributable to Leidos common stockholders(2) | $ 7.13 | $ 0.12 | $ 0.60 | $ 0.03 | $ (0.01) | $ 7.87 | ||||||
Diluted shares | 136 | 136 | 136 | 136 | 136 | 136 | ||||||
Nine Months Ended September 27, 2024 | ||||||||||||
As reported | Acquisition, | Amortization | Asset | Gain on sale | Non-GAAP | |||||||
Net income | $ 969 | $ 16 | $ 82 | $ 4 | $ (2) | $ 1,069 | ||||||
Income tax expense(1) | 295 | 4 | 28 | 2 | — | 329 | ||||||
Income before income taxes | 1,264 | 20 | 110 | 6 | (2) | 1,398 | ||||||
Depreciation expense | 101 | — | — | — | — | 101 | ||||||
Amortization of intangibles | 110 | — | (110) | — | — | — | ||||||
Interest expense, net | 146 | — | — | — | — | 146 | ||||||
Adjusted EBITDA | $ 1,621 | $ 20 | $ — | $ 6 | $ (2) | $ 1,645 | ||||||
Adjusted EBITDA margin | 13.2 % | 13.4 % |
(1) Calculation uses an estimated statutory tax rate on non-GAAP adjustments. |
(2) Earnings per share is computed independently for each of the non-GAAP adjustment presented and therefore may not sum to the total non-GAAP earnings per share due to rounding. |
(3) Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the condensed consolidated statements of operations. |
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except per share data and margin percentages)
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the nine months ended September 29, 2023:
Nine Months Ended September 29, 2023 | ||||||||||||
As reported | Acquisition, | Amortization of | Asset | Goodwill | Non-GAAP | |||||||
Operating income | $ 260 | $ 26 | $ 153 | $ 88 | $ 599 | $ 1,126 | ||||||
Non-operating expense, net | (167) | — | — | — | — | (167) | ||||||
Income before income taxes | 93 | 26 | 153 | 88 | 599 | 959 | ||||||
Income tax expense(1)(4) | (115) | (6) | (39) | (31) | (28) | (219) | ||||||
Net (loss) income | (22) | 20 | 114 | 57 | 571 | 740 | ||||||
Less: net income attributable to non-controlling interest | 8 | — | — | — | — | 8 | ||||||
Net (loss) income attributable to Leidos common stockholders | $ (30) | $ 20 | $ 114 | $ 57 | $ 571 | $ 732 | ||||||
Diluted EPS attributable to Leidos common stockholders(2) | $ (0.22) | $ 0.14 | $ 0.83 | $ 0.41 | $ 4.14 | $ 5.30 | ||||||
Diluted shares | 137 | 138 | 138 | 138 | 138 | 138 | ||||||
Nine Months Ended September 29, 2023 | ||||||||||||
As reported | Acquisition, | Amortization of | Asset | Goodwill | Non-GAAP | |||||||
Net (loss) income | $ (22) | $ 20 | $ 114 | $ 57 | $ 571 | $ 740 | ||||||
Income tax expense(1)(4) | 115 | 6 | 39 | 31 | 28 | 219 | ||||||
Income before income taxes | 93 | 26 | 153 | 88 | 599 | 959 | ||||||
Depreciation expense | 95 | — | — | — | — | 95 | ||||||
Amortization of intangibles | 153 | — | (153) | — | — | — | ||||||
Interest expense, net | 163 | — | — | — | — | 163 | ||||||
Adjusted EBITDA | $ 504 | $ 26 | $ — | $ 88 | $ 599 | $ 1,217 | ||||||
Adjusted EBITDA margin | 4.4 % | 10.6 % |
(1) Calculation uses an estimated statutory tax rate on non-GAAP adjustments. |
(2) Earnings per share is computed independently for each of the non-GAAP adjustment presented and therefore may not sum to the total non-GAAP earnings per share due to rounding. |
(3) Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the condensed consolidated statements of operations. |
(4) Non-GAAP tax rates were revised from using a blended rate to an individual tax rate for each non-GAAP adjustment, as this approach better reflects the allocation of the tax adjustment. |
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except margin percentages)
The following tables present the reconciliation of non-GAAP operating income by reportable segment and Corporate to operating income:
Three Months Ended September 27, 2024 | ||||||||||||
Operating | Acquisition, | Amortization of | Asset | Non-GAAP | Non-GAAP | |||||||
National Security & Digital | $ 187 | $ — | $ 6 | $ 2 | $ 195 | 10.5 % | ||||||
Health & Civil | 287 | — | 8 | 2 | 297 | 24.2 % | ||||||
Commercial & International | 41 | 1 | 7 | 2 | 51 | 8.8 % | ||||||
Defense Systems | 37 | — | 16 | — | 53 | 10.2 % | ||||||
Corporate | (36) | 2 | — | — | (34) | NM | ||||||
Total | $ 516 | $ 3 | $ 37 | $ 6 | $ 562 | 13.4 % |
Three Months Ended September 29, 2023 | ||||||||||||||
Operating | Acquisition, | Amortization | Goodwill | Asset | Non-GAAP | Non-GAAP | ||||||||
National Security & Digital | $ 170 | $ — | $ 12 | $ — | $ — | $ 182 | 9.8 % | |||||||
Health & Civil | 165 | — | 9 | — | — | 174 | 16.5 % | |||||||
Commercial & International | (646) | 9 | 9 | 599 | 80 | 51 | 9.2 % | |||||||
Defense Systems | 3 | 3 | 20 | — | 8 | 34 | 7.4 % | |||||||
Corporate | (28) | 5 | — | — | — | (23) | NM | |||||||
Total | $ (336) | $ 17 | $ 50 | $ 599 | $ 88 | $ 418 | 10.7 % |
Nine Months Ended September 27, 2024 | ||||||||||||
Operating | Acquisition, | Amortization of | Asset | Non-GAAP | Non-GAAP | |||||||
National Security & Digital | $ 545 | $ — | $ 17 | $ 2 | $ 564 | 10.3 % | ||||||
Health & Civil | 816 | — | 21 | 2 | 839 | 22.8 % | ||||||
Commercial & International | 64 | 9 | 22 | 2 | 97 | 5.9 % | ||||||
Defense Systems | 92 | — | 50 | — | 142 | 9.5 % | ||||||
Corporate | (111) | 11 | — | — | (100) | NM | ||||||
Total | $ 1,406 | $ 20 | $ 110 | $ 6 | $ 1,542 | 12.5 % |
Nine Months Ended September 29, 2023 | ||||||||||||||
Operating | Acquisition, | Amortization | Goodwill | Asset | Non-GAAP | Non-GAAP | ||||||||
National Security & Digital | $ 487 | $ — | $ 35 | $ — | $ — | $ 522 | 9.7 % | |||||||
Health & Civil | 412 | — | 30 | — | — | 442 | 14.3 % | |||||||
Commercial & International | (599) | 10 | 29 | 599 | 80 | 119 | 7.5 % | |||||||
Defense Systems | 47 | 3 | 59 | — | 8 | 117 | 8.5 % | |||||||
Corporate | (87) | 13 | — | — | — | (74) | NM | |||||||
Total | $ 260 | $ 26 | $ 153 | $ 599 | $ 88 | $ 1,126 | 9.8 % |
NM - Not Meaningful |
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except percentages)
The following table presents the reconciliation of non-GAAP free cash flow to net cash provided by operating activities as well as the calculation of operating cash flow and non-GAAP free cash flow conversion ratios:
Three Months Ended | ||||
September 27, 2024 | September 29, 2023 | |||
Net cash provided by operating activities | $ 656 | $ 795 | ||
Payments for property, equipment and software | (23) | (50) | ||
Non-GAAP free cash flow | $ 633 | $ 745 | ||
Net income (loss) attributable to Leidos common stockholders | $ 364 | $ (399) | ||
Acquisition, integration and restructuring costs(1)(2)(3) | 2 | 13 | ||
Amortization of acquired intangibles(1)(3) | 28 | 38 | ||
Goodwill impairment charges(2)(3) | — | 571 | ||
Asset impairment charges(2)(3) | 4 | 57 | ||
Non-GAAP net income attributable to Leidos common stockholders | $ 398 | $ 280 | ||
Operating cash flow conversion ratio | 180 % | (199) % | ||
Non-GAAP free cash flow conversion ratio | 159 % | 266 % |
(1) After-tax expenses excluded from non-GAAP net income. |
(2) Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the condensed consolidated statements of operations. |
(3) Non-GAAP tax rates were revised for the three months ended September 29, 2023, from using a blended rate to an individual tax rate for each non-GAAP adjustment, as this approach better reflects the allocation of the tax adjustment. |
View original content:https://www.prnewswire.com/news-releases/leidos-reports-strong-third-quarter-2024-results-and-raises-full-year-guidance-302289156.html
SOURCE Leidos
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