- Revenues: $4.0 billion for
fourth quarter (up 8% year-over-year); $15.4
billion for the year (up 7% year-over-year)
- Diluted Earnings per Share: $1.66 for fourth quarter (up 30%
year-over-year); $1.44 for the year
(down 71% year-over-year)
- Non-GAAP Diluted Earnings per Share:
$1.99 for fourth quarter (up 9%
year-over-year); $7.30 for the year
(up 11% year-over-year)
- Cash Flows from Operations: $304
million for fourth quarter; $1.2
billion for the year
- Initial FY24 guidance reflects financial performance
consistent with 2021 Investor Day targets
RESTON,
Va., Feb. 13, 2024 /PRNewswire/ -- Leidos
Holdings, Inc. (NYSE: LDOS), a FORTUNE 500® innovation
company, today reported financial results for the fourth quarter
and fiscal year 2023.
Tom Bell, Leidos Chief Executive
Officer, commented: "With a strong finish to the year, Leidos
delivered on all of its financial commitments. Record top- and
bottom-line performance enabled us to exceed the high end of the
guidance ranges that we set last quarter for all metrics. Our
financial performance over the last three quarters demonstrates how
strongly the team has enhanced its focus on cost controls and cash
generation and committed to a "promises made, promises kept"
culture. 2024 is going to be another busy and exciting year for
Leidos, as we capitalize on our leaner, more focused organizational
structure and chart our path to our second decade of growth."
Summary Operating Results
(in millions, except
margin and per
share data)
|
|
Three Months
Ended
|
|
Year Ended
|
|
December 29,
2023
|
|
December 30,
2022
|
|
December 29,
2023
|
|
December 30,
2022
|
Revenues
|
|
$
3,980
|
|
$
3,697
|
|
$
15,438
|
|
$
14,396
|
Net income
|
|
$
230
|
|
$
180
|
|
$
208
|
|
$
693
|
Net income
margin
|
|
5.8 %
|
|
4.9 %
|
|
1.3 %
|
|
4.8 %
|
Diluted earnings per
share (EPS)
|
|
$
1.66
|
|
$
1.28
|
|
$
1.44
|
|
$
4.96
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Measures*:
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
452
|
|
$
397
|
|
$
1,669
|
|
$
1,493
|
Adjusted EBITDA
margin
|
|
11.4 %
|
|
10.7 %
|
|
10.8 %
|
|
10.4 %
|
Non-GAAP diluted
EPS
|
|
$
1.99
|
|
$
1.83
|
|
$
7.30
|
|
$
6.60
|
|
|
|
|
|
|
|
|
|
*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 in our
debt agreements. See Non-GAAP Financial Measures at the end of this
press release for more information and a reconciliation of these
non-GAAP measures to the most directly comparable GAAP
measures.
|
Revenues were $3.98 billion for
the quarter and $15.44 billion for
the year, up 8% and 7% over the comparable 2022 periods,
respectively. For the quarter and the year, revenues grew
year-over-year due to increased demand across all customer
segments, especially within the Health segment.
For the quarter, net income was $230
million, or $1.66 per diluted
share, up 28% and 30%, respectively, compared to the fourth quarter
of fiscal year 2022. Net income margin was 5.8%, up 90 basis points
year-over-year. Adjusted EBITDA was $452
million (11.4% margin), up 14% over the fourth quarter of
2022. Non-GAAP net income was $276
million, which generated non-GAAP diluted EPS of
$1.99. Non-GAAP net income was up 8%,
and non-GAAP diluted EPS was up 9% compared to the fourth quarter
of fiscal year 2022.
For the year, net income was $208
million, or $1.44 per diluted
share. Net income and diluted EPS were down 70% and 71%,
respectively, compared to fiscal year 2022. Net income margin for
the year decreased to 1.3% from 4.8% in fiscal year 2022, primarily
as a result of pre-tax impairment and restructuring charges of
$699 million mainly associated with
the Security Enterprise Solutions (SES) reporting unit recorded in
the third quarter of fiscal year 2023. Adjusted EBITDA was
$1.67 billion (10.8% margin), up 12%
over fiscal year 2022. Non-GAAP net income was $1.02 billion, which generated non-GAAP diluted
EPS of $7.30. Non-GAAP net income and
non-GAAP diluted EPS were both up 11% compared to fiscal year
2022.
The primary drivers of increased earnings for the quarter and
the year were improved program execution and reduced indirect
spending across the company as well as increased volumes and higher
incentive awards in the medical examination business.
Cash Flow Summary
In the fourth quarter, Leidos generated $304 million of net cash provided by operating
activities and used $76 million in
investing activities and $245 million
in financing activities. Net cash provided by operating activities
benefited from strong collections and working capital management,
partially offset by higher cash tax payments. Days Sales
Outstanding (DSO) for the quarter was 56, a 1-day improvement from
the third quarter of 2023 and a 2-day improvement from the fourth
quarter of fiscal year 2022.
Investing activities consisted primarily of $78 million in property, equipment and software
payments, which resulted in quarterly free cash flow of
$226 million. Financing activities
were driven by $253 million returned
to shareholders, including $202
million in share repurchases and $51
million as part of a regular quarterly cash dividend
program.
For the year net cash provided by operating activities was
$1.17 billion and free cash flow was
$958 million. For the year Leidos
used $211 million in investing
activities and $715 million in
financing activities. As of December 29, 2023, the Company had
$777 million in cash and cash
equivalents and $4.7 billion in
debt.
On February 8, 2024, the Leidos Board of Directors declared
that Leidos will pay a cash dividend of $0.38 per share on March 28, 2024, to
stockholders of record at the close of business on March 15,
2024.
New Business Awards
Net bookings totaled $2.8 billion
in the fourth quarter of fiscal year 2023 and $16.5 billion for fiscal year 2023, representing
book-to-bill ratios of 0.7 and 1.1, respectively. As a result,
backlog at the end of fiscal year 2023 was $37.0 billion, of which $8.8 billion was funded.
Forward Guidance
Leidos is initiating fiscal year 2024 guidance as specified in
the table below.
Measure
|
FY24
Guidance
|
Revenues
(billions)
|
$15.7 -
$16.1
|
Adjusted EBITDA
Margin
|
Mid-to-High
10%
|
Non-GAAP Diluted
EPS
|
$7.50 -
$7.90
|
Cash Flows Provided by
Operating Activities (billions)
|
approximately
$1.1
|
Fiscal year 2024 guidance for cash flows provided by operating
activities reflects approximately $60 million of cash tax
payments related to the Tax Cuts and Jobs Act of 2017 provision
requiring the capitalization and amortization of research and
development costs that went into effect on January 1, 2022. The actual impact on cash flows
provided by operating activities will depend on the amount of
research and development costs Leidos will incur, whether Congress
modifies or repeals this provision and whether new guidance and
interpretive rules are issued by the US Treasury, among other
factors.
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
margin or diluted EPS, 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 margin, diluted EPS or net income attributable to Leidos
shareholders at this time. The amounts of these deductions may be
material and, therefore, could result in projected net income
margin, net income attributable to Leidos shareholders and diluted
EPS being materially less than 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 February 13, 2024.
Analysts and institutional investors may participate via telephone
by following the link to the registration form
(https://register.vevent.com/register/BIb6b1a440f1f947129e4e1d6e203859f3).
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
February 13, 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 47,000 collaborates to create
smarter technology solutions for customers in heavily regulated
industries. Headquartered in Reston,
Virginia, Leidos reported annual revenues of approximately
$15.4 billion for the fiscal
year ended December 29, 2023. For more information, visit
www.leidos.com.
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 U.S. government
defense and non-defense budgets, including budget reductions,
sequestration, implementation of spending limits or changes in
budgetary priorities, delays in the U.S. government budget process
or a government shutdown, or the U.S. government's failure to raise
the debt ceiling, which increases the possibility of a default by
the U.S. government on its debt obligations, related credit-rating
downgrades, or an economic recession; uncertainties in tax due to
new tax legislation or other regulatory developments; deterioration
of economic conditions or weakening in credit or capital markets;
uncertainty in the consequences of current and future geopolitical
events; inflationary pressures and fluctuations in interest rates;
delays in the U.S. government contract procurement process or the
award of contracts and delays or loss of contracts as a result of
competitor protests; changes in U.S. government procurement rules,
regulations and practices, including its organizational conflict of
interest rules; increased preference by the U.S. government for
minority-owned, small and small disadvantaged businesses;
fluctuations in foreign currency exchange rates; our compliance
with various U.S. government and other government procurement rules
and regulations; governmental reviews, audits and investigations of
our company; our ability to effectively compete and win contracts
with the U.S. government and other customers; our ability to
respond rapidly to emerging technology trends, including the use of
artificial intelligence; our reliance on information technology
spending by hospitals/healthcare organizations; our reliance on
infrastructure investments by industrial and natural resources
organizations; energy efficiency and alternative energy sourcing
investments; investments by U.S. government and commercial
organizations in environmental impact and remediation projects; the
effects an epidemic, pandemic or similar outbreaks may have on our
business, financial position, results of operations and/or cash
flows; our ability to attract, train and retain skilled employees,
including our management team, and to obtain security clearances
for our employees; our ability to accurately estimate costs,
including cost increases due to inflation, associated with our
firm-fixed-price contracts and other contracts; resolution of legal
and other disputes with our customers and others or legal or
regulatory compliance issues; cybersecurity, data security or other
security threats, system failures or other disruptions of our
business; our compliance with international, federal, state and
local laws and regulations regarding privacy, data security,
protection, storage, retention, transfer, disposal and other
processing, technology protection and personal information; the
damage and disruption to our business resulting from natural
disasters and the effects of climate change; our ability to
effectively acquire businesses and make investments; our ability to
maintain relationships with prime contractors, subcontractors and
joint venture partners; our ability to manage performance and other
risks related to customer contracts; the failure of our inspection
or detection systems to detect threats; the adequacy of our
insurance programs, customer indemnifications or other liability
protections designed to protect us from significant product or
other liability claims, including cybersecurity attacks; our
ability to manage risks associated with our international business;
our ability to comply with the U.S. Foreign Corrupt Practices Act,
the U.K. Bribery Act of 2010 and similar worldwide anti-corruption
and anti-bribery laws and regulations; our ability to protect our
intellectual property and other proprietary rights by third parties
of infringement, misappropriation or other violations by us of
their intellectual property rights; our ability to prevail in
litigation brought by third parties of infringement,
misappropriation or other violations by us of their intellectual
property rights; our ability to declare or increase future
dividends based on our earnings, financial condition, capital
requirements and other factors, including compliance with
applicable law and our agreements; our ability to grow our
commercial health and infrastructure businesses, which could be
negatively affected by budgetary constraints faced by hospitals and
by developers of energy and infrastructure projects; our ability to
successfully integrate acquired businesses; and our ability to
execute our business plan and long-term management initiatives
effectively and to overcome these and other known and unknown risks
that we face.
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 U.S. Securities and Exchange Commission ("SEC"), including
the "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Legal
Proceedings" sections of our latest Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q, all of which may be viewed or
obtained through the Investor Relations section of our website at
www.leidos.com.
All information in this release is as of February 13, 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
|
Melissa Lee
Dueñas
|
571.526.6124
|
571.526.6850
|
ir@leidos.com
|
Duenasml@leidos.com
|
LEIDOS HOLDINGS,
INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
|
|
|
|
Three Months
Ended
|
|
Year Ended
|
|
|
December 29,
2023
|
|
December 30,
2022
|
|
December 29,
2023
|
|
December 30,
2022
|
Revenues
|
|
$
3,980
|
|
$
3,697
|
|
$
15,438
|
|
$ 14,396
|
Cost of
revenues
|
|
3,385
|
|
3,176
|
|
13,194
|
|
12,312
|
Selling, general and
administrative expenses
|
|
233
|
|
221
|
|
942
|
|
951
|
Acquisition,
integration and restructuring costs
|
|
10
|
|
5
|
|
24
|
|
17
|
Goodwill impairment
charges
|
|
(3)
|
|
—
|
|
596
|
|
—
|
Asset impairment
charges
|
|
3
|
|
37
|
|
91
|
|
40
|
Equity earnings of
non-consolidated subsidiaries
|
|
(9)
|
|
(7)
|
|
(30)
|
|
(12)
|
Operating
income
|
|
361
|
|
265
|
|
621
|
|
1,088
|
Non-operating
expense:
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(49)
|
|
(51)
|
|
(212)
|
|
(199)
|
Other (expense)
income, net
|
|
(2)
|
|
4
|
|
(6)
|
|
(3)
|
Income before income
taxes
|
|
310
|
|
218
|
|
403
|
|
886
|
Income tax
expense
|
|
(80)
|
|
(38)
|
|
(195)
|
|
(193)
|
Net income
|
|
230
|
|
180
|
|
208
|
|
693
|
Less: net income
attributable to non-controlling interest
|
|
1
|
|
3
|
|
9
|
|
8
|
Net income attributable
to Leidos common stockholders
|
|
$
229
|
|
$
177
|
|
$
199
|
|
$
685
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
1.67
|
|
$
1.29
|
|
$
1.45
|
|
$
5.00
|
Diluted
|
|
1.66
|
|
1.28
|
|
1.44
|
|
4.96
|
Weighted average number
of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
137
|
|
137
|
|
137
|
|
137
|
Diluted
|
|
138
|
|
138
|
|
138
|
|
138
|
|
|
|
|
|
|
|
|
|
Cash dividends declared
per share
|
|
$
0.38
|
|
$
0.36
|
|
$
1.46
|
|
$
1.44
|
LEIDOS HOLDINGS,
INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
|
|
|
|
December 29,
2023
|
|
December 30,
2022
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
$
777
|
|
$
516
|
Receivables,
net
|
|
2,429
|
|
2,350
|
Inventory,
net
|
|
310
|
|
287
|
Other current
assets
|
|
489
|
|
490
|
Total current
assets
|
|
4,005
|
|
3,643
|
Property, plant and
equipment, net
|
|
961
|
|
847
|
Intangible assets,
net
|
|
667
|
|
952
|
Goodwill
|
|
6,112
|
|
6,696
|
Operating lease
right-of-use assets, net
|
|
512
|
|
545
|
Other long-term
assets
|
|
438
|
|
388
|
Total assets
|
|
$
12,695
|
|
$ 13,071
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
2,277
|
|
$
2,254
|
Accrued payroll and
employee benefits
|
|
695
|
|
701
|
Short-term debt and
current portion of long-term debt
|
|
18
|
|
992
|
Total current
liabilities
|
|
2,990
|
|
3,947
|
Long-term debt, net of
current portion
|
|
4,664
|
|
3,928
|
Operating lease
liabilities
|
|
516
|
|
570
|
Deferred tax
liabilities
|
|
3
|
|
40
|
Other long-term
liabilities
|
|
264
|
|
233
|
Total
liabilities
|
|
8,437
|
|
8,718
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Common stock, $0.0001
par value, 500,000,000 shares authorized, 135,766,419 and
136,926,990 shares issued and outstanding at
December 29, 2023 and December 30,
2022, respectively
|
|
—
|
|
—
|
Additional paid-in
capital
|
|
1,885
|
|
2,005
|
Retained
earnings
|
|
2,364
|
|
2,367
|
Accumulated other
comprehensive loss
|
|
(48)
|
|
(73)
|
Total Leidos
stockholders' equity
|
|
4,201
|
|
4,299
|
Non-controlling
interest
|
|
57
|
|
54
|
Total stockholders'
equity
|
|
4,258
|
|
4,353
|
Total liabilities and
stockholders' equity
|
|
$
12,695
|
|
$ 13,071
|
LEIDOS HOLDINGS,
INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
|
|
|
|
Three Months
Ended
|
|
Year Ended
|
|
|
December 29,
2023
|
|
December 30,
2022
|
|
December 29,
2023
|
|
December 30,
2022
|
Cash flows from
operations:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
230
|
|
$
180
|
|
$
208
|
|
$
693
|
Adjustments to
reconcile net income to net cash provided by
operations:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
83
|
|
84
|
|
331
|
|
333
|
Stock-based
compensation
|
|
20
|
|
20
|
|
77
|
|
73
|
Goodwill impairment
charges
|
|
(3)
|
|
—
|
|
596
|
|
—
|
Asset impairment
charges
|
|
3
|
|
37
|
|
91
|
|
40
|
Deferred income
taxes
|
|
83
|
|
10
|
|
(109)
|
|
(211)
|
Other
|
|
3
|
|
5
|
|
28
|
|
26
|
Change in assets and
liabilities, net of effects of acquisitions
and dispositions:
|
|
|
|
|
|
|
|
|
Receivables
|
|
44
|
|
(35)
|
|
(65)
|
|
(174)
|
Other current assets
and other long-term assets
|
|
(1)
|
|
28
|
|
140
|
|
160
|
Accounts payable and
accrued liabilities and other long-
term liabilities
|
|
9
|
|
(73)
|
|
31
|
|
(143)
|
Accrued payroll and
employee benefits
|
|
(110)
|
|
(119)
|
|
(5)
|
|
98
|
Income taxes
receivable/payable
|
|
(57)
|
|
(12)
|
|
(158)
|
|
97
|
Net cash provided by
operating activities
|
|
304
|
|
125
|
|
1,165
|
|
992
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Acquisitions of
businesses, net of cash acquired
|
|
—
|
|
(190)
|
|
(6)
|
|
(192)
|
Payments for property,
equipment and software
|
|
(78)
|
|
(53)
|
|
(207)
|
|
(129)
|
Proceeds from
disposition of businesses
|
|
2
|
|
—
|
|
2
|
|
15
|
Net proceeds from sale
of assets
|
|
—
|
|
—
|
|
—
|
|
6
|
Other
|
|
—
|
|
(15)
|
|
—
|
|
(13)
|
Net cash used in
investing activities
|
|
(76)
|
|
(258)
|
|
(211)
|
|
(313)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from debt
issuance
|
|
—
|
|
—
|
|
1,743
|
|
380
|
Repayments of
borrowings
|
|
(4)
|
|
(86)
|
|
(2,045)
|
|
(545)
|
Payments for debt
issuance and modification costs
|
|
—
|
|
—
|
|
(7)
|
|
—
|
Dividend
payments
|
|
(51)
|
|
(50)
|
|
(201)
|
|
(199)
|
Repurchases of stock
and other
|
|
(202)
|
|
(10)
|
|
(246)
|
|
(542)
|
Proceeds from
issuances of stock
|
|
13
|
|
13
|
|
50
|
|
48
|
Net capital
distributions to non-controlling interests
|
|
(1)
|
|
(2)
|
|
(9)
|
|
(7)
|
Net cash used in
provided by financing activities
|
|
(245)
|
|
(135)
|
|
(715)
|
|
(865)
|
Effect of foreign
exchange rate changes on cash and cash
equivalents
|
|
6
|
|
(20)
|
|
6
|
|
(6)
|
Net (decrease) increase
in cash, cash equivalents and
restricted cash
|
|
(11)
|
|
(288)
|
|
245
|
|
(192)
|
Cash, cash equivalents
and restricted cash at beginning of
period
|
|
939
|
|
971
|
|
683
|
|
875
|
Cash, cash equivalents
and restricted cash at end of year
|
|
$
928
|
|
$
683
|
|
$
928
|
|
$
683
|
LEIDOS HOLDINGS,
INC.
UNAUDITED SEGMENT OPERATING RESULTS
(in millions)
|
|
|
|
Three
Months Ended
|
Year Ended
|
|
|
December 29,
2023
|
|
December 30,
2022
|
|
December 29,
2023
|
|
December 30,
2022
|
Revenues:
|
|
|
|
|
|
|
|
|
Defense
Solutions
|
|
$
2,212
|
|
$
2,068
|
|
$
8,732
|
|
$
8,244
|
Civil
|
|
961
|
|
938
|
|
3,664
|
|
3,464
|
Health
|
|
807
|
|
691
|
|
3,042
|
|
2,688
|
Total
|
|
$
3,980
|
|
$
3,697
|
|
$
15,438
|
|
$ 14,396
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
Defense
Solutions
|
|
$
167
|
|
$
132
|
|
$
636
|
|
$
541
|
Civil
|
|
90
|
|
74
|
|
(413)
|
|
234
|
Health
|
|
147
|
|
86
|
|
528
|
|
421
|
Corporate
|
|
(43)
|
|
(27)
|
|
(130)
|
|
(108)
|
Total
|
|
$
361
|
|
$
265
|
|
$
621
|
|
$
1,088
|
|
|
|
|
|
|
|
|
|
Operating income
margin:
|
|
|
|
|
|
|
|
|
Defense
Solutions
|
|
7.5 %
|
|
6.4 %
|
|
7.3 %
|
|
6.6 %
|
Civil
|
|
9.4 %
|
|
7.9 %
|
|
(11.3) %
|
|
6.8 %
|
Health
|
|
18.2 %
|
|
12.4 %
|
|
17.4 %
|
|
15.7 %
|
Total
|
|
9.1 %
|
|
7.2 %
|
|
4.0 %
|
|
7.6 %
|
Defense Solutions
Defense Solutions revenues were $2.21
billion for the quarter and $8.73
billion for the year, up 7% and 6% over the comparable 2022
periods, respectively. Revenue growth in the quarter was primarily
in the areas of digital modernization, including the Navy Next
Generation Enterprise Network Recompete (NGEN-R) Service
Management, Integration and Transport (SMIT) contract, and
offensive hypersonics as well as increased task order volume on the
Sentinel program. Revenue growth for the year benefited from the
quarterly drivers as well as a $94
million net increase related to the acquisition of Cobham
Special Missions that was completed on October 30, 2022.
Defense Solutions operating income margin for the quarter was
7.5%, compared to 6.4% in the prior year quarter. On a non-GAAP
basis, operating margin for the quarter was 9.0%, compared to 8.6%
in the prior year quarter. Defense Solutions operating income
margin for fiscal year 2023 was 7.3%, compared to 6.6% in the prior
year. On a non-GAAP basis, operating margin for the year was 8.8%,
compared to 8.3% in the prior year. The increase in segment
profitability for the quarter and the year was primarily
attributable to improved program execution and cost control.
Civil
Civil revenues were $961 million
for the quarter and $3.66 billion for
the year, up 2% and 6% over the comparable 2022 periods. The
primary driver for revenue growth in the quarter was infrastructure
spending by the Federal Aviation Administration (FAA). For the year
revenue growth was primarily driven by the ramp of the National
Aeronautics and Space Administration (NASA) Advanced Enterprise
Global Information Technology Solutions (AEGIS) contract, increased
demand on existing programs with commercial energy providers and
increased volume of sales and maintenance for security
products.
Civil operating income margin for the quarter was 9.4%, compared
to 7.9% in the prior year quarter. On a non-GAAP basis, operating
margin for the quarter was 10.8%, compared to 11.2% in the prior
year quarter. Civil operating income margin for fiscal year 2023
was (11.3)%, compared to 6.8% in the prior year; the decline in
profitability was primarily as a result of pre-tax impairment and
restructuring charges of $688 million
associated with the SES reporting unit recorded in the third
quarter of fiscal year 2023. On a non-GAAP basis, operating margin
for the year was unchanged at 9.2%.
Health
Health revenues were $807 million
for the quarter and $3.04 billion for
the year, up 17% and 13% over the comparable 2022 periods,
respectively. Higher levels of medical examinations drove increased
revenues for the quarter and the year. In addition, growth on the
Social Security Administration (SSA) Information Technology Support
Services Contract II (ITSSC II) contributed to increased revenues
for the year.
Health operating income margin for the quarter was 18.2%,
compared to 12.4% in the prior year quarter. On a non-GAAP basis,
operating margin for the quarter was 19.0%, up from 14.3% in the
prior year quarter. Health operating income margin for fiscal year
2023 was 17.4%, compared to 15.7% in the prior year. On a non-GAAP
basis, operating margin for the year was 18.1%, up from 17.1% in
fiscal year 2022. The increase in segment profitability was driven
primarily by increased volumes and higher incentive awards in the
medical examination business.
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 U.S. government represents
the value on contracts for which funding is appropriated less
revenues previously recognized on these contracts. Funded backlog
for contracts with non-U.S. government entities and commercial
customers represents the estimated value on contracts, which may
cover multiple future years, under which Leidos is obligated to
perform, less revenue previously recognized on the contracts.
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:
|
|
December 29,
2023
|
|
December 30,
2022
|
Segment
|
|
Funded
|
|
Unfunded
|
|
Total
|
|
Funded
|
|
Unfunded
|
|
Total
|
Defense
Solutions
|
|
$
4,541
|
|
$
14,783
|
|
$
19,324
|
|
$
4,442
|
|
$ 14,155
|
|
$ 18,597
|
Civil
|
|
2,182
|
|
9,475
|
|
11,657
|
|
1,876
|
|
8,790
|
|
10,666
|
Health
|
|
2,073
|
|
3,908
|
|
5,981
|
|
2,064
|
|
4,455
|
|
6,519
|
Total
|
|
$
8,796
|
|
$
28,166
|
|
$
36,962
|
|
$
8,382
|
|
$
27,400
|
|
$ 35,782
|
LEIDOS HOLDINGS, INC.
UNAUDITED
NON-GAAP FINANCIAL MEASURES
Leidos uses and refers to organic revenues, non-GAAP operating
income, non-GAAP operating margin, adjusted EBITDA, adjusted EBITDA
margin, non-GAAP diluted EPS, free cash flow and free cash flow
conversion, which are not measures of financial performance under
generally accepted accounting principles in the U.S. and,
accordingly, these measures should not be considered in isolation
or as a substitute for the comparable GAAP measures and should be
read in conjunction with Leidos's consolidated financial statements
prepared in accordance with GAAP.
Management believes that these non-GAAP measures provide another
measure 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 captures 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 and severance costs
related to acquisitions.
- Amortization of acquired intangible assets – Represents the
amortization of the fair value of the acquired intangible
assets.
- Derivative loss – Represents the fair value loss associated
with the foreign currency forward contract to hedge the preliminary
purchase price for the Cobham
acquisition in Australian dollars.
- Goodwill impairment charges – Represents impairments of
goodwill due to changes in actual performance against performance
projected when the goodwill was acquired.
- Asset impairment charges – Represents impairments of long-lived
assets.
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 operating activities.
Non-GAAP free cash flow conversion is computed by
dividing 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 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
|
|
Year Ended
|
|
|
December 29,
2023
|
|
December 30,
2022
|
|
Percent
Change
|
|
December 29,
2023
|
|
December 30,
2022
|
|
Percent
Change
|
Defense
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, as
reported
|
|
$
2,212
|
|
$
2,068
|
|
7 %
|
|
$
8,732
|
|
$
8,244
|
|
6 %
|
Acquisition and
divestiture revenues(1)
|
|
9
|
|
2
|
|
|
|
95
|
|
6
|
|
|
Organic
revenues
|
|
$
2,203
|
|
$
2,066
|
|
7 %
|
|
$
8,637
|
|
$
8,238
|
|
5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Civil
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, as
reported
|
|
$
961
|
|
$
938
|
|
2 %
|
|
$
3,664
|
|
$
3,464
|
|
6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, as
reported
|
|
$
807
|
|
$
691
|
|
17 %
|
|
$
3,042
|
|
$
2,688
|
|
13 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, as
reported
|
|
$
3,980
|
|
$
3,697
|
|
8 %
|
|
$
15,438
|
|
$
14,396
|
|
7 %
|
Acquisition and
divestiture revenues(1)
|
|
9
|
|
2
|
|
|
|
95
|
|
6
|
|
|
Organic
revenues
|
|
$
3,971
|
|
$
3,695
|
|
7 %
|
|
$
15,343
|
|
$
14,390
|
|
7 %
|
(1) Current
period acquisition and divestiture revenues reflect revenues in the
current as reported figures for 12 months from closing of each
acquisition or divestiture. For the three months and year ended
December 29, 2023, Defense Solutions segment acquisition and
divestiture revenues include the acquisition of Cobham Special
Missions that was completed on October 30, 2022. Year ago
acquisition and divestiture revenues reflect revenues from assets
subsequently divested. For the year ended December 30, 2022,
Defense Solutions segment acquisition and divestiture revenues
include the Aviation & Missile Solutions LLC (AMS) divestiture
that was completed on April 29, 2022. For the three months and year
ended December 30, 2022, Defense Solutions segment
acquisitions 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 and growth 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 December 29, 2023:
|
|
Three Months Ended
December 29, 2023
|
|
|
As
reported
|
|
Acquisition,
integration
and
restructuring
costs
|
|
Amortization
of acquired
intangibles
|
|
Asset
impairment
charges
|
|
Goodwill
impairment
charges
|
|
Non-GAAP
results
|
Operating
income
|
|
$
361
|
|
$
10
|
|
$
49
|
|
$
3
|
|
$
(3)
|
|
$
420
|
Non-operating expense,
net
|
|
(51)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(51)
|
Income before income
taxes
|
|
310
|
|
10
|
|
49
|
|
3
|
|
(3)
|
|
369
|
Income tax
expense(1)
|
|
(80)
|
|
(2)
|
|
(13)
|
|
(1)
|
|
3
|
|
(93)
|
Net income
|
|
$
230
|
|
$
8
|
|
$
36
|
|
$
2
|
|
$
—
|
|
$
276
|
Less: net income
attributable to non-controlling
interest
|
|
1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
Net income attributable
to Leidos common
stockholders
|
|
$
229
|
|
$
8
|
|
$
36
|
|
$
2
|
|
$
—
|
|
$
275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
attributable to Leidos common
stockholders(2)
|
|
$
1.66
|
|
$ 0.06
|
|
$ 0.26
|
|
$ 0.01
|
|
$
—
|
|
$
1.99
|
Diluted
shares
|
|
138
|
|
138
|
|
138
|
|
138
|
|
138
|
|
138
|
|
|
Three Months Ended
December 29, 2023
|
|
|
As
reported
|
|
Acquisition,
integration
and
restructuring
costs
|
|
Amortization
of acquired
intangibles
|
|
Asset
impairment
charges
|
|
Goodwill
impairment
charges
|
|
Non-GAAP
results
|
Net income
|
|
$
230
|
|
$
8
|
|
$
36
|
|
$
2
|
|
$
—
|
|
$
276
|
Income tax expense
(1)
|
|
80
|
|
2
|
|
13
|
|
1
|
|
(3)
|
|
93
|
Income before income
taxes
|
|
310
|
|
10
|
|
49
|
|
3
|
|
(3)
|
|
369
|
Depreciation
expense
|
|
34
|
|
—
|
|
—
|
|
—
|
|
—
|
|
34
|
Amortization of
intangibles
|
|
49
|
|
—
|
|
(49)
|
|
—
|
|
—
|
|
—
|
Interest expense,
net
|
|
49
|
|
—
|
|
—
|
|
—
|
|
—
|
|
49
|
EBITDA
|
|
$
442
|
|
$
10
|
|
$
—
|
|
$
3
|
|
$
(3)
|
|
$
452
|
EBITDA
margin
|
|
11.1 %
|
|
|
|
|
|
|
|
|
|
11.4 %
|
(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
adjustments 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 and growth 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 December
30, 2022:
|
|
Three Months Ended
December 30, 2022
|
|
|
As reported
|
|
Acquisition,
integration
and
restructuring
costs
|
|
Amortization
of acquired
intangibles
|
|
Asset
impairment
charges
|
|
Derivative
loss
|
|
Non-GAAP
results
|
Operating
income
|
|
$ 265
|
|
$
5
|
|
$
57
|
|
$
37
|
|
$
—
|
|
$ 364
|
Non-operating expense,
net
|
|
(47)
|
|
—
|
|
—
|
|
—
|
|
2
|
|
(45)
|
Income before income
taxes
|
|
218
|
|
5
|
|
57
|
|
37
|
|
2
|
|
319
|
Income tax
expense(1)
|
|
(38)
|
|
(1)
|
|
(15)
|
|
(9)
|
|
(1)
|
|
(64)
|
Net income
|
|
$ 180
|
|
$
4
|
|
$
42
|
|
$
28
|
|
$
1
|
|
$ 255
|
Less: net income
attributable to non-controlling
interest
|
|
3
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3
|
Net income attributable
to Leidos common
stockholders
|
|
$ 177
|
|
$
4
|
|
$
42
|
|
$
28
|
|
$
1
|
|
$ 252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
attributable to Leidos common
stockholders(2)
|
|
$ 1.28
|
|
$ 0.03
|
|
$ 0.30
|
|
$ 0.20
|
|
$ 0.01
|
|
$ 1.83
|
Diluted
shares
|
|
138
|
|
138
|
|
138
|
|
138
|
|
138
|
|
138
|
|
|
|
Three Months Ended
December 30, 2022
|
|
|
As reported
|
|
Acquisition,
integration
and
restructuring
costs
|
|
Amortization
of acquired
intangibles
|
|
Asset
impairment
charges
|
|
Derivative
loss
|
|
Non-GAAP
results
|
Net income
|
|
$ 180
|
|
$
4
|
|
$
42
|
|
$
28
|
|
$
1
|
|
$ 255
|
Income tax expense
(1)
|
|
38
|
|
1
|
|
15
|
|
9
|
|
1
|
|
64
|
Income before income
taxes
|
|
218
|
|
5
|
|
57
|
|
37
|
|
2
|
|
319
|
Depreciation
expense
|
|
27
|
|
—
|
|
—
|
|
—
|
|
—
|
|
27
|
Amortization of
intangibles
|
|
57
|
|
—
|
|
(57)
|
|
—
|
|
—
|
|
—
|
Interest expense,
net
|
|
51
|
|
—
|
|
—
|
|
—
|
|
—
|
|
51
|
EBITDA
|
|
$ 353
|
|
$
5
|
|
$
—
|
|
$
37
|
|
$
2
|
|
$ 397
|
EBITDA
margin
|
|
9.5 %
|
|
|
|
|
|
|
|
|
|
10.7 %
|
(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 and growth 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 year ended December 29, 2023:
|
|
Year Ended December
29, 2023
|
|
|
As
reported
|
|
Acquisition,
integration
and
restructuring
costs(3)
|
|
Amortization
of acquired
intangibles
|
|
Asset
impairment
charges
|
|
Goodwill
impairment
charges
|
|
Non-GAAP
results
|
Operating
income
|
|
$
621
|
|
$
36
|
|
$ 202
|
|
$
91
|
|
$ 596
|
|
$ 1,546
|
Non-operating expense,
net
|
|
(218)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(218)
|
Income before income
taxes
|
|
403
|
|
36
|
|
202
|
|
91
|
|
596
|
|
1,328
|
Income tax
expense(1)
|
|
(195)
|
|
(9)
|
|
(51)
|
|
(31)
|
|
(26)
|
|
(312)
|
Net income
|
|
208
|
|
27
|
|
151
|
|
60
|
|
570
|
|
1,016
|
Less: net income
attributable to non-controlling
interest
|
|
9
|
|
—
|
|
—
|
|
—
|
|
—
|
|
9
|
Net income attributable
to Leidos common
stockholders
|
|
$
199
|
|
$
27
|
|
$ 151
|
|
$
60
|
|
$ 570
|
|
$ 1,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
attributable to Leidos common
stockholders(2)
|
|
$
1.44
|
|
$ 0.20
|
|
$ 1.09
|
|
$ 0.43
|
|
$ 4.13
|
|
$
7.30
|
Diluted
shares
|
|
138
|
|
138
|
|
138
|
|
138
|
|
138
|
|
138
|
|
|
Year Ended December
29, 2023
|
|
|
As
reported
|
|
Acquisition,
integration
and
restructuring
costs(3)
|
|
Amortization
of acquired
intangibles
|
|
Asset
impairment
charges
|
|
Goodwill
impairment
charges
|
|
Non-GAAP
results
|
Net income
|
|
$ 208
|
|
$
27
|
|
$
151
|
|
$
60
|
|
$ 570
|
|
$
1,016
|
Income tax
expense(1)
|
|
195
|
|
9
|
|
51
|
|
31
|
|
26
|
|
312
|
Income before income
taxes
|
|
403
|
|
36
|
|
202
|
|
91
|
|
596
|
|
1,328
|
Depreciation
expense
|
|
129
|
|
—
|
|
—
|
|
—
|
|
—
|
|
129
|
Amortization of
intangibles
|
|
202
|
|
—
|
|
(202)
|
|
—
|
|
—
|
|
—
|
Interest expense,
net
|
|
212
|
|
—
|
|
—
|
|
—
|
|
—
|
|
212
|
EBITDA
|
|
$ 946
|
|
$
36
|
|
$
—
|
|
$
91
|
|
$ 596
|
|
$
1,669
|
EBITDA
margin
|
|
6.1 %
|
|
|
|
|
|
|
|
|
|
10.8 %
|
(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
adjustments 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
consolidated statements of operations.
|
LEIDOS HOLDINGS, INC.
UNAUDITED
NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions,
except per share data and margin and growth 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 year ended December 30,
2022:
|
|
Year Ended December 30,
2022
|
|
|
As reported
|
|
Acquisition,
integration
and
restructuring
costs
|
|
Amortization
of acquired
intangibles
|
|
Asset
impairment
charges
|
|
Derivative
loss
|
|
Non-GAAP
results
|
Operating
income
|
|
$ 1,088
|
|
$
17
|
|
$ 229
|
|
$
40
|
|
$
—
|
|
$
1,374
|
Non-operating expense,
net
|
|
(202)
|
|
—
|
|
—
|
|
—
|
|
18
|
|
(184)
|
Income before income
taxes
|
|
886
|
|
17
|
|
229
|
|
40
|
|
18
|
|
1,190
|
Income tax expense
(1)
|
|
(193)
|
|
(4)
|
|
(59)
|
|
(10)
|
|
(5)
|
|
(271)
|
Net income
|
|
693
|
|
13
|
|
170
|
|
30
|
|
13
|
|
919
|
Less: net income
attributable to non-controlling
interest
|
|
8
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8
|
Net income attributable
to Leidos common
stockholders
|
|
$ 685
|
|
$
13
|
|
$ 170
|
|
$
30
|
|
$
13
|
|
$ 911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
attributable to Leidos common
stockholders(2)
|
|
$ 4.96
|
|
$ 0.09
|
|
$ 1.23
|
|
$ 0.22
|
|
$ 0.09
|
|
$ 6.60
|
Diluted
shares
|
|
138
|
|
138
|
|
138
|
|
138
|
|
138
|
|
138
|
|
|
|
Year Ended December 30,
2022
|
|
|
As reported
|
|
Acquisition,
integration
and
restructuring
costs
|
|
Amortization
of acquired
intangibles
|
|
Asset
impairment
charges
|
|
Derivative
loss
|
|
Non-GAAP
results
|
Net income
|
|
$ 693
|
|
$
13
|
|
$ 170
|
|
$
30
|
|
$
13
|
|
$ 919
|
Income tax expense
(1)
|
|
193
|
|
4
|
|
59
|
|
10
|
|
5
|
|
271
|
Income before income
taxes
|
|
886
|
|
17
|
|
229
|
|
40
|
|
18
|
|
1,190
|
Depreciation
expense
|
|
103
|
|
—
|
|
—
|
|
—
|
|
—
|
|
103
|
Amortization of
intangibles
|
|
230
|
|
—
|
|
(229)
|
|
—
|
|
—
|
|
1
|
Interest expense,
net
|
|
199
|
|
—
|
|
—
|
|
—
|
|
—
|
|
199
|
EBITDA
|
|
$
1,418
|
|
$
17
|
|
$
—
|
|
$
40
|
|
$
18
|
|
$
1,493
|
EBITDA
margin
|
|
9.8 %
|
|
|
|
|
|
|
|
|
|
10.4 %
|
(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
adjustments 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 and growth percentages)
The following tables present the reconciliation of non-GAAP
operating income by reportable segment and Corporate to operating
income:
|
|
Three Months Ended
December 29, 2023
|
|
|
Operating
income
(loss)
|
|
Acquisition,
integration
and
restructuring
costs
|
|
Amortization
of acquired
intangibles
|
|
Goodwill
impairment
charges
|
|
Asset
impairment
charges
|
|
Non-GAAP
operating
income
(loss)
|
|
Non-GAAP
operating
margin
|
Defense
Solutions
|
|
$
167
|
|
$
2
|
|
$
29
|
|
$
—
|
|
$
—
|
|
$
198
|
|
9.0 %
|
Civil
|
|
90
|
|
—
|
|
14
|
|
(3)
|
|
3
|
|
104
|
|
10.8 %
|
Health
|
|
147
|
|
—
|
|
6
|
|
—
|
|
—
|
|
153
|
|
19.0 %
|
Corporate
|
|
(43)
|
|
8
|
|
—
|
|
—
|
|
—
|
|
(35)
|
|
NM
|
Total
|
|
$
361
|
|
$
10
|
|
$
49
|
|
$
(3)
|
|
$
3
|
|
$
420
|
|
10.6 %
|
|
|
Three Months Ended
December 30, 2022
|
|
|
Operating
income (loss)
|
|
Acquisition,
integration
and
restructuring
costs
|
|
Amortization
of acquired
intangibles
|
|
Asset
impairment
charges
|
|
Non-GAAP
operating
income (loss)
|
|
Non-GAAP
operating
margin
|
Defense
Solutions
|
|
$
132
|
|
$
—
|
|
$
33
|
|
$
12
|
|
$
177
|
|
8.6 %
|
Civil
|
|
74
|
|
—
|
|
17
|
|
14
|
|
105
|
|
11.2 %
|
Health
|
|
86
|
|
—
|
|
7
|
|
6
|
|
99
|
|
14.3 %
|
Corporate
|
|
(27)
|
|
5
|
|
—
|
|
5
|
|
(17)
|
|
NM
|
Total
|
|
$
265
|
|
$
5
|
|
$
57
|
|
$
37
|
|
$
364
|
|
9.8 %
|
|
|
Year Ended December
29, 2023
|
|
|
Operating
income
(loss)
|
|
Acquisition,
integration
and
restructuring
costs
|
|
Amortization
of acquired
intangibles
|
|
Goodwill
impairment
charges
|
|
Asset
impairment
charges
|
|
Non-GAAP
operating
income
(loss)
|
|
Non-GAAP
operating
margin
|
Defense
Solutions
|
|
$
636
|
|
$
5
|
|
$
117
|
|
$
—
|
|
$
8
|
|
$
766
|
|
8.8 %
|
Civil
|
|
(413)
|
|
10
|
|
62
|
|
596
|
|
83
|
|
338
|
|
9.2 %
|
Health
|
|
528
|
|
—
|
|
23
|
|
—
|
|
—
|
|
551
|
|
18.1 %
|
Corporate
|
|
(130)
|
|
21
|
|
—
|
|
—
|
|
—
|
|
(109)
|
|
NM
|
Total
|
|
$
621
|
|
$
36
|
|
$
202
|
|
$ 596
|
|
$
91
|
|
$ 1,546
|
|
10.0 %
|
|
|
Year Ended December 30,
2022
|
|
|
Operating
income (loss)
|
|
Acquisition,
integration
and
restructuring
costs
|
|
Amortization
of acquired
intangibles
|
|
Asset
impairment
charges
|
|
Non-GAAP
operating
income (loss)
|
|
Non-GAAP
operating
margin
|
Defense
Solutions
|
|
$
541
|
|
$
—
|
|
$
130
|
|
$
12
|
|
$
683
|
|
8.3 %
|
Civil
|
|
234
|
|
—
|
|
70
|
|
14
|
|
318
|
|
9.2 %
|
Health
|
|
421
|
|
—
|
|
29
|
|
9
|
|
459
|
|
17.1 %
|
Corporate
|
|
(108)
|
|
17
|
|
—
|
|
5
|
|
(86)
|
|
NM
|
Total
|
|
$
1,088
|
|
$
17
|
|
$
229
|
|
$
40
|
|
$
1,374
|
|
9.5 %
|
LEIDOS HOLDINGS, INC.
UNAUDITED
NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions,
except per share data and margin and growth percentages)
The following table presents the reconciliation of free cash
flow to net cash provided by operating activities as well as the
calculation of operating cash flow and free cash flow conversion
ratios:
|
|
Three Months
Ended
|
|
Year Ended
|
(in millions, except
conversion ratio)
|
|
December 29,
2023
|
|
December 30,
2022
|
|
December 29,
2023
|
|
December 30,
2022
|
Net cash provided by
operating activities(1)
|
|
$
304
|
|
$
125
|
|
$
1,165
|
|
$
992
|
Payments for property,
equipment and software
|
|
(78)
|
|
(53)
|
|
(207)
|
|
(129)
|
Free cash
flow
|
|
$
226
|
|
$
72
|
|
$
958
|
|
$
863
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Leidos common stockholders
|
|
$
229
|
|
$
177
|
|
$
199
|
|
$
685
|
Acquisition,
integration and restructuring costs(2)(3)
|
|
8
|
|
4
|
|
27
|
|
13
|
Amortization of
acquired intangibles(2)
|
|
36
|
|
42
|
|
151
|
|
170
|
Goodwill impairment
charges(2)
|
|
—
|
|
—
|
|
570
|
|
—
|
Asset impairment
charges(2)
|
|
2
|
|
28
|
|
60
|
|
30
|
Derivative
loss(2)
|
|
—
|
|
1
|
|
—
|
|
13
|
Non-GAAP net income
attributable to Leidos common
stockholders
|
|
$
275
|
|
$
252
|
|
$
1,007
|
|
$
911
|
|
|
|
|
|
|
|
|
|
Operating cash flow
conversion ratio
|
|
133 %
|
|
71 %
|
|
585 %
|
|
145 %
|
Free cash flow
conversion ratio
|
|
82 %
|
|
29 %
|
|
95 %
|
|
95 %
|
(1) Prior
year financial information has been reclassified to reflect the
effect of foreign exchange rate changes on cash, cash equivalents
and restricted cash in net cash provided by operating
activities.
|
(2)
After-tax expenses excluded from non-GAAP net income.
|
(3) Asset markdowns associated with
restructuring activities were recorded to "Cost of revenues" in the
consolidated statements of operations.
|
LEIDOS HOLDINGS, INC.
UNAUDITED
HISTORICAL FINANCIAL MEASURES
Background
Beginning in fiscal 2024, Leidos will operate in four reportable
segments that are focused on specific, defined capability sets
delivered to customers:
National Security and Digital—provides technology enabled
services and mission software capabilities for defense and
intelligence customers in the areas of cyber, logistics, security
operations and decision analytics, as well as IT operations and
digital transformation programs across all U.S. federal government
customers.
Health & Civil—will deliver customer solutions with unique
capabilities in the areas of public health, care coordination, life
and environmental sciences and transportation.
Commercial & International—encompasses our security
enterprise solution and commercial energy offerings, as well as our
United Kingdom and Australian
businesses.
Defense Systems—includes programs to develop and produce
advanced space, aerial, surface and sub-surface manned and
un-manned Defense Systems.
We have prepared unaudited historical consolidated financial
information based on the new reporting structure set forth below,
which includes certain non-GAAP measures. 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.
Unaudited Historical Financial Measures
The following table presents revenues for fiscal 2023 and 2022
under the new segment structure (in millions):
|
|
Three
Months Ended
|
|
Year Ended
|
|
|
March 31,
2023
|
|
June 30,
2023
|
|
September
29,
2023
|
|
December 29,
2023
|
|
December 29,
2023
|
|
December 30,
2022
|
National Security and
Digital
|
|
$
1,757
|
|
$
1,791
|
|
$
1,852
|
|
$
1,796
|
|
$
7,196
|
|
$
6,745
|
Health &
Civil
|
|
1,008
|
|
1,034
|
|
1,055
|
|
1,141
|
|
4,238
|
|
3,945
|
Commercial &
International
|
|
489
|
|
547
|
|
552
|
|
538
|
|
2,126
|
|
1,900
|
Defense
Systems
|
|
445
|
|
466
|
|
462
|
|
505
|
|
1,878
|
|
1,806
|
Total
|
|
$
3,699
|
|
$
3,838
|
|
$
3,921
|
|
$
3,980
|
|
$ 15,438
|
|
$ 14,396
|
LEIDOS HOLDINGS, INC.
UNAUDITED
NON-GAAP HISTORICAL FINANCIAL MEASURES
The following tables present the reconciliation of operating
income by reportable segment to non-GAAP operating income for
fiscal 2023 and 2022 under the new segment structure (in
millions):
|
|
Three Months Ended
March 31, 2023
|
|
|
Operating
income (loss)
|
|
Acquisition,
integration and
restructuring
costs
|
|
Amortization of
acquired
intangibles
|
|
Non-GAAP
operating
income (loss)
|
National Security and
Digital
|
|
$
145
|
|
$
—
|
|
$
12
|
|
$
157
|
Health &
Civil
|
|
113
|
|
—
|
|
10
|
|
123
|
Commercial &
International
|
|
13
|
|
—
|
|
10
|
|
23
|
Defense
Systems
|
|
23
|
|
—
|
|
20
|
|
43
|
Corporate
|
|
(29)
|
|
3
|
|
—
|
|
(26)
|
Total
|
|
$
265
|
|
$
3
|
|
$
52
|
|
$
320
|
|
|
Three Months Ended June
30, 2023
|
|
|
Operating
income (loss)
|
|
Acquisition,
integration and
restructuring
costs
|
|
Amortization of
acquired
intangibles
|
|
Non-GAAP
operating
income (loss)
|
National Security and
Digital
|
|
$
172
|
|
$
—
|
|
$
11
|
|
$
183
|
Health &
Civil
|
|
134
|
|
—
|
|
11
|
|
145
|
Commercial &
International
|
|
34
|
|
1
|
|
10
|
|
45
|
Defense
Systems
|
|
21
|
|
—
|
|
19
|
|
40
|
Corporate
|
|
(30)
|
|
5
|
|
—
|
|
(25)
|
Total
|
|
$
331
|
|
$
6
|
|
$
51
|
|
$
388
|
|
|
Three Months Ended
September 29, 2023
|
|
|
Operating
income (loss)
|
|
Acquisition,
integration and
restructuring
costs
|
|
Amortization of
acquired
intangibles
|
|
Asset
impairment
charges
|
|
Goodwill
impairment
charges
|
|
Non-GAAP
operating
income (loss)
|
National Security and
Digital
|
|
$
170
|
|
$
—
|
|
$
12
|
|
$
—
|
|
$
—
|
|
$
182
|
Health &
Civil
|
|
165
|
|
—
|
|
9
|
|
—
|
|
—
|
|
174
|
Commercial &
International
|
|
(646)
|
|
9
|
|
9
|
|
80
|
|
599
|
|
51
|
Defense
Systems
|
|
3
|
|
3
|
|
20
|
|
8
|
|
—
|
|
34
|
Corporate
|
|
(28)
|
|
5
|
|
—
|
|
—
|
|
—
|
|
(23)
|
Total
|
|
$
(336)
|
|
$
17
|
|
$
50
|
|
$
88
|
|
$
599
|
|
$
418
|
|
|
Three Months Ended
December 29, 2023
|
|
|
Operating
income (loss)
|
|
Acquisition,
integration and
restructuring
costs
|
|
Amortization of
acquired
intangibles
|
|
Asset
impairment
charges
|
|
Goodwill
impairment
charges
|
|
Non-GAAP
operating
income (loss)
|
National Security and
Digital
|
|
$
185
|
|
$
—
|
|
$
12
|
|
$
—
|
|
$
—
|
|
$
197
|
Health &
Civil
|
|
162
|
|
—
|
|
10
|
|
—
|
|
—
|
|
172
|
Commercial &
International
|
|
39
|
|
—
|
|
8
|
|
3
|
|
(3)
|
|
47
|
Defense
Systems
|
|
18
|
|
2
|
|
19
|
|
—
|
|
—
|
|
39
|
Corporate
|
|
(43)
|
|
8
|
|
—
|
|
—
|
|
—
|
|
(35)
|
Total
|
|
$
361
|
|
$
10
|
|
$
49
|
|
$
3
|
|
$
(3)
|
|
$
420
|
LEIDOS HOLDINGS,
INC.
UNAUDITED NON-GAAP
HISTORICAL FINANCIAL MEASURES [CONTINUED]
|
|
|
|
Year Ended December 29,
2023
|
|
|
Operating
income (loss)
|
|
Acquisition,
integration and
restructuring
costs
|
|
Amortization of
acquired
intangibles
|
|
Asset
impairment
charges
|
|
Goodwill
impairment
charges
|
|
Non-GAAP
operating
income (loss)
|
National Security and
Digital
|
|
$
672
|
|
$
—
|
|
$
47
|
|
$
—
|
|
$
—
|
|
$
719
|
Health &
Civil
|
|
574
|
|
—
|
|
40
|
|
—
|
|
—
|
|
614
|
Commercial &
International
|
|
(560)
|
|
10
|
|
37
|
|
83
|
|
596
|
|
166
|
Defense
Systems
|
|
65
|
|
5
|
|
78
|
|
8
|
|
—
|
|
156
|
Corporate
|
|
(130)
|
|
21
|
|
—
|
|
—
|
|
—
|
|
(109)
|
Total
|
|
$
621
|
|
$
36
|
|
$
202
|
|
$
91
|
|
$
596
|
|
$
1,546
|
|
|
Year Ended December 30,
2022
|
|
|
Operating
income (loss)
|
|
Acquisition,
integration and
restructuring
costs
|
|
Amortization of
acquired
intangibles
|
|
Asset
impairment
charges
|
|
Non-GAAP
operating
income (loss)
|
National Security and
Digital
|
|
$
606
|
|
$
—
|
|
$
57
|
|
$
14
|
|
$
677
|
Health &
Civil
|
|
448
|
|
—
|
|
48
|
|
13
|
|
509
|
Commercial &
International
|
|
131
|
|
—
|
|
35
|
|
4
|
|
170
|
Defense
Systems
|
|
11
|
|
—
|
|
89
|
|
4
|
|
104
|
Corporate
|
|
(108)
|
|
17
|
|
—
|
|
5
|
|
(86)
|
Total
|
|
$
1,088
|
|
$
17
|
|
$
229
|
|
$
40
|
|
$
1,374
|
View original
content:https://www.prnewswire.com/news-releases/leidos-holdings-inc-reports-fourth-quarter-and-fiscal-year-2023-results-302059804.html
SOURCE Leidos