Leidos Posts Strong Fourth Quarter and Fiscal Year 2024 Results

Leidos Holdings, Inc. (NYSE: LDOS) today reported financial results for the fourth quarter and fiscal year 2024, highlighted by double-digit earnings growth, accelerating revenue growth, and excellent business development results. In addition, Leidos established guidance for 2025 that forecasts continued growth in revenues, non-GAAP diluted earnings per share, and cash flows provided by operating activities.

“2024 was a fantastic year for Leidos, as we delivered robust results at or above the high end of our guidance range across all metrics,” said Leidos Chief Executive Officer Tom Bell. “The fourth quarter was especially strong in revenue growth and business development, driven by our focus on the enduring, mission critical needs of our customers. In addition, our 2024 performance propelled us beyond the three-year targets established at our 2021 Investor Day.”

“Our outlook for the future remains decidedly positive, as we have a clearly defined strategy and technology-enabled team that is poised to navigate this dynamic environment from a position of strength,” Bell said.

SUMMARY OF OPERATING RESULTS

Revenues were $4.37 billion for the quarter and $16.66 billion for the year, up 10% and 8% over the comparable 2023 periods, respectively. For the quarter and the year, revenues grew year-over-year due to strong demand across all customer segments, especially for managed health services.

For the quarter, net income was $282 million, or $2.12 per diluted share, up 23% and 28%, respectively, compared to the fourth quarter of fiscal year 2023. Net income margin was 6.5%, up 70 basis points year-over-year. Adjusted EBITDA was $508 million (11.6% margin), up 12% over the fourth quarter of 2023. Non-GAAP net income was $316 million, which generated non-GAAP diluted EPS of $2.37. Non-GAAP net income was up 14%, and non-GAAP diluted EPS was up 19% compared to the fourth quarter of fiscal year 2023.

For the year, net income was $1,251 million, or $9.22 per diluted share. Net income and diluted EPS were up 501% and 540%, respectively, compared to fiscal year 2023. Net income margin for the year increased to 7.5% from 1.3% in fiscal year 2023, which included pre-tax impairment and restructuring charges associated with the Security Enterprise Solutions (SES) reporting unit. Adjusted EBITDA was $2.15 billion (12.9% margin), up 29% over fiscal year 2023. Non-GAAP net income was $1.39 billion, which generated non-GAAP diluted EPS of $10.21. Non-GAAP net income was up 36%, and non-GAAP diluted EPS was up 40% compared to fiscal year 2023.

The primary drivers of increased earnings for the quarter and the year were increased volumes on managed health services programs and improved program execution and cost control across the company.

CASH FLOW SUMMARY

In the fourth quarter, Leidos generated $299 million of net cash provided by operating activities and used $86 million in investing activities and $440 million in financing activities. Net cash provided by operating activities benefited from strong EBITDA performance, collections, and working capital management. Days Sales Outstanding (DSO) for the quarter was 59, unchanged from the from the third quarter of 2024.

Investing activities consisted exclusively of property, equipment and software payments, which resulted in quarterly free cash flow of $213 million. Financing activities were driven by $459 million returned to shareholders, including $406 million in share repurchases and $53 million as part of a regular quarterly cash dividend program.

For the year, net cash provided by operating activities was $1.39 billion and free cash flow was $1.24 billion. For the year Leidos used $142 million in investing activities and $1,084 million in financing activities. As of January 3, 2025, the Company had $943 million in cash and cash equivalents and $4.7 billion in debt.

On February 7, 2025, the Leidos Board of Directors declared that Leidos will pay a cash dividend of $0.40 per share on March 28, 2025, to stockholders of record at the close of business on March 14, 2025.

NEW BUSINESS AWARDS

Net bookings totaled $7.6 billion in the fourth quarter and $23.4 billion for fiscal year 2024, representing book-to-bill ratios of 1.7 and 1.4, respectively. As a result, backlog at the end of fiscal year 2024 was $43.6 billion, of which $8.4 billion was funded. Included in the quarterly bookings were several notable awards:

• Veterans Benefits Administration (VBA) Medical Disability Examinations (MDE) Regions 1-4 Follow-On. The VBA MDE Office awarded Leidos an indefinite delivery, indefinite quantity (IDIQ), firm-fixed price contract with a period of performance of one year and one optional year. 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.
• Indirect Fires Protection Capability (IFPC) Increment 2 Program. Leidos was awarded a five-year, $4.1 billion IDIQ contract by the U.S. Army’s Program Executive Office Missile and Space for the IFPC Increment 2 Program. The initial order under the contract includes 18 launchers for the Guam Defense Systems.
• Transportation Security Administration (TSA) Integrated Logistics Support Follow-On. The TSA’s Deployment and Security Division awarded Leidos a checkpoint sustainment contract to maintain 12,000 units of Transportation Security Equipment deployed at more than 430 airport locations in the U.S. and its territories. To support TSA’s mission, Leidos maintains a dedicated system to support field service technicians, capture metrics, perform predictive analytics, and leverage the capabilities of Leidos Trusted Mission AI to support screening system availability. The contract has an eight-year period of performance with a maximum value of $2.6 billion.
• F-16 Foreign Military Sales (FMS). The Air Force Life Cycle Management Center awarded Leidos a 10-year, single award IDIQ contract with a maximum value of $987 million to provide critical engineering and sustainment services for FMS customers of the U.S. Air Force’s F-16 Fighting Falcon. Leidos will provide post-production support using technology designed to enhance the customer’s repair and return process, improve engineering and technical support resolution, and help reduce diminishing manufacturing sources and material shortages. The F-16 has been procured by over 25 nations around the world, supporting a global fleet size of approximately 2,200 active aircraft.
• Common Hypersonic Glide Body (C-HGB) and Thermal Protection System (TPS). Leidos was awarded a five-year, $670 million cost-plus-fixed-fee contract for the C-HGB and TPS.

FORWARD GUIDANCE

Leidos is initiating fiscal year 2025 guidance as specified in the table below.

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.

ABOUT LEIDOS

Leidos is an industry and technology leader serving government and commercial customers with smarter, more efficient digital and mission innovations. Headquartered in Reston, Virginia, with 48,000 global employees, Leidos reported annual revenues of approximately $16.7 billion for the fiscal year ended January 3, 2025. For more information, visit www.leidos.com.