- Revenues of $3.6 billion,
up 4% year-over-year
- Net Income of $164 million;
Adjusted EBITDA of $372
million
- Diluted Earnings per Share of $1.17, or $1.59 on
a non-GAAP basis
- Record Cash Flows from Operations of $748 million and Free Cash Flow of $721 million
- Net Bookings of $4.1
billion (book-to-bill ratio of 1.1)
- Improved revenue outlook for 2022
RESTON,
Va., Nov. 1, 2022 /PRNewswire/ -- Leidos
Holdings, Inc. (NYSE: LDOS), a FORTUNE 500® science and
technology leader, today reported financial results for the third
quarter of fiscal year 2022.
Roger Krone, Leidos Chairman and
Chief Executive Officer, commented, "Our third quarter results
demonstrate the momentum in our business as we continue to report
revenue growth at the upper end of our guidance across our
diversified portfolio. In addition, our dedicated team delivered
earnings in excess of our forecast and generated the highest
quarterly cash flow from operations in our history. These results
position us well to deliver on our full-year financial targets as
we make the world safer, healthier and more efficient."
Summary Operating Results
|
|
Three Months
Ended
|
(in millions, except
margin and per share amounts)
|
|
September 30,
2022
|
|
October 1,
2021
|
Revenues
|
|
$
3,608
|
|
$
3,483
|
Net income
|
|
$
164
|
|
$
208
|
Net income
margin
|
|
4.5 %
|
|
6.0 %
|
Diluted earnings per
share (EPS)
|
|
$
1.17
|
|
$
1.43
|
|
|
|
|
|
Non-GAAP
Measures*:
|
|
|
|
|
Adjusted
EBITDA
|
|
$
372
|
|
$
403
|
Adjusted EBITDA
margin
|
|
10.3 %
|
|
11.6 %
|
Non-GAAP diluted
EPS
|
|
$
1.59
|
|
$
1.80
|
|
|
|
|
|
* 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 $3.61
billion, up 4% compared to the third quarter of 2021;
the largest contributors were continued growth of the Navy Next
Generation Enterprise Network Recompete (NGEN-R) Service
Management, Integration and Transport (SMIT) contract; ramp-up of
the National Aeronautics and Space Administration (NASA) Advanced
Enterprise Global Information Technology Solutions (AEGIS)
contract; and increased deployments on the Defense Healthcare
Management System Modernization (DHMSM) program.
Net income was $164 million and
diluted EPS was $1.17. Net income and
diluted EPS were down 21% and 18% year-over-year, respectively. Net
income and diluted EPS include a $16
million unrealized loss associated with the foreign currency
forward contract entered into in order to hedge the preliminary
purchase price for Cobham Aviation Services Australia
("Cobham") in Australian dollars.
In addition, net interest expense increased to $50 million from $47
million in the third quarter of 2021. Weighted average
diluted shares for the quarter were 138 million compared to
143 million in the prior year quarter, which benefited from
the Accelerated Share Repurchase (ASR) agreement implemented in the
first quarter of 2022.
Adjusted EBITDA was $372 million
for the third quarter, down 8% year-over-year, and adjusted EBITDA
margin decreased from 11.6% to 10.3% over the same period.
Profitability in the year-ago quarter was elevated due to
temporarily increased workload and decreased indirect expenses as a
result of the COVID-19 pandemic as well as an elevated level of
write-ups on certain contracts. Adjusted EBITDA and adjusted EBITDA
margin increased $6 million and 10
basis points, respectively, compared to the second quarter of 2022.
Non-GAAP net income was $221 million
for the third quarter, down 15% year-over-year, and non-GAAP
diluted EPS for the quarter was $1.59, down 12% year-over-year.
Cash Flow Summary
In the third quarter net cash provided by operating activities
was $748 million, or 462% of net
income attributable to Leidos shareholders. After adjusting for
payments for property, equipment and software, free cash flow was
$721 million, resulting in a free
cash flow conversion ratio of 329%. In addition, Leidos used
$26 million for investing activities
and $217 million for financing
activities.
Leidos returned $49 million to
shareholders in the third quarter as part of its regular
quarterly cash dividend program. As of September 30, 2022,
Leidos had $807 million in cash and
cash equivalents and $5.0 billion of
debt.
On October 30, 2022, Leidos
completed the acquisition of Cobham Special Mission, which provides
airborne border surveillance and search and rescue services to the
Australian Federal Government. Purchase consideration was
$305 million Australian dollars, subject to working
capital adjustments. At the signing of the definitive agreement,
Leidos entered into a forward contract for $215 million to offset foreign currency
fluctuations of the full purchase consideration. Based on the
exchange rate at the close, the translated purchase price was
$196 million. We realized a loss of
$18 million associated with the
foreign exchange forward contract.
On October 28, 2022, the Leidos Board of Directors declared
a cash dividend of $0.36 per share to
be paid on December 30, 2022, to stockholders of record at the
close of business on December 15, 2022.
New Business Awards
Net bookings totaled $4.1 billion
in the quarter, representing a book-to-bill ratio of 1.1. As a
result, backlog at the end of the quarter was $35.0 billion, of which $7.4 billion was funded. Notable awards in the
quarter include:
- Sentinel. Leidos was awarded a prime task order by the
Department of Defense to enhance technological innovation with a
focus on rapid insertion of technologies across the mission
spectrum for multiple services, and integrating new technology with
existing and legacy systems for increased effectiveness. Leidos
will support the government with rapid technology insertion to
enhance Command, Control, Computers, Communications, Cyber,
Intelligence, Surveillance and Reconnaissance (C5ISR) missions at a
global scale. This award enables Leidos to expand its extensive
C5ISR portfolio as well as deliver a critical capability towards
improved warfighter support. The contract has a total value of
$1.5 billion dollars and includes a
one-year base period of performance with four one-year options.
- U.S. Naval Sea Systems Command (NAVSEA) Medium Unmanned
Undersea Vehicle (MUUV). Leidos was selected by the NAVSEA to
design and build a MUUV to support intelligence preparation of the
operational environment by providing submarine-based autonomous
oceanographic sensing and data collection for the Navy. The MUUV
will also provide surface-launched and recovered mine
countermeasures. The single award, cost-plus-fixed-fee contract
holds an approximate value of $358
million if all options are exercised.
- Defense Information Systems Agency (DISA) Defense
Enclave Services (DES) Task Order. DISA awarded Leidos a task
order contract with a total estimated value of $138 million dollars with a five year period of
performance. Through the DES contract, Leidos will consolidate
enterprise IT services and provide standardized, responsive and
cost-effective solutions for more than 370,000 users spanning 22
Department of Defense (DoD) agencies and field activities with over
500 sites both in the U.S. and abroad. This first task order will
lay the framework and begin to consolidate, integrate and optimize
five agencies on a common network architecture through digital
modernization and transformation. The work will focus on mission
value and user experience, while improving cybersecurity, network
availability and reliability for Fourth Estate agencies.
Forward Guidance
Leidos is updating its fiscal year 2022 guidance as follows:
|
FY22
Guidance
|
Measure
|
Current
|
Prior
|
Revenues
(billions)
|
$14.2 -
$14.4
|
$13.9 -
$14.3
|
Adjusted EBITDA
Margin
|
10.3% -
10.5%
|
10.3% -
10.5%
|
Non-GAAP Diluted
EPS
|
$6.20 -
$6.40
|
$6.10 -
$6.50
|
Cash Flows Provided by
Operating Activities (billions)
|
at or above
$1.0
|
at or above
$1.0
|
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 8:00 A.M. eastern time on November 1, 2022.
Analysts and institutional investors may participate by dialing +1
(877) 869-3847 (toll-free U.S.) or +1 (201) 689-8261 (international
callers).
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).
After the call concludes, an audio replay can be accessed on the
Leidos Investor Relations website or by dialing +1 (877) 660-6853
(toll-free U.S.) or +1 (201) 612-7415 (international callers) and
entering conference ID 13733461.
About Leidos
Leidos is a Fortune 500® technology, engineering, and
science solutions and services leader working to solve the world's
toughest challenges in the defense, intelligence, civil and health
markets. Leidos' 44,000 employees support vital missions for
government and commercial customers. Headquartered in Reston, Va., Leidos reported annual revenues
of approximately $13.7 billion for
the fiscal year ended December 31,
2021.
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 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,
uncertainties in tax due to new tax legislation or other regulatory
developments, the impact of COVID-19 and related actions taken to
prevent its spread, our contract awards, 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: the impact of COVID-19 or future
epidemics on our business, including the potential for facility
closures, re-evaluation of U.S. government spending levels and
priorities, delay of new contract awards, supply chain impacts,
airline travel levels, our ability to recover costs under
contracts, insurance challenges, uncertainty regarding the efficacy
of vaccines against variants, booster vaccinations, or the lack of
public acceptance of vaccines and low vaccination rates, and laws
and regulations with respect to vaccinations; changes to our
reputation and relationships with government agencies, developments
in the U.S. government defense budget, including budget reductions,
implementation of spending limits or changes in budgetary
priorities; delays in the U.S. government budget process or
approval of raises to the debt ceiling; delays in the U.S.
government contract procurement process or the award of contracts
or our ability to win contracts; delays or loss of contracts as a
result of competitor protests; changes in U.S. government
procurement rules, regulations and practices; changes in interest
rates and inflation, and other market factors out of our control,
including general economic and political conditions; our compliance
with various U.S. government and other government procurement rules
and regulations; governmental reviews, audits and investigations of
Leidos; our reliance on information technology spending by
hospitals/healthcare organizations, infrastructure investments by
industrial and natural resources organizations and other customer
investments related to our business; our ability to attract, train
and retain skilled employees, including our management team, and to
obtain security clearances for our employees; the mix of our
contracts and our ability to accurately estimate costs associated
with our firm-fixed-price and other contracts as well as our
ability to realize as revenues the full amount of our backlog;
cybersecurity, data security or other security threats, systems
failures or other disruptions of our business; resolution of legal
and other disputes with our customers and others or legal or
regulatory compliance issues; our ability to effectively acquire
businesses and make investments and any related contingencies or
liabilities to which we may become subject; 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, including complex engineering
projects; our ability to obtain necessary components and materials
to perform our contracts, including semiconductors and related
equipment, on reasonable terms or at all; the failure of our
inspection or detection systems to detect threats; changes in
business conditions that could impact business investments and/or
recorded goodwill or the value of other long-lived assets; the
adequacy of our insurance programs designed to protect us from
significant product or other liability claims; our ability to
manage risks associated with our international business; our
ability to declare future dividends or repurchase our stock based
on our earnings, financial condition, capital requirements and
other factors, including compliance with applicable laws and
contractual agreements; changes in accounting, U.S. or foreign tax,
export or other laws, regulations, and policies and their
interpretation or application; 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.
This release also contains certain forward-looking statements
with respect to Leidos' acquisition of Cobham Aviation Services
Australia, including benefits of the transaction and the products
and markets of each company. Many factors could cause actual future
events to differ materially from the forward-looking statements in
this release, including but not limited to: (i) the occurrence of
any event, change or other circumstance that could give rise to the
termination of the merger agreement, (ii) the effect of the
announcement of the transaction on Cobham Aviation Services
Australia's business relationships, operating results, and business
generally, (iii) risks that the transaction disrupts current plans
and operations of Leidos or Cobham Aviation Services Australia and
potential difficulties in Cobham Aviation Services Australia's
employee retention as a result of the transaction, (iv) risks
related to diverting management's attention from Cobham Aviation
Services Australia ongoing business operations, (v) the outcome of
any legal proceedings that may be instituted against Leidos or
against Cobham Aviation Services Australia related to the merger
agreement or the transaction, (vi) the ability of Leidos to
successfully integrate Cobham Aviation Services Australia's
operations, product lines, and technology, and (vii) the ability of
Leidos to implement its plans, forecasts, and other expectations
with respect to Cobham Aviation Services Australia's business after
the completion of the proposed acquisition and realize additional
opportunities for growth and innovation. 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 November 1, 2022.
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 CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except
per share amounts)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
2022
|
|
October 1,
2021
|
|
September
30,
2022
|
|
October 1,
2021
|
Revenues
|
|
$
3,608
|
|
$
3,483
|
|
$
10,699
|
|
$ 10,246
|
Cost of
revenues
|
|
3,095
|
|
2,942
|
|
9,136
|
|
8,740
|
Selling, general and
administrative expenses
|
|
233
|
|
233
|
|
727
|
|
625
|
Bad debt expense
(recoveries)
|
|
(1)
|
|
(1)
|
|
3
|
|
(11)
|
Acquisition,
integration and restructuring costs
|
|
4
|
|
6
|
|
12
|
|
21
|
Asset impairment
charges
|
|
—
|
|
3
|
|
3
|
|
3
|
Equity earnings of
non-consolidated subsidiaries
|
|
(4)
|
|
(5)
|
|
(5)
|
|
(14)
|
Operating
income
|
|
281
|
|
305
|
|
823
|
|
882
|
Non-operating
expense:
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(50)
|
|
(47)
|
|
(148)
|
|
(138)
|
Other (expense)
income, net
|
|
(10)
|
|
2
|
|
(7)
|
|
1
|
Income before income
taxes
|
|
221
|
|
260
|
|
668
|
|
745
|
Income tax
expense
|
|
(57)
|
|
(52)
|
|
(155)
|
|
(162)
|
Net income
|
|
164
|
|
208
|
|
513
|
|
583
|
Less: net income
attributable to non-controlling interest
|
|
2
|
|
3
|
|
5
|
|
4
|
Net income attributable
to Leidos common stockholders
|
|
$
162
|
|
$
205
|
|
$
508
|
|
$
579
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
1.18
|
|
$
1.45
|
|
$
3.71
|
|
$
4.11
|
Diluted
|
|
1.17
|
|
1.43
|
|
3.68
|
|
4.05
|
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
137
|
|
141
|
|
137
|
|
141
|
Diluted
|
|
138
|
|
143
|
|
138
|
|
143
|
|
|
|
|
|
|
|
|
|
Cash dividends declared
per share
|
|
$
0.36
|
|
$
0.36
|
|
$
1.08
|
|
$
1.04
|
LEIDOS HOLDINGS,
INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in
millions)
|
|
|
|
September
30,
2022
|
|
December 31,
2021
|
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
807
|
|
$
727
|
Receivables,
net
|
|
2,284
|
|
2,189
|
Inventory,
net
|
|
286
|
|
274
|
Other current
assets
|
|
464
|
|
429
|
Total current
assets
|
|
3,841
|
|
3,619
|
Property, plant and
equipment, net
|
|
671
|
|
670
|
Intangible assets,
net
|
|
977
|
|
1,177
|
Goodwill
|
|
6,618
|
|
6,744
|
Operating lease
right-of-use assets, net
|
|
593
|
|
612
|
Other long-term
assets
|
|
399
|
|
439
|
Total assets
|
|
$
13,099
|
|
$ 13,261
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
2,301
|
|
$
2,141
|
Accrued payroll and
employee benefits
|
|
813
|
|
605
|
Short-term debt and
current portion of long-term debt
|
|
1,027
|
|
483
|
Total current
liabilities
|
|
4,141
|
|
3,229
|
Long-term debt, net of
current portion
|
|
3,975
|
|
4,593
|
Operating lease
liabilities
|
|
591
|
|
589
|
Deferred tax
liabilities
|
|
24
|
|
239
|
Other long-term
liabilities
|
|
229
|
|
267
|
Total
liabilities
|
|
8,960
|
|
8,917
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Common stock, $0.0001
par value, 500 million shares authorized, 137 million
and
140 million shares issued and outstanding
at September 30, 2022, and
December 31, 2021, respectively
|
|
—
|
|
—
|
Additional paid-in
capital
|
|
1,982
|
|
2,423
|
Retained
earnings
|
|
2,239
|
|
1,880
|
Accumulated other
comprehensive loss
|
|
(135)
|
|
(12)
|
Total Leidos
stockholders' equity
|
|
4,086
|
|
4,291
|
Non-controlling
interest
|
|
53
|
|
53
|
Total stockholders'
equity
|
|
4,139
|
|
4,344
|
Total liabilities and
stockholders' equity
|
|
$
13,099
|
|
$ 13,261
|
LEIDOS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in millions)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
2022
|
|
October 1,
2021
|
|
September
30,
2022
|
|
October 1,
2021
|
Cash flows from
operations:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
164
|
|
$
208
|
|
$
513
|
|
$
583
|
Adjustments to
reconcile net income to net cash
provided by operations:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
81
|
|
87
|
|
249
|
|
244
|
Stock-based
compensation
|
|
18
|
|
17
|
|
53
|
|
49
|
Asset impairment
charges
|
|
—
|
|
3
|
|
3
|
|
3
|
Deferred income
taxes
|
|
(85)
|
|
1
|
|
(221)
|
|
4
|
Other
|
|
17
|
|
—
|
|
21
|
|
(11)
|
Change in assets and
liabilities, net of effects of
acquisitions and dispositions:
|
|
|
|
|
|
|
|
|
Receivables
|
|
100
|
|
(14)
|
|
(138)
|
|
(103)
|
Other current assets
and other long-term assets
|
|
59
|
|
70
|
|
132
|
|
161
|
Accounts payable and
accrued liabilities and other
long-term liabilities
|
|
214
|
|
175
|
|
(57)
|
|
(172)
|
Accrued payroll and
employee benefits
|
|
116
|
|
37
|
|
217
|
|
83
|
Income taxes
receivable/payable
|
|
64
|
|
(19)
|
|
109
|
|
(20)
|
Net cash provided by
operating activities
|
|
748
|
|
565
|
|
881
|
|
821
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Acquisition of
businesses, net of cash acquired
|
|
—
|
|
(29)
|
|
(2)
|
|
(622)
|
Divestiture of a
business
|
|
—
|
|
—
|
|
15
|
|
—
|
Payments for property,
equipment and software
|
|
(27)
|
|
(24)
|
|
(76)
|
|
(71)
|
Net proceeds from sale
of assets
|
|
—
|
|
—
|
|
6
|
|
—
|
Other
|
|
1
|
|
—
|
|
2
|
|
—
|
Net cash used in
investing activities
|
|
(26)
|
|
(53)
|
|
(55)
|
|
(693)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from debt
issuance
|
|
—
|
|
—
|
|
380
|
|
380
|
Repayments of
commercial paper
|
|
(150)
|
|
—
|
|
—
|
|
—
|
Repayments of
borrowings
|
|
(25)
|
|
(27)
|
|
(459)
|
|
(80)
|
Dividend
payments
|
|
(49)
|
|
(51)
|
|
(149)
|
|
(149)
|
Repurchases of stock
and other
|
|
(4)
|
|
(140)
|
|
(532)
|
|
(266)
|
Net capital
(distributions to) contributions from non-
controlling interests
|
|
(2)
|
|
(1)
|
|
(5)
|
|
38
|
Proceeds from issuances
of stock
|
|
13
|
|
10
|
|
35
|
|
33
|
Net cash used in
financing activities
|
|
(217)
|
|
(209)
|
|
(730)
|
|
(44)
|
Net increase in cash,
cash equivalents and restricted
cash
|
|
505
|
|
303
|
|
96
|
|
84
|
Cash, cash equivalents
and restricted cash at beginning
of period
|
|
466
|
|
468
|
|
875
|
|
687
|
Cash, cash equivalents
and restricted cash at end of
period
|
|
971
|
|
771
|
|
$
971
|
|
$
771
|
Less: restricted cash
at end of period
|
|
164
|
|
184
|
|
164
|
|
184
|
Cash and cash
equivalents at end of period
|
|
$
807
|
|
$
587
|
|
$
807
|
|
$
587
|
LEIDOS HOLDINGS, INC.
UNAUDITED SEGMENT OPERATING
RESULTS
(in millions)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
2022
|
|
October 1,
2021
|
|
September
30,
2022
|
|
October 1,
2021
|
Revenues:
|
|
|
|
|
|
|
|
|
Defense
Solutions
|
|
$
2,075
|
|
$
2,009
|
|
$
6,176
|
|
$
5,971
|
Civil
|
|
874
|
|
792
|
|
2,526
|
|
2,357
|
Health
|
|
659
|
|
682
|
|
1,997
|
|
1,918
|
Total
|
|
$
3,608
|
|
$
3,483
|
|
$ 10,699
|
|
$ 10,246
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
Defense
Solutions
|
|
$
137
|
|
$
140
|
|
$
409
|
|
$
429
|
Civil
|
|
79
|
|
58
|
|
160
|
|
187
|
Health
|
|
91
|
|
130
|
|
335
|
|
339
|
Corporate
|
|
(26)
|
|
(23)
|
|
(81)
|
|
(73)
|
Total
|
|
$
281
|
|
$
305
|
|
$
823
|
|
$
882
|
|
|
|
|
|
|
|
|
|
Operating income
margin:
|
|
|
|
|
|
|
|
|
Defense
Solutions
|
|
6.6 %
|
|
7.0 %
|
|
6.6 %
|
|
7.2 %
|
Civil
|
|
9.0 %
|
|
7.3 %
|
|
6.3 %
|
|
7.9 %
|
Health
|
|
13.8 %
|
|
19.1 %
|
|
16.8 %
|
|
17.7 %
|
Total
|
|
7.8 %
|
|
8.8 %
|
|
7.7 %
|
|
8.6 %
|
Defense Solutions
Defense Solutions revenues of $2,075
million increased by 3% compared to the prior year quarter.
The primary drivers of revenue growth were the ramp up of Navy
NGEN-R SMIT and various force protection programs, which offset the
wind down of certain programs supporting operations in Afghanistan and the surrounding region and
adverse foreign exchange impacts. For the quarter Defense Solutions
operating income margin decreased to 6.6% from 7.0% in the prior
year quarter and non-GAAP operating income margin was 8.1% compared
to 8.8% in the prior year quarter. The decline in segment
profitability was attributable to program mix as well as
investments in prototype development contracts in the current
quarter.
Civil
Civil revenues of $874 million
increased by 10% compared to the prior year quarter. The primary
driver of revenue growth was the ramp up of the NASA AEGIS program.
In addition, the segment delivered software upgrades and increased
maintenance activity within its security products business and
additional engineering support to commercial energy companies,
which increased both revenue and profitability. Civil operating
income margin for the quarter increased to 9.0% from 7.3% in the
prior year quarter. Non-GAAP operating income margin was 11.0%,
compared to 9.6% in the prior year quarter.
Health
Health revenues of $659 million
decreased by 3% compared to the prior year quarter. Increased
backlog of disability exams caused by COVID-19 in the third quarter
of 2021 and increased competition in the current quarter more than
offset increased deployments on the DHMSM program. With the return
to more normal volume of disability exams, operating income margin
declined from 19.1% to 13.8% and non-GAAP operating income margin
decreased from 20.7% to 15.0% compared to the prior year
quarter.
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:
|
|
September 30,
2022
|
|
October 1,
2021
|
Segment
|
|
Funded
|
|
Unfunded
|
|
Total
|
|
Funded
|
|
Unfunded
|
|
Total
|
Defense
Solutions
|
|
$
4,178
|
|
$
13,842
|
|
$
18,020
|
|
$
4,412
|
|
$ 15,160
|
|
$ 19,572
|
Civil
|
|
2,037
|
|
8,652
|
|
10,689
|
|
1,713
|
|
7,702
|
|
9,415
|
Health
|
|
1,214
|
|
5,105
|
|
6,319
|
|
1,164
|
|
4,541
|
|
5,705
|
Total
|
|
$
7,429
|
|
$
27,599
|
|
$
35,028
|
|
$
7,289
|
|
$ 27,403
|
|
$ 34,692
|
The increase in backlog includes $43
million of backlog acquired through business combinations in
our Defense Solutions reportable segment. Total backlog at
September 30, 2022, included a negative impact of $363 million when compared to total backlog at
October 1, 2021, primarily due to the exchange rate movements
in the British pound and Australian dollar when compared to the
U.S. dollar.
LEIDOS HOLDINGS, INC.
UNAUDITED
NON-GAAP FINANCIAL MEASURES
Leidos uses and refers to organic growth, 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
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 growth captures the revenue growth that is
inherent in the underlying business excluding the impact of
acquisitions made within the prior year; it is computed as current
revenues excluding acquisition revenues within the last 12 months
divided by previous year revenues excluding revenues from entities
divested within the prior year.
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.
- Asset impairment charges – Represents impairments of long-lived
intangible 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.
Free cash flow is computed by deducting expenditures
for property, equipment and software from net cash provided by
operating activities.
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 growth by
reportable segment and total operations:
|
|
|
|
Three Months
Ended
|
|
|
|
|
September
30,
2022
|
|
October 1,
2021
|
|
Percent
Change
|
Defense
Solutions
|
|
|
|
|
|
|
Revenues, as
reported
|
|
$
2,075
|
|
$
2,009
|
|
3 %
|
Acquisition and
divestiture revenues(1)
|
|
8
|
|
5
|
|
|
Pro-forma revenues
(Organic Growth Rate)
|
|
$
2,067
|
|
$
2,004
|
|
3 %
|
|
|
|
|
|
|
|
Civil
|
|
|
|
|
|
|
Revenues, as
reported
|
|
$
874
|
|
$
792
|
|
10 %
|
|
|
|
|
|
|
|
Health
|
|
|
|
|
|
|
Revenues, as
reported
|
|
$
659
|
|
$
682
|
|
(3) %
|
|
|
|
|
|
|
|
Total
Operations
|
|
|
|
|
|
|
Revenues, as
reported
|
|
$
3,608
|
|
$
3,483
|
|
4 %
|
Total acquisition and
divestiture revenues(1)
|
|
8
|
|
5
|
|
|
Pro-forma revenues
(Organic Growth Rate)
|
|
$
3,600
|
|
$
3,478
|
|
4 %
|
(1) Current period acquisition
revenues reflect revenues in the current as reported figures for 12
months from closing of each acquisition. Acquisition revenues for
the three months ended September 30, 2022 for the Defense
Solutions segment include a strategic, immaterial acquisition
acquired September 21, 2021. Year ago acquisition revenues reflect
revenues from assets subsequently divested. Acquisitions and
divestiture in the three months ended October 1, 2021 for the
Defense Solutions segment include the Aviation & Missile
Solutions LLC (AMS) divestiture that was completed on April 29,
2022.
|
UNAUDITED NON-GAAP
FINANCIAL MEASURES [CONTINUED]
(in millions, except
per share amounts 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 30, 2022:
|
|
|
|
|
Three Months Ended
September 30, 2022
|
|
|
|
As
reported
|
|
|
Acquisition,
integration and
restructuring
costs
|
|
|
Amortization of
acquired
intangibles
|
|
|
Derivative
loss
|
|
|
Non-GAAP
results
|
Operating
income
|
|
$
|
281
|
|
$
|
4
|
|
$
|
57
|
|
$
|
—
|
|
$
|
342
|
Non-operating expense,
net
|
|
|
(60)
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
(44)
|
Income before income
taxes
|
|
|
221
|
|
|
4
|
|
|
57
|
|
|
16
|
|
|
298
|
Income tax
expense(1)
|
|
|
(57)
|
|
|
(1)
|
|
|
(15)
|
|
|
(4)
|
|
|
(77)
|
Net income
|
|
|
164
|
|
|
3
|
|
|
42
|
|
|
12
|
|
|
221
|
Less: net income
attributable to non-
controlling interest
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
Net income attributable
to Leidos
common stockholders
|
|
$
|
162
|
|
$
|
3
|
|
$
|
42
|
|
$
|
12
|
|
$
|
219
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
attributable to Leidos
common stockholders(2)
|
|
$
|
1.17
|
|
$
|
0.02
|
|
$
|
0.31
|
|
$
|
0.09
|
|
$
|
1.59
|
Diluted
shares
|
|
|
138
|
|
|
138
|
|
|
138
|
|
|
138
|
|
|
138
|
|
|
|
Three Months Ended
September 30, 2022
|
|
|
|
As
reported
|
|
|
Acquisition,
integration and
restructuring
costs
|
|
|
Amortization of
acquired
intangibles
|
|
|
Derivative
loss
|
|
|
Non-GAAP
results
|
Net income
|
|
$
|
164
|
|
$
|
3
|
|
$
|
42
|
|
$
|
12
|
|
$
|
221
|
Income tax
expense(1)
|
|
|
57
|
|
|
1
|
|
|
15
|
|
|
4
|
|
|
77
|
Income before income
taxes
|
|
|
221
|
|
|
4
|
|
|
57
|
|
|
16
|
|
|
298
|
Depreciation
expense
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
Amortization of
intangibles
|
|
|
57
|
|
|
—
|
|
|
(57)
|
|
|
—
|
|
|
—
|
Interest expense,
net
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50
|
EBITDA
|
|
$
|
352
|
|
$
|
4
|
|
$
|
—
|
|
$
|
16
|
|
$
|
372
|
EBITDA
margin
|
|
|
9.8 %
|
|
|
|
|
|
|
|
|
|
|
|
10.3 %
|
(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 amounts 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 October 1, 2021:
|
|
|
|
|
Three Months Ended
October 1, 2021
|
|
|
|
As reported
|
|
|
Acquisition,
integration and
restructuring
costs
|
|
|
Amortization of
acquired
intangibles
|
|
|
Asset
impairment
charges
|
|
|
Non-GAAP
results
|
Operating
income
|
|
$
|
305
|
|
$
|
6
|
|
$
|
62
|
|
$
|
3
|
|
$
|
376
|
Non-operating expense,
net
|
|
|
(45)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45)
|
Income before income
taxes
|
|
|
260
|
|
|
6
|
|
|
62
|
|
|
3
|
|
|
331
|
Income tax
expense(1)
|
|
|
(52)
|
|
|
(2)
|
|
|
(16)
|
|
|
(1)
|
|
|
(71)
|
Net income
|
|
|
208
|
|
|
4
|
|
|
46
|
|
|
2
|
|
|
260
|
Less: net income
attributable to non-
controlling interest
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
Net income attributable
to Leidos common
stockholders
|
|
$
|
205
|
|
$
|
4
|
|
$
|
46
|
|
$
|
2
|
|
$
|
257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
attributable to Leidos
common stockholders (2)
|
|
$
|
1.43
|
|
$
|
0.03
|
|
$
|
0.32
|
|
$
|
0.01
|
|
$
|
1.80
|
Diluted
shares
|
|
|
143
|
|
|
143
|
|
|
143
|
|
|
143
|
|
|
143
|
|
|
|
Three Months Ended
October 1, 2021
|
|
|
|
As reported
|
|
|
Acquisition,
integration and
restructuring
costs
|
|
|
Amortization of
acquired
intangibles
|
|
|
Asset
impairment
charges
|
|
|
Non-GAAP
results
|
Net income
|
|
$
|
208
|
|
$
|
4
|
|
$
|
46
|
|
$
|
2
|
|
$
|
260
|
Income tax
expense(1)
|
|
|
52
|
|
|
2
|
|
|
16
|
|
|
1
|
|
|
71
|
Income before income
taxes
|
|
|
260
|
|
|
6
|
|
|
62
|
|
|
3
|
|
|
331
|
Depreciation
expense
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
Amortization of
intangibles
|
|
|
63
|
|
|
—
|
|
|
(62)
|
|
|
—
|
|
|
1
|
Interest expense,
net
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
EBITDA
|
|
$
|
394
|
|
$
|
6
|
|
$
|
—
|
|
$
|
3
|
|
$
|
403
|
EBITDA
margin
|
|
|
11.3 %
|
|
|
|
|
|
|
|
|
|
|
|
11.6 %
|
(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.
|
LEIDOS HOLDINGS,
INC.
UNAUDITED NON-GAAP
FINANCIAL MEASURES [CONTINUED]
(in millions, except
per share amounts 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 30, 2022:
|
|
|
|
|
Nine Months Ended
September 30, 2022
|
|
|
|
As reported
|
|
|
Acquisition,
integration
and
restructuring
costs
|
|
|
Amortization
of acquired
intangibles
|
|
|
Asset
impairment
charges
|
|
|
Derivative
loss
|
|
|
Non-GAAP
results
|
Operating
income
|
|
$
|
823
|
|
$
|
12
|
|
$
|
172
|
|
$
|
3
|
|
$
|
—
|
|
$
|
1,010
|
Non-operating expense,
net
|
|
|
(155)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
(139)
|
Income before income
taxes
|
|
|
668
|
|
|
12
|
|
|
172
|
|
|
3
|
|
|
16
|
|
|
871
|
Income tax
expense(1)
|
|
|
(155)
|
|
|
(3)
|
|
|
(44)
|
|
|
(1)
|
|
|
(4)
|
|
|
(207)
|
Net income
|
|
|
513
|
|
|
9
|
|
|
128
|
|
|
2
|
|
|
12
|
|
|
664
|
Less: net income
attributable to non-
controlling interest
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
Net income attributable
to Leidos
common stockholders
|
|
$
|
508
|
|
$
|
9
|
|
$
|
128
|
|
$
|
2
|
|
$
|
12
|
|
$
|
659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
attributable to Leidos
common stockholders
|
|
$
|
3.68
|
|
$
|
0.07
|
|
$
|
0.93
|
|
$
|
0.01
|
|
$
|
0.09
|
|
$
|
4.78
|
Diluted
shares
|
|
|
138
|
|
|
138
|
|
|
138
|
|
|
138
|
|
|
138
|
|
|
138
|
|
|
|
Nine Months Ended
September 30, 2022
|
|
|
|
As reported
|
|
|
Acquisition,
integration
and
restructuring
costs
|
|
|
Amortization
of acquired
intangibles
|
|
|
Asset
impairment
charges
|
|
|
Derivative
loss
|
|
|
Non-GAAP
results
|
Net income
|
|
$
|
513
|
|
$
|
9
|
|
$
|
128
|
|
$
|
2
|
|
$
|
12
|
|
$
|
664
|
Income tax
expense(1)
|
|
|
155
|
|
|
3
|
|
|
44
|
|
|
1
|
|
|
4
|
|
|
207
|
Income before income
taxes
|
|
|
668
|
|
|
12
|
|
|
172
|
|
|
3
|
|
|
16
|
|
|
871
|
Depreciation
expense
|
|
|
76
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
76
|
Amortization of
intangibles
|
|
|
173
|
|
|
—
|
|
|
(172)
|
|
|
—
|
|
|
—
|
|
|
1
|
Interest expense,
net
|
|
|
148
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
148
|
EBITDA
|
|
$
|
1,065
|
|
$
|
12
|
|
$
|
—
|
|
$
|
3
|
|
$
|
16
|
|
$
|
1,096
|
EBITDA
margin
|
|
|
10.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2 %
|
(1)
Calculation uses an estimated statutory tax rate on non-GAAP
adjustments.
|
LEIDOS HOLDINGS,
INC.
UNAUDITED NON-GAAP
FINANCIAL MEASURES [CONTINUED]
(in millions, except
per share amounts 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 October 1, 2021:
|
|
|
|
|
Nine Months Ended
October 1, 2021
|
|
|
|
As reported
|
|
|
Acquisition,
integration and
restructuring
costs
|
|
|
Amortization of
acquired
intangibles
|
|
|
Asset
impairment
charges
|
|
|
Non-GAAP
results
|
Operating
income
|
|
$
|
882
|
|
$
|
21
|
|
$
|
171
|
|
$
|
3
|
|
$
|
1,077
|
Non-operating expense,
net
|
|
|
(137)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(137)
|
Income before income
taxes
|
|
|
745
|
|
|
21
|
|
|
171
|
|
|
3
|
|
|
940
|
Income tax
expense(1)
|
|
|
(162)
|
|
|
(5)
|
|
|
(44)
|
|
|
(1)
|
|
|
(212)
|
Net income
|
|
|
583
|
|
|
16
|
|
|
127
|
|
|
2
|
|
|
728
|
Less: net income
attributable to non-
controlling interest
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
Net income attributable
to Leidos common
stockholders
|
|
$
|
579
|
|
$
|
16
|
|
$
|
127
|
|
$
|
2
|
|
$
|
724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
attributable to Leidos
common stockholders
|
|
$
|
4.05
|
|
$
|
0.11
|
|
$
|
0.89
|
|
$
|
0.01
|
|
$
|
5.06
|
Diluted
shares
|
|
|
143
|
|
|
143
|
|
|
143
|
|
|
143
|
|
|
143
|
|
|
|
Nine Months Ended
October 1, 2021
|
|
|
|
As reported
|
|
|
Acquisition,
integration and
restructuring
costs
|
|
|
Amortization of
acquired
intangibles
|
|
|
Asset
impairment
charges
|
|
|
Non-GAAP
results
|
Net income
|
|
$
|
583
|
|
$
|
16
|
|
$
|
127
|
|
$
|
2
|
|
$
|
728
|
Income tax
expense(1)
|
|
|
162
|
|
|
5
|
|
|
44
|
|
|
1
|
|
|
212
|
Income before income
taxes
|
|
|
745
|
|
|
21
|
|
|
171
|
|
|
3
|
|
|
940
|
Depreciation
expense
|
|
|
71
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
71
|
Amortization of
intangibles
|
|
|
173
|
|
|
—
|
|
|
(171)
|
|
|
—
|
|
|
2
|
Interest expense,
net
|
|
|
138
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
138
|
EBITDA
|
|
$
|
1,127
|
|
$
|
21
|
|
$
|
—
|
|
$
|
3
|
|
$
|
1,151
|
EBITDA
margin
|
|
|
11.0 %
|
|
|
|
|
|
|
|
|
|
|
|
11.2 %
|
(1)
Calculation uses an estimated statutory tax rate on non-GAAP
adjustments.
|
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 30, 2022
|
|
|
|
Operating
income
(loss)
|
|
|
Acquisition,
integration
and
restructuring
costs
|
|
|
Amortization
of acquired
intangibles
|
|
|
Non-GAAP
operating
income
(loss)
|
|
Non-GAAP
operating
margin
|
Defense
Solutions
|
|
$
|
137
|
|
$
|
—
|
|
$
|
32
|
|
$
|
169
|
|
8.1 %
|
Civil
|
|
|
79
|
|
|
—
|
|
|
17
|
|
|
96
|
|
11.0 %
|
Health
|
|
|
91
|
|
|
—
|
|
|
8
|
|
|
99
|
|
15.0 %
|
Corporate
|
|
|
(26)
|
|
|
4
|
|
|
—
|
|
|
(22)
|
|
NM
|
Total
|
|
$
|
281
|
|
$
|
4
|
|
$
|
57
|
|
$
|
342
|
|
9.5 %
|
|
|
Three Months Ended
October 1, 2021
|
|
|
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
|
|
$
140
|
|
$
—
|
|
$
36
|
|
$
—
|
|
$
176
|
|
8.8 %
|
Civil
|
|
58
|
|
—
|
|
18
|
|
—
|
|
76
|
|
9.6 %
|
Health
|
|
130
|
|
—
|
|
8
|
|
3
|
|
141
|
|
20.7 %
|
Corporate
|
|
(23)
|
|
6
|
|
—
|
|
—
|
|
(17)
|
|
NM
|
Total
|
|
$
305
|
|
$
6
|
|
$
62
|
|
$
3
|
|
$
376
|
|
10.8 %
|
|
|
Nine Months Ended
September 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
|
|
$
409
|
|
$
—
|
|
$
97
|
|
$
—
|
|
$
506
|
|
8.2 %
|
Civil
|
|
160
|
|
—
|
|
53
|
|
—
|
|
213
|
|
8.4 %
|
Health
|
|
335
|
|
—
|
|
22
|
|
3
|
|
360
|
|
18.0 %
|
Corporate
|
|
(81)
|
|
12
|
|
—
|
|
—
|
|
(69)
|
|
NM
|
Total
|
|
$
823
|
|
$
12
|
|
$
172
|
|
$
3
|
|
$ 1,010
|
|
9.4 %
|
|
|
Nine Months Ended
October 1, 2021
|
|
|
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
|
|
$
429
|
|
$
—
|
|
$
93
|
|
$
—
|
|
$
522
|
|
8.7 %
|
Civil
|
|
187
|
|
—
|
|
54
|
|
—
|
|
241
|
|
10.2 %
|
Health
|
|
339
|
|
—
|
|
24
|
|
3
|
|
366
|
|
19.1 %
|
Corporate
|
|
(73)
|
|
21
|
|
—
|
|
—
|
|
(52)
|
|
NM
|
Total
|
|
$
882
|
|
$
21
|
|
$
171
|
|
$
3
|
|
$ 1,077
|
|
10.5 %
|
LEIDOS HOLDINGS,
INC.
UNAUDITED NON-GAAP
FINANCIAL MEASURES [CONTINUED]
(in millions, except
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
|
|
|
|
September 30,
2022
|
|
|
October 1,
2021
|
Net cash provided by
operating activities
|
|
$
|
748
|
|
$
|
565
|
Payments for property,
equipment and software
|
|
|
(27)
|
|
|
(24)
|
Free cash
flow
|
|
$
|
721
|
|
$
|
541
|
|
|
|
|
|
|
|
Net income attributable
to Leidos common stockholders
|
|
$
|
162
|
|
$
|
205
|
Acquisition,
integration and restructuring costs (1)
|
|
|
3
|
|
|
4
|
Amortization of
acquired intangibles (1)
|
|
|
42
|
|
|
46
|
Derivative loss
(1)
|
|
|
12
|
|
|
—
|
Asset impairment
charges (1)
|
|
|
—
|
|
|
2
|
Non-GAAP net income
attributable to Leidos common stockholders
|
|
$
|
219
|
|
$
|
257
|
|
|
|
|
|
|
|
Operating cash flow
conversion ratio
|
|
|
462 %
|
|
|
276 %
|
Free cash flow
conversion ratio
|
|
|
329 %
|
|
|
211 %
|
(1)
After-tax expenses excluded from non-GAAP net income.
|
View original
content:https://www.prnewswire.com/news-releases/leidos-holdings-inc-reports-third-quarter-fiscal-year-2022-results-301663871.html
SOURCE Leidos