Leidos Beats On Q2; Strengthens Australian Portfolio

  • Leidos Holdings, Inc LDOS reported second-quarter FY22 revenue growth of 4% year-on-year to $3.60 billion, beating the consensus of $3.52 billion. Revenue grew 4% organically.
  • The most significant revenue contributors were the Navy Next Generation Enterprise Network Recompete (NGEN-R) Service Management, Integration and Transport (SMIT) contract and the increased deployments on the Defense Healthcare Management System Modernization (DHMSM) program.
  • Defense Solutions' revenue rose 2% Y/Y to $2.05 billion. Civil revenue grew 7% Y/Y to $857 million. Health revenue expanded 7% Y/Y to $688 million.
  • Net bookings totaled $2.2 billion, representing a book-to-bill ratio of 0.6. As a result, the backlog was $34.7 billion. 
  • The adjusted EBITDA margin contracted by 20 bps to 10.2%.
  • Non-GAAP EPS of $1.59 beat the consensus of $1.56.
  • Leidos held $339 million in cash and equivalents and generated $40 million in operating cash flow.
  • Dividend: The board declared a cash dividend of $0.36.
  • Outlook: Leidos reiterated FY22 revenue guidance of $13.9 billion - $14.3 billion, versus the consensus of $14.2 billion.
  • Leidos sees non-GAAP EPS of $6.10 - $6.50 versus the consensus of $6.48.
  • Leidos agreed to acquire Cobham Aviation Services Australia's Special Mission business from Cobham Limited.
  • The Special Mission business provides airborne border surveillance and search and rescue services to the Australian Federal Government.
  • Leidos Chair and CEO Roger Krone said, "The integration of Special Mission into Leidos Australia will expand the scope of our global airborne ISR capabilities, diversify revenues, and open up new growth avenues."
  • Price Action: LDOS shares closed lower by 1.73% at $105.15 on Monday.
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