Leidos Holdings reports first quarter fiscal Year 2018 results

Leidos Holdings reports first quarter fiscal Year 2018 results

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US: Leidos Holdings, a global science and technology leader, today reported financial results for the first quarter of the fiscal year 2018.

Roger Krone, Leidos Chairman and Chief Executive Officer, commented: “Our first quarter results demonstrate a strong start to the year, with a notable performance in bookings, profitability and cash generation. These results reflect the power of the efficient and flexible cost structure behind our innovative technical solutions, and the unwavering commitment of our employees to deliver excellence in program performance and value to our customers. Book-to-bill was at the highest level of any first quarter in the last five years due to improved win rates and an enhanced business development engine. Strong bookings combined with a positive budgetary outlook bolster our ability to grow and deliver increased value to our customers, shareholders, and employees.” 

Summary Results

Revenues for the quarter were $2.44 billion, compared to $2.58 billion in the prior year quarter, reflecting a 5.3% decrease.

Operating income for the quarter was $159 million, compared to $141 million in the prior-year quarter. Operating margin increased to 6.5% from 5.5% in the prior year quarter, primarily due to decreases in amortization of intangible assets, acquisition and integration costs and restructuring charges. Excluding these items, non-GAAP operating income margin for the quarter increased to 9.7% from 9.4% in the prior-year quarter.

Diluted earnings per share (“EPS”) attributable to Leidos common stockholders for the quarter was $0.66, compared to $0.47 in the prior-year quarter. Excluding the items mentioned in the preceding paragraph, non-GAAP diluted EPS for the quarter was $1.03, compared to $0.88 in the prior-year quarter. The weighted average diluted share count for the quarter was 154 million compared to 153 million in the prior-year quarter. 

Defense Solutions

Defense Solutions revenues for the quarter of $1,178 million decreased by $116 million, or 9.0%, compared to the prior-year quarter. The revenue decrease was primarily attributable to timing of revenue recognition on certain contracts, the completion of certain contracts and net volume decreases, partially offset by revenues from new awards.

Defense Solutions operating income margin for the quarter was 7.2%, compared to 6.1% in the prior-year quarter. On a non-GAAP basis, operating margin for the quarter was 8.7%, compared to 7.3% in the prior year quarter, due to stronger program performance on certain contracts. 

Civil

Civil revenues for the quarter of $840 million decreased by $2 million, or 0.2%, compared to the prior-year quarter. The revenue change was due to increased revenues from new awards and the favorable impact of foreign exchange rates. These were more than offset by net volume decreases and lower revenues from our international business due to the completion of a contractual deliverable in the prior-year quarter.

Civil operating income margin for the quarter was 8.8%, compared to 6.4% in the prior-year quarter. On a non-GAAP basis, operating income margin for the quarter was 11.8%, compared to 10.5% in the prior year quarter, reflecting stronger program performance on certain contracts.

Health

Health revenues for the quarter of $425 million decreased by $18 million, or 4.1%, compared to the prior year quarter. The revenue decrease was primarily attributable to the timing of revenue recognition and completion of certain contracts, partially offset by net volume increases.

Health operating income margin for the quarter was 9.9%, compared to 10.6% in the prior year quarter. On a non-GAAP basis, operating income margin for the quarter was 12.5%, compared to 14.9% in the prior year quarter, primarily attributable to higher profit write-ups in the prior-year quarter. 

Cash Flow Summary

Net cash provided by operating activities for the quarter was $22 million compared to $71 million net cash used in operating activities in the prior-year quarter. The increased operating net cash inflows were primarily due to a higher than expected level of advance contract payments from customers, timing of collections of receivables and lower payments for integration and restructuring costs, partially offset by cash paid in the quarter of $24 million related to the 2016 acquisition of the IS&GS Business.

Net cash used in investing activities for the quarter was $96 million compared to $5 million in the prior-year quarter. The increase was primarily due to cash paid in the quarter of $81 million related to the 2016 acquisition of the IS&GS Business and higher purchases of property, plant, and equipment.

Net cash used in financing activities for the quarter was $91 million compared to $78 million in the prior-year quarter. The increase was primarily due to the repurchase of shares of common stock under the share repurchase program for an aggregate purchase price of $10 million.

As of March 30, 2018, the Company had $215 million in cash and cash equivalents and $3.1 billion of debt.