#United States #Q3 Financials #Reston, Virginia #Earnings #Leidos Holdings

Leidos Delivers Strong Third Quarter Performance

Leidos Holdings, Inc. has recently reported its financial results for the third quarter of the fiscal year 2026. The company demonstrated robust revenue growth, positioning itself strongly in the industry amidst ever-changing market demands. The figures disclosed show revenues of $4.63 billion, marking a 4% increase compared to the same period last year.

In terms of profitability, the net income for this quarter was $413 million, which results in a diluted earnings per share (EPS) of $3.28, reflecting a 12% and 16% increase from the previous year, respectively. This surge can be primarily attributed to heightened customer demand for defense technology products, as well as successful acquisitions that supported overall revenue growth. Notably, the acquisition of ENTRUST Solutions played a significant role in offsetting declines experienced in certain sectors, particularly managed health and federal civilian IT programs.

Tom Bell, the CEO of Leidos, commented on the strong financial performance, stating, "Leidos delivered another quarter of strong financial performance, allowing us to enhance our 2026 guidance for the third consecutive quarter. Our sustained momentum reflects the strength of our focused team, united behind our NorthStar 2030 strategy and committed to delivering on our customers' most critical missions." Bell emphasized confidence in executing their strategic goals and the commitment to investing in unique capabilities moving forward.

Key Financial Highlights

• - Adjusted EBITDA (non-GAAP) stood at $644 million, a 5% increase year-over-year, and the adjusted EBITDA margin was 13.9%.
• - The margin for net income also saw positive growth, increasing from 8.3% last year to 8.9% this quarter.
• - Cash flows from operations generated $523 million, contributing to a non-GAAP free cash flow of $476 million.

Cash Flow Insights

The operating cash flow conversion ratio was an impressive 128%. This high conversion ratio signifies that the majority of the company's financial resources are being effectively utilized to fund operations and growth initiatives. Moreover, during the quarter, Leidos engaged in strategic investment activities, allocating $48 million primarily towards property, equipment, and software payments.

Shareholder Returns and Dividends

In terms of shareholder value, Leidos reported a total of $549 million used in financing activities. This included returning $556 million to shareholders—$504 million through stock repurchases and $52 million distributed as cash dividends. The board declared a cash dividend of $0.45 per share, which represents a significant 4.7% increase over the previous quarter's dividend, reinforcing Leidos’ commitment to providing returns to its shareholders.

New Business Awards and Future Outlook

In addition to strong quarterly results, Leidos secured $5.5 billion in new bookings this quarter, resulting in a backlog of $49.6 billion, indicative of a firm pipeline for future revenue generation. Noteworthy contract wins include a $717 million deal with the U.S. Air Force and a $672 million contract with the Transportation Security Administration, which showcase Leidos' significant presence in both defense and security sectors.

Leidos has updated its guidance for fiscal year 2026 to reflect its current trajectory, aiming for revenues between $18.00 billion and $18.20 billion. Adjusted EBITDA margins are expected to stay in the mid-13% range, with non-GAAP diluted EPS projected between $12.50 and $12.70.

Overall, Leidos is strategically positioned for continued growth, underpinned by strong financial results and proactive management strategies aimed at meeting customer needs effectively. The commitment to innovation and responsive operational strategies suggests that the company is on track to sustain its momentum well into the future.