Revenues of $4.0 billion, up 7% year-over-year Net income of $283 million or $2.07 per diluted share Adjusted EBITDA (non-GAAP) of $490 million (12.3% margin) Non-GAAP Diluted Earnings per Share of $2.29, up 56% year-over-year Cash Flows from Operations of $63 million; Free Cash Flow (non-GAAP) of $46 million Net Bookings of $3.7 billion (book-to-bill ratio of 0.9 for the quarter and 1.1 for trailing twelve months) RESTON, Va., April 30, 2024 /PRNewswire/ -- Leidos Holdings, Inc. (NYSE:LDOS), a FORTUNE 500® innovation company, today reported financial results for the first quarter of fiscal year 2024. Thomas Bell, Leidos Chief Executive Officer, commented, "Our strong start to the year demonstrates the team's ability to deliver for its employees, customers, and shareholders. With greater visibility around customer funding and performance ahead of plan, we are raising guidance on all metrics ahead of our typical pace. We fully expect that 2024 will showcase our commitment to profitable growth. Going forward, our focus remains on operational execution while we develop a robust strategy, invest in disruptive technology-driven solutions, and unlock maximum value through our capability-based organization." Summary Operating Results Three Months Ended (in millions, except margin and per share data) March 29, 2024 March 31, 2023 Revenues $                  3,975 $                  3,699 Net income $                     283 $                     164 Net income margin 7.1 % 4.4 % Diluted earnings per share (EPS) $                    2.07 $                    1.17 Non-GAAP Measures*: Adjusted EBITDA $                     490 $                     346 Adjusted EBITDA margin 12.3 % 9.4 % Non-GAAP diluted EPS $                    2.29 $                    1.47 * 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 $3.98 billion, up 7% compared to the first quarter of 2023. Revenues grew year-over-year due to increased demand across all customer segments, especially for managed health services. For the first quarter, net income was $283 million, or $2.07 per diluted share. Net income and diluted EPS were up 73% and 77% year-over-year, respectively. Net income margin of 7.1% increased from 4.4% in the first quarter of 2023. Adjusted EBITDA was $490 million for the first quarter, up 42% year-over-year. Record adjusted EBITDA margin of 12.3% increased from 9.4% in the first quarter of 2023. Non-GAAP net income was $313 million for the first quarter, up 53% year-over-year, and non-GAAP diluted EPS for the quarter was $2.29, up 56% year-over-year. The primary drivers of increased profitability were increased volumes on fixed-rate managed health services and improved cost control across the company. Cash Flow Summary In the first quarter, Leidos generated $63 million of net cash provided by operating activities and used $12 million in investing activities and $228 million in financing activities. Net cash provided by operating activities was driven by strong EBITDA and collections performance. Days Sales Outstanding (DSO) for the quarter was 62, in line with the first quarter of 2023. Investing activities consisted primarily of $17 million in property, equipment and software payments, which resulted in quarterly free cash flow of $46 million. Leidos returned $236 million to shareholders in the first quarter, including $183 million in share repurchases and $53 million as part of its regular quarterly cash dividend program. As of March 29, 2024, Leidos had $633 million in cash and cash equivalents and $4.7 billion of debt. On April 26, 2024, the Leidos Board of Directors declared a cash dividend of $0.38 per share to be paid on June 28, 2024, to stockholders of record at the close of business on June 14, 2024. Business Development Net bookings totaled $3.7 billion in the quarter, representing a book-to-bill ratio of 0.9. As a result, backlog at the end of the quarter was $36.6 billion, of which $8.0 billion was funded. Forward Guidance Leidos is updating its fiscal year 2024 guidance as follows: FY24 Guidance Measure Current Prior Revenues (billions) $16.0 - $16.4 $15.7 - $16.1 Adjusted EBITDA Margin Mid-to-High 11% Mid-to-High 10% Non-GAAP Diluted EPS $8.40 - $8.80 $7.50 - $7.90 Cash Flows Provided by Operating Activities (billions) approximately $1.3 approximately $1.1 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 A.M. eastern time on April 30, 2024. 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). An archived version of the webcast will be available on the Leidos Investor Relations website until April 30, 2025. About Leidos Leidos is a Fortune 500® innovation company rapidly addressing the world's most vexing challenges in national security and health. The company's global workforce of 47,000 collaborates to create smarter technology solutions for customers in heavily regulated industries. Headquartered in Reston, Virginia, Leidos reported annual revenues of approximately $15.4 billion for the fiscal year ended December 29, 2023. 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, strategy 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, government budgets and the ongoing Continuing Resolution, uncertainties in tax due to new tax legislation or other regulatory developments, 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: developments in the U.S. government defense and non-defense budgets, including budget reductions, sequestration, implementation of spending limits or changes in budgetary priorities, delays in the U.S. government budget process or a government shutdown, or the U.S. government's failure to raise the debt ceiling, which increases the possibility of a default by the U.S. government on its debt obligations, related credit-rating downgrades, or an economic recession; uncertainties in tax due to new tax legislation or other regulatory developments; rising inflationary pressures and fluctuations in interest rates; delays in the U.S. government contract procurement process or the award of contracts and delays or loss of contracts as a result of competitor protests; changes in U.S. government procurement rules, regulations and practices; our compliance with various U.S. government and other government procurement rules and regulations; governmental reviews, audits and investigations of our company; our ability to effectively compete and win contracts with the U.S. government and other customers; our ability to respond rapidly to emerging technology trends, including the use of artificial intelligence; our reliance on information technology spending by hospitals/healthcare organizations; our reliance on infrastructure investments by industrial and natural resources organizations; energy efficiency and alternative energy sourcing investments; investments by U.S. government and commercial organizations in environmental impact and remediation projects; the effects of health epidemics, pandemics and similar outbreaks may have on our business, financial position, results of operations and/or cash flows; our ability to attract, train and retain skilled employees, including our management team, and to obtain security clearances for our employees; our ability to accurately estimate costs, including cost increases due to inflation, associated with our firm-fixed-price contracts and other contracts; resolution of legal and other disputes with our customers and others or legal or regulatory compliance issues; cybersecurity, data security or other security threats, system failures or other disruptions of our business; our compliance with international, federal, state and local laws and regulations regarding privacy, data security, protection, storage, retention, transfer and disposal, technology protection and personal information; the damage and disruption to our business resulting from natural disasters and the effects of climate change; our ability to effectively acquire businesses and make investments; 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; the failure of our inspection or detection systems to detect threats; the adequacy of our insurance programs, customer indemnifications or other liability protections designed to protect us from significant product or other liability claims, including cybersecurity attacks; our ability to manage risks associated with our international business; our ability to comply with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010 and similar worldwide anti-corruption and anti-bribery laws and regulations; our ability to protect our intellectual property and other proprietary rights by third parties of infringement, misappropriation or other violations by us of their intellectual property rights; our ability to prevail in litigation brought by third parties of infringement, misappropriation or other violations by us of their intellectual property rights; our ability to declare or increase future dividends based on our earnings, financial condition, capital requirements and other factors, including compliance with applicable law and our agreements; our ability to grow our commercial health and infrastructure businesses, which could be negatively affected by budgetary constraints faced by hospitals and by developers of energy and infrastructure projects; our ability to successfully integrate acquired businesses; 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. 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 April 30, 2024. 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   LEIDOS HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) Three Months Ended March 29,2024 March 31,2023 Revenues $        3,975 $        3,699 Cost of revenues 3,337 3,204 Selling, general and administrative expenses 226 233 Acquisition, integration and restructuring costs 4 3 Equity earnings of non-consolidated subsidiaries (7) (6) Operating income 415 265 Non-operating income (expense): Interest expense, net (49) (54) Other income (expense), net 2 (4) Income before income taxes 368 207 Income tax expense (85) (43) Net income 283 164 Less: net (loss) income attributable to non-controlling interest (1) 2 Net income attributable to Leidos common stockholders $           284 $           162 Earnings per share: Basic $          2.09 $          1.18 Diluted 2.07 1.17 Weighted average number of common shares outstanding: Basic 136 137 Diluted 137 138 Cash dividends declared per share $          0.38 $          0.36   LEIDOS HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, except share and per share data) March 29,2024 December 29,2023 Assets: Cash and cash equivalents $           633 $           777 Receivables, net 2,713 2,429 Inventory, net 318 310 Other current assets 486 489 Total current assets 4,150 4,005 Property, plant and equipment, net 972 961 Intangible assets, net 629 667 Goodwill 6,099 6,112 Operating lease right-of-use assets, net 493 512 Other long-term assets 474 438 Total assets $      12,817 $      12,695 Liabilities: Accounts payable and accrued liabilities $        2,301 $        2,277 Accrued payroll and employee benefits 740 695 Current portion of long-term debt 43 18 Total current liabilities 3,084 2,990 Long-term debt, net of current portion 4,636 4,664 Operating lease liabilities 495 516 Other long-term liabilities 289 267 Total liabilities