Yahoo Finance Leidos Holdings (LDOS) Q1 Earnings Miss, Revenues Rise Y/Y
Leidos Holdings, Inc.’s LDOS first-quarter 2023 adjusted earnings of $1.47 per share missed the Zacks Consensus Estimate of $1.59 by 7.5%. The bottom line also declined 7% from $1.58 per share registered a year ago.
The company reported GAAP earnings of $1.17 per share, which decreased from the prior-year quarter’s figure of $1.25.
The year-over-year downside in earnings can be attributed to expected reductions in certain disability examinations owing to additional competition and increased expenses in the security products business.
Total Revenues
Leidos Holdings generated total revenues of $3,699 million in the reported quarter, exceeding the Zacks Consensus Estimate of $3,656.4 million by 1.2%. The top line also improved 5.9% year over year, driven by revenue growth in all segments. This overall segmental improvement can be attributed to broad-based strength across the Civil and Health units.
Leidos Holdings, Inc. Price, Consensus and EPS Surprise
Leidos Holdings, Inc. price-consensus-eps-surprise-chart | Leidos Holdings, Inc. Quote
Backlog
The company recorded a total backlog of $35.09 billion, down from $35.78 billion at 2022 end. Of this amount, $8.30 billion was funded.
Operational Statistics
The cost of revenues increased 7.4% to $3,204 million. The operating income totaled $265 million compared with $271 million in the year-ago quarter.
Operating income margin was 7.1% compared with 7.8% in the prior-year period. Interest expenses were $54 million, up 12.5% year over year.
Segmental Performance
Defense Solutions: Net revenues in this segment improved 3.1% year over year to $2,112 million. The increase can be attributed to higher revenue growth from the Navy Next Generation Enterprise Network Recompete Service Management, Integration and Transport and Space Development Agency Wide Field of Vision Tranche 1 contracts as well as the Cobham Special Mission acquisition.
The operating income increased to $147 million from the year-ago quarter’s $133 million. The operating margin stood at 7%.
Health: The segment recorded revenues of $710 million, up 9.2% year over year. This improvement can be attributed to the growth of the Social Security Administration Information Technology Support Services Contract II and increased deployments for the Defense Healthcare Management System Modernization contract.
Operating income was $107 million compared with $118 million in the year-ago quarter. The operating margin came in at 15.1%.
Civil: Revenues in this segment amounted to $877 million, up 10.3% year-over-year. The upside was due to revenue growth in the National Aeronautics and Space Administration Advanced Enterprise Global Information Technology Solutions program and increased demand for engineering support to commercial energy companies.
Operating income decreased to $40 million from $43 million in the year-ago period. The operating margin stood at 4.6%.
Financials
Leidos Holdings’ cash and cash equivalents as of Mar 31, 2023, were $379 million compared with $516 million as of Dec 30, 2022.
Long-term debt, net of the current portion, amounted to $4,675 million as of Mar 31, 2023, compared with $3,298 million as of Dec 30, 2022.
Net cash used by operating activities was $98 million against cash provided by operating activities of $93 million a year ago.
2023 Guidance
Leidos Holdings reiterated its 2023 view. The company still expects to generate adjusted earnings in the range of $6.40-$6.80 per share. The Zacks Consensus Estimate for earnings is pegged at $6.65 per share, higher than the midpoint of the guided range.
LDOS continues to expect revenues in the range of $14.7-$15.1 billion. The Zacks Consensus Estimate for revenues is pegged at $14.96 billion, higher than the midpoint of the guided range.
The company still expects cash flow from operating activities at or more than $700 million.
Zacks Rank
Leidos Holdings currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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