Leidos Holdings (LDOS) Q1 Earnings Beat, Revenues Rise Y/Y

Leidos Holdings, Inc.’s LDOS first-quarter 2021 adjusted earnings of $1.73 per share beat the Zacks Consensus Estimate of $1.49 by 16.1%. Moreover, the bottom line grew 45.4% from $1.19 per share registered a year ago.

The company’s GAAP earnings of $1.42 per share improved from the year-ago quarter’s 80 cents.

Total Revenues

Leidos Holdings generated total revenues of $3,315 million in the quarter under consideration, which exceeded the Zacks Consensus Estimate of $3,213 million by 3.2%. The top line also improved 14.7% year over year. This increase in revenues is primarily attributable to program wins and a net increase in volumes on certain programs.

Backlog

At the end of the reported quarter, the company’s total backlog was $32.6 billion compared with $31.9 billion at 2020-end. Of this, $7 billion was funded.

Operational Statistics

Total cost of revenues in the quarter increased 14.2% to $2,848 million. Operating income totaled $308 million compared with the year-ago quarter’s income of $192 million.

Non-GAAP operating income margin for the quarter was 11.1% compared with 8.5% in the prior-year quarter, primarily attributable to a net increase in higher-margin program volumes and program wins.

Interest expenses summed $45 million compared with $48 million in the prior-year quarter.

Segmental Performance

Defense Solutions: Net revenues at this segment improved 14.8% to $1,958 million from the prior-year quarter’s $1,705 million. This upside can be primarily attributed to program wins, a net increase in volumes on certain programs and a benefit in exchange rate movements.

The segment’s operating income escalated to $152 million from the year-ago quarter’s $95 million, with the operating margin expanding 220 basis points (bps) to 7.8%.

Health: The segment recorded revenues of $591 million in the first quarter, up 11.5% year over year. The revenue increase was primarily attributable to a net increase in volumes on certain programs and program wins.

Operating income surged 39.7% to $102 million, while operating margin expanded 350 bps to 173%.

Civil: Revenues at this segment amounted to $766 million, up 17.1%. This uptick was primarily attributable to the acquisition of the SD&A businesses in the second quarter of fiscal 2020 and a net increase in program volumes.

While operating income rose 25.4% to $74 million, operating margin contracted 70 bps to 9.7%.

Leidos Holdings, Inc. Price, Consensus and EPS Surprise

Leidos Holdings, Inc. Price, Consensus and EPS Surprise

Leidos Holdings, Inc. price-consensus-eps-surprise-chart | Leidos Holdings, Inc. Quote

Financials

Cash and cash equivalents as of Apr 2, 2021, were $377 million compared with $524 million as of Jan 1, 2021.

Long-term debt, net of current portion, amounted to $4,663 million as of Apr 2, 2021, compared with $4,644 million as of Jan 1, 2021.

Net cash provided by operating activities in the first quarter of 2021 was $237 million compared with $372 million a year ago.

2021 Guidance

Leidos Holdings revised its view for 2021. The company currently expects adjusted earnings in the $6.35-$6.65 range, up from $6.15-$6.45 per share anticipated earlier. The Zacks Consensus Estimate for 2021 earnings, pegged at $6.35 per share, is below the midpoint of the company’s projected view.

Leidos Holdings expects revenues of $13.7-$14.1 billion this year, unchanged from the previous guidance. The Zacks Consensus Estimate for 2021 revenues, pegged at $13.87 billion, is below the midpoint of the company-guided range.

The company’s cash flow from operating activities is anticipated to be at or above $875 million.

Zacks Rank

Leidos Holdings carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Lockheed Martin Corp. LMT reported first-quarter 2021 earnings of $6.56 per share, which surpassed the Zacks Consensus Estimate of $6.32 by 3.8%.

Hexcel Corporation HXL reported first-quarter 2021 loss of 10 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 16 cents.

Raytheon Technologies Corporation’s RTX first-quarter 2021 adjusted earnings per share of 90 cents outpaced the Zacks Consensus Estimate of 88 cents by 2.3%.

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