Leidos Reports Q1 2020 Financial Results; Roger Krone Quoted

Roger Krone
Roger Krone

Leidos has reported financial results for the first quarter of fiscal year 2020, noting revenues for the quarter were $2.89B, operating income for the quarter was $192M and operating income margin decreased to 6.6 percent from 7.5 percent in the prior year quarter, due to COVID-19, the company announced on Tuesday

"First quarter results demonstrated the resiliency of our business, as evidenced by strong pro-forma organic revenue growth across all business segments, significant bookings and a new record backlog position, said Roger Krone, Leidos chairman and chief executive officer and a 2020 Wash100 Award recipient. 

Leidos has reported a non-GAAP operating income margin for the quarter was 8.5 percent, compared to 9.3 percent in the prior year quarter, due to the impacts of the COVID-19 pandemic. Diluted EPS attributable to Leidos common stockholders for the quarter was $0.80, compared to $1.29 in the prior year quarter. 

The company noted non-GAAP diluted EPS for the quarter was $1.19, compared to $1.13 in the prior year quarter. The weighted average diluted share count for the quarter was 144 million compared to 147 million in the prior year quarter.

Leidos’ Defense Solutions revenues for the quarter increased by $214 million compared to the prior year quarter. The revenue increase was primarily attributable to $129 million of revenues related to the acquisition of Dynetics, program wins, a net increase in program volumes and higher net profit write-ups in the current quarter. 

The company’s civil revenues for the quarter of $654 million increased by $31 million, compared to the prior year quarter. Health revenues for the quarter of $530 million increased by $67 million. 

Leidos’ net cash provided by operating activities for the quarter was $372 million compared to $288 million in the prior year quarter. Of the contract awards Leidos received, the most notable, the company announced was the Defense Information Systems Agency (DISA) Global Network Management. 

The company was awarded a five-year, $6.5 billion prime contract by the DISA to provide network services under the Global Solutions Management Operations II contract. Under the contract, Leidos will manage the Department of Defense Information Network/Defense Information System Network, a series of interconnected networks and computer systems that serve as the backbone of the Department of Defense's command and control systems. 

For the quarter, COVID-19 negatively impacted revenues by approximately $50 million. The full extent of the impact of the COVID-19 pandemic on our operational and financial performance, including our ability to execute on programs in the expected timeframe, will depend on future developments.

The CARES Act has enabled Leidos to defer our federal and some state income tax payments from the second quarter of fiscal year 2020 to the third quarter of fiscal year 2020 and also to defer payment of the employer portion of social security taxes for the balance of fiscal year 2020.

“While the COVID-19 pandemic presented some late quarter headwinds, we are confident that the critical nature of our work, coupled with our early business contingency planning, will largely mitigate any long-term impacts," Krone concluded. 

About Leidos

Leidos is a Fortune 500® information technology, engineering, and science solutions and services leader working to solve the world's toughest challenges in the defense, intelligence, homeland security, civil and health markets. The Company's 37,000 employees support vital missions for government and commercial customers. Headquartered in Reston, Va., Leidos reported annual revenues of approximately $11.09 billion for the fiscal year ended January 3, 2020.

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