LDOS - Earnings call transcript Q2 2019

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Operator

Greetings, welcome to Leidos Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

At this time, I will now turn the conference over to Kelly Hernandez from Investor Relations. Ms. begin. may you Hernandez,

Kelly Hernandez

and our everyone. conference second Rob, welcome call. like you to quarter good you, I'd morning, to Thank XXXX earnings

Jim Leidos management Joining Chairman Officer; Roger are team. other Reagan, CEO; and the me Financial our of Krone, members Chief today and our

Roger highlights on will XXXX. from as discussion as our we'll comments the of market strategy. June guidance questions. Jim discuss will call the environment off a we for and the quarter lead remarks Today, ending follow call and for financial the quarter our our our results with XX, expectations. from Company will with performance Roger notable open your these After and Jim, well the

see uncertainties. Today's include information differ such, that discussion cause contains refer statements Please on on factors could forward-looking release results currently and actual risks the it, does based for and the our we to to press as risk more specific as materially. environment

we and provided morning The and the in and available Finally, that well Investor release this the website issued will included supplementary as during the of information the presentation we financial in discuss section as press is presentation measures. the non-GAAP A is are between two our GAAP press call, release the reconciliation file slides. financial Relations also on at ir.leidos.com.

turn With to call that, Krone. the I'll Roger over

Roger Krone

earnings thank for call. us our joining XXXX And quarter this all Kelly. you for you, conference Thank second morning

to growth, strong continues momentum the win quarter revenue and a growth Our position organic through nearly backlog second with accelerate record X% rates.

guidance us segments against to and and earnings. of enables business across for executing growth revenue pipeline all in success our both Our raise our full-year our driving

generation and and demonstrates recently of and announced shareholders. ability of generate management for sustainably flow the our dividend the team addition, the confidence value company's Board the cash of our to In increase the strength Directors

a leading during record the growth future that indicator increased as potential. key quarter reaching a of our achieved level $XX.X also to Importantly, billion, our serves that we wins backlog

and from scale from delivering our strategic a resulted customers organization, leveraging the focus to our awards. highlights successes on of of These our the quarter's innovative solutions couple

our provide, We NASA's and this will secure agency's & takeaway IT maintain win successfully the Under Technologies protest research that contract essential a or business, program Services managed, Leidos NEST. core computational and support defended End-User on scientific, abilities. with services

single over $X.X over the The potential of period a ten-year of has award contract value total performance. billion

also Air war and the gathering, intelligence successfully analysis, protest surveillance support through the ACC across Combat a mission the Force reconnaissance We Command training distribution another fighters defended enterprise. takeaway on to with win intelligence, Air and

single and strategy $XXX total effort. the collaborative important This all work award if our to value approximately we it priority hitting ceiling and of transformed stride key and have the Business task options with remains into functional order a a are proud see development cross has exercised. customers. of us key I'm a million company's winning

with to net continue quarter, the $XXX During free of cash on quarter million exited and income focus growth converted we flow successfully to XXX% cash leveraging a the equivalents more revenue generate cash. strong non-GAAP the in and on hand. We to

$X.XX X% quarterly options evaluate September ever to the to payment with dividend for with philosophy, is yesterday the from announced deployment effective continue our raises excess we share. $X.XX increase. per stated company's our As capital capital in dividend line we The and dividend to our deploying first the increase

for excess returning thoughtfully and M&A growth and repurchases. our dividends deploying confidence remain reinforces our committed share organic to long-term our This capital shareholders. to in with including to our strong increase which reflects our stated commitment balances shareholders line appointment with in to returns capital's capital and delivering philosophy We performance investments through

and retention driven has growth in our hiring momentum positive a impact The efforts. and business our strong on revenue positive

During added than more employees XX,XXX. net a new the our we increasing total organization quarter, to headcount to XXXX our

takeaway in of able our the to the domain cleared hiring tightness helping in into transfer the some being efforts cleared family clear labor into particular the are Leidos market. alleviate wins helps The personnel directly

still move we our by clearance Investigative takes the new by to progress process, it time employees While the backlog. National significant the reducing the encouraged through Background in Bureau made are clearance

of seeing there's While improvement, by we're awaiting clearance. the room the Bureau effort for still backlog results early the reduce to targeted

to to made welcome and support of on during the to highlight want to our a our I of executive all our build customers Continuing forward with grow excited with employees continuing the them their refinements are organization look new and theme, critical people We to couple leadership quarter. missions. to trust have our most we team

announce to of the the leadership Defense the Office Company. roles Agency of Programs throughout position in pleased Advanced government, Special Director Technology as the Officer of DARPA. joining to technical the Carlini at spent Chief promotion the Company and Jim or am I served to Prior Jim decades Research XXXX having the industry Projects including for in academia

and the delivery continue Jim Northrop technology technical to is development Vice rapid ranging of throughout enterprise the in excellence Grumman to learning of at differentiate defense, member also drive cyber a advanced areas of Systems. President solutions software. Science and Electronic secure ensuring previously was artificial Board and machine critical programs from mission-critical Defense Jim to intelligence will

the the the all in effort markets. incubated capabilities innovation our of lead deliver Leidos to to Link, to leverage business He in customers the served the cutting-edge center, solutions also throughout will

will for has driving role the supplier created Leidos throughout framework over framework, operations. business strategic be who and from In moved and newly our of Cantor takes of the into Jim position principles a Chief Jim program enhancing this Excellence Partnerships. responsible Performance, all role Jim Strategic

for quite budgets to two discretionary year our favorable. stable predictable The fiscal Senate defense bill the and is the to of positive by now recent XXXX. administration conditions remain Budget more approval The continue for the in house large expected the macroenvironment, the passage allows Turning business. Act government years; and Bipartisan and in XXXX and for

Defense embedded X% the non-defense outstanding, in of to key National business. unchanged capabilities on tightly ability solutions remain to in critical still continue our the provide growth Strategy in with our their are innovative continued budget our X.X% execute customers and and most of a defense and appropriations our priorities growth provide core foundation missions. to for supportive The help align overall the Although

confidence As the for we our moment. guidance look in mentioned, results strength of will details raise ahead our revenue landscape halfway the the provide the through in we and give revised of continued and earnings tailwinds combined I both year. the point previously with see the full Jim us a expectations to market in year

to as we last of some we in quarter, call social initiatives over Before want to we did engage the again a the Jim, I company. hand community spotlight and as

that progress quarter made the help efforts alarming. want nationwide we This have to is resolve I opioid epidemic, the to which highlight and our scale the of

members on employees times that epidemic. pledge organizations with In nurture of addictions, nonprofit to and work support recovery. create conversations by business family affected our own focused prevention about additional launched some have Leidos employees are to the safe CEO for to and environments dangers of and experienced opioids potential about difficult response to this which encourages leaders the educate

to from report I'm their signing this CEO by more organizations support to and have crisis. employees the ending making their changes organizations pleased throughout than the country CEOs to commitment pledge across XX epidemic that in to-date demonstrate the

health to to work helping in at to this goal much the recognize concern still is Well, I'm XXX least that have growing initiative you done signatories. share be and navigate can as this is live all of and to in our where with we us proud we work. communities There share

innovative delivering leveraging solutions by remain the scale. In to on conclusion, our of we our strength focused customers

continue on generate cash to leveraging We customers to with our focus the in business. success

Financial for quarter the more results Reagan, details our to guidance. Chief turn I'll Officer and second on that, over With Jim call our

Jim Reagan

execution summary, Thanks, Roger. the continuing to thanks our across call achieved In segments. today. us joining all everyone of on we've And strong for

revenue over the we've prior contract program by and the accelerated several seen highest in Our on of win growth. driven X.X% organic new growth year years growth is

adjusted able heavily to Lower our were profit the driver while early in long-term compression. we deliver the primary write-ups programs is phase strong more line were composition the our have targets. year-over-year previously. growth as margins of reflective of is to We that with XX.X% This discussed weighted maintaining revenue margin EBITDA of

driven past year. the increase prior the to over $X.XX non-GAAP EPS over share million year were cash lower income. primarily the count purchases flows diluted by $X.XX Operating $XXX net Non-GAAP our conversion sharing from of XXX% resulting reflecting

into development backlog our and nearly We than booking for the business contribution XX% to-date. had from XX% awards Takeaways in quarter bookings including on year billion another in new the more significant the quarter of takeaway great net $X wins. over bookings represented business of front

years, two development our past is up billion our Our and ending the of backlog XX% advantage. the of XX% strategy year over past the over business success and scale $XX.X highlighting

quarter, in the we proposals in end. decision XX.X adjudicated which billion period after submitted quarter pending decisions accounting in resulted of at XX submit some billion the In large for

of results. from than largely more completion. grew of carry overview offset year operating early Now program our for margin to an revenues XX related solutions lower result X.X% decline phase. newer programs as over points the program the year quarter which Defense basis X.X% new of prior the Non-GAAP the segment in margins prior

grew basis. and XX% resulting net XX the wins. large booked on In reflects recent of X.Xx cyber sale ramp-up Defense largely quarter book-to-bill our win takeaway a of solutions a also over when organically civil trailing of adjusting in segment; the our growth including our This takeaway business. billion month revenues commercial $X.X awards for of for a

basis lower more and phase write-ups to segment profit points to Non-GAAP operating year early civil net programs the composition XX margins in materials. a prior declined heavily due weighted revenue our from and that's

a bookings large The were month and for X.Xx takeaway a segment trailing XX billion, $X.X X.Xx book-to-bill award. a very on of at result strong basis. quarter reflecting the was Civil

over DHMSM prior our segment; XX% showed to programs on expansion finally deployments contributing again And here with revenue growth and growth health year. the strong other results

were programs you. have previewed Non-GAAP that profile XX.X% shifted to health of with very the group margins margin on levels strong, recompete a the certain the as but prior more operating from again level down year's in we previously normalized

by rates. And health any process level little a perspective, our rather $XXX while driven than procurement win this from the is by primarily over million than generated a bookings in delays segment of net and a past reflection the in its lower bookings

a and have which month and decision health QX well-positioned to healthy low in expect book-to-bill the over pipeline a continue a we trailing decision basis was of market. resolved X.Xx months. we On awaiting very awards volume to has remains coming of be XX very the

business summarize, updating second increased and pleased strong half our we're as mentioned XXXX and our results reflect entire and second to Roger visibility. EPS revenue with quarter performance To our guidance across we the the are through

increase an are $XXX a range range. of billion, raising the First, $XX.XX we revenue from and the to to guidance billion prior our narrowing million at of $XX.XX midpoint

higher Second, reflecting and narrowing and revenue guidance. our also raising lower net slightly growth the we're estimated interest expenses, earnings-per-share

diluted to the We $X.XX now the $X.XX to year range non-GAAP midpoint the range. $X.XX EPS in be of increase the expect over representing at for a prior

flow expectations margins Our operations adjusted EBITDA and unchanged. from were remained cash

so over take the turn call I'll to that, With questions. Rob, we can some

Operator

[Operator from line you. first proceed Instructions] Jefferies. with question question. today Please is Shelia the Thank with Our your of Kahyaoglu

Shelia Kahyaoglu

Good morning and thank you.

Roger mentioned question this I Just you billion the pipeline $XX a for picture quarter. you big think first,

is you You resulting an $XX sizing bids large very more program? in quarter you're or award last consolidation overall seeing numbers. where industry bigger comment had trend is can Maybe per this billion, the

Roger Krone

speak on to what's can't companies. with going really I other

expect programs we that Leidos we and the We it but tell you scale stated for time now have fewer will long I wanted by is go programs larger after growing to we the trend to that amount. and in larger a And have pursue continue. we adding that for

we customer to have sort waves, go you go it's and But is, you everybody aggregating disaggregating. kind in do is we see think like had company-by-company a part the see else of which And or think I I and interesting doing. they second aggregate. to they what -- of is see them

the where we've one going it a into Maybe And two. NextGen going to NCMI couple an contract time which had for long they're break break have a to then that another old is we essentially was and they're into program example pieces.

it comes our us goes. So been just to strategy has go and after programs. for But larger

Shelia Kahyaoglu

a so how program, think the color us $X follow-up NASA, maybe end Make of that now ramp protest just on and to a think give the then sense. is to go over. profit billion the potential you on NEST that impact? that, the Can high of we the any to about number And I

Jim Reagan

is this question. Thanks Well, your Shelia. Jim, for

by we The consistent ramp NEST of I something order with the take margins task going profit normally consistent. next comment that all, bookings fair will program-by-program way ramp program to overall net but think is. NEST that specific on be that average XX to about over it's first can into that the XX program numbers is to the profit think the our relatively the months. is think with number profile NASA don't pretty of the We of what that I and you to a best NASA say very is that basis, on is being think

Shelia Kahyaoglu

Thanks color. Thank you. for the

Jim Reagan

Thank you.

Operator

from The next the with with Suisse. questions. question is of Please Spingarn line Rob proceed Credit your

Rob Spingarn

Good Hi. morning.

Roger Krone

morning, good Hey, Rob.

Rob Spingarn

here. So, hone come the It's to Roger, growth on wanted obviously in a on sector. I theme It's strong. in the quite

to talk the budget of about could growth and with lag, type are that flatten. earlier on fact time flattish But of understand And market budgets about context of at at there's I to same talked I XXXX? projections this. the you your pour kind to that's numbers going look with assessment want in reconcile X% the earlier. especially guys a it beginning to but referred the don't the you any You I to FYDP be this wanted flat water XXXX that to when your X% we your some

Roger Krone

Yes. do become at system look defense, long have for through roll X.X% it course, components. and to to PBS can be to two does XX X% non-defense often to the How you that analysis And to and of that XX underneath for budget outlays? we take have months. the

are a what budget gives couple momentum look are And the to where accounts strong and XXXX dissect both then spent it XXXX you is a shrinking. of and and what you then for civil accounts at get have you growing years. the defense you budget when So and and the in kind

efficiencies, a digital we're back government us, for the And federal across with seeing consolidation transformation of move office really lot favorable to modernization, large. cloud, movement

the we've just that three, four And and over we've there, the increases, up within and strength years, always going those then going which the kind be budget had pleased that by strength the by agency agent is – said of obviously agency see So very then – percentages to overall by agencies. go forever. we're couple last where But bounded by accounts of we forward. can't

Rob Spingarn

I and maybe then but the you in And change of the any bit maybe delve structure can you of a Okay. program talk one into the just with that of NextGen and perhaps on we some roll-offs up lag larger comment and about could opportunities think that came bit? course little

Roger Krone

with which start is I'll Navy NextGen Okay. NMCI.

that is on where We to the opposed be are SMI TTY portion we which had network as that the of award. the hoped buying for [ph] that bidding of a more would in up called really equipment architecture

XXXX. year now and my at the That's this to and next and that think is Navy time. till an adjustments back award to I won't expect their guess NextGen on looked some gone procurement making and we the has at solicitation Navy that will we see go probably best

on was be just A Energy maybe outstanding, Hanford couple of have that's we other on I'll I weeks to bids two a those, hopeful supposed we're touch recompete large Department and six the time it's that actually one within be it XXth, four weeks-ish. weeks, we a to program Global And And then behind is that or or think Organization that. two Management our at week GSMO. Support DISA, probably large call going the Rob, infrastructure

might be the that We third and hopeful an think when and that backlog. you just award from have in someone's there, are then quarter protests things will about still enter there made into to actually probably

Rob Spingarn

Anything rolling Okay. way? way? going Anything off the other

Roger Krone

so to the We came award. ACC are about it because those of period. Well, ones the went NASA submits, ISR, and submits our that hurt in talked from right, NEST big off course,

Rob Spingarn

Okay. Thank you very much.

Roger Krone

you. Thank

Operator

is question & Please question. next The line from Rumohr von your with Cowen with Company. the of Cai proceed

Cai von Rumohr

Yes. quarter. Thanks much so good and

billion the to NEST of they your NASA program, contribute are and So are they quarter? X much the both in How but actually big did structure. awards ISR both IDIQ

Jim Reagan

Jim. is this Cai,

You two the $X can additional little billion to bit of the a backlog think under contributing those them. is between of

Cai von Rumohr

it. Got

exclude the could your And quarter of seeing weeks environment normally color what's some kind third the of give that you last anticipation booking in we which Okay. over of if is seasonal a couple GSMO, us then peak? you're the

Roger Krone

-- at fact, see that activity to were a cyclical we're to different. waiting Cai, we been more – has that always it in although go has we in that Well, quarter. we the quarter, to but believe still nice ends. July you're pleased have protest reason really and really the had we to which quarter, any But still and looking would And been a of rest month absolutely good third the that no high, I second right, have third is how be week quarter

Again, you pleased lot end a decisions And down. want sense fiscal we're reason just of the now certainty no for a of the that get federal the budget them slow get really there and action the by is with agencies budget year. to before to made

we most Navy I NexGen some I fiscal happen. So, and year. be to is think revisions these don't of can through to able expect happen things Albeit, to go going in

Cai von Rumohr

very you Thank much.

Operator

question. Please of with the question with comes from your next Caso Our Wells line Fargo. Edward proceed

Edward Caso

Congrats Good good another set here. Hi. of numbers morning. on

rates. a that what of little and sort you good frame Thanks. Could bit more how levels mentioned You much win improvement?

Jim Reagan

into XXs one help revenue contribute we notable rates. our on been thing normal we've you the can for don't as specifics really most around that only before well said in Ed, that -- would is I been It what share growth. helping of nice would being about like if rates some Yes. as But our roughly or to rest significant new on recompete exception above success qualitatively think the or roughly details the has year business there's out and XX%. we growth this disappointment really both year from increases, than to-date curve give main that's to high get the the way on think current win thing prospect of one been in coming the things recompete of what of future. win has with think takeaways you budget the the a other that little and been really as of bit its kind we the and that and But

the So, good of for a of right? think being And as XX%. you recompete, a you of being so, companies number of lot -- think between normally of think in kind is takeaways and converse takeaways XX% of somewhere if

Our takeaway and win excess of win to business our rates of been the XX% well rates target. that a excess lot have been XX% well that I know in companies in of have new also

So I'll at that. it leave

Edward Caso

My capital strong your more region net outside attrition us bit question can a tell split of little you and you region? Great. then mentioned sort is, other the of about it Thanks. adds, capital headcount and

Roger Krone

I'll both think I that. Jim comment and on

to for Our as it it's attrition we us. not low really And down, would still focused is cyclically as be. effort like it

we really leaders and we involuntary have our redeploying what employees. broken it more and the hard to our really when trouble that's or fought set we what call employees voluntary working redeploying call and comes hard and on because our into with we're really have have team, end and really to geography aggressively an We we involuntary skill of a and contract

the people that's high are security capital where we region, to probably do and and And have hire been for live we the like be. hire, ability the commodity. in would us the market probably people then type a you that they it clearly Maryland the I would national hottest pleased groups hottest skills down of with to any isolated our were voluntary in area level to I – clearance not retain is of think And but and that say, have

think just remain to I it's going that.

move talked other and where do the We've about us. our beyond has radius, we've sites past for work had is the a successful higher that retention the of when then permits work that strategy to us XX to that we in mile been contract the

St. stay kind in of We and longer have and Eagan, and Minnesota do. and people the Louis places -- we were frankly tend enjoy work Charlotte to Virginia Charlottesville Morgantown, West that

Edward Caso

you. Great. Thank

Operator

The Matt next question comes Stanley. with Please from with Morgan Sharp question. proceed your

Matt Sharp

Good quarter. morning, nice a gentlemen,

Roger Krone

Thank you.

Matt Sharp

point on longer revenue? and we get obviously the negotiations no in might touch XXXX, for budget are but XQ, going there between this budget point? If do just going upside CR wanted does with look here likely moment, October Congress to I where be in President – Is it a the out a cards. at to prior to that like dynamics a there how are or play the at was the into playoff and just X, what's XQ the the deal impact revenue that this

Roger Krone

you wouldn't I it's even talk say would model. that Matt, significant. not the sure I'll your I'm Yes. just adjust about behavior.

I and hopefully the I have manager your appropriations you bills operate way, that with will relative program most And think, but authorization little may you're government an they to DHS CR statement think –and do The in a done. languish you're spike bill longer, restricted you're really get out. take of of to under the If will expanding going what by a work. Bill we a and may and

been money been a it has what have spend we but people obligated. which obviously encourages normal that anything, now will So they and the normal, order, call

great news and our going tend it be the do us their I to our season -- There it debate quarter is a a on good let stabilizes, adds of table, think is third the mission elections sort the And for but we've battles taken gives to nation. sport U.S. with think going And it revenue. of it the I to to really conduct and to election be quarter, the and in and the look more a There off at another that's slight budget their lift, just and ability I confidence. And think be us is, fourth customers the the there's work certainty tonight. confidence lot lot going

Matt Sharp

competition. just it. Got then, quick Thanks. a one on And

to peers have terms now names some but for same in the you're been some notable been businesses, at competition are able last pursue. point, this some programs scaling more your in other of of change elevated I the of playing names with be years, couple behavior size. Over there wondering at there was on substantial of larger point? their see that they a opportunities this if beginning catch-up or may obviously, of Has bidding to the

Roger Krone

Let's see.

First of all, In very world always it's would put in. competitive that, I years we that the tell you here, very mean unbelievable I foot just have which the it's five forward. I've your marketplace. to been been that and difficult, is live and best really very, very, it's always you

really, be down technical have to goes might at say, where have to three the but they four, maybe of have because we story. good of your You presenting for now competition. bids, it or that bidders, been number really it amount right, doesn't especially reduce the I are would maybe, some five, seen consolidation, of

has and proposals and to present that we gotten it competition competitors I really think motivates it have I I those always but have it sometimes robust about that customers. it well prior and say, As our two been found are to be peers where solutions it's learned you from to great in come we to only in the need career, to here, differentiated with worse, wouldn't my up us write able is articulate and

Matt Sharp

Thank it. Got you.

Operator

next question Please with Citigroup. Jon the your of comes proceed line Raviv question. Our with from

Jon Raviv

your highs that previously being increase, a you've repo integrated. all-time in late dividend but Hey. was Good is IS&GS with also and you've at M&A got bit quarter, highlighted capital morning. opportunities On stock so now the the allocation,

organic picture guess, versus I on versus at question those, So how are inorganic point? you repo big evaluating this

Roger Krone

and it We've use consistent deployment. spend talked mind about capital Jon, do that and we've customer how that. try organic support we've first same. mission maybe We the can always growth on been to ways we do in our dollar remarks creative the in we that thinking we're internally prepared about mentioned numbingly we'll and to

saw You sheet little capital support balance of in to some customers. able to we because were deploy a our increase

us might just whatever mean, that's thing are, of in but at as M&A opportunities, look We we do. a for we lot active prudent a think to

about a going how of be every that to want a your deal thoughtful accretive make long-term We make create the over sure DCS sure couple want we to money. to always that like interest not rates almost sustainable, will that said, then just in value We're with spend we we that is because today, short-term. years We is out if very, in important, that there'll more for ways isn't, our there us, align we've be true dividend very efficient some standpoint pleased. just see we be to And will deals there couldn't always we return value. is from hope but that owners. capital And the as

We dividend. to never out go we back and we check, found the but had actually increased

our that. And remarkable well. then, toolbox will enjoy thing so, everybody in that's and obviously we to it's kind of hopefully And have been committed share as and repurchases

Jon Raviv

opportunities here, funded investments growth you can some internally change consider you. that how or spend cash, the Thank as R&D? where CapEx pick-up working else then, more you in does And capital, the really you see on Okay. way specifically

Jim Reagan

more bid and And months We're how the more we've meaning get Jim. of on on proposal the always much marketing increased for rate we part investments and the much business run on the in made that, XX Yes. addition of Hi, cost. Jon, in amount this where is bid to we're past that same of best efficient, deployment spend money. so over and new has our return funds, we money able analyzing we that to investment

investments. returns some had we've on those So nice

people to a and I to team a from those side, our disciplined that's what just very inorganic fashion. of underscore heard should that, in have -- is is got at opportunities look you it I to is what you the Getting ongoing. want which think, process Roger evaluating We've opportunities said,

if Roger to any and And the it's meaning undertake we keep said, announcements meets should And something we're months the we surprised be actively to mistake continue that's to are in deployment. in of the you something looking you stick lack that that as hear so, financial criteria strategic, from us to we Company, capital anything, for meaningful you the our toolbox M&A six big that don't from not before it buybacks not going share coming continue meaningful, and will transaction. on

Jon Raviv

you. Thank

Operator

of comes Our with line the next Joseph Stifel. question DeNardi with your from Please question. proceed

Joseph DeNardi

bit deeper say there? performance Good in the guys price are answer. your that, don't best the bullish It of terms And all seems your quarters. of past you offering, morning. a probe Jim several performance, where seeing win what's and is sounded could it please past success. kind if you pretty three takeaway have you Roger, tactical on I'm driving little the in just like wondering for

Roger Krone

Yes.

Okay.

Let's just kind their that at the When to reset being of cost fortunate business. talked able traditional a transaction, and the on. back about of we IS&GS structure we that close look journey been were to enough we've lot go

so immediate helped we would the And structure one advantage price. lose. We we you but that And We've lose shot. been saw tell then -- reason not is number that cost our combine never of that that bringing by scale. them were into able we price, we the not that and able -- an taking it on

customer and that to that what a technology record, agencies call our And really differentiated back create we ask that behind question, going that every the refresh great growth. what roots, team has helped ourselves our call to we differentiated our fueled But against we us is time we the offering helped unique of continues we from that develop what write we are that what got help then, And generate programs, to to us that a proposal, technology we've offering. then the the winning offering. of the CRAD investing to deploy the larger IRAD, SNC have is in kind programs which we

technology So, here, and losses are rate culture with us. core we and by we I Company, our win win think that have the we we've position in of want there obviously, I now approach. technical don't the but we and made that won, and the is a has for the wish that improvements difference that always differentiated that's to That's on pleased There we been based losses our are had upon the where we're everything. in way, win --

Joseph DeNardi

Jim, year, then, the recompete out anything level? unusual just a is or normal you. And Thank you. there is from Thank just standpoint, to helpful. call it next as That's

Jim Reagan

It to we've year, ones. This big normal those got will of next some level for be the back year.

Hanford recompetes GSMO many to next nearly have You've are call, submitted big like year not we we're that going in to but lumpy year. going heard about earlier be as this and the do

Joseph DeNardi

you. Thank

Operator

Please next with Our question Parsons your Goldman from Gavin comes proceed Sachs. line the of questions. with

Gavin Parsons

Hey. everyone. Good morning,

Jim Reagan

Hey. Gavin. Good morning,

Gavin Parsons

at able can couple can win? rate which of how the the the the you years? dollars Hey. than say it to government the different you would over what factor few that you for of Guys, Is work it is look is growth? hire? is Is budget if get Is the your it last and amount the passed that years, you gating next out

Roger Krone

of addition that brought win didn't ability been rate able has ability it's is address to not They to the and journey Well, new customers relationships been our with and not been great of it's have. history we've to IS&GS with us been a markets long for that the hire. Leidos long do What all organization. and

we just long I offering but with we agency clip, expand directorships. had federal addressable customers, new our expanded to relationship think And to to like across their agencies, new about addressable federal to continue to market. So a how the to within that that but expand that have market, do not think maintain we've our continue a

we've second how And from it's agency our that that to to agency selling, and learned do capability a that work cross and done we've sold expand the a lessons one take we at so agency for then the offering use our near we're a them ability to new sold not scale, being have constrained of that those people, solution. regards. we business funds, win, But we traditionally for our a with, in kind nowhere relationship which but have

Gavin Parsons

helpful. it. talked we Got That's in while. And I think a about haven't JEDI

JEDI the roll updated has companies on on out? maybe there thoughts view them there of the more a Just your the whether with increased something space, or in is partner in threat like opportunity any non-traditional aspirations to

Roger Krone

award course, not a of forward prediction there'll made JEDI JEDI will relatively is soon. bidder we're and that Well, on and Yes. our be go

And have done customer. that great this with work transformation the relationships people. the spends ratio goals spend and of have people customer amount the agencies. I able a providers. with operate the objectives of we off for to eventual our the by say money the their certified and capable and customers be of IT reduce to all -- tail have we cost mission change with see of cloud of that right way hosting the digital have providing to the AWS all would that we back Azure the We offers we certified cloud just We as further offices programs

capability. look reached And and to cloud utilize better help we're in competitors partners So all the have customer hosting like They thrilled. the again, come for their mission us out.

Gavin Parsons

Got it. Thank you.

Operator

proceed Our is with your from Please Tobey of next line question. SunTrust question Robinson. Summer the with

Tobey Summer

Thanks.

contracts attain a Company's the was now the the level, everything couple there those you if segments? times and of about want is or I segment are of commented easy competition. an you of at questions the in echelon at beyond wondering size You on reach scale can you contracts

Roger Krone

Let me if follow up. answer the question I think not, you and asked,

dollar we a as countries, U.S., further Leidos although scope in the a segments, we see the where we they United billions that of also on equivalent the work. in can scale, any select size go in level enough at operations the that customer they few bid comment, and also would having answer is true in scale. may to Australia, four true question And are significant space? other U.S. back and view the we and hundreds and where that's is, So, after contract and it the large of of reach have scale which they free millions have corporate The you Kingdom feel and therefore, is, And the are I in absolutely. for have might

really is where do collaboration what environment we create And have the an to to at Company strive natural. is

and LInC, And other to so, to as learning across. the a competitions. to have need, leverage that capability learning out they ability if they'll has Leidos don't our the Company our Innovation after quite late, of all talk CTO maybe in that Health feels and have machine contributed will seek depth groups really pull to and going in the what success the across be we Leidos Council like some they they CTO they is the Group Center, and of machine in that in of able knows the And the

Tobey Summer

on what employer? comment prospective why tell the employees ramp to and then, of an choose I Leidos you And as they Could to Roger, you. GENESIS? us you the contour also is expected Thank should was as maybe curious, could pitch

Roger Krone

Yes.

end. go Okay, to I'll try the we're quick. great. And near

we program, involved deployments and are We've the sequential. by now two orders. changed actively they on in all, GENESIS of of First the are wave longer no way, the kind

So we're implementing a wave wave and one four.

last and those we're began June. involved four fully week wave And so, of

probably that We add have that, wave three years, next every we will for ongoing. more maybe another expect two to means And months. about than waves three the

should and late And see in occurring so ramp early that XXXX says that a the peak we probably XXXX, or activity XXXX.

agreed have the We've schedule. the down. locked with a been deployment customer That We great on has got team.

has Our progress. supportive. making DHA been customer We're terrific really, really

So hitting really its is that program stride.

to do do, like We talk we surveys, On Leidos? everything why employees the we way come in. we people to on

three to who talk people employees reasons also are come. think We We that leave. there

that we First work of they love the do. is, the nature

important a whether customers, the health have mission. security the payments, very national love employee level, security, that. United very, which social at transforming support of be national are most our States, in it Intel We organizations, We

their people. work people to opportunity, And that the then, continuing the love. love to growth is the the we attract at lifelong they larger is, the to professional Leidos. reeducation a on programs, be rewarded responsibility It have which move ability our be Second people to opportunities is, frankly with, here that their so third great they programs, development, skill and performance, creates more, set, eventually, for they the the organization Company, our come to work professional great and certificate and be see to grow more to a and for programs, just up learners the cycle environment of to and leader do

Tobey Summer

you. Thank

Operator

Thank you.

the turn for the call question-and-answer I reached our to over end Kelly closing And have remarks. Hernandez session. We of now will

Kelly Hernandez

Thank in a your great day. Rob. you, forward your to you We for again Leidos. and time for Have interest you next quarter. morning all Thank this updating look

Operator

conference. today's concludes This

you at lines your disconnect participation. may time. Thank for this You your

Leidos (LDOS) 30 Jul 192019 Q2 Earnings call transcript