LDOS - Earnings call transcript Q1 2024

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Operator

Greetings, and welcome to Leidos First Quarter 2024 Earnings Conference Call. At this time, all participants are in a lister-only mode. A brief question-and-answer session will follow the formal presentation. Please note this conference is being recorded.

At this time, I'll turn the conference over to Stuart Davis from Investor Relations. begin. may you Stuart,

Stuart Davis

and our everyone. XXXX First Call. operator, welcome Earnings like you to Quarter good you, I'd morning, to Conference Thank Fiscal Year

me you'll webcast presentation use on and Investor Relations supplemental our Financial Joining financial our slides Today's the the Tom during website, earnings of our and where Officer. being we'll Cage, find today's Chief CEO; is call portion are today also that Chris call. Bell, release

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

during slides. shown in call non-GAAP the on GAAP and reconciliation X, presentation measures. included two is as and discuss Slide financial release we'll A between press the today's Finally,

turn on Bell, the Tom call to With X. that, Slide I'll over begin will who

Thomas Bell

everyone. steps you, start for you to substantial robust position around and and very Thank some year Stuart, I'm a full for in future. to purposeful report additional It's good XXXX, our awesome today. very And raise the again a Leidos be we're guidance thrilled with taking to good to Leidos details morning, an

of challenges quarter The vexing excellent and passion with a of addressing starting the delivering got and an our Leidos pace, bottom out team customers' and blocks impressively most line result, year, as top this results.

all X.X% grew year-over-year, revenue organically. quarter First

our the organization unlocking a First demonstrate grew Leidos. These And capability-based quarter for year-over-year is record that EPS XX.X%, across XX%. company. was value margin non-GAAP results significant adjusted EBITDA new

million open began as promised, our repurchasing program stock the quarter. on market the With shares by of XXXX good cash worth buyback during we generation, $XXX

budget for I a customer call, XXXX resources uncertain very that have passed confidently very year federal XXXX against their appropriations good of our with need place, Senate earnings And now initial House remember during our in the environment. in guidance then, direction Leidos funding missions. XXXX government. the the last the backdrop framed Happily, a to You'll for and since and all they have customers execute and our

certainty that we our realignment success our increased team's near-term confidence strong organizational the our and the budget, to of our quick start With have growth customers' in year, in prospects.

increasing exceed the As financial in our far are commitments. such, new now will our we to significantly detail guidance XXXX previous our multi-year expect guidance Chris XXXX and later call.

for As remain people at first our Leidos, out I capability and shareholders. of helm of to year our the deliver my round with customers the I impressed

quarters, XX.X% XX%. revenue development. we've maintained the free and non-GAAP Over EBITDA last X rigorous EPS IRAD has and margins adjusted delivered and of of conversion XXX%. grown flow grown in cash X% business And investments We've has

possible to refine at business. around been able that Leidos, pleased very conversation about a I'm healthy Leidos profitability. especially we've here what's the is indeed

So of future. my for additional like details prepared the to share Leidos steps remainder for purposeful position an are we about I'd taking awesome to the remarks, some

growth capabilities-focused continuing our and to developing increasing growth achieving full a third, and value-creating, on distinct X in profit unlock superior execution and by elements: first, technologies; robust We are disruptive organization; Leidos' focusing in value profitable organic new propelling merit-based flawless key investment and second, strategy.

elements Let through you. me walk of these each with

And wins continue quick value going to First, our we're will achieving significant that the happy we're unlock realignment. with move we're very this from anticipating capability-based organizational forward.

better first our consolidating a international truly commercial by we're for into customers. serve segment to now example, able time, single and our For global business the

becoming which are, that allies even help February, a efforts partners growing had Conference. pervasive and to made clear In our to was the threats attend global collective and affair, I opportunity It fact, are Munich Security in the our more sobering crucial. abundantly

and where and the of the To help, how technical custom future leading-edge more Leidos you interoperability battlefields an can demand solutions. new idea of ever global give

the valuable allies with As and we world, collaborate gain customers insights into issues our we around across their borders. interconnected

integrates one together. U.S. enables a correlate to critical and respond to Australia, better whole to realignment AUKUS more globally, into closely opportunity even touch Leidos' the a Security their of partnership organization the all Leidos international Trilateral needs. quickly and points customer us work Our which seek solution unique with our Also, represents as U.K. emerging for the

is autonomy, The segment is serve Leidos' warfare. new ambitions advanced of AUKUS a our sharing, to list This positioned these reads Leidos International electronic like of cyber, focus and X information seamless through Commercial hypersonics, catalog strength. and other. Pillar uniquely AI like believe We no

continue will investment distinct to technologies. we organic in disruptive accelerate Second,

lead of On sharpening foundational our to portfolio or technology turn of this core Leidos. highlighted into deep. our that Nearly can the confidently prowess innovation is and my at role, I remain first a impressive, market bolts, technologies, Leidos Continually golden to year earnings I I technology North the a broad call as Star. what reaffirm call, cutting-edge

call innovation AI, and robust Trusted focus we cyber, software. truly life. is people maintain the across to free customer pipeline in IRAD partnership Smart but what have rapid organic commercial prowess bring best-in-class immense we accelerators, to best-in-class with Making Mission staffed program Smarter full-spectrum solution a technologies, entire incredibly secure Leidos, particular and At combine in a set. smart remaining passion resulting we everywhere, who each, And a on In work the with technical we

practically our Trusted and AI solutions. customer the Let's portfolio breadth one accelerators. Mission these talk integral spans of in is about all our of

AI deliver missions. complex and Our Mission for most humans outcomes a as Trusted customers' our way we rapid partner to the secure work solutions in high-quality, transforming

to where to ever-changing exploit leveraging the community, contracts amounts address vast of several security large we have Trusted classified For challenges. data we're Mission example, national intelligence AI across

developing This use cyber in has allows defeating attacks automate unique the our tools of the defenses. novel In averting These the foreseeing, us cyber occur. realm, discovery years vulnerabilities to cyber defenses Crucial to next and team new deploy of the generation and development solution before experts of defensive of risks. last tools. AI X the spent proactively

In first proven vessels is generation generation several the transited anchors work. that which of Mission part unmanned unmanned autonomous We've Mission AI as for Pacific the AI Navy, a we're built Systems, and Defense applying now the vessels. enabling task to of this U.S. next of recently manned, the all Trusted autonomy technology Trusted of force, twice our the technology surface

Generative efficiently, real leveraging best quantifiable This our software IT, our the position relationships technology enables to impact. generation emerging customers. more to providers us AI bring our to we're In delivering the and with key exclusive of of operate latest uniquely to customers

couple share Let me a of here. examples

productivity way customer coding in a just transform combining power, most knowledge their software. the government into commercial months, In know software assistant increases environments. customer secure to solutions with we GenAI And of develop the X/X. Our partnership with we've Sourcegraph are these even leverages few by development tools' we unparalleled cutting-edge, deployable their proven our

gives partnership to We've exclusive of the bring technology automated us Leidos in IT environment service best within requests. customers completely desk the service differentiated have deployed with and solutions. a Moveworks our Our already their ability GenAI-based thousands of IT processing

begin meet more on invite in our of you AI. event, of like to smart XX across just Trusted solutions all of give Our positions solutions AI than demand June. our especially AI the examples at our growing solutions here I selling Reston and customers. our customer to a these into meet but labor our leadership see if people, focus sense be our an our to we bolts, you'd But some to integrating global action trust Investors Mission uniquely on position Mission will AI for you in Trusted golden wicked us rather I hosting in headquarters

update I'd to Finally, decade of the give like for on second our you Leidos' development growth. of an strategy

I deep structured of during strategic the this a conversations are with year you now this be And want share some did principles complete to of effort until our will guiding As formally business. our whole across I call, next high-level mentioned early not work. that while is last the year,

exploit in models, upcoming of expand the strengths, building seeking our conscious repeatable logical, uncovering AI our power Mission unique potential, markets. closely and down areas do, a competitive speed adjacent Leidos opportunities on into discriminator, greatest of everything core of Principles be will we the investing differentially into growth strategy to doubling making Trusted business to

us will stay to best. principles true to enable what we do guiding These

emerging about our think in capital near to cash While generation strategic view opportunities on in deployment to quick respond we committed and a management focus note, to a our and the remain I returns disciplined we continue the are pace our at will market. policy that being strategy, as to Also capacity key term. shareholder importantly, assets. sheet continuing balance as of

year. closing, we're great off this start to fiscal In a

shareholders customers, committed smarter are other. outcomes to deliver building We our successes our on and each and for

think strategy. bigger, to and we and see so be XXXX tremendous to push boundaries am continue We'll the best challenge Leidos' that ourselves crystallizing year a As confident compelling growth far. I achievements will

the to I'll first pass With call Chris the for financial results year. quarter our the you promises financial that, full to and for discuss to Chris? our

Chris Cage

for and today. us Tom, to Thanks, thanks everyone joining

our operating expectations. great new surpassing a was organization in first far quarter initial The one, our

and profit year, reporting context year top segment's relentless in track to a efficiency performance. bottom of While an on was full on and focus are led line Civil Health standout, cash the in innovation deliver each of segment. performance into these every results revenue, Putting above-plan well to we and operational the exceptional and

were quarter place, billion, Slide missions. customers income statement execute X.X% in $X.XX in the vital appropriations on teams year-over-year. for to top us enabled profitability. first to up the working first line our growth the X. to Turning quarter record are achieve With with their on Revenues Strong

for XX% was and of diluted quarter, explosive growth the XX.X%. basis XX%, respectively. Non-GAAP income increased earnings' Adjusted was to operating $X.XX, the million EPS EBITDA EBITDA million up year-over-year, non-GAAP XXX was result and $XXX This was points core margin $XXX up net and performance. XX% adjusted

line us objectives. of position have compared offset expense higher business longer-term year period. but support lower share net our bottom slightly the The in rate favorable strategic the boosted only was a of and count execution net continue to to a cash prior This interest our performance the tax by not put reinvesting flows, to impact slightly a wholly across

segment to programs, year-over-year. DES volumes on Sentinel which Slide Digital the X. Turning revenues and the more in increased growth offset X% and Security drivers focused on XXXX. the largest early than were loss catalysts National box increased The

increased Health points quarter year XX% XXX income up increased Digital prior year and and XX.X% strong achievements, margin basis XX%, from operating year also excellent margin operating program from Civil Security in non-GAAP milestone control to ago. and prior the with over at cost a came and the National XX.X% some revenues income quarter non-GAAP execution.

volumes year with the but driver entered around portfolio. we're profitability and revenue investing we're although veterans. exam increased to drive The We delivering throughput, increased job across primary at tempered improving was of reservers our volumes higher And team active nation's cases. growth complexity Act the health optimizing expectations services seeing heavily managed on resources and the exceptional efficiency, PACT amazing duty and an did to service members, medical

Commercial revenues deliveries increased SES and business structure, compared of operating products, including X%, portfolio. and the international non-GAAP year. a made the product of prior the X.X% income improved margin up had was seeing changes increased to cost in impact rationalize geographic the we're supply and basis points chain We security and XXX and we leaner

time for our the since security not the I'm team this recovery year. done optimizing performance in is and their proud products fully work Though of business, last

points of revenue X% with full were points to sequentially margins we XX ISR airborne non-GAAP our and the increased basis this declined businesses. margin Defense Systems Systems for the year. segment quarter basis hypersonics Defense for X% increased volumes year-over-year improvement prior and year committed XXX remain but up operating in over Finally,

$XX cash $XXX million we a million in including the of free sheet generated $XXX a of now ago. and worth cash In $X.X of repurchased was XX dividends. quarter million market on net on Slide balance and operating X. cash and cash debt. and equivalents Turning cash unchanged QX, We million flow. paid for to flow the from million million days, and of activities DSO the from with open $XXX billion flow in $XX shares the $XX ended quarter year of We

goes ratio our below gross X.Xx, now at leverage target. Our Xx comfortably

On to Slide X. the on forward outlook

we poised the metrics. an to all to look we are expect revenue ahead the and improved $XX we on for outlook, to guidance $XXX rest are and our billion, As of building. raising momentum we've strong now of $XX.X fiscal QX XXXX been the the on billion We between range. capitalize our Based year increase XXXX, million

non-GAAP and flow which to improving diluted for EBITDA $X.XX. EPS raising mid- revenue high range we're full new Our adjusted margin And the profitability our billion range With an raising margin $XXX for target to record by finally, is fiscal to operating a year. year. would cash we're XX%, $X.XX by outlook, our approximately $X.X new a be to of $X.XX million

a outlook quarter, under multibillion-dollar first new both is a April trailing of The and billion, guidance award work updated growth and X, net for $XXX a the We're our protest, classified business which objectives. total on is which received our support we and this positive months. $X.X a year award Defense booked we quarterly to Underpinning on translated bookings to X.Xx X.Xx are expect XX the development. that currently development for seeing positive business a momentum a Systems of awards for this In Leidos. million book-to-bill excludes quarter, of

guidance. let give Finally, sector-specific you that movements year some full our me color

high. to the we then, if complexity have of volumes medical remain highlighted actually Health increased quarter volumes and PACT had cases. potential Civil fourth outperform given examination the Act the On Since that call,

should second better. of or quarter levels little performance The similar a see even

However, of to some as early. burned recompete the of them volumes, a VBA increased result has contracts the we'll and have than through planned, sooner its

moderate partner performance in a are back best-in-class to long-standing VA, trusted process. mission Health and are We the for the service to of through positioned but to year the continue competitive we Civil well half planning the our the as segment in

in segments growth quarter the Commercial and First International anticipated. robust revenue than was Systems Defense more

relatively for see still both full we we performance revenue year see segments, growth the Although some in potential as flat.

to begin revenue. its on of Defense to And products developmental International, some and is some Systems we will still Commercial the working geographies exited weigh SES and In mature programs. of

signals to in deliver certainty, across confident ranges. together, this Taken these and segments seen we our positive within with demand funding performance X the feel new all ability quarter,

that, questions. take to With operator, we're some ready

Operator

the Stifel. Bert first Subin [Operator question with comes line Instructions] Our from of

Bert Subin

Is profitable on evaluate wanted phenomenon to year that case right the best PACT Tom, to each. when be growing supporting you a you longer being based that Civil. I a about of your capital allocation you being use ago, like business to return is guess, put now case started, business is a for and capital It seem would the each said on Or there and well? Act? term for the business most fastest Health in driven to by near-term as capital

Thomas Bell

year process. that prepared in I do I what in strategic believe we for the say merit-based bottom this business thinking we is I and Leidos. because analyzing is as of cases of in use line did for a that, and doing top strategy business line superior XXXX deep all my mentioned capital draw sub remarks are the cases where the and growth a undertake best to

done. positioned been dividends strategy paying we've and the is so are Leidos' to our that in care has that under well seed not And leadership the put increased is way. demands result, business even we're have managed a so is business process our emerging that some respond in to come absolutely this reason in in able as health areas though now, that to the corn investments the And year, fact, yes, made

for very about to how strategy ideas So future and last very we businesses we've excited that the strategy we're invest, which And got We're about to emerging we're process. position seeing where benefit process that excited through to great from the of are about year made decisions invest past underway. growth.

add you Chris, to want did that? to anything

Chris Cage

and about, positioned Health be continuing. strategy to too. and organization are for see we're to Civil deliver that. excellent we But investment be it's the where for point, standout, parts excited there just portfolio do a -- we to veterans multiyear I Tom's rewarded the obviously, very of and results been a that other us been And are our has and momentum that's

same other our And broadly. things that so AI the thinking organization Health I benefited investments our some wouldn't focus made Civil solely we've center like have the and limit on the results apply in Civil. and investments to of at Health at and And and capabilities from time,

as strategies see and you'll those unfolds. see accelerate continue to you'll So the those us continue, year investments

Bert Subin

just there. And and That's it -- spent you Tom, Chris, mentioned great. you

minutes prepared talking You several your spent about AI. in remarks

for has on think I AI like of sales what your win leader in lot credit break a being of taken out impacts and of sort industry on peers their some and are steps rate their gets the how one to the certain contracts. it

examples? business think we of us It seems And confident like forward? some quite your with Are about to like there there. it there Or bit it's numbers pretty positioning you're AI are you in can your you're as VA. give what just Health would to some doing in sort better go sort related of seem helped a the

Thomas Bell

Yes. people decide same market fun the thing look Bert. and ways. prosecute at to it yes, many thanks, is different And about Well, capitalism in the

we looking ourselves key how We aware a world. see AI value we a that our challenges, huge world forward. We are solutions unlocking and enabler think at we AI selling as itself. our that Trusted the unto market We're it's the as customer labor not for difficult providers competitors That's space. and see the to and as Mission see solution into bring superior customers see

spirit target. antidotal breaking as evidence. you to So in to your share of continue the going out I we're questions, a some avoid specific can with AI But

improve exams. in of while the those we've that has us about AI, of instance, been quality $X investing billion to For deployment on enabled health

tools enable command systems, to and each AI of systems some aggregate in security AI by to We've We've control able our to put able and there. systems have that been things effects. linking words, other airport together unmanned AI speak business will their result we that unlocks. help unmanned our the in the the efficiency in us SES quickly able been is put to of have our our other embedded been throughput in clinics we've to In the direct solutions

So Trusted means the we're is that continue to but to end something not you going on Mission of I And that hope to to AI more. serving as XXth even see differentiation understand a us missions. customer join an can June

Operator

Tobey comes the line of question Securities. next from with Our Truist Sommer

Jasper Bibb

Tobey. on for Bibb Jasper is This

raised think on then call, last range sustainably off. guides the I significantly you base mid- XX% about quarter. grow 'XX initial a guidance you margin And as talked high this to the

are looking margins progress on the I made you So forward, given thinking how year? about you've already guess this progression

Chris Cage

pleased it with Obviously, really and year. prepared strong. we thanks for got It of very Health wasn't the just in of we're indicated to Civil the business. gate Jasper, remarks, Yes, start the that, the And our teams right. our all as was out

so obviously, And that, We outlook be strong year the year full that's has now our mid- unfolds. XX%. aren't that we're that portfolio, for across updated margin in think been to a as on the ahead some of think had we of to And performance parts but Systems, the area Defense QX, example, business but an which yet first will both International basis. be you performance Commercial will they that expect good quarters, where about of high and

continue the how the for through year the is out QX, in there potential half business the there this competitive uplift see there's over And QX, year of of of level to and this for back we and what indicated, to on recompetes Health this sustained but into QX and future. and Civil, plays we'll the process momentum, So have the into 'XX. is certainly course performance this through that

Thomas Bell

team a embraced they've bit, culture. a Just pivoting concept this off of to little for the whole want shout-out promises-made, I to promises-kept how that of give

continuing quarter perform committed So the to our a are they first business, in standout the while Health not through to year. only we business have performance

to excited to current in next gives So really strategy very and invest of heights. we're future our degrees our growth differentially hit that our and about confident in us the propel great to we're the very ability freedom range,

Jasper Bibb

driven Health part what the had mentioned the for That segment makes growth in on you quarter. of then were the as margins sense. Leidos in in curious the side managed of legacy and segment quarter. trends And Civil improvement this the health guess programs Civil first just I the

Chris Cage

as together, a energy Yes. see and the some that and it's programs the more in team Leidos the bringing there. part are And of that about the The in across we all equation. of Civil businesses any has excellent those portfolio synergies and personnel to the gate. on extended of software It solid particular Civil wouldn't the both there's I that sides capabilities was portfolio. the standouts in first out think be quarter can

certain we're look -- unfolds, for international the especially to particular we and cetera, et at interest on a area of us. that FAA our as forward So and momentum where extend that can looking building business to year as customers, as capabilities

Thomas Bell

a that business. stomp we're not bit without the on having a I Health of go can't side let little But foot great of in the performance question the

to continuing there. invest are in We innovation

just number comments, total mentioned XXXX. to Leidos exams have were innovations to financial that, the that than about is veterans us the by of built do and serve results COVID that and some XX% now serve results for over his the some Bert us to this of able homebound veterans of before investments behind as are in crisis veterans the XX%. are our in asked VBA And by More rural allowed increasing Chris that we're the increase the our better better puts during the that able to in we're by position XX%, us even XXXX. And served in volume

Leidos' the investments but about part that enabling we've veterans our take to unlock to and portfolio, are to unlock the technology capability serving particular. this portfolio results. then very made the in So veterans We're the clinics us of whole financial in volume in of not and are ways only the excited

Operator

comes next Kahyaoglu from with question of Jefferies. Sheila Our the line

Sheila Kahyaoglu

the to great choosing Leidos candidate, team. the Board Tom, whole Kudos the results, clearly, Leidos right for

in of and how downside PACT frame remarks moderation. little Chris about So there? maybe it Act Can in it terms scenarios the maybe upside you should we on and we talked think Health, about a mentioned bit his the

Thomas Bell

Yes.

very contract on forward. PACT Act a racing in But ceiling Administration, early. -- Veterans volume good value position behalf reaching Chris contract unique are to liquidate and that to comments, of will they recompete feel the Administration as they that about that the his may mentioned We're to So and for puts the volumes pressure and have Veterans on that. have the in

However, great veterans in very to this in continue position we've capabilities confident the for feel technology, got nation. team we have recompete. We to and that serve a the the assembled

in to RFP said so in exactly we've And we're while, very in out. the going Chris the good serve his being the just the Chris? for and that, our of veterans profitability year unsure moderation put that because a a half We as that's its Veterans second is nation that's That's and how business provisioned comments, very slight competitive we business some our of to dynamics Administration a in. business feel can can continue continue grow to we robustly. and that of

Chris Cage

the we add, gotten just I'd continue in service increasing our excellent We'll yet invest the cases, strongest signal the number to And the and we see of not of volume customer invested. should throughput complexity Sheila, that the for the from those drive ability Yes, drive continuing of just to We've I veterans. mean, have into it's it's XXXX. remain that activity cases. elevated, and

So aided we're, well first experiences. believe, I can of quite with our as the where make of that, served were say it sure that we're innings play too. which strong, continue to going fees thing and accordingly this veterans still would incentive quarter wasn't are part out, results, early by in we great invest to even to

time. over So opportunities that performance still there's some drive higher to

like right in how positioned now. we're that business really I So

Sheila Kahyaoglu

year-on-year. they sequentially on bps And XXX better then but Defense down margins, maybe were Systems

maybe there profitability? we do terms of about focusing Dynetics, in in think milestones just So the on how improvement key

Chris Cage

Yes.

and way a of the actually team. ahead out mean, Dynetics we leading pace. There is said of we're quarter. we in margins Leidos getting to the gates and over business that specific one the are over cetera, tracking, remarks, of But structure. of time, drive Cindy, focused completed pleased which as We're just higher rate integrated in I HR, et fully So with of our all end couple that's performed set the things last whether her we're first financial, at things we're systems, with into some our we the on year, this of

And so part there's that resource are that. sharing, more efficiencies of unlocked lot as a collaboration,

an and program exciting that very will identify of unfolds. And and year that's the performance in talent rest our of upgrades profitability drive we've Leidos, and our program area along and strength finally, we that's the upgrades, can into So next this higher it's area that a higher seen transitioning year mile as then process execution. improvements phase an It's markers that of keep incorporated key the the programs. next team are and to out feel most well the know sometimes are to think we've We bidding. early been bids the about are programs, lessons on and profitable, round those putting I are that And into developmental and positioned of not growing learned, those applied we business. phases good win the has they

Thomas Bell

less all with and I year full their I'm mentioned to performance to earlier I just and promises-made, for And I up keeping their operandi, -- Chris the Yes. Sheila. and or foot-stomped meeting is about businesses foot very team an stomp that committed exceeding the for, modus amongst to report the very promises-kept results, the happy year a Cindy that hoped to but we bit, comment full and little a and as committed her commitments she year perhaps than robust by them, have start to might to those. are undeterred

Operator

comes line with Seifman the JPMorgan. of Our question next Seth from

Rocco J Barbero

seen supported on we normalize? expect the Or the then is the quarters? there rate National Seth. margins, and coming should This quarter. QX, to milestones in On Digital the recompete? margin the QX ] think margins about as be is should as on Civil, mid-teens pending strongest in back as stronger the the half we and Health business, expected but the [ falling achievements margin And Should additional Security milestone for obviously, Rocco in into

Chris Cage

start execution Obviously, team and Security National is excellent I'll on. it. because consistently expect and they've jump delivered what Yes, we Tom from that Digital, can program

to award to anticipate but against on the fees them. out you'll they able do way bet knock not park have that continued of you're sometimes And it so, I wouldn't

level started the half that there's was color So be yes, a exceed it process. there. that. we the to strength there we possibility give the some as year, we'll And mid-teens -- closer on we to we and get We'll continue be execution when through the to We've even potential, for relates in second when think program could you and as QX. And it reasonable expectation the of in signaled to year. exceeded able the year, Health I the a better see continue that, Health, as that recompete than to and we'll better Civil,

Thomas Bell

culture, say whole promises-kept just would promises-made, I uninvites overperformance. never that my

to I and welcomed. and all Overperformance year is his work in are is overperform as future. And going have so the team overperformance every look to achieve understood both this goal confidence, a and we to Roy

haven't about it very robust. And our more and yet, National very Digital pipeline and our space. Roy's it business more We than and in talked robust Security in exciting exciting is development but is business, nowhere

make we marketplace the So only Steve to working he the deliver are very to now in results but and in the X future, positioned results years. to not hard win deliver sure are for to next

Rocco J Barbero

year to limit is when Systems And the this changing we expect Great. should growth? hypersonics or drive business Defense to then growth

Thomas Bell

and go But disappointed Tranche that's we're people the Army X, to several for their it's forward. Obviously, customers serve And progressing capabilities that We've of are maintain of Enduring Well, program and for payload were this we've them LRIP a wide around got to yes, problem, got our at avenues to And solve we year. And to excited technology with wasn't wicked what's week, our and we're from we're want with very in well year, prowess a the view test focused take how the end regard with conversations our decision an one. hopeful we've in one in happening the but while the this very obviously that of understanding prime standpoint. IFPC our threat program this nation very that hypersonics selected, our we're to not for of areas Shield. working is working about market expectation is on they our we wicked in That the having customers. of lot business. only hypersonics proven field through programs. in want smart several where robust Defense they and hard fact, Systems that a

and only hypersonics currently necking our is areas, effectively. prosecuting but we're of to excited suite the isn't about Defense on, So very and capabilities those one of down we're focused business hypersonics,

Operator

question from next Wells Matt with Fargo. Akers line Our the comes of

Matthew Akers

comment security you products if I could the wonder business. on

said remarks, work you I optimizing be in think done that. still to there's prepared the

curious big So to about that I talked then some of if on think I of decided was just these how year. you -- that about you should last we kind products some you've are And touch you in-sourcing could products exit? think

Thomas Bell

the time we of the they Chris, for that the Leidos that of into strategy how great part the and to and we being are They to is glasses. a the as way in what possible. We a at looking taken early for excited the they've certain conversation have how we about and exit very at weren't Leidos did and the into we last it pragmatists, through geographies, rose-colored our positively best decided they're into and excited refine you'd proud and we're still degree We're not year, those we're the actually are continued add? We about year. marketplace spending prosecute market place looking inclined last the at market for perform. the future. looking to be through that lot talked very year a where the last business. happy I'm But because as that we and offering engaged, become actions it's anything swift they and team they're while They're through grow strategy world the her very very, we commoditized see. business next. expect products about since innings, that of unfolds on Vicki opportunities And year And to

Chris Cage

facility add, the And lay getting mean, next will be and I leadership eyes our the week teams up about we're ourselves. I doing Charleston would been excited just there Actually, there. a down good on job And it to have running. team

we're to I screening So a differentiation, There's on positions, technical of won't But have portfolio. seeing pulling has a we're which specifics people focused leadership we out that ones get where a of time. looking for we're the strength forward been long about of that. business clearly, variety into products.

down will be with double on. to You stick that something continue can and imagine we

et changes that make and we're suite cetera, those some equipment, borders have baggage, excellent the there and pockets are to but we have of -- We check accordingly. port checkpoint baggage evaluate positioned of where to just continue

Matthew Akers

that a have up ask to ramp I Great. this And way think the bit on the the for might year. that to CapEx. of year? I little to then year? also of $XXX about but is the want sort start A And slow missed it, right does million still

Chris Cage

of we ramp them and the of of proud ways we for out can capabilities, few see Diego this the of you'll still there. and customer summer, get in our also ask facility We've and little facility when we're on that's the get Matt, work to completed bit that But And et disciplined things to be that classified our Diego Yes, teams there's in lot our a unmanned reserve brand-new interesting San allocate going cetera. are got San for in a to a we demos, be smart front a tests, approvals. even teams up. budget, looking

that we'll a we that bit, ramp little expect to to manage tightly. but So continue up

Thomas Bell

Chris bit. of of there. a be mentioned in will just doing world-class team nation. great and the job terms a Diego is facility little the building standards up latest that San our foot-stomp to I'll security We're the

will opportunities the And the as and the them that most. as serve on about at the the very therefore, conversations so opportunity, that Coast have facilities better are we're and our and good for classification customers than we'll highest West levels. with And to us any unlock excited

Operator

Poponak Our next Sachs. with line Goldman of from question Noah the comes

Noah Poponak

XX% last the without of XX% shake little and just getting what in company go same should out? about on normal margin this depending of Health as a of be half Leidos thing bit quarter, margins, time margin the forward we but kind a guess of where business? frame as the the ourselves, back with Or ahead Systems EBITDA just mid-XXs that year over on beyond Defense putting you're all EBITDA guess more plus you despite and even a year, I the total So is Civil thinking it, I on saying Health margin. and

Thomas Bell

and we're suggesting were wrapping up us beyond. when for Well, no, talking we people and guiding year, year, we being over high-XXs to last where the me But the were be I about might XX%. chastising business XXXX in point we we're not remember were

we Now potential the smart we're preconceived going be to grow notions at we to can decisions. to a going see bank expand to the where business better to but over commitment maintain That's and certain areas full business. and proving not make into locked We're And is certain is. want XX% gains this get a exploit of of good. and go, We're we want not always very margins level. to what eager those to other

this we'll we've eager in anything? And year, as XXXX. can to be very guided that. better as or to commitment is So you prosecute our XXs meet see if high we Chris, XXXX, we

Chris Cage

Well, mid- here just points team from no, away to your But models. made. sure the on XXs. make I want are their high run Tom, to doesn't us well

to direction. And invest and reached have going lines demand. that we're potential, ahead in of the made, haven't stay driving we we we're I business to capitalizing their of full continue them to that that think gains on

But this that see going and unlock evaluate things So can business opportunities continue where to to has those lot potential, have are, it. Noah. those are we're you of to clearly, we'll a

Noah Poponak

The does like kind funded number. there the make a lot Tom, but and stated to Are sound or the has of past, as backlog proposal. flatter that in changes it's it BNP you're time the the And number It's expecting improve all-in company it's you total pretty this been side? should be decent, Okay. you -- and book-to-bill, through you're funded take little more on making any numbers of you making to changes on sounds we book-to-bill It higher positive expecting or had growth been your guess. numbers I seen in well. that a on bid those year? Or

Thomas Bell

a yes, profitably, focused us And in the team on vision to execute right we've being put place for business the profitable growing growth.

refined pipeline the after so right business. go aggressively is not And business, to the all being

of all my for not rightly of And a accordingly. priming our understand out, We've because You call book-to-bill the Leidos, ratios good the people remember pump is not business pipeline healthy are these one they sayings, got fool's you a that message of fan as mission. backlog, quarterly and I'm big a business.

to health pipeline on focus year, we're the year up opportunities good embarrassed thing year-over-year. not as right growth. And do calls. of in of there future that got. profitable a takeaway number the to by brag of got have looking a huge things. us. half latter on All backlog, We've on hoping wait backlog see to growth. we've is front we're improve goes in significant a we've The this we're of got that X% about It's And on. to robust and the businesses a pipelines and new But are businesses yes, those of And

Operator

with Our von question of the line Cai from Rumohr TD next comes Cowen.

Cai Von Rumohr

exams, medical numbers. terrific on work good Tom,

that mentioned ceiling you might we terms might new any you expect the ceiling? when approximately when approaching us a you the range time of that exam. medical give in So frame hit on you're Can And us tell can of RFP? you

Chris Cage

the the when has is Chris. and place. put didn't coming veterans, Again, customer we're our volumes were team original serve that work, and done it's in Cai, the been great to this see proud contracts

issue is process. We we'd entirely that ceiling that time differently. our upon control beginning expectation It's quarters of extend towards. of in this the vehicle they've authorization line over and should structured play exam the the time them based an run and once So give of culminate place actually stay competitive our next new already working to justification we're year contractual quarter. on it's a to not that's to Obviously, by fiscal within volume, our if government have is process things fourth but that out had couple believe the end track, to

Thomas Bell

nation our afford Cai, gap appreciate us. for have the is fact can capability served that critical Obviously, you'll who the those

served. they make be our sure with that veterans system make very working with the to positioned Veterans that our keep dialogue And and the we're appreciative to we're sure of is are we Administration so very alacrity whole serving the continue much And how veterans in adequately. them around to

Cai Von Rumohr

it. Got

and the business. bids that other any done the be so of might next you've attract well do risk of about lots way got you're thought I same most how next bidders. doing so obviously, assume, better profit so at structured would the you visibility than opportunity lots or VA structure this any And there because Is there's the that all services thought because has that RFP? Or or might not to the have

Thomas Bell

no, compete we're very Cai, assembled is the that that done, our in Veterans to adjust our Administration. Exactly what our made They're think the I on good to rules But we through investment the decides the will in to the to to do, serve the themselves. serve the continue team to incentives confident feel return what facilitation that, we in technology we've the and nation answer and very a be that we've the nation's still continue veterans. in don't we'll long But the deployed, place we've known short we've and working are yet. time. accordingly investments adequately and whatever work make and next are and RFP an and customer adequate

profits fact veterans effectively. We're so serving we do. deterred here Veterans The we're our the us we're is making exactly has doing this. because what to are Administration We're by incentivized excited. robust actually So not

get coming is And customer and so they clinic into care the QTC we best-in-class. reputation have better than good any. And is And veterans served, the it's customer news a a the the health get story. who Leidos service quality

very and way. our to So we're it serve about nation this very excited eager continue to in

Operator

comes line of with from next Melius Our question Spingarn the Robert Research.

Robert Spingarn

billable costs And passed from can shareholders in of it lower does materials with and competitors than the efficiency to industry automated or generate might value from wondering little or reduced AI, more that So you case, is through that of time consultants to more if hours. the just to and about to XX% and This plus question, efficiently be talked rather and back the your of more the big-picture that lead accrue AI, being customer? and work Tom, you how I'm all presumably done I contracts. And bit cost wanted a sales it's perspective, your but a start about earlier.

Thomas Bell

the best and what it technologies in is looking remarks, conduit Rob, becoming prepared really we're my space. at with from and commercial government practices GenAI mentioned I AI, into that

people You'll the that anybody space appreciate know well Leidos Leidos a have as in whole particular, the the and that and of systems and like complications government government very idiosyncrasies bunch well. fact as

does just value-added AI don't that forget. that a do our I things allows So people to deploy team able more go with focused What remarks the We're very keen prepared human. trite, it my Trusted does we're to on of cut and it to use customers. into Moveworks best-in-class capabilities down integrating our is that being examples in we work that the or then ecosystem we for commercial routine, customer X than the are repetitive we're outsized of deeply cited examples and analytical Mission solutions. And work results Sourcegraph X generate those but in solutions productive the very AI then

on are to never being, the add? you'd partnership AI Chris, in our anything very human focused and like alone with solutions unafraid. being We

Chris Cage

question. Rob, a good it's a good It's insight.

the you've on the play current long little got I be the think we I contracts, were think about maximizing of dollar cost-plus that'd to we take worried the book game mean that view shortsighted. if I here. a bit

opportunities. That's to with and to well incrementally deliver that, competitive future budget recognizing to then what's can customers, them play our more that's coming So point, keep ourselves Leidos. Tom's the going outcome and set more same going back we mission to to with be on up what's

we we continue So to our capability. invest momentum this perpetuating in this see growth as

Robert Spingarn

And then, on talking look answer. we plus, so of to I interesting I think, are at around of XX% not real that, much price. again, but that, if side revenues think fixed Chris, following other a cost that's just about And the

revenue couple rolls the natural about pricing pretty Is any that post-inflation? you the meaningful wondering, and it's backlog off want there XX%, portion to has that, similar profile. the work are a that as margins where get repriced over next I words, If I'm ask of in other a So portion. things lift stale years that backlog. in you'd reflects to pre-inflation of

Chris Cage

And fixed that, inflation, jobs, price, backlog. say or of of on pockets a there's I on if with I I'd our pervasive -- in priced even expectation. there's we some mean our a built going backlog that. I multiyear get current it's as we lot mean not but Rob, inflationary in opportunity you're concern where there's it

for teams time, outcomes. period that, those ran of on have execute flexibility the of they inflation how Some a for hot. But

opportunities that new we're our efficiencies for we're and shareholders. so moving evaluating return to process. an also with, our motivated their drive generate make own And bid in them they attractive we're merits sure forward on looking for each can to And

good over that pipeline about feel good and about objectives our our where backlog feel our helps So and time. support margin

Stuart Davis

like question. have one it only more looks for time Operator, we

Operator

question final of the Our with Jason comes from line Citi. Gursky

Jason Gursky

side quarter advantage And of are coming you you Europe at the again here the was. Europe, today, this on Security kind how the seeing just it so and during the what speak? point at about demand event somber you're kinds seeing what that of I'm pond, be go taking then perspective do might to Tom, in the And out the of programs you of over given these call you Conference and on that operate Munich of curious demand from days. mentioned chasing a there? kind that of you Leidos signals where

Thomas Bell

somber was affair. sobering a Yes, it

title question beginning, you at haven't that the For was the of picked published the magazine lose-lose those the who mark. up of they conference

you that, gives increasing that a robustly. more become that all to year. defense the has are So a, And think this budgets tone sense joyful. They one, I of any earlier don't

growth and in is to effectors. I actual launches but defense. that, systems, effector product, more is words, platform solutions happening line much solutions globally, Europe. the integrated certainly the effectors, than there top for morphed for so that we're pardon system that your defense see hypothesis But and hardware expenditures my but personal those So from beg not more to importantly going the

solutions, only look got the line, not because in spend, and but anchored not well so Europe. But services cyber, to we've to particularly hypersonics, autonomy, the is solutions And in our information sharing, I Leidos' strengths. effectors. that I a because increase AI, in customers services X see products mentioned -- those -- catalog a advanced effectors at but top I positioned unique I also seamless of shift and in Leidos mean shift needs. only AUKUS, Europe serve in what robust already prosecute U.K., capabilities about, like market, reads all opportunity product and Leidos And Pillar AUKUS that the to the throughout to and help as electronic I mentioned warfare. presence from is in this

them all able to conversations the So hurdles ITAR serve of to our all allows I been we integrated ourselves just we us aggregated into before. capabilities, aligned and again, ways we just part our is about been have gives now to between inhibited from capabilities. It is launching of customers point about one And talk to exciting than an all to as this can warfare of fact undersea think launching Leidos. think U.S. electronic to touch defense point are us the even to and the International talk segment more we've talking to positioned. robust that the in I a prosecute talk more think all air to forcefully capabilities, gives have connect before. U.K. around off approach. I and to doing Baltics And have about for the to Commercial points much a have U.S. jointly uniquely them U.K. those a The all that us position the time more lowering place, customer really whole so with Leidos'

and early going be those got to little storming So do a budgets it's say not about going us. are doing we they're be They're how to still days. haughty norming all it. But and to and

things. in these partners humble are also We

working partner result. to we better to and in who work prosecute find even champions So national we're these a might out with want Europe to with as

exciting very a but early opportunity, yet. it's days So

Jason Gursky

here the about then the and in of great. of competitive maybe domestically, competitive just environment what on you general late just on front last be you're could from the pipeline And talk a just you perspective that would seeing you trends have one here

Thomas Bell

Yes.

we're we reasonably well doing defending work the So in have.

recompetes about is big there. in those is our is Our making areas about there's a The the I've feel on-contract with position are opportunities, retooling the Leidos. I put we all got very well many pipeline kind good, very stoped very prosecute are going sure and the in game over to capture robustly new with after got. growth performance actually business opportunities we of a that and good we've team our and and takeaway happy for -- billion. ourselves growth and

and we're we're the customer seeing ample competitions, for differentiate opportunities So Leidos like ample anything of does uptake on seeing to kind to best. things add? itself that in Leidos you'd Chris,

Chris Cage

I any the getting have really known just compelling value competitive they're are that that quickly, you not just on need writing comes and do trend to understanding see. a a looking are you is mark clarity understood. unparalleled say that solution, or best the that pretty Yes, jumped Oftentimes, Ivans RFI. the have hit out Crazy continue and lot set mean, the to of for And in what to things it down you to Jason, I'd the and proposal, that. your pay attention we customer certainly, might of seeing I'm not decisions well We the

that we're where depth So structure well. continue management that we we're talent adding like do to account we positioned. think to doing we're focused and in our well, think and We on

Operator

Q&A call the to turn the Stuart I'll concludes This Davis portion. over remarks. closing back now for

Stuart Davis

for We a you to this for great look operator, morning again all your soon. time your you, call, your thank morning's interest Have assistance Thank and this and in forward updating on day. you Leidos.

Operator

your concludes This participation. Thank today's you for conference call.

a disconnect. now wonderful Everyone, have day. may You

Leidos (LDOS) 30 Apr 242024 Q1 Earnings call transcript