Leidos (LDOS) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 adjusted EBITDA margin of 14.2% and strong organic revenue growth year-over-year, with revenues reaching $4.19 billion, up 7% year-over-year.

• Net income was $362 million, reversing a prior year loss, and all four segments reported revenue and operating income growth.

• Raised 2024 guidance across all key metrics due to sustained business momentum and improved market clarity.

• Returned $254 million to shareholders in Q3 via $203 million in share repurchases and $51 million in dividends, with a 5.3% dividend increase.

• Introduced the North Star growth strategy, focusing on targeted capital deployment and new growth engines, to be detailed at the March 2025 Investor Day.

Financial highlights

• Q3 revenue was $4.19 billion, up 6.9% year-over-year, with strong customer demand and high employee retention.

• Adjusted EBITDA reached $596 million, up 32% year-over-year; adjusted EBITDA margin hit a record 14.2%.

• Non-GAAP net income was $396 million and non-GAAP diluted EPS was $2.93, up 40% and 44% year-over-year, respectively.

• Free cash flow for the quarter was $633 million, with $656 million in operating cash flow; free cash flow conversion reached 159%.

• Bookings for the quarter were $8.1 billion, with total backlog at $40.6 billion and a book-to-bill ratio of 1.9.

Outlook and guidance

• FY24 revenue guidance raised to $16.35–$16.45 billion, up $150 million at midpoint.

• Adjusted EBITDA margin guidance increased to high-12% range; non-GAAP diluted EPS guidance raised to $9.80–$10.00.

• Operating cash flow guidance raised by $50 million to approximately $1.35 billion for the year.

• 2024 expected to deliver 6% revenue growth and 36% EPS growth; 2025 projected as a pivot year with lower single-digit revenue growth and stable margins.

• Management expects to meet liquidity needs over the next 12 months through operating cash flow, available cash, and credit facilities.