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Leidos Holdings, Inc.’s (LDOS - Free Report) second-quarter 2021 adjusted earnings of $1.52 per share missed the Zacks Consensus Estimate of $1.57 by 3.2%. The bottom line also declined 1.9% from $1.55 per share registered a year ago.
The company’s GAAP earnings of $1.18 per share improved from the year-ago quarter’s $1.06.
Total Revenues
Leidos Holdings generated total revenues of $3,448 million in the quarter under consideration, which exceeded the Zacks Consensus Estimate of $3,339 million by 3.3%. The top line also improved 18.3% year over year. This increase in revenues is primarily attributable to growth across all its reportable segments.
Backlog
At the end of the reported quarter, the company’s total backlog was $33.5 billion, up 9% year over year. Of this, $7.16 billion was funded.
Operational Statistics
Total cost of revenues in the quarter increased 16.6% to $2,950 million. Operating income totaled $269 million compared with the year-ago quarter’s income of $249 million.
Non-GAAP operating income margin for the quarter was 7.8% compared with 8.5% in the prior-year quarter.
Interest expenses summed $46 million compared with $41 million in the prior-year quarter.
Segmental Performance
Defense Solutions: Net revenues in this segment improved 14% to $2,004 million from the prior-year quarter’s $1,757 million. This upside can be primarily attributed to the start-up of the Navy Next Generation IT contract and increased weapons systems development.
The segment’s operating income escalated to $137 million from the year-ago quarter’s $119 million, with the operating margin at 6.8%.
Health: The segment recorded revenues of $645 million in the second quarter, which soared 62% year over year. The revenue increase primarily came as a result of the surge in veterans' disability examinations after the pause due to the COVID-19 pandemic as well as increased volumes on the Defense Healthcare Management System Modernization (DHMSM) program and the ramp up of new programs such as the Military and Family Life Counseling (MFLC) program.
Operating income was $107 million compared to the year-ago quarter’s income of $1 million, while operating margin expanded 1630 bps to 16.6%.
Civil: Revenues in this segment amounted to $799 million, up 5%. This uptick was primarily attributable to the increased demand for large programs such as Hanford Site Integration.
While operating income declined 29.5% to $55 million, operating margin contracted 340 bps to 6.9%.
Leidos Holdings, Inc. Price, Consensus and EPS Surprise
Cash and cash equivalents as of Jul 2, 2021, were $338 million compared with $524 million as of Jan 1, 2021.
Long-term debt, net of current portion, amounted to $4,639 million as of Jul 2, 2021, compared with $4,644 million as of Jan 1, 2021.
Net cash provided by operating activities in the first half of 2021 was $256 million compared with $794 million a year ago.
2021 Guidance
Leidos Holdings reaffirmed its view for 2021. The company continues to expect adjusted earnings in the $6.35-$6.65 per share range. The Zacks Consensus Estimate for 2021 earnings, pegged at $6.35 per share, is below the midpoint of the company’s projected view.
Leidos Holdings expects revenues of $13.7-$14.1 billion this year, unchanged from the previous guidance. The Zacks Consensus Estimate for 2021 revenues, pegged at $13.87 billion, is below the midpoint of the company-guided range.
The company’s cash flow from operating activities is anticipated to be at or above $875 million.
Lockheed Martin Corp. (LMT - Free Report) reported second-quarter 2021 adjusted earnings of $7.13 per share, which surpassed the Zacks Consensus Estimate of $6.51 by 9.5%.
Teledyne Technologies Inc. (TDY - Free Report) reported second-quarter 2021 adjusted earnings of $4.61 per share, which surpassed the Zacks Consensus Estimate of $2.94 by 56.8%. The bottom line also improved 72% from the year-ago quarter’s $2.68.
General Dynamics Corp. (GD - Free Report) reported second-quarter 2021 earnings from continuing operations of $2.61 per share, which beat the Zacks Consensus Estimate of $2.52 by 3.6%.
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Leidos Holdings (LDOS) Q2 Earnings Miss, Revenues Rise Y/Y
Leidos Holdings, Inc.’s (LDOS - Free Report) second-quarter 2021 adjusted earnings of $1.52 per share missed the Zacks Consensus Estimate of $1.57 by 3.2%. The bottom line also declined 1.9% from $1.55 per share registered a year ago.
The company’s GAAP earnings of $1.18 per share improved from the year-ago quarter’s $1.06.
Total Revenues
Leidos Holdings generated total revenues of $3,448 million in the quarter under consideration, which exceeded the Zacks Consensus Estimate of $3,339 million by 3.3%. The top line also improved 18.3% year over year. This increase in revenues is primarily attributable to growth across all its reportable segments.
Backlog
At the end of the reported quarter, the company’s total backlog was $33.5 billion, up 9% year over year. Of this, $7.16 billion was funded.
Operational Statistics
Total cost of revenues in the quarter increased 16.6% to $2,950 million. Operating income totaled $269 million compared with the year-ago quarter’s income of $249 million.
Non-GAAP operating income margin for the quarter was 7.8% compared with 8.5% in the prior-year quarter.
Interest expenses summed $46 million compared with $41 million in the prior-year quarter.
Segmental Performance
Defense Solutions: Net revenues in this segment improved 14% to $2,004 million from the prior-year quarter’s $1,757 million. This upside can be primarily attributed to the start-up of the Navy Next Generation IT contract and increased weapons systems development.
The segment’s operating income escalated to $137 million from the year-ago quarter’s $119 million, with the operating margin at 6.8%.
Health: The segment recorded revenues of $645 million in the second quarter, which soared 62% year over year. The revenue increase primarily came as a result of the surge in veterans' disability examinations after the pause due to the COVID-19 pandemic as well as increased volumes on the Defense Healthcare Management System Modernization (DHMSM) program and the ramp up of new programs such as the Military and Family Life Counseling (MFLC) program.
Operating income was $107 million compared to the year-ago quarter’s income of $1 million, while operating margin expanded 1630 bps to 16.6%.
Civil: Revenues in this segment amounted to $799 million, up 5%. This uptick was primarily attributable to the increased demand for large programs such as Hanford Site Integration.
While operating income declined 29.5% to $55 million, operating margin contracted 340 bps to 6.9%.
Leidos Holdings, Inc. Price, Consensus and EPS Surprise
Leidos Holdings, Inc. price-consensus-eps-surprise-chart | Leidos Holdings, Inc. Quote
Financials
Cash and cash equivalents as of Jul 2, 2021, were $338 million compared with $524 million as of Jan 1, 2021.
Long-term debt, net of current portion, amounted to $4,639 million as of Jul 2, 2021, compared with $4,644 million as of Jan 1, 2021.
Net cash provided by operating activities in the first half of 2021 was $256 million compared with $794 million a year ago.
2021 Guidance
Leidos Holdings reaffirmed its view for 2021. The company continues to expect adjusted earnings in the $6.35-$6.65 per share range. The Zacks Consensus Estimate for 2021 earnings, pegged at $6.35 per share, is below the midpoint of the company’s projected view.
Leidos Holdings expects revenues of $13.7-$14.1 billion this year, unchanged from the previous guidance. The Zacks Consensus Estimate for 2021 revenues, pegged at $13.87 billion, is below the midpoint of the company-guided range.
The company’s cash flow from operating activities is anticipated to be at or above $875 million.
Zacks Rank
Leidos Holdings carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Defense Releases
Lockheed Martin Corp. (LMT - Free Report) reported second-quarter 2021 adjusted earnings of $7.13 per share, which surpassed the Zacks Consensus Estimate of $6.51 by 9.5%.
Teledyne Technologies Inc. (TDY - Free Report) reported second-quarter 2021 adjusted earnings of $4.61 per share, which surpassed the Zacks Consensus Estimate of $2.94 by 56.8%. The bottom line also improved 72% from the year-ago quarter’s $2.68.
General Dynamics Corp. (GD - Free Report) reported second-quarter 2021 earnings from continuing operations of $2.61 per share, which beat the Zacks Consensus Estimate of $2.52 by 3.6%.