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Leidos Holdings, Inc.’s (LDOS - Free Report) third-quarter 2023 adjusted earnings of $2.03 per share beat the Zacks Consensus Estimate of $1.64 by 23.8%. The bottom line also increased 27.7% from $1.59 registered a year ago.
The year-over-year upside was driven by an improved business mix as well as increased volumes, higher incentive awards and recovery of prior expenditures in the medical examination business.
The company reported a GAAP loss of $2.91 per share, indicating a deterioration from the prior-year quarter’s reported earnings of $1.17.
Leidos Holdings, Inc. Price, Consensus and EPS Surprise
Leidos Holdings generated total revenues of $3,921 million in the reported quarter, which beat the Zacks Consensus Estimate of $3,779.6 million by 3.7%. The top line also improved 8.7% year over year, driven by increased demand across all customer segments, especially for digital modernization and medical examination solutions.
Backlog
The company recorded a total backlog of $38.04 billion, up from $34.15 billion recorded in the prior-year quarter. Of this amount, $9.05 billion was funded.
Operational Statistics
The cost of revenues increased 7.7% year over year to $3,334 million. The company reported an operating loss of $336 million against an operating income of $281 million in the year-ago quarter.
The operating loss margin was 8.6% against an operating income margin of 7.8% in the prior-year period.
Interest expenses totaled $53 million, up 6% year over year.
Segmental Performance
Defense Solutions: Net revenues in this segment improved 7% year over year to $2,221 million. The increase can be attributed to higher revenue growth from digital modernization, including the Navy Next-Generation Enterprise Network Recompete Service Management, Integration and Transport contract, as well as offensive and defensive hypersonics programs. The acquisition of Cobham Special Missions also benefitted this unit’s revenues.
The operating income increased to $147 million from the year-ago quarter’s level of $137 million. The reported operating margin was 6.6%.
Health: The segment recorded revenues of $776 million, up 17.8% year over year. This improvement can be attributed to higher levels of medical examinations and growth from the Social Security Administration Information Technology Support Services Contract II.
The operating income totaled $152 million compared with $91 million in the year-ago quarter. The reported operating margin was 19.6%.
Civil: Revenues in this segment amounted to $924 million, up 5.7% year over year. The upside was driven by higher volumes within the security products portfolio, infrastructure spending by the Federal Aviation Administration and increased demand for engineering support to commercial energy companies.
This segment recorded an operating loss of $607 million against an operating income of $79 million in the year-ago period. The reported operating loss margin was 65.7%.
Financials
Leidos Holdings’ cash and cash equivalents as of Sep 29, 2023, were $750 million compared with $516 million as of Dec 30, 2022.
The long-term debt, net of the current portion, amounted to $4,667 million as of Sep 29, 2023, compared with $3,928 million as of Dec 30, 2022.
Net cash used by operating activities totaled $861 million compared with $867 million a year ago.
2023 Guidance
Leidos Holdings updated its 2023 view. The company now expects to generate adjusted earnings in the range of $6.80-$7.10 per share, up from the prior guided range of $6.40-$6.80. The Zacks Consensus Estimate for earnings is pegged at $6.64 per share, lower than the projected range.
LDOS now expects revenues in the range of $15.1-$15.3 billion, up from the earlier guidance of $14.9-$15.2 billion. The Zacks Consensus Estimate for revenues is pegged at $15.12 billion, lower than the midpoint of the guided range.
The company currently expects cash flow from operating activities at or more than $850 million compared with the prior guidance of $700 million.
Lockheed Martin Corporation (LMT - Free Report) reported third-quarter 2023 adjusted earnings of $6.77 per share, which beat the Zacks Consensus Estimate of $6.66 by 1.7%. The bottom line, however, deteriorated 1.5% from the year-ago quarter's recorded figure.
Net sales were $16.88 billion, which beat the Zacks Consensus Estimate of $16.66 billion by 1.3%. The top line also rose 1.8% from $16.58 billion reported in the year-ago quarter.
RTX Corporation’s (RTX - Free Report) third-quarter 2023 adjusted earnings per share of $1.25 beat the Zacks Consensus Estimate of $1.19 by 5%. The bottom line also improved 3.3% from the year-ago quarter’s level of $1.21.
RTX’s third-quarter adjusted sales of $18,952 million beat the Zacks Consensus Estimate of $18,709 million by 1.3%.
L3Harris Technologies, Inc. (LHX - Free Report) reported third-quarter 2023 adjusted earnings (from continuing operations) of $3.19 per share, which beat the Zacks Consensus Estimate of $3.06 by 4.2%. However, the bottom line decreased 2.1% from the year-ago quarter’s reported figure.
L3Harris’ revenues totaled $4,915 million, which beat the Zacks Consensus Estimate of $4,819 million by 2%. The figure also rose 15.8% from the year-ago quarter’s recorded figure of $4,246 million.
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Leidos Holdings (LDOS) Beats on Q3 Earnings, Ups '23 Sales View
Leidos Holdings, Inc.’s (LDOS - Free Report) third-quarter 2023 adjusted earnings of $2.03 per share beat the Zacks Consensus Estimate of $1.64 by 23.8%. The bottom line also increased 27.7% from $1.59 registered a year ago.
The year-over-year upside was driven by an improved business mix as well as increased volumes, higher incentive awards and recovery of prior expenditures in the medical examination business.
The company reported a GAAP loss of $2.91 per share, indicating a deterioration from the prior-year quarter’s reported earnings of $1.17.
Leidos Holdings, Inc. Price, Consensus and EPS Surprise
Leidos Holdings, Inc. price-consensus-eps-surprise-chart | Leidos Holdings, Inc. Quote
Total Revenues
Leidos Holdings generated total revenues of $3,921 million in the reported quarter, which beat the Zacks Consensus Estimate of $3,779.6 million by 3.7%. The top line also improved 8.7% year over year, driven by increased demand across all customer segments, especially for digital modernization and medical examination solutions.
Backlog
The company recorded a total backlog of $38.04 billion, up from $34.15 billion recorded in the prior-year quarter. Of this amount, $9.05 billion was funded.
Operational Statistics
The cost of revenues increased 7.7% year over year to $3,334 million. The company reported an operating loss of $336 million against an operating income of $281 million in the year-ago quarter.
The operating loss margin was 8.6% against an operating income margin of 7.8% in the prior-year period.
Interest expenses totaled $53 million, up 6% year over year.
Segmental Performance
Defense Solutions: Net revenues in this segment improved 7% year over year to $2,221 million. The increase can be attributed to higher revenue growth from digital modernization, including the Navy Next-Generation Enterprise Network Recompete Service Management, Integration and Transport contract, as well as offensive and defensive hypersonics programs. The acquisition of Cobham Special Missions also benefitted this unit’s revenues.
The operating income increased to $147 million from the year-ago quarter’s level of $137 million. The reported operating margin was 6.6%.
Health: The segment recorded revenues of $776 million, up 17.8% year over year. This improvement can be attributed to higher levels of medical examinations and growth from the Social Security Administration Information Technology Support Services Contract II.
The operating income totaled $152 million compared with $91 million in the year-ago quarter. The reported operating margin was 19.6%.
Civil: Revenues in this segment amounted to $924 million, up 5.7% year over year. The upside was driven by higher volumes within the security products portfolio, infrastructure spending by the Federal Aviation Administration and increased demand for engineering support to commercial energy companies.
This segment recorded an operating loss of $607 million against an operating income of $79 million in the year-ago period. The reported operating loss margin was 65.7%.
Financials
Leidos Holdings’ cash and cash equivalents as of Sep 29, 2023, were $750 million compared with $516 million as of Dec 30, 2022.
The long-term debt, net of the current portion, amounted to $4,667 million as of Sep 29, 2023, compared with $3,928 million as of Dec 30, 2022.
Net cash used by operating activities totaled $861 million compared with $867 million a year ago.
2023 Guidance
Leidos Holdings updated its 2023 view. The company now expects to generate adjusted earnings in the range of $6.80-$7.10 per share, up from the prior guided range of $6.40-$6.80. The Zacks Consensus Estimate for earnings is pegged at $6.64 per share, lower than the projected range.
LDOS now expects revenues in the range of $15.1-$15.3 billion, up from the earlier guidance of $14.9-$15.2 billion. The Zacks Consensus Estimate for revenues is pegged at $15.12 billion, lower than the midpoint of the guided range.
The company currently expects cash flow from operating activities at or more than $850 million compared with the prior guidance of $700 million.
Zacks Rank
Leidos Holdings currently 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 Corporation (LMT - Free Report) reported third-quarter 2023 adjusted earnings of $6.77 per share, which beat the Zacks Consensus Estimate of $6.66 by 1.7%. The bottom line, however, deteriorated 1.5% from the year-ago quarter's recorded figure.
Net sales were $16.88 billion, which beat the Zacks Consensus Estimate of $16.66 billion by 1.3%. The top line also rose 1.8% from $16.58 billion reported in the year-ago quarter.
RTX Corporation’s (RTX - Free Report) third-quarter 2023 adjusted earnings per share of $1.25 beat the Zacks Consensus Estimate of $1.19 by 5%. The bottom line also improved 3.3% from the year-ago quarter’s level of $1.21.
RTX’s third-quarter adjusted sales of $18,952 million beat the Zacks Consensus Estimate of $18,709 million by 1.3%.
L3Harris Technologies, Inc. (LHX - Free Report) reported third-quarter 2023 adjusted earnings (from continuing operations) of $3.19 per share, which beat the Zacks Consensus Estimate of $3.06 by 4.2%. However, the bottom line decreased 2.1% from the year-ago quarter’s reported figure.
L3Harris’ revenues totaled $4,915 million, which beat the Zacks Consensus Estimate of $4,819 million by 2%. The figure also rose 15.8% from the year-ago quarter’s recorded figure of $4,246 million.