Leidos Holdings (LDOS) Q1 Earnings Beat, Revenues Rise Y/Y

Leidos Holdings, Inc.’s LDOS first-quarter 2022 adjusted earnings of $1.58 per share beat the Zacks Consensus Estimate of $1.49 by 6%. The bottom line, however, declined 8.7% from $1.73 per share registered a year ago.

The company reported GAAP earnings of $1.25 per share, which deteriorated from the year-ago quarter’s earnings of $1.42.

The year-over-year downside can be attributed to the absence of the $26 million net benefit from an adjustment to legal reserves related to the Mission Support Alliance (MSA) joint venture, which the company recorded in first-quarter 2021.

Leidos Holdings, Inc. price-consensus-eps-surprise-chart | Leidos Holdings, Inc. Quote

Total Revenues

Leidos Holdings generated total revenues of $3,494 million in the quarter under consideration, exceeding the Zacks Consensus Estimate of $3,386 million by 3.2%.

The top line also improved 5.4% year over year. This increase in revenues is attributable to growth in all three of the company’s segments.

Backlog

At the end of first-quarter 2022, the company’s total backlog was $36.35 billion, up from $34.46 at 2021-end. Of this, $7.09 billion was funded.

Operational Statistics

The total cost of revenues in the quarter increased 4.7% to $2,982 million.

Operating income totaled $271 million compared with the year-ago quarter’s income of $308 million.

The operating income margin for the quarter was 7.8% compared with 9.3% in the prior-year quarter.

Interest expenses were $48 million, up 6.7% year over year.

Segmental Performance

Defense Solutions: Net revenues in this segment improved 4.6% year over year to $2,049 million in the first quarter. This upside can be primarily attributed to the ramp-up of the Navy NGEN-R SMIT contract and the Enduring Indirect Fires Protection Capability (IFPC) contracts.

The segment’s operating income declined to $133 million from the year-ago quarter’s $152 million, with the operating margin being 6.5%.

Health: The segment recorded revenues of $650 million in the first quarter, which rose 10% year over year. The uptick was the result of increased volumes on the DHMSM program and the ramp-up of new programs such as Military and Family Life Counseling (MFLC).

Operating income was $118 million compared with the year-ago quarter’s income of $102 million. The operating margin came in at 18.2%.

Civil: Revenues in this segment amounted to $795 million, up 3.8%. The revenue upside was driven by increased demand in existing programs with the Department of Energy (DoE) and Federal Aviation Administration (FAA) as well as commercial energy providers.

While operating income declined from $74 million to $43 million, the operating margin was 5.4%.

Financials

Cash and cash equivalents as of Apr 1, 2022 was $297 million compared with $727 million as of Dec 31, 2021.

Long-term debt, net of current portion, amounted to $4,569 million as of Apr 1, 2022 compared with $4,593 million as of Dec 31, 2021.

Net cash provided by operating activities during the first quarter of 2022 was $93 million compared with $239 million a year ago.

2022 Guidance

Leidos Holdings reaffirmed its 2022 view. The company still expects to generate adjusted earnings in the range of $6.10-$6.50 per share. The Zacks Consensus Estimate for 2022 earnings, pegged at $6.41 per share, lies above the mid-point of the guidance range.

Leidos Holdings also continues to expect its revenues in the range of $13.9-$14.3 billion. The Zacks Consensus Estimate for 2022 revenues, pegged at $14.11 billion, is almost in line with the mid-point of the guided range.

The company’s cash flow from operating activities is still anticipated to be at or above $1 billion.

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

Raytheon Technologies’ RTX first-quarter 2022 adjusted earnings per share (EPS) of $1.15 beat the Zacks Consensus Estimate of $1.01 by 13.9%. Moreover, the bottom-line figure improved 27.8% from the year-ago quarter’s adjusted earnings of 90 cents.

Raytheon’s first-quarter sales of $15,716 million missed the Zacks Consensus Estimate of $15,799 million by 0.5%. The sales figure, however, rose 3% from $15,251 million recorded in the year-ago quarter.

Lockheed Martin LMT reported first-quarter 2022 earnings of $6.44 per share, which surpassed the Zacks Consensus Estimate of $6.22 by 3.5%. The bottom line however declined 1.8% year over year.

Lockheed Martin’s net sales amounted to $14.96 billion, which missed the Zacks Consensus Estimate of $15.53 billion by 3.7%. The top line also declined 8% from $16.26 billion reported in the year-ago quarter

Teledyne Technologies Inc. TDY reported first-quarter 2022 adjusted earnings of $4.27 per share, which surpassed the Zacks Consensus Estimate of $4.09 by 4.4%. The bottom line also improved 33.9% from the year-ago quarter’s $3.19 per share.

Teledyne’s total sales in the first quarter amounted to $1,321 million, which exceeded the Zacks Consensus Estimate of $1,315 million by 0.5%. The top line also improved 64% from $805.7 million reported a year ago.

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