-- Revenues: $2.44 billionRESTON, Va., May 3, 2018 — (PRNewswire) — Leidos Holdings, Inc. (NYSE: LDOS), a global science and technology leader, today reported financial results for the first quarter of fiscal year 2018.
Roger Krone, Leidos Chairman and Chief Executive Officer, commented: "Our first quarter results demonstrate a strong start to the year, with notable performance in bookings, profitability and cash generation. These results reflect the power of the efficient and flexible cost structure behind our innovative technical solutions, and the unwavering commitment of our employees to deliver excellence in program performance and value to our customers. Book-to-bill was at the highest level of any first quarter in the last five years due to improved win rates and an enhanced business development engine. Strong bookings combined with a positive budgetary outlook bolster our ability to grow and deliver increased value to our customers, shareholders, and employees."
Revenues for the quarter were $2.44 billion, compared to $2.58 billion in the prior year quarter, reflecting a 5.3% decrease.
Operating income for the quarter was $159 million, compared to $141 million in the prior year quarter. Operating margin increased to 6.5% from 5.5% in the prior year quarter, primarily due to decreases in amortization of intangible assets, acquisition and integration costs and restructuring charges. Excluding these items, non-GAAP operating income margin for the quarter increased to 9.7% from 9.4% in the prior year quarter.
Diluted earnings per share ("EPS") attributable to Leidos common stockholders for the quarter was $0.66, compared to $0.47 in the prior year quarter. Excluding the items mentioned in the preceding paragraph, non-GAAP diluted EPS for the quarter was $1.03, compared to $0.88 in the prior year quarter. The weighted average diluted share count for the quarter was 154 million compared to 153 million in the prior year quarter.
Defense Solutions revenues for the quarter of $1,178 million decreased by $116 million, or 9.0%, compared to the prior year quarter. The revenue decrease was primarily attributable to timing of revenue recognition on certain contracts, the completion of certain contracts and net volume decreases, partially offset by revenues from new awards.
Defense Solutions operating income margin for the quarter was 7.2%, compared to 6.1% in the prior year quarter. On a non-GAAP basis, operating margin for the quarter was 8.7%, compared to 7.3% in the prior year quarter, due to stronger program performance on certain contracts.
Civil revenues for the quarter of $840 million decreased by $2 million, or 0.2%, compared to the prior year quarter. The revenue change was due to increased revenues from new awards and the favorable impact of foreign exchange rates. These were more than offset by net volume decreases and lower revenues from our international business due to the completion of a contractual deliverable in the prior year quarter.
Civil operating income margin for the quarter was 8.8%, compared to 6.4% in the prior year quarter. On a non-GAAP basis, operating income margin for the quarter was 11.8%, compared to 10.5% in the prior year quarter, reflecting stronger program performance on certain contracts.
Health revenues for the quarter of $425 million decreased by $18 million, or 4.1%, compared to the prior year quarter. The revenue decrease was primarily attributable to timing of revenue recognition and completion of certain contracts, partially offset by net volume increases.
Health operating income margin for the quarter was 9.9%, compared to 10.6% in the prior year quarter. On a non-GAAP basis, operating income margin for the quarter was 12.5%, compared to 14.9% in the prior year quarter, primarily attributable to higher profit write-ups in the prior year quarter.
Cash Flow Summary
Net cash provided by operating activities for the quarter was $22 million compared to $71 million net cash used in operating activities in the prior year quarter. The increased operating net cash inflows were primarily due to a higher than expected level of advance contract payments from customers, timing of collections of receivables and lower payments for integration and restructuring costs, partially offset by cash paid in the quarter of $24 million related to the 2016 acquisition of the IS&GS Business.
Net cash used in investing activities for the quarter was $96 million compared to $5 million in the prior year quarter. The increase was primarily due to cash paid in the quarter of $81 million related to the 2016 acquisition of the IS&GS Business and higher purchases of property, plant and equipment.
Net cash used in financing activities for the quarter was $91 million compared to $78 million in the prior year quarter. The increase was primarily due to the repurchase of shares of common stock under the share repurchase program for an aggregate purchase price of $10 million.
As of March 30, 2018, the Company had $215 million in cash and cash equivalents and $3.1 billion of debt.
New Business Awards
Net bookings totaled $2.5 billion in the quarter, representing a book-to-bill ratio of 1.02.
Notable recent awards received include:
- United States Army: Leidos was awarded a follow-on $200 million hybrid contract (cost-plus-fixed-fee and firm-fixed-price) to support geospatial requirements, standards and systems across the U.S. Army. The multiple-award contract has a potential five-year period of performance and work will be performed in Alexandria, VA. Under the contract, Leidos will continue to provide technologies and expertise to support the U.S. Army's ongoing geospatial research, integration, development, and operational requirements at the U.S. Army Geospatial Center at Fort Belvoir. Leidos will also develop geospatial enterprise-enabled systems for the Army and other Department of Defense ("DOD") and non-DOD entities.
- United States Army: Leidos was awarded a follow-on prime contract to continue to provide logistics services to the 1st Theater Sustainment Command in support of U.S. Army Central, the Army component of U.S. Central Command. Leidos will apply its expertise in delivering resilient mission logistics services to provide receipt, storage, maintenance, issue and distribution of ammunition. The single-award cost-plus-fixed-fee/cost-plus-incentive-fee contract has a one-year base period of performance, five one-year options, and a total contract value of approximately $112 million .
- Federal Aviation Administration : Leidos was awarded a task order to develop the 7th Generation geostationary earth orbit satellite used for the Federal Aviation Administration's Wide Area Augmentation System ("WAAS"). The task order supports the WAAS, a safety-critical system that augments Global Positioning System ("GPS") Standard Positioning Service. WAAS enables aircraft to rely on GPS for all phases of flight, including precision approaches to any airport within its service area. The task order has a four-year development phase, and one 10-year Operations and Maintenance phase with a total contract value of approximately $117 million .
- Intelligence Community : The Company was awarded contracts valued at $1.3 billion , if all options are exercised, by U.S. national security and intelligence clients. Though the specific nature of these contracts is classified, they all encompass mission-critical services that help to counter global threats and strengthen national security.