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Leidos Posts Strong First Quarter Results and Raises Full-Year GuidanceMay 5, 2026 6:00 AM
PR Newswire (US) Revenues of $4.4 billion, up 4% year-over-yearNet income of $335 million or $2.56 per diluted shareAdjusted EBITDA (non-GAAP) of $614 million and Adjusted EBITDA margin (non-GAAP) of 14.0%Non-GAAP Diluted Earnings per Share of $3.13, up 5% year-over-yearCash Flows from Operations of $301 million; Non-GAAP Free Cash Flow of $270 millionRESTON, Va., May 5, 2026 /PRNewswire/ -- Leidos Holdings, Inc. (NYSE: LDOS) today reported financial results for the first quarter of fiscal year 2026, highlighted by robust earnings and revenue growth."Leidos delivered strong first quarter performance, as our teams worked proactively with customers to drive improved mission outcomes early in the year," said Leidos Chief Executive Officer Tom Bell. "Also importantly, with the quick close of the Entrust acquisition and the signing of our security products joint venture, we're actively executing our NorthStar 2030 strategy while supporting our nation's highest priority objectives. Given all this and our ongoing confidence in our business, we're pleased to raise our revenue, earnings, and cash guidance for the year. And we continue to see the second half of 2026 as the launchpad for multiyear growth acceleration."SUMMARY OPERATING RESULTS
Three Months Ended(in millions, except margin and per share data)
April 3, 2026
April 4, 2025Revenues
$ 4,400
$ 4,245Net income
$ 335
$ 365Net income margin
7.6 %
8.6 %Diluted earnings per share (EPS)
$ 2.56
$ 2.77Non-GAAP Measures*:
Adjusted EBITDA
$ 614
$ 601Adjusted EBITDA margin
14.0 %
14.2 %Non-GAAP diluted EPS
$ 3.13
$ 2.97
* Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Management believes that these non-GAAP measures provide another representation of Leidos' results of operations and financial condition, including its ability to comply with financial covenants. See Non-GAAP Financial Measures at the end of this press release for more information and a reconciliation of our selected reported results to these non-GAAP measures.Revenues for the quarter were $4.40 billion, up 4% compared to the first quarter of 2025, including 3% organically. Revenues grew year-over-year due to increased customer demand, especially for innovative products and solutions in Intelligence, commercial energy infrastructure, and domestic and international air traffic management.For the first quarter, net income was $335 million, or $2.56 per diluted share. Net income and diluted EPS were both down 8% year-over-year; net income margin was 7.6% compared to 8.6% in the first quarter of 2025. Net income and diluted EPS for the quarter reflect $39 million in costs associated with the acquisition of ENTRUST Solutions Group ("Entrust") and the pending joint venture to combine the Security Enterprise Solutions and Industrial Automation businesses of Leidos with Analogic Corporation. Adjusting for one-time items like those, non-GAAP net income rose 4% year-over-year, to $408 million for the first quarter, and non-GAAP diluted EPS rose 5% to $3.13.In addition, adjusted EBITDA was $614 million for the first quarter, up 2% year-over-year. Adjusted EBITDA margin of 14.0% decreased from 14.2% in the first quarter of 2025. Profitability remained high through prudent cost management, excellent award and incentive fee performance, and a $15 million insurance reimbursement for legal costs incurred prior to fiscal 2026.CASH FLOW SUMMARYIn the first quarter, Leidos generated $301 million of net cash provided by operating activities, used $2.36 billion in investing activities and generated $1.39 billion in financing activities. Net cash provided by operating activities was driven by strong EBITDA and collections performance.The primary investment in the quarter was the acquisition of Entrust. In addition, investing activities included $31 million in property, equipment and software payments, which resulted in quarterly free cash flow of $270 million. Financing activities were driven by proceeds of $1.4 billion in senior notes and $300 million in commercial paper to finance the Entrust acquisition, as well as $298 million returned to shareholders, including $243 million in share repurchases and $55 million as part of a regular quarterly cash dividend program. As of April 3, 2026, Leidos had $457 million in cash and cash equivalents and $6.3 billion of debt.On May 1, 2026, the Leidos Board of Directors declared a cash dividend of $0.43 per share. The dividend will be payable on June 30, 2026, to stockholders of record at the close of business on June 15, 2026.NEW BUSINESS AWARDSNet bookings totaled $3.3 billion in the quarter, representing a book-to-bill ratio of 0.8. As a result, backlog at the end of the quarter was $48.4 billion, of which $9.6 billion was funded. Trailing-twelve-month book-to-bill of 1.1 resulted in year-over-over growth in total and funded backlog of 4% and 31%, respectively. Included in the quarterly bookings were several notable awards:Mission Awareness Capabilities Ramp-up and Optimization (MACRO) II. Leidos has been awarded a five-year, $869 million MACRO II task order to develop and integrate secure, AI-enabled systems for the U.S. Army that enhance decision-making across all military domains. The program focuses on transforming large volumes of data into actionable insights, enabling faster and more effective battlefield decisions. This award aligns with Leidos' NorthStar 2030 strategy, reinforcing its role in advancing digital modernization and mission software capabilities for multi-domain operations.Global Solutions Management-Operations (GSM-O) II Task Orders. The Defense Information Systems Agency (DISA) awarded Leidos over $461M in multi-year awards, including the renewal of two cyber task orders. Under the GSM-O II Indefinite Delivery/Indefinite Quantity (IDIQ) contract, Leidos provides exceptional 24x7 worldwide operational and defensive cyber performance on the Department of Defense (DOD) Information Network / Defense Information System Network (DODIN/DISN), including Epic Fury surge support with emergency circuit activations, site restoral efforts and extended cyber coverage.National Security Agency (NSA) Technical Signals Intelligence (TechSIGINT) Modernization. The NSA awarded Leidos a two-year $335 million contract to extend and expand support for its TechSIGINT modernization efforts. NSA's TechSIGINT mission delivers critical insights into foreign weapons systems and air and space capabilities, strengthening the nation's ability to understand and respond to evolving global threats. Leidos will develop and deploy new systems using cloud architectures and standardized NSA corporate infrastructures and services and will provide the technical services to develop, deploy and sustain a wide range of enhanced TechSIGINT collection, production and analysis capabilities.Securities and Exchange Commission (SEC) Infrastructure Support Services 2 (ISS2). Leidos has been awarded the U.S. SEC's ISS2 contract, a 10-year award valued at approximately $284 million to help further modernize, secure, and operate the agency's core IT environment. Through ISS2, Leidos will support an enterprise environment serving approximately 5,900 federal and contractor end users and help sustain the resilient infrastructure, end-user services, and software ecosystem that underpin the SEC's mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.FORWARD GUIDANCELeidos is raising its fiscal year 2026 guidance as follows:
FY26 GuidanceMeasureCurrentPriorRevenues (B)$18.00 - $18.40$17.50 - $17.90Adjusted EBITDA MarginMid 13%Mid 13%Non-GAAP Diluted EPS$12.10 - $12.50$12.05 - $12.45Cash Flows Provided by Operating Activities (B)Approximately $1.80Approximately $1.75For information regarding adjusted EBITDA margin and non-GAAP diluted EPS, see the related explanations and reconciliations to GAAP measures included elsewhere in this release.Leidos does not provide a reconciliation of forward-looking adjusted EBITDA margins or non-GAAP diluted EPS to net income margin or diluted EPS due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Because certain deductions for non-GAAP exclusions used to calculate projected net income margin or diluted EPS may vary significantly based on actual events, Leidos is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income at this time. The amounts of these deductions may be material and, therefore, could result in projected net income margin and diluted EPS being materially less than what may be implied by projected adjusted EBITDA margins and non-GAAP diluted EPS.CONFERENCE CALL INFORMATIONLeidos management will discuss operations and financial results in an earnings conference call beginning at 8 A.M. eastern time on May 5, 2026. A live audio broadcast of the conference call along with a supplemental presentation will be available to the public through links on the Leidos Investor Relations website (http://ir.leidos.com). An archived version of the webcast will be available on the Leidos Investor Relations website until May 5, 2027.ABOUT LEIDOSLeidos is an industry and technology leader serving government and commercial customers with smarter, more efficient digital and mission innovations. Headquartered in Reston, Virginia, with 50,000 global employees, Leidos reported annual revenues of approximately $17.2 billion for the fiscal year ended January 2, 2026. For more information, visit www.leidos.com.FORWARD-LOOKING STATEMENTSCertain statements in this release contain or are based on "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as "expects," "intends," "plans," "anticipates," "believes," "estimates," "guidance" and similar words or phrases. Forward-looking statements in this release include, among others, estimates of our future growth, strategy and financial and operating performance, including future revenues, adjusted EBITDA margins, diluted EPS (including on a non-GAAP basis) and cash flows provided by operating activities, as well as statements about our business contingency plans, government budgets and spending, uncertainties in tax due to new tax legislation or other regulatory developments, strategy, planned investments including the pending joint venture, sustainability goals and our future dividends, share repurchases, capital expenditures, debt repayments, acquisitions, dispositions and cash flow conversion. These statements reflect our belief and assumptions as to future events that may not prove to be accurate.Actual performance and results may differ materially from those results anticipated by our guidance and other forward-looking statements made in this release depending on a variety of factors, including, but not limited to: developments in the U.S. government defense and non-defense budgets, including budget reductions, sequestration, implementation of spending limits or changes in budgetary priorities, continuation of the U.S. government shutdown and other or future delays in the U.S. government budget process, or the U.S. government's failure to raise the debt ceiling, which increases the possibility of a default by the U.S. government on its debt obligations, related credit-rating downgrades, or an economic recession; uncertainties in tax due to new tax legislation or other regulatory developments; deterioration of economic conditions or weakening in credit or capital markets; uncertainty in the consequences of current and future geopolitical events; inflationary pressures and fluctuations in interest rates; delays in the U.S. government contract procurement process or the award of contracts and delays or loss of contracts as a result of competitor protests; changes in U.S. government procurement rules, regulations and practices; our compliance with various U.S. government and other government procurement rules and regulations; governmental reviews, audits and investigations of our company; our ability to effectively compete and win contracts with the U.S. government and other customers; our ability to respond rapidly to emerging technology trends, including the use of artificial intelligence; our reliance on information technology spending by hospitals/healthcare organizations; our reliance on infrastructure investments by industrial and natural resources organizations; energy efficiency and alternative energy sourcing investments; investments by U.S. government and commercial organizations in environmental impact and remediation projects; the effects of an epidemic, pandemic or similar outbreak may have on our business, financial position, results of operations and/or cash flows; our ability to attract, train and retain skilled employees, including our management team, and to obtain security clearances for our employees; our ability to accurately estimate costs, including cost increases due to inflation, associated with our firm-fixed-price contracts and other contracts; resolution of legal and other disputes with our customers and others or legal or regulatory compliance issues; cybersecurity, data security or other security threats, system failures or other disruptions of our business; our compliance with international, federal, state and local laws and regulations regarding privacy, data security, protection, storage, retention, transfer, disposal and other processing, technology protection and personal information; the damage and disruption to our business resulting from natural disasters and the effects of climate change; our ability to effectively acquire businesses and make investments; our ability to maintain relationships with prime contractors, subcontractors and joint venture partners; our ability to manage performance and other risks related to customer contracts; the failure of our inspection or detection systems to detect threats; the adequacy of our insurance programs, customer indemnifications or other liability protections designed to protect us from significant product or other liability claims, including cybersecurity attacks; our ability to manage risks associated with our international business; our ability to comply with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010 and similar worldwide anti-corruption and anti-bribery laws and regulations; our ability to protect our intellectual property and other proprietary rights by third parties of infringement, misappropriation or other violations by us of their intellectual property rights; our ability to prevail in litigation brought by third parties of infringement, misappropriation or other violations by us of their intellectual property rights; our ability to declare or increase future dividends based on our earnings, financial condition, capital requirements and other factors, including compliance with applicable law and our agreements; our ability to grow our commercial health and infrastructure businesses, which could be negatively affected by budgetary constraints faced by hospitals and by developers of energy and infrastructure projects; our ability to successfully integrate acquired businesses; and our ability to execute our business plan and long-term management initiatives effectively and to overcome these and other known and unknown risks that we face.These are only some of the factors that may affect the forward-looking statements contained in this release. For further information concerning risks and uncertainties associated with our business, please refer to the filings we make from time to time with the U.S. Securities and Exchange Commission (SEC), including the "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Legal Proceedings" sections of our latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, all of which may be viewed or obtained through the Investor Relations section of our website at www.leidos.com.All information in this release is as of May 5, 2026. Leidos expressly disclaims any duty to update the guidance or any other forward-looking statement provided in this release to reflect subsequent events, actual results or changes in Leidos' expectations. Leidos also disclaims any duty to comment upon or correct information that may be contained in reports published by investment analysts or others.CONTACTS:
Investor Relations:
Media Relations:Stuart Davis
Brandon Ver Velde571.526.6124
571.526.6257ir@leidos.com
brandon.p.vervelde@leidos.com LEIDOS HOLDINGS, INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended(in millions, except per share data)
April 3,
2026
April 4,
2025Revenues
$ 4,400
$ 4,245Cost of revenues
3,639
3,488Selling, general and administrative expenses
223
230Acquisition, integration and restructuring costs
35
4Equity earnings of non-consolidated subsidiaries
(5)
(7)Operating income
508
530Non-operating expense:
Interest expense, net
(55)
(49)Other expense, net
(24)
(3)Income before income taxes
429
478Income tax expense
(94)
(113)Net income
335
365Less: net income attributable to non-controlling interest
7
2Net income attributable to Leidos common stockholders
$ 328
$ 363Earnings per share:
Basic
$ 2.60
$ 2.79Diluted
2.56
2.77Weighted average number of common shares outstanding:
Basic
126
130Diluted
128
131Cash dividends declared per share
$ 0.43
$ 0.40
LEIDOS HOLDINGS, INC.UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
April 3,
2026
January 2,
2026Assets:
Cash and cash equivalents
$ 457
$ 1,108Receivables, net
3,028
2,708Inventory, net
336
342Other current assets
582
656Total current assets
4,403
4,814Property, plant and equipment, net
966
961Intangible assets, net
993
458Goodwill
8,094
6,342Operating lease right-of-use assets, net
553
526Deferred tax assets
35
48Other long-term assets
343
344Total assets
$ 15,387
$ 13,493Liabilities:
Accounts payable and accrued liabilities
$ 2,145
$ 1,988Accrued payroll and employee benefits
687
819Short-term debt and current portion of long-term debt
320
20Total current liabilities
3,152
2,827Long-term debt, net of current portion
6,014
4,628Operating lease liabilities
610
587Deferred tax liabilities
280
221Other long-term liabilities
267
268Total liabilities
10,323
8,531Stockholders' equity:
Common stock, $0.0001 par value, 500,000,000 shares authorized, 125,783,512 and 126,380,657 shares issued and outstanding at April 3, 2026, and January 2, 2026, respectively
—
—Additional paid-in capital
117
319Retained earnings
4,921
4,647Accumulated other comprehensive loss
(25)
(50)Total Leidos stockholders' equity
5,013
4,916Non-controlling interest
51
46Total stockholders' equity
5,064
4,962Total liabilities and stockholders' equity
$ 15,387
$ 13,493
LEIDOS HOLDINGS, INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended (in millions)
April 3,
2026
April 4,
2025Cash flows from operations:
Net income
$ 335
$ 365Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization
72
69Stock-based compensation
25
21Deferred income taxes
(8)
(24)Loss on pension plan settlement
23
—Other
10
(1)Change in assets and liabilities, net of effects of acquisitions and dispositions:
Receivables
(160)
(246)Other current assets and other long-term assets
3
(27)Accounts payable and accrued liabilities and other long-term liabilities
54
(72)Accrued payroll and employee benefits
(154)
(148)Income taxes receivable/payable
101
121Net cash provided by operating activities
301
58Cash flows from investing activities:
Acquisition of a business, net of cash acquired
(2,338)
—Payments for property, equipment and software
(31)
(22)Divestiture of a business
4
—Other
6
—Net cash used in investing activities
(2,359)
(22)Cash flows from financing activities:
Proceeds from debt issuance
1,397
997Net proceeds from commercial paper
300
—Repayments of borrowings
(5)
(529)Payments for debt issuance costs
(15)
(7)Dividend payments
(55)
(53)Repurchases of stock and other
(243)
(528)Proceeds from issuances of stock
16
15Net capital distributions to non-controlling interests
(2)
(5)Net cash provided by (used in) financing activities
1,393
(110)Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
(1)
7Net decrease in cash, cash equivalents and restricted cash
(666)
(67)Cash, cash equivalents and restricted cash at beginning of period
1,204
991Cash, cash equivalents and restricted cash at end of period
538
924Less: restricted cash at end of period
81
82Cash and cash equivalents at end of period
$ 457
$ 842
LEIDOS HOLDINGS, INC.UNAUDITED SEGMENT OPERATING RESULTS
Three Months Ended(in millions)
April 3,
2026
April 4,
2025Revenues:
Intelligence & Digital
$ 1,513
$ 1,408Health
1,188
1,188Homeland
816
770Defense
883
879Total
$ 4,400
$ 4,245Operating income (loss):
Intelligence & Digital
$ 146
$ 132Health
284
288Homeland
33
61Defense
62
74Corporate
(17)
(25)Total
$ 508
$ 530Operating income margin:
Intelligence & Digital
9.6 %
9.4 %Health
23.9 %
24.2 %Homeland
4.0 %
7.9 %Defense
7.0 %
8.4 %Total
11.5 %
12.5 %Beginning fiscal 2026, we completed a realignment of our reporting structure, which resulted in the identification of four reportable segments: Intelligence & Digital, Health, Homeland and Defense. Additionally, we separately present the unallocable costs associated with corporate functions as Corporate. We commenced operating and reporting under the new organizational structure effective the first day of fiscal 2026. As a result of this change, prior year segment results have been recast to reflect the current reportable segment structure.Intelligence & DigitalIntelligence & Digital revenues of $1.51 billion increased by 7% compared to the prior year quarter. Revenue growth was driven by recent contract awards and increased volumes for Intelligence Community mission support, as well as $22 million from the acquisition of Kudu Dynamics. For the quarter, operating income margin increased to 9.6% from 9.4% in the prior year quarter. Similarly, non-GAAP operating income margin of 10.2% was up from 9.7% in the prior year quarter.HealthHealth revenues of $1.19 billion, unchanged compared to the prior year quarter. Health profitability was also relatively stable across periods. Health operating income margin for the quarter was 23.9%, compared to 24.2% in the prior year quarter, and non-GAAP operating income margin was 24.2%, compared to 24.7% in the prior year quarter.HomelandHomeland revenues of $816 million increased by 6% compared to the prior year quarter driven primarily by continued strong demand for Energy Infrastructure engineering services and domestic and international air traffic control systems. Operating income margin for the quarter was 4.0%, compared to 7.9% in the prior year quarter, primarily from costs associated with the acquisition of Entrust and the pending joint venture to combine the Security Enterprise Solutions and Industrial Automation businesses of Leidos with Analogic Corporation. Non-GAAP operating margin decreased to 8.5% from 9.4% in the prior year quarter as the result of changing customer requirements on a fixed price program.DefenseDefense revenues of $883 million were up slightly compared to the prior year quarter, as strong growth in integrated air defense systems offset the wind down of certain airborne surveillance programs. Defense operating income margin for the quarter was 7.0%, compared to 8.4% in the prior year quarter, and non-GAAP operating margin was 8.3%, compared to 9.8% in the prior year quarter. The lower profitability resulted from schedule delays on a fixed price development program.LEIDOS HOLDINGS, INC.
UNAUDITED BACKLOG BY REPORTABLE SEGMENTBacklog represents the revenues we expect to recognize under negotiated contracts and unissued task orders on sole source IDIQ contracts, to the extent we believe their execution and funding to be probable. Backlog does not include potential task orders expected to be awarded under multiple award IDIQ contracts.Backlog value is based on management's estimates about volume of services, availability of customer funding and other factors, and excludes contracts that are under protest. Estimated backlog comprises both funded and negotiated unfunded backlog. Backlog estimates are subject to change and may be affected by several factors, including modifications of contracts, non-exercise of options and foreign currency movements.Funded backlog for contracts with the U.S. government represents the value on contracts for which funding is appropriated less revenues previously recognized on these contracts. Funded backlog for contracts with non-U.S. government entities and commercial customers represents the estimated value on contracts, which may cover multiple future years, under which Leidos is obligated to perform, less revenue previously recognized on the contracts. Unfunded backlog represents all remaining value on task orders that is not funded, including options, that we expect to recognize as well as expected future task orders under sole source IDIQ contracts. The estimated value of backlog as of the dates presented was as follows:
April 3, 2026
April 4, 2025(in millions)
Funded
Unfunded
Total
Funded
Unfunded
TotalIntelligence & Digital
$ 1,882
$ 17,453
$ 19,335
$ 1,745
$ 15,603
$ 17,348Health
1,760
4,800
6,560
832
7,431
8,263Homeland
3,304
6,580
9,884
2,617
7,357
9,974Defense
2,652
9,938
12,590
2,135
8,576
10,711Total
$ 9,598
$ 38,771
$ 48,369
$ 7,329
$ 38,967
$ 46,296Backlog at April 3, 2026, includes $371 million acquired through the acquisition of Entrust within the Homeland reportable segment.LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURESLeidos uses and refers to non-GAAP operating income, non-GAAP operating margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP diluted EPS, non-GAAP free cash flow and non-GAAP free cash flow conversion, which are not measures of financial performance under generally accepted accounting principles in the U.S. and, accordingly, these measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be read in conjunction with Leidos's consolidated financial statements prepared in accordance with GAAP.Management believes that these non-GAAP measures provide another representation of the results of operations and financial condition, including its ability to comply with financial covenants. These non-GAAP measures are frequently used by financial analysts covering Leidos and its peers. The computation of non-GAAP measures may not be comparable to similarly titled measures reported by other companies, thus limiting their use for comparability.Organic revenues capture the revenue that is inherent in the underlying business excluding the impact of acquisitions and divestitures made within the prior year; it is computed as current revenues excluding revenues from acquisitions within the last 12 months and divestitures within the current and year-ago periods.Non-GAAP operating income is computed by excluding the following discrete items from operating income:Acquisition, integration and restructuring costs – Represents acquisition, integration, lease termination, severance and retention costs and asset markdowns related to acquisitions and restructuring activities.Amortization of acquired intangible assets – Represents the amortization of the fair value of the acquired intangible assets. We do not exclude the revenue associated with these acquired intangible assets from non-GAAP operating income.Non-GAAP non operating income is computed by excluding the discrete items from operating income and the following discrete items from non operating income.Settlement loss on pension plan buy-out – Represents the settlement loss in connection with the buy-out of our UK defined benefit pension plan.Acquisition related financing costs – Represents the cost associated with the termination of the bridge loan facility in connection with the acquisition of Entrust.Non-GAAP operating margin is computed by dividing non-GAAP operating income by revenues.Adjusted EBITDA is computed by excluding the following items from income before income taxes: (i) discrete items as identified above; (ii) interest expense; (iii) interest income; (iv) depreciation expense; and (v) amortization of internally developed intangible assets.Adjusted EBITDA margin is computed by dividing adjusted EBITDA by revenues.Non-GAAP net income is computed by excluding the discrete items listed under non-GAAP operating income and their related tax impacts.Non-GAAP diluted EPS is computed by dividing net income attributable to Leidos common stockholders, adjusted for the discrete items as identified above and the related tax impacts, by the diluted weighted average number of common shares outstanding.Non-GAAP free cash flow is computed by deducting expenditures for property, equipment and software from net cash provided by (used in) operating activities.Non-GAAP free cash flow conversion is computed by dividing non-GAAP free cash flow by non-GAAP net income attributable to Leidos common stockholders; operating cash flow conversion is computed by dividing net cash provided by operating activities by net income attributable to Leidos common stockholders.LEIDOS HOLDINGS, INC.UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED](in millions, except growth percentages)The following table presents the reconciliation of revenues to organic revenues by reportable segment and total operations:
Three Months Ended
April 3, 2026
April 4, 2025
Percent ChangeIntelligence & Digital
Revenues, as reported$ 1,513
$ 1,408
7.5 %Acquisition revenues(1)22
—
Organic revenues1,491
1,408
5.9 %Health
Revenues, as reported1,188
1,188
— %Homeland
Revenues, as reported816
770
6.0 %Acquisition and divestiture revenues(1)(2)11
8
Organic revenues805
762
5.6 %Defense
Revenues, as reported883
879
0.5 %Total Operations
Revenues, as reported4,400
4,245
3.7 %Acquisition and divestiture revenues(1)(2)33
8
Organic revenues$ 4,367
$ 4,237
3.1 %
(1) Current period acquisition revenues reflects revenues in the current as reported figures for 12 months from closing of each acquisition. Acquisition revenues for the three months ended April 3, 2026 for the Intelligence & Digital and Homeland segments includes Kudu Dynamics (acquired May 23, 2025) and Entrust (acquired March 27, 2026).(2) Prior period divestiture revenues reflect revenues from assets subsequently divested. Divestiture revenues for the three months ended April 4, 2025, for the Homeland segment include an immaterial business not aligned to the Company's long term strategy (divested October 31, 2025). LEIDOS HOLDINGS, INC.UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED](in millions, except per share data and margin percentages) The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the three months ended April 3, 2026:
Three Months Ended April 3, 2026
As reported
Acquisition, integration and restructuring costs
Amortization of acquired intangibles
Settlement loss on pension plan buy-out
Acquisition related financing costs
Non-GAAP resultsOperating income
$ 508
$ 35
$ 30
$ —
$ —
$ 573Non-operating expense, net
(79)
—
—
23
5
(51)Income before income taxes
429
35
30
23
5
522Income tax expense(1)
(94)
(6)
(7)
(6)
(1)
(114)Net income
335
29
23
17
4
408Less: net income attributable to non-controlling interest
7
—
—
—
—
7Net income attributable to Leidos common stockholders
$ 328
$ 29
$ 23
$ 17
$ 4
$ 401
Diluted EPS attributable to Leidos common stockholders(2)
$ 2.56
$ 0.23
$ 0.18
$ 0.13
$ 0.03
$ 3.13Diluted shares
128
128
128
128
128
128
Three Months Ended April 3, 2026
As reported
Acquisition, integration and restructuring costs
Amortization of acquired intangibles
Settlement loss on pension plan buy-out
Acquisition related financing costs
Non-GAAP resultsNet income
$ 335
$ 29
$ 23
$ 17
$ 4
$ 408Income tax expense(1)
94
6
7
6
1
114Income before income taxes
429
35
30
23
5
522Depreciation expense
42
—
—
—
—
42Amortization of intangibles
30
—
(30)
—
—
—Interest expense, net
55
—
—
—
(5)
50Adjusted EBITDA
$ 556
$ 35
$ —
$ 23
$ —
$ 614Adjusted EBITDA margin
12.6 %
14.0 %
(1)Calculation uses an estimated statutory tax rate on non-GAAP adjustments.(2)Earnings per share is computed independently for each of the non-GAAP adjustment presented and therefore may not sum to the total non-GAAP earnings per share due to rounding. LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED](in millions, except per share data and margin percentages)The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the three months ended April 4, 2025:
Three Months Ended April 4, 2025
As reported
Acquisition, integration and restructuring costs (1)
Amortization of acquired intangibles
Non-GAAP resultsOperating income
$ 530
$ 5
$ 30
$ 565Non-operating expense, net
(52)
—
—
(52)Income before income taxes
478
5
30
513Income tax expense(2)
(113)
(1)
(8)
(122)Net income
365
4
22
391Less: net income attributable to non-controlling interest
2
—
—
2Net income attributable to Leidos common stockholders
$ 363
$ 4
$ 22
$ 389
Diluted EPS attributable to Leidos common stockholders(3)
$ 2.77
$ 0.03
$ 0.17
$ 2.97Diluted shares
131
131
131
131
Three Months Ended April 4, 2025
As reported
Acquisition, integration and restructuring costs (1)
Amortization of acquired intangibles
Non-GAAP resultsNet income
$ 365
$ 4
$ 22
$ 391Income tax expense(2)
113
1
8
122Income before income taxes
478
5
30
513Depreciation expense
39
—
—
39Amortization of intangibles
30
—
(30)
—Interest expense, net
49
—
—
49Adjusted EBITDA
$ 596
$ 5
$ —
$ 601Adjusted EBITDA margin
14.0 %
14.2 %
(1)Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the consolidated statements of operations.(2)Calculation uses an estimated statutory tax rate on non-GAAP adjustments.(3)Earnings per share is computed independently for each of the non-GAAP adjustment presented and therefore may not sum to the total non-GAAP earnings per share due to rounding. LEIDOS HOLDINGS, INC.UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED](in millions, except margin percentages) The following tables present the reconciliation of non-GAAP operating income by reportable segment and Corporate to operating income:
Three Months Ended April 3, 2026
Operating income (loss)
Acquisition, integration and restructuring costs
Amortization of acquired intangibles
Non-GAAP operating income (loss)
Non-GAAP operating marginIntelligence & Digital
$ 146
$ 1
$ 8
$ 155
10.2 %Health
284
—
4
288
24.2 %Homeland
33
29
7
69
8.5 %Defense
62
—
11
73
8.3 %Corporate
(17)
5
—
(12)
NMTotal
$ 508
$ 35
$ 30
$ 573
13.0 %
Three Months Ended April 4, 2025
Operating income (loss)
Acquisition, integration and restructuring costs (1)
Amortization of acquired intangibles
Non-GAAP operating income (loss)
Non-GAAP operating marginIntelligence & Digital
$ 132
$ —
$ 5
$ 137
9.7 %Health
288
—
6
294
24.7 %Homeland
61
4
7
72
9.4 %Defense
74
—
12
86
9.8 %Corporate
(25)
1
—
(24)
NMTotal
$ 530
$ 5
$ 30
$ 565
13.3 %NM - Not Meaningful(1) Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the condensed consolidated statements of operations. LEIDOS HOLDINGS, INC.UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED](in millions, except percentages)The following table presents the reconciliation of free cash flow to net cash provided by operating activities as well as the calculation of operating cash flow and free cash flow conversion ratios:
Three Months Ended
April 3, 2026
April 4, 2025Net cash provided by operating activities
$ 301
$ 58Payments for property, equipment and software
(31)
(22)Non-GAAP free cash flow
$ 270
$ 36
Net income attributable to Leidos common stockholders
$ 328
$ 363Acquisition, integration and restructuring costs(1)(2)
29
4Amortization of acquired intangibles(1)
23
22Settlement loss on pension plan buy-out(1)
17
—Acquisition related financing costs(1)
4
—Non-GAAP net income attributable to Leidos common stockholders
$ 401
$ 389
Operating cash flow conversion ratio
92 %
16 %Non-GAAP free cash flow conversion ratio
67 %
9 %
(1)After-tax expenses excluded from non-GAAP net income.(2)Asset markdowns associated with restructuring activities for the three months ended April 4, 2025, were recorded to "Cost of revenues" in the condensed consolidated statements of operations. View original content:https://www.prnewswire.com/news-releases/leidos-posts-strong-first-quarter-results-and-raises-full-year-guidance-302761919.htmlSOURCE Leidos Holdings, Inc. Original: Leidos Posts Strong First Quarter Results and Raises Full-Year Guidance
US Market News
4 months ago
Leidos Posts Strong Fourth Quarter and Fiscal Year 2025 ResultsFebruary 17, 2026 6:00 AM
PR Newswire (US)
Revenues: $4.2 billion for fourth quarter (down 4% year-over-year); $17.2 billion for the year (up 3% year-over-year)Diluted Earnings per Share: $2.53 for fourth quarter (up 19% year-over-year); $11.14 for the year (up 21% year-over-year)Non-GAAP Diluted Earnings per Share: $2.76 for fourth quarter (up 16% year-over-year); $11.99 for the year (up 17% year-over-year)Cash Flows from Operations: $495 million for fourth quarter; $1.8 billion for the yearNet Bookings: $5.6 billion for fourth quarter (book-to-bill ratio of 1.3); $17.5 billion for the year (book-to-bill ratio of 1.0)RESTON, Va., Feb. 17, 2026 /PRNewswire/ -- Leidos Holdings, Inc. (NYSE: LDOS) today reported financial results for the fourth quarter and fiscal year 2025, highlighted by significant growth in priority markets, enhanced profitability, double-digit earnings growth, and excellent business development performance. In addition, Leidos established guidance for 2026 that forecasts continued growth in revenues and non-GAAP diluted earnings per share and robust cash flows provided by operating activities."Our performance this quarter and throughout the year underscores the incredible resilience of our team and the power of our strategy in action," said Leidos Chief Executive Officer Tom Bell. "In a dynamic market environment, we delivered solid top-line growth, outstanding earnings power, and robust cash generation, which provide a strong foundation for future investment. This success is not accidental; we are acting with urgency to advance our customers' most critical national security priorities and proactively shaping our portfolio towards our strategic Growth Pillars—in space and maritime, energy infrastructure, digital modernization and cyber, mission software, and managed health services.""Our NorthStar 2030 strategy is guiding us to deliver smarter, more efficient outcomes for the nation while accelerating long-term value for our shareholders," Bell said.SUMMARY OF OPERATING RESULTS(in millions, except margin and per share data)Three Months Ended
Year EndedJanuary 2,
2026
January 3, 2025
January 2,
2026
January 3, 2025Revenues$ 4,207
$ 4,365
$ 17,174
$ 16,662Net income$ 335
$ 282
$ 1,462
$ 1,251Net income margin8.0 %
6.5 %
8.5 %
7.5 %Diluted earnings per share (EPS)$ 2.53
$ 2.12
$ 11.14
$ 9.22Non-GAAP Measures*:
Adjusted EBITDA$ 556
$ 508
$ 2,420
$ 2,153Adjusted EBITDA margin13.2 %
11.6 %
14.1 %
12.9 %Non-GAAP diluted EPS$ 2.76
$ 2.37
$ 11.99
$ 10.21
*Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Management believes that these non-GAAP measures provide another measure of Leidos' results of operations and financial condition, including its ability to comply with financial covenants in our debt agreements. See Non-GAAP Financial Measures at the end of this press release for more information and a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures.Revenues were $4.21 billion for the quarter, down 4% year-over-year primarily as a result of an extra work week in the fourth quarter of fiscal year 2024 and the six-week government shutdown in the fourth quarter of 2025. For the year, revenues of $17.17 billion grew 3% driven by strong demand across all customer segments, especially for integrated air defense, Intelligence Community support, and cyber.For the quarter, net income was $335 million, or $2.53 per diluted share, both up 19% compared to the fourth quarter of fiscal year 2024. Net income margin was 8.0%, up 150 basis points year-over-year. Adjusted EBITDA was $556 million (13.2% margin), up 9% over the fourth quarter of 2024. Non-GAAP net income was $364 million, which generated non-GAAP diluted EPS of $2.76. Non-GAAP net income was up 15%, and non-GAAP diluted EPS was up 16% compared to the fourth quarter of fiscal year 2024.For the year, net income was $1.46 billion, or $11.14 per diluted share. Net income and diluted EPS were up 17% and 21%, respectively, compared to fiscal year 2024. Net income margin for the year increased to 8.5% from 7.5% in fiscal year 2024. Adjusted EBITDA was $2.42 billion (14.1% margin), up 12% over fiscal year 2024. Non-GAAP net income was $1.57 billion, which generated non-GAAP diluted EPS of $11.99. Non-GAAP net income was up 14%, and non-GAAP diluted EPS was up 17% compared to fiscal year 2024.The primary drivers of increased earnings for the quarter and the year were increased efficiencies on certain fixed price programs and improved program execution and cost control across the company.CASH FLOW SUMMARYIn the fourth quarter, Leidos generated $495 million of net cash provided by operating activities, the highest fourth quarter performance in the company's history, driven by strong EBITDA performance, collections, and working capital management. Leidos used $33 million in investing activities, consisting primarily of property, equipment and software payments, which resulted in quarterly free cash flow of $452 million and free cash flow conversion of 127%. Leidos used $357 million in financing activities, including $305 million in share repurchases and $55 million as part of a regular quarterly cash dividend program.For the year, net cash provided by operating activities was $1.75 billion, free cash flow was $1.63 billion, and free cash flow conversion was 104%. For the year, free cash flow grew 26%, or 32% on a per share basis. For the year Leidos used $405 million in investing activities and $1.15 billion in financing activities. As of January 2, 2026, the Company had $1.1 billion in cash and cash equivalents and $4.6 billion in debt.On February 13, 2026, the Leidos Board of Directors declared that Leidos will pay a cash dividend of $0.43 per share on March 31, 2026, to stockholders of record at the close of business on March 16, 2026.After the close of the quarter, Leidos entered into a stock purchase agreement to acquire power design firm Entrust for a purchase price of $2.4 billion, subject to customary adjustments for Entrust's cash, debt, transaction expenses and net working capital. Entrust's engineering expertise extends from points of generation to transmission and distribution across the power delivery spectrum of both gas and electric utilities. Acquiring Entrust will broaden Leidos' base of utility clients and strengthen its ability to drive innovation across a broader, more diverse set of utility customers. The transaction is expected to close in the first half of fiscal 2026, subject to the satisfaction or waiver of customary closing conditions.NEW BUSINESS AWARDSNet bookings totaled $5.6 billion in the fourth quarter and $17.5 billion for fiscal year 2025, representing book-to-bill ratios of 1.3 and 1.0, respectively. As a result, backlog at the end of fiscal year 2025 was $49.0 billion, of which $9.7 billion was funded. Included in the quarterly bookings were several notable awards:Air Base Air Defense - Missile Defense (ABADS-MD). The Air Force awarded Leidos a five-year, $2.2 billion award to deploy its Affordable Long-Range Persistent Surveillance (ALPS) and Medium-Range Air Defense Radar (MRADR) systems in support of the ABADS-MD program. These systems fulfill the Department of War (DoW) mandate for survivable base defense through passive sensors that detect threats without emitting a targetable signal. ALPS and MRADR use novel sensing technology coupled with sophisticated GPU-accelerated signal processing to create a high-quality, long-range air picture for air-breathing targets. These software-centric systems sit at the center of Integrated Air Defense, feeding real-time data into command-and-control nodes to secure air bases in both domestic and contested, forward-deployed theaters.Air Force Cloud One Next (C1N) Architecture & Common Shared Services (ACSS). Leidos secured a potential six-year, $455 million takeaway to lead the Air Force's C1N ACSS initiative. Leveraging expertise in Zero Trust, automation, and multi-cloud brokering, Leidos will provide a unified, self-service enterprise-grade cloud platform that accelerates application migration and modernization and enhances warfighter data accessibility at the point of need.Common Hypersonic Glide Body (C-HGB). The Army awarded Leidos a $151 million contract modification to extend work on the C-HGB program, a direct reflection of the administration's urgent mandate to accelerate missile and munition production. Leidos remains committed to ensuring our warfighters possess the long-range, high-speed capabilities necessary to maintain a decisive advantage in contested environments.Defense Information System Agency (DISA) Compartmented Enterprise Systems Office (CESO). Under a new $142 million award, Leidos will support DISA CESO in securing and modernizing IT for classified networks, focusing on cloud services, cybersecurity, and enterprise IT support for sensitive operations. By replacing rigid legacy systems with agile DevSecOps and Zero Trust architectures, Leidos will deliver the high-velocity data access required for today's complex theater operations.In addition, Leidos received prime positions on several indefinite delivery/indefinite quantity (IDIQ) contracts that provide competitive differentiation and channels for future growth but are not included in bookings or backlog beyond any awarded task orders. The largest of these IDIQs were:Missile Defense Agency (MDA) Scalable Homeland Innovative Enterprise Layered Defense (SHIELD). The MDA awarded Leidos a position on SHIELD, a ten-year IDIQ with a ceiling value of $151 billion supporting the rapid development and deployment of the nation's 'Golden Dome' multi-domain, layered homeland defense architecture. Under the contract, Leidos is positioned to deliver end-to-end, mission-integrated capabilities spanning sensing, battle management, and system integration across space and terrestrial layers. Leveraging its proven expertise in missile defense integration, AI-enabled command-and-control, and digital engineering, Leidos enables plug-and-play connectivity and accelerated kill-chain execution from sensor to effector.Defense Microelectronics Activity (DMEA) Advanced Technology Support Program V (ATSP5). Leidos secured a position on DMEA's ATSP5, a ten-year IDIQ with a ceiling value of $24.5 billion that enables the DoW and other federal agencies to rapidly modernize military technology through advanced engineering and prototyping, while mitigating supply chain risks and resolving equipment obsolescence. Under the streamlined ATSP5 framework, Leidos can advance customers' operational requirements in intelligence, surveillance, and reconnaissance; sensors; space systems; cyber and Zero Trust; and enterprise systems integration.FORWARD GUIDANCELeidos is initiating fiscal year 2026 guidance as specified in the table below.MeasureFY26 GuidanceRevenues (billions)$17.5 - $17.9Adjusted EBITDA MarginMid 13%Non-GAAP Diluted EPS$12.05 - $12.45Cash Flows Provided by Operating Activities (billions)Approximately $1.75For information regarding adjusted EBITDA margin and non-GAAP diluted EPS, see the related explanations and reconciliations to GAAP measures included elsewhere in this release.Leidos does not provide a reconciliation of forward-looking adjusted EBITDA margins or non-GAAP diluted EPS to net income margin or diluted EPS, due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Because certain deductions for non-GAAP exclusions used to calculate projected net income may vary significantly based on actual events, Leidos is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income margin, diluted EPS or net income attributable to Leidos shareholders at this time. The amounts of these deductions may be material and, therefore, could result in projected net income margin, net income attributable to Leidos shareholders and diluted EPS being materially less than projected adjusted EBITDA margins and non-GAAP diluted EPS.CONFERENCE CALL INFORMATIONLeidos management will discuss operations and financial results in an earnings conference call beginning at 8 A.M. eastern time on February 17, 2026. A live audio broadcast of the conference call along with a supplemental presentation will be available to the public through links on the Leidos Investor Relations website (http://ir.leidos.com). An archived version of the webcast will be available on the Leidos Investor Relations website until February 17, 2027.ABOUT LEIDOSLeidos is an industry and technology leader serving government and commercial customers with smarter, more efficient digital and mission innovations. Headquartered in Reston, Virginia, with 47,000 global employees, Leidos reported annual revenues of approximately $17.2 billion for the fiscal year ended January 2, 2026. For more information, visit www.leidos.com.FORWARD-LOOKING STATEMENTSCertain statements in this release contain or are based on "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as "expects," "intends," "plans," "anticipates," "believes," "estimates," "guidance" and similar words or phrases. Forward-looking statements in this release include, among others, estimates of our future growth, strategy and financial and operating performance, including future revenues, adjusted EBITDA margins, diluted EPS (including on a non-GAAP basis) and cash flows provided by operating activities, as well as statements about our business contingency plans, government budgets and the ongoing Continuing Resolution, uncertainties in tax due to new tax legislation or other regulatory developments, strategy, planned investments, sustainability goals and our future dividends, share repurchases, capital expenditures, debt repayments, acquisitions (including the acquisition of Entrust), dispositions and cash flow conversion. These statements reflect our belief and assumptions as to future events that may not prove to be accurate.Actual performance and results may differ materially from those results anticipated by our guidance and other forward-looking statements made in this release depending on a variety of factors, including, but not limited to: developments in the U.S. government defense and non-defense budgets, including budget reductions, sequestration, implementation of spending limits or changes in budgetary priorities, initiatives aimed at improving governmental efficiency, delays in the U.S. government budget process or a government shutdown, or the U.S. government's failure to raise the debt ceiling, which increases the possibility of a default by the U.S. government on its debt obligations, related credit-rating downgrades, or an economic recession; uncertainties in tax due to new tax legislation or other regulatory developments; deterioration of economic conditions or weakening in credit or capital markets; uncertainty in the consequences of current and future geopolitical events; inflationary pressures and fluctuations in interest rates; delays in the U.S. government contract procurement process or the award of contracts and delays or loss of contracts as a result of competitor protests; changes in U.S. government procurement rules, regulations and practices, including its organizational conflict of interest rules; changes in global trade policies, tariffs and other measures that could restrict international trade; increased preference by the U.S. government for minority-owned, small and small disadvantaged businesses; fluctuations in foreign currency exchange rates; our compliance with various U.S. government and other government procurement rules and regulations; governmental reviews, audits and investigations of our company; our ability to effectively compete and win contracts with the U.S. government and other customers; our ability to respond rapidly to emerging technology trends, including the use of artificial intelligence; our reliance on information technology spending by hospitals/healthcare organizations; our reliance on infrastructure investments by industrial and natural resources organizations; energy efficiency and alternative energy sourcing investments; investments by U.S. government and commercial organizations in environmental impact and remediation projects; the effects of an epidemic, pandemic or similar outbreak may have on our business, financial position, results of operations and/or cash flows; our ability to attract, train and retain skilled employees, including our management team, and to obtain security clearances for our employees; our ability to accurately estimate costs, including cost increases due to inflation, associated with our firm-fixed-price contracts and other contracts; resolution of legal and other disputes with our customers and others or legal or regulatory compliance issues; cybersecurity, data security or other security threats, system failures or other disruptions of our business; our compliance with international, federal, state and local laws and regulations regarding privacy, data security, protection, storage, retention, transfer, disposal and other processing, technology protection and personal information; the damage and disruption to our business resulting from natural disasters and the effects of climate change; our ability to effectively acquire businesses and make investments; our ability to manage risks associated with our joint ventures, including those in which we are a minority owner and do not operate the assets; our ability to maintain relationships with prime contractors, subcontractors and joint venture partners; our ability to manage performance and other risks related to customer contracts; the failure of our inspection or detection systems to detect threats; the adequacy of our insurance programs, customer indemnifications or other liability protections designed to protect us from significant product or other liability claims, including cybersecurity attacks; our ability to manage risks associated with our international business; our ability to comply with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010 and similar worldwide anti-corruption and anti-bribery laws and regulations; our ability to protect our intellectual property and other proprietary rights by third parties of infringement, misappropriation or other violations by us of their intellectual property rights; our ability to prevail in litigation brought by third parties of infringement, misappropriation or other violations by us of their intellectual property rights; our ability to declare or increase future dividends based on our earnings, financial condition, capital requirements and other factors, including compliance with applicable law and our agreements; our ability to grow our commercial health and infrastructure businesses, which could be negatively affected by budgetary constraints faced by hospitals and by developers of energy and infrastructure projects; our ability to successfully integrate acquired businesses; our ability to complete the acquisition of Entrust or successfully integrate Entrust to achieve the expected benefits of such acquisition; and our ability to execute our business plan and long-term management initiatives effectively and to overcome these and other known and unknown risks that we face.These are only some of the factors that may affect the forward-looking statements contained in this release. For further information concerning risks and uncertainties associated with our business, please refer to the filings we make from time to time with the U.S. Securities and Exchange Commission ("SEC"), including the "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Legal Proceedings" sections of our latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, all of which may be viewed or obtained through the Investor Relations section of our website at www.leidos.com.All information in this release is as of February 17, 2026. Leidos expressly disclaims any duty to update the guidance or any other forward-looking statement provided in this release to reflect subsequent events, actual results or changes in Leidos' expectations. Leidos also disclaims any duty to comment upon or correct information that may be contained in reports published by investment analysts or others.CONTACTS:
Investor Relations:Media Relations:Stuart DavisTodd Blecher571.526.6124571.926.3822ir@leidos.com todd.blecher@leidos.com LEIDOS HOLDINGS, INC.UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Year Ended(in millions, except per share data)January 2,
2026
January 3,
2025
January 2,
2026
January 3,
2025Revenues$ 4,207
$ 4,365
$ 17,174
$ 16,662Cost of revenues3,468
3,672
14,075
13,864Selling, general and administrative expenses266
279
999
983Acquisition, integration and restructuring costs8
2
18
16Asset impairment charges1
5
5
11Equity earnings of non-consolidated subsidiaries(9)
(14)
(32)
(39)Operating income473
421
2,109
1,827Non-operating income (expense):
Interest expense, net(48)
(47)
(203)
(193)Other income, net4
1
3
5Income before income taxes429
375
1,909
1,639Income tax expense(94)
(93)
(447)
(388)Net income335
282
1,462
1,251Less: net income (loss) attributable to non-controlling 8
(2)
14
(3)Net income attributable to Leidos common stockholders$ 327
$ 284
$ 1,448
$ 1,254Earnings per share:
Basic$ 2.57
$ 2.14
$ 11.31
$ 9.36Diluted2.53
2.12
11.14
9.22Weighted average number of common shares outstanding:
Basic127
133
128
134Diluted129
134
130
136Cash dividends declared per share$ 0.43
$ 0.40
$ 1.63
$ 1.54 LEIDOS HOLDINGS, INC.UNAUDITED CONSOLIDATED BALANCE SHEETS
(in millions, except share and par value data)January 2,
2026
January 3,
2025Assets
Cash and cash equivalents$ 1,108
$ 849Receivables, net2,708
2,645Inventory, net342
315Other current assets656
525Total current assets4,814
4,334Property, plant and equipment, net961
991Intangible assets, net458
517Goodwill6,342
6,084Operating lease right-of-use assets, net526
560Deferred tax assets48
203Other long-term assets344
321Total assets$ 13,493
$ 13,010Liabilities:
Accounts payable and accrued liabilities$ 1,988
$ 2,131Accrued payroll and employee benefits819
811Current portion of long-term debt20
618Total current liabilities2,827
3,560Long-term debt, net of current portion4,628
4,052Operating lease liabilities587
621Deferred tax liabilities221
2Other long-term liabilities268
315Total liabilities8,531
8,550Stockholders' equity:
Preferred stock, $0.0001 par value, 10,000,000 shares authorized and no shares issued and
outstanding at January 2, 2026, and January 3, 2025—
—Common stock, $0.0001 par value, 500,000,000 shares authorized, 126,380,657 and
131,163,899 shares issued and outstanding at January 2, 2026, and January 3, 2025, respectively—
—Additional paid-in capital319
1,112Retained earnings4,647
3,410Accumulated other comprehensive loss(50)
(110)Total Leidos stockholders' equity4,916
4,412Non-controlling interest46
48Total stockholders' equity4,962
4,460Total liabilities and stockholders' equity$ 13,493
$ 13,010 LEIDOS HOLDINGS, INC.UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
Year Ended(in millions)January 2,
2026
January 3,
2025
January 2,
2026
January 3,
2025Cash flows from operations:
Net income$ 335
$ 282
$ 1,462
$ 1,251Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization75
79
290
290Stock-based compensation23
26
95
85Asset impairment charges1
5
5
11Deferred income taxes81
(2)
369
(98)Other6
39
9
44Change in assets and liabilities, net of effects of acquisitions and dispositions:
Receivables251
40
(46)
(220)Other current assets and other long-term assets(7)
(6)
19
96Accounts payable and accrued liabilities and other long-term liabilities(200)
(16)
(308)
(117)Accrued payroll and employee benefits11
(87)
1
121Income taxes receivable/payable(81)
(66)
(146)
(28)Net cash provided by operating activities495
294
1,750
1,435Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired(1)
—
(293)
—Payments for property, equipment and software(43)
(86)
(125)
(149)Proceeds from disposition of businesses9
—
9
—Other2
—
4
7Net cash used in investing activities(33)
(86)
(405)
(142)Cash flows from financing activities:
Proceeds from debt issuance—
—
997
—Repayments of borrowings(5)
(4)
(1,019)
(18)Payments for debt issuance and modification costs—
—
(7)
—Dividend payments(55)
(53)
(211)
(208)Repurchases of stock and other(305)
(406)
(944)
(906)Proceeds from issuances of stock15
27
62
55Net capital distributions to non-controlling interests(7)
(3)
(16)
(6)Other—
(1)
(7)
(1)Net cash used in provided by financing activities(357)
(440)
(1,145)
(1,084)Effect of foreign exchange rate changes on cash and cash equivalents2
(15)
13
(10)Net increase (decrease) in cash, cash equivalents and restricted cash107
(247)
213
199Cash, cash equivalents and restricted cash at beginning of period1,097
1,238
991
792Cash, cash equivalents and restricted cash at end of year$ 1,204
$ 991
$ 1,204
$ 991 LEIDOS HOLDINGS, INC.UNAUDITED SEGMENT OPERATING RESULTS
Three Months Ended
Year Ended(in millions, except margin percentages)January 2,
2026
January 3,
2025
January 2,
2026
January 3,
2025Revenues:
National Security & Digital$ 1,846
$ 1,894
$ 7,611
$ 7,365Health & Civil1,205
1,328
5,069
5,015Commercial & International610
604
2,315
2,252Defense Systems546
539
2,179
2,030Total$ 4,207
$ 4,365
$ 17,174
$ 16,662Operating income (loss):
National Security & Digital$ 196
$ 175
$ 760
$ 720Health & Civil264
279
1,202
1,095Commercial & International51
40
166
104Defense Systems44
2
156
94Corporate(82)
(75)
(175)
(186)Total$ 473
$ 421
$ 2,109
$ 1,827Operating income margin:
National Security & Digital10.6 %
9.2 %
10.0 %
9.8 %Health & Civil21.9 %
21.0 %
23.7 %
21.8 %Commercial & International8.4 %
6.6 %
7.2 %
4.6 %Defense Systems8.1 %
0.4 %
7.2 %
4.6 %Total11.2 %
9.6 %
12.3 %
11.0 %Revenues and operating income for the three months and year ended January 2, 2026, reflect the impact of a six-week government shutdown. Revenues and operating income for the three months and year ended January 3, 2025, reflect the impact of an extra work week as part of the company's 4-4-5 financial calendar. Together, these two factors lowered year-over-year comparisons for revenue by an estimated 7 and 2 percentage points for the quarter and year, respectively, with relatively little impact on profitability.National Security & DigitalNational Security & Digital revenues were $1.85 billion for the quarter and $7.61 billion for the year, down 3% and up 3% over the comparable 2024 periods, respectively. The segment realized significant growth in the quarter and the year from new business wins across the portfolio, including large classified contracts within the Intelligence Community and the Army Global Unified Network program, as well as the acquisition of Kudu Dynamics.National Security & Digital operating income margin was 10.6% for the quarter, compared to 9.2% in the prior year quarter, and 10.0% for the year, compared to 9.8% in the prior year. On a non-GAAP basis, operating income margin was 11.3% for the quarter, compared to 9.7% in the prior year quarter, and 10.4% for the year, compared to 10.2% in the prior year. The increase in segment profitability for the quarter and full year was driven by increased volumes and efficiencies on certain fixed price programs and improved program execution.Health & CivilHealth & Civil revenues were $1.21 billion for the quarter and $5.07 billion for the year, down 9% and up 1% over the comparable 2024 periods, respectively. Health & Civil operating income margin was 21.9% for the quarter, compared to 21.0% in the prior year quarter, and 23.7% for the year, compared to 21.8% in the prior year. On a non-GAAP basis, operating income margin was 22.4% for the quarter, compared to 21.6% in the prior year quarter, and 24.2% for the year, compared to 22.5% in the prior year. The managed health services business was a moderate headwind to the quarter and a moderate tailwind for the year. The consistent increase in segment profitability for the quarter and the year was driven by strong program execution as well as technology-driven efficiencies and prudent cost management.LEIDOS HOLDINGS, INC.
UNAUDITED SEGMENT OPERATING RESULTS [CONTINUED]Commercial & InternationalCommercial & International revenues were $610 million for the quarter and $2.32 billion for the year, up 1% and 3% over the comparable 2024 periods. The primary drivers for revenue growth in the quarter and year were higher volumes within commercial energy and improved performance in the United Kingdom, which offset the divestiture of an immaterial business not aligned to the Company's long term strategy.Commercial & International operating income margin for the quarter was 8.4%, compared to 6.6% in the prior year quarter. On a non-GAAP basis, operating margin for the quarter was 9.7%, compared to 7.9% in the prior year quarter. Commercial & International operating income margin for fiscal year 2025 was 7.2%, compared to 4.6% in the prior year. On a non-GAAP basis, operating margin for the year was 8.7% compared to 6.4% in the prior year. The increase in segment profitability for the quarter and year was primarily driven by a more profitable business mix and improved program execution.Defense SystemsDefense System revenues were $546 million for the quarter and $2.18 billion for the year, up 1% and 7% over the comparable 2024 periods, respectively, driven primarily by higher production volumes on warfighter support programs. Defense Systems operating income margin for the quarter was 8.1%, compared to 0.4% in the prior year quarter. On a non-GAAP basis, operating margin for the quarter was 10.3%, up from 3.5% in the prior year quarter. Defense Systems operating income margin for fiscal year 2025 was 7.2%, compared to 4.6% in the prior year. On a non-GAAP basis, operating margin for the year was 9.5%, up from 7.9% in fiscal year 2024. The increase in segment profitability for the quarter and year was primarily driven by rigorous cost-discipline and the successful maturation of key programs into the production phase.LEIDOS HOLDINGS, INC.
UNAUDITED BACKLOG BY REPORTABLE SEGMENTBacklog represents the revenues we expect to recognize under negotiated contracts and unissued task orders on sole source IDIQ contracts, to the extent we believe their execution and funding to be probable. Backlog does not include potential task orders expected to be awarded under multiple award IDIQ contracts.Backlog value is based on management's estimates about volume of services, availability of customer funding and other factors, and excludes contracts that are under protest. Estimated backlog comprises both funded and negotiated unfunded backlog. Backlog estimates are subject to change and may be affected by several factors including modifications of contracts, non-exercise of options and foreign currency movements.Funded backlog for contracts with the U.S. government represents the value on contracts for which funding is appropriated less revenues previously recognized on these contracts. Funded backlog for contracts with non-U.S. government entities and commercial customers represents the estimated value on contracts, which may cover multiple future years, under which Leidos is obligated to perform, less revenue previously recognized on the contracts. Unfunded backlog represents all remaining value on task orders that is not funded, including options, that we expect to recognize as well as expected future task orders under sole source IDIQ contracts.The estimated value of segment backlog as of the dates presented was as follows:
January 2, 2026
January 3, 2025(1)(in millions)
Funded
Unfunded
Total
Funded
Unfunded
TotalNational Security & Digital
$ 2,749
$ 23,891
$ 26,640
$ 2,881
$ 23,404
$ 26,285Health & Civil
2,745
7,690
10,435
1,456
10,735
12,191Commercial & International
2,588
2,659
5,247
2,456
1,901
4,357Defense Systems
1,603
5,107
6,710
1,616
3,941
5,557Total
$ 9,685
$ 39,347
$ 49,032
$ 8,409
$ 39,981
$ 48,390
(1)Amounts have been recast to include estimated future revenue on task orders expected to be awarded under sole source IDIQ contracts. As a result, unfunded backlog increased $4,836 million.Backlog at January 2, 2026, includes $149 million acquired through the acquisition of Kudu Dynamics within the National Security and Digital reportable segment. LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURESLeidos uses and refers to organic revenues, non-GAAP operating income, non-GAAP operating margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP diluted EPS, free cash flow and free cash flow conversion, which are not measures of financial performance under generally accepted accounting principles in the U.S. and, accordingly, these measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be read in conjunction with Leidos's consolidated financial statements prepared in accordance with GAAP.Management believes that these non-GAAP measures provide another measure of the results of operations and financial condition, including its ability to comply with financial covenants. These non-GAAP measures are frequently used by financial analysts covering Leidos and its peers. The computation of non-GAAP measures may not be comparable to similarly titled measures reported by other companies, thus limiting their use for comparability.Organic revenues captures the revenue that is inherent in the underlying business excluding the impact of acquisitions and divestitures made within the prior year; it is computed as current revenues excluding revenues from acquisitions within the last 12 months and divestitures within the current and year-ago periods.Non-GAAP operating income is computed by excluding the following discrete items from operating income:Acquisition, integration and restructuring costs – Represents acquisition, integration, lease termination, severance and retention costs and asset markdowns related to acquisitions and restructuring activities.Amortization of acquired intangible assets – Represents the amortization of the fair value of the acquired intangible assets.Asset impairment charges – Represents impairments of long-lived intangible assets, right-of-use assets, and other assets related to our facility rationalization effort.Gain on sale of business – Represents the gain on sale of a business.Gain on sale of intangible assets – Represents the gain on sale of intellectual property not used in operations.Non-GAAP operating margin is computed by dividing non-GAAP operating income by revenues.Adjusted EBITDA is computed by excluding the following items from income before income taxes: (i) discrete items as identified above; (ii) interest expense; (iii) interest income; (iv) depreciation expense; and (v) amortization of internally developed intangible assets.Adjusted EBITDA margin is computed by dividing adjusted EBITDA by revenues.Non-GAAPnet income is computed by excluding the discrete items listed under non-GAAP operating income and their related tax impacts.Non-GAAP diluted EPS is computed by dividing net income attributable to Leidos common stockholders, adjusted for the discrete items as identified above and the related tax impacts, by the diluted weighted average number of common shares outstanding.Non-GAAP free cash flow is computed by deducting expenditures for property, equipment and software from net cash provided by operating activities.Non-GAAP free cash flow conversion is computed by dividing free cash flow by non-GAAP net income attributable to Leidos common stockholders; operating cash flow conversion is computed by dividing net cash provided by operating activities by net income attributable to Leidos shareholders.LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except growth percentages)
The following table presents the reconciliation of revenues to organic revenues by reportable segment and total operations:
Three Months Ended
Year Ended
January 2,
2026
January 3,
2025
Percent
Change
January 2,
2026
January 3,
2025
Percent
ChangeNational Security & Digital
Revenues, as reported$ 1,846
$ 1,894
(3) %
$ 7,611
$ 7,365
3 %Acquisition revenues(1)22
—
60
—
Organic revenues$ 1,824
$ 1,894
(4) %
$ 7,551
$ 7,365
3 %Health & Civil
Revenues, as reported$ 1,205
$ 1,328
(9) %
$ 5,069
$ 5,015
1 %Commercial & International
Revenues, as reported$ 610
$ 604
1 %
$ 2,315
$ 2,252
3 %Divestiture revenues(2)—
6
—
6
Organic revenues$ 610
$ 598
2 %
$ 2,315
$ 2,246
3 %Defense Systems
Revenues, as reported$ 546
$ 539
1 %
$ 2,179
$ 2,030
7 %Total Operations
Revenues, as reported$ 4,207
$ 4,365
(4) %
$ 17,174
$ 16,662
3 %Acquisition and divestiture revenues(1)(2)22
6
60
6
Organic revenues$ 4,185
$ 4,359
(4) %
$ 17,114
$ 16,656
3 %
(1)Current period acquisition revenues reflect revenues in the current as reported figures for 12 months from closing of each acquisition. Acquisition revenues for the three months and year ended January 2, 2026, for the National Security & Digital segment include Kudu Dynamics (acquired May 23, 2025).(2)Prior period divestiture revenues reflect revenues from assets subsequently divested. Divestiture revenues for the three months and twelve months ended January 3, 2025, for the Commercial and International segment include an immaterial business not aligned to the Company's long term strategy (divested October 31, 2025). LEIDOS HOLDINGS, INC.UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED](in millions, except per share data and margin percentages) The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the three months ended January 2, 2026:
Three Months Ended January 2, 2026
As reported
Acquisition,
integration
and
restructuring
costs
Amortization
of acquired
intangibles
Asset
impairment
charges
Gain on sale
of business
Non-GAAP
resultsOperating income
$ 473
$ 8
$ 34
$ 1
$ —
$ 516Non-operating expense, net
(44)
—
—
—
(5)
(49)Income before income taxes
429
8
34
1
(5)
467Income tax expense(1)
(94)
(2)
(8)
—
1
(103)Net income
$ 335
$ 6
$ 26
$ 1
$ (4)
$ 364Less: net income attributable to
non-controlling interest
8
—
—
—
—
8Net income attributable to Leidos
common stockholders
$ 327
$ 6
$ 26
$ 1
$ (4)
$ 356
Diluted EPS attributable to Leidos
common stockholders(2)
$ 2.53
$ 0.05
$ 0.20
$ 0.01
$ (0.03)
$ 2.76Diluted shares
129
129
129
129
129
129
Three Months Ended January 2, 2026
As reported
Acquisition,
integration
and
restructuring
costs
Amortization
of acquired
intangibles
Asset
impairment
charges
Gain on sale
of business
Non-GAAP
resultsNet income
$ 335
$ 6
$ 26
$ 1
$ (4)
$ 364Income tax expense(1)
94
2
8
—
(1)
103Income before income taxes
429
8
34
1
(5)
467Depreciation expense
41
—
—
—
—
41Amortization of intangibles
34
—
(34)
—
—
—Interest expense, net
48
—
—
—
—
48EBITDA
$ 552
$ 8
$ —
$ 1
$ (5)
$ 556EBITDA margin
13.1 %
13.2 %
(1)Calculation uses an estimated statutory tax rate on non-GAAP adjustments.(2)Earnings per share is computed independently for each of the non-GAAP adjustments presented and therefore may not sum to the total non-GAAP earnings per share due to rounding. LEIDOS HOLDINGS, INC.UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED](in millions, except per share data and margin percentages)
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the three months ended January 3, 2025:
Three Months Ended January 3, 2025
As reported
Acquisition,
integration and
restructuring costs
Amortization of
acquired
intangibles
Asset impairment
charges
Non-GAAP
resultsOperating income
$ 421
$ 2
$ 37
$ 5
$ 465Non-operating expense, net
(46)
—
—
—
(46)Income before income taxes
375
2
37
5
419Income tax expense(1)
(93)
—
(9)
(1)
(103)Net income
$ 282
$ 2
$ 28
$ 4
$ 316Less: net loss attributable to
non-controlling interest
(2)
—
—
—
(2)Net income attributable to Leidos
common stockholders
$ 284
$ 2
$ 28
$ 4
$ 318Diluted EPS attributable to Leidos
common stockholders(2)
$ 2.12
$ 0.01
$ 0.21
$ 0.03
$ 2.37Diluted shares
134
134
134
134
134
Three Months Ended January 3, 2025
As reported
Acquisition,
integration and
restructuring costs
Amortization of
acquired
intangibles
Asset impairment
charges
Non-GAAP
resultsNet income
$ 282
$ 2
$ 28
$ 4
$ 316Income tax expense(1)
93
—
9
1
103Income before income taxes
375
2
37
5
419Depreciation expense
42
—
—
—
42Amortization of intangibles
37
—
(37)
—
—Interest expense, net
47
—
—
—
47EBITDA
$ 501
$ 2
$ —
$ 5
$ 508EBITDA margin
11.5 %
11.6 %
(1)Calculation uses an estimated statutory tax rate on non-GAAP adjustments.(2)Earnings per share is computed independently for each of the non-GAAP adjustment presented and therefore may not sum to the total non-GAAP earnings per share due to rounding. LEIDOS HOLDINGS, INC.UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED](in millions, except per share data and margin percentages)
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the year ended January 2, 2026:
Year Ended January 2, 2026
As reported
Acquisition,
integration
and
restructuring
costs(1)
Amortization
of acquired
intangibles
Asset
impairment
charges
Gain on sale
of business
Non-GAAP
resultsOperating income
$ 2,109
$ 19
$ 129
$ 4
$ —
$ 2,261Non-operating expense, net
(200)
—
—
—
(5)
(205)Income before income taxes
1,909
19
129
4
(5)
2,056Income tax expense(2)
(447)
(4)
(32)
(1)
1
(483)Net income
1,462
15
97
3
(4)
1,573Less: net income attributable to
non-controlling interest
14
—
—
—
—
14Net income attributable to Leidos
common stockholders
$ 1,448
$ 15
$ 97
$ 3
$ (4)
$ 1,559
Diluted EPS attributable to Leidos
common stockholders(3)
$ 11.14
$ 0.12
$ 0.75
$ 0.02
$ (0.03)
$ 11.99Diluted shares
130
130
130
130
130
130
Year Ended January 2, 2026
As reported
Acquisition,
integration
and
restructuring
costs(1)
Amortization
of acquired
intangibles
Asset
impairment
charges
Gain on sale
of business
Non-GAAP
resultsNet income
$ 1,462
$ 15
$ 97
$ 3
$ (4)
$ 1,573Income tax expense(1)
447
4
32
1
(1)
483Income before income taxes
1,909
19
129
4
(5)
2,056Depreciation expense
160
—
—
—
—
160Amortization of intangibles
130
—
(129)
—
—
1Interest expense, net
203
—
—
—
—
203EBITDA
$ 2,402
$ 19
$ —
$ 4
$ (5)
$ 2,420EBITDA margin
14.0 %
14.1 %
(1)Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the consolidated statements of operations.(2)Calculation uses an estimated statutory tax rate on non-GAAP adjustments.(3)Earnings per share is computed independently for each of the non-GAAP adjustments presented and therefore may not sum to the total non-GAAP earnings per share due to rounding. LEIDOS HOLDINGS, INC.UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED](in millions, except per share data and margin percentages)
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the year ended January 3, 2025:
Year Ended January 3, 2025
As reported
Acquisition,
integration
and
restructuring
costs(1)
Amortization
of acquired
intangibles
Asset
impairment
charges
Gain on sale
of intangible
assets
Non-GAAP
resultsOperating income
$ 1,827
$ 22
$ 147
$ 11
$ —
$ 2,007Non-operating expense, net
(188)
—
—
—
(2)
(190)Income before income taxes
1,639
22
147
11
(2)
1,817Income tax expense(2)
(388)
(5)
(37)
(3)
1
(432)Net income
1,251
17
110
8
(1)
1,385Less: net loss attributable to
non-controlling interest
(3)
—
—
—
—
(3)Net income attributable to Leidos
common stockholders
$ 1,254
$ 17
$ 110
$ 8
$ (1)
$ 1,388
Diluted EPS attributable to Leidos
common stockholders(3)
$ 9.22
$ 0.13
$ 0.81
$ 0.06
$ (0.01)
$ 10.21Diluted shares
136
136
136
136
136
136
Year Ended January 3, 2025
As reported
Acquisition,
integration
and
restructuring
costs(1)
Amortization
of acquired
intangibles
Asset
impairment
charges
Gain on sale
of intangible
assets
Non-GAAP resultsNet income
$ 1,251
$ 17
$ 110
$ 8
$ (1)
$ 1,385Income tax expense(2)
388
5
37
3
(1)
432Income before income taxes
1,639
22
147
11
(2)
1,817Depreciation expense
143
—
—
—
—
143Amortization of intangibles
147
—
(147)
—
—
—Interest expense, net
193
—
—
—
—
193EBITDA
$ 2,122
$ 22
$ —
$ 11
$ (2)
$ 2,153EBITDA margin
12.7 %
12.9 %
(1)Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the consolidated statements of operations.(2)Calculation uses an estimated statutory tax rate on non-GAAP adjustments.(3)Earnings per share is computed independently for each of the non-GAAP adjustments presented and therefore may not sum to the total non-GAAP earnings per share due to rounding. LEIDOS HOLDINGS, INC.UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED](in millions, except margin percentages) The following tables present the reconciliation of non-GAAP operating income by reportable segment and Corporate to operating income:
Three Months Ended January 2, 2026
Operating
income (loss)
Acquisition,
integration and
restructuring costs
Amortization of
acquired
intangibles
Asset impairment
charges
Non-GAAP
operating
income
(loss)
Non-GAAP
operating
marginNational Security &
Digital
$ 196
$ 2
$ 9
$ 1
$ 208
11.3 %Health & Civil
264
—
6
—
270
22.4 %Commercial &
International
51
1
7
—
59
9.7 %Defense Systems
44
—
12
—
56
10.3 %Corporate
(82)
5
—
—
(77)
NMTotal
$ 473
$ 8
$ 34
$ 1
$ 516
12.3 %
Three Months Ended January 3, 2025
Operating
income (loss)
Acquisition,
integration and
restructuring costs
Amortization of
acquired
intangibles
Asset impairment
charges
Non-GAAP
operating
income
(loss)
Non-GAAP
operating
marginNational Security &
Digital
$ 175
$ —
$ 6
$ 3
$ 184
9.7 %Health & Civil
279
—
6
2
287
21.6 %Commercial &
International
40
—
8
—
48
7.9 %Defense Systems
2
—
17
—
19
3.5 %Corporate
(75)
2
—
—
(73)
NMTotal
$ 421
$ 2
$ 37
$ 5
$ 465
10.7 %
Year Ended January 2, 2026
Operating income
(loss)
Acquisition,
integration and
restructuring costs(1)
Amortization of
acquired
intangibles
Asset impairment
charges
Non-GAAP
operating
income
(loss)
Non-GAAP
operating
marginNational Security &
Digital
$ 760
$ 4
$ 29
$ 1
$ 794
10.4 %Health & Civil
1,202
—
24
—
1,226
24.2 %Commercial & International
166
7
28
—
201
8.7 %Defense Systems
156
—
48
3
207
9.5 %Corporate
(175)
8
—
—
(167)
NMTotal
$ 2,109
$ 19
$ 129
$ 4
$ 2,261
13.2 %
NM - Not Meaningful(1)Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the consolidated statements of operations. LEIDOS HOLDINGS, INC.UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED](in millions, except margin percentages)
The following table present the reconciliation of non-GAAP operating income by reportable segment and Corporate to operating income (continued):
Year Ended January 3, 2025
Operating
income (loss)
Acquisition,
integration and
restructuring
costs(1)
Amortization of
acquired
intangibles
Asset impairment
charges
Non-GAAP
operating
income (loss)
Non-GAAP
operating
marginNational Security &
Digital
$ 720
$ —
$ 23
$ 5
$ 748
10.2 %Health & Civil
1,095
—
27
4
1,126
22.5 %Commercial &
International
104
9
30
2
145
6.4 %Defense Systems
94
—
67
—
161
7.9 %Corporate
(186)
13
—
—
(173)
NMTotal
$ 1,827
$ 22
$ 147
$ 11
$ 2,007
12.0 %
NM - Not Meaningful(1)Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the consolidated statements of operations. LEIDOS HOLDINGS, INC.UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
The following table presents the reconciliation of free cash flow to net cash provided by operating activities as well as the calculation of operating cash flow and free cash flow conversion ratios:
Three Months Ended
Year Ended(in millions, except conversion ratio)
January 2,
2026
January 3, 2025
January 2,
2026
January 3, 2025Net cash provided by operating activities(1)
$ 495
$ 294
$ 1,750
$ 1,435Payments for property, equipment and software
(43)
(86)
(125)
(149)Free cash flow
$ 452
$ 208
$ 1,625
$ 1,286
Net income attributable to Leidos common stockholders
$ 327
$ 284
$ 1,448
$ 1,254Acquisition, integration and restructuring costs(2)(3)
6
2
15
17Amortization of acquired intangibles(2)
26
28
97
110Asset impairment charges(2)
1
4
3
8Gain on sale of intangible assets(2)
(4)
—
(4)
(1)Non-GAAP net income attributable to Leidos common
stockholders
$ 356
$ 318
$ 1,559
$ 1,388
Operating cash flow conversion ratio
151 %
104 %
121 %
114 %Free cash flow conversion ratio
127 %
65 %
104 %
93 %
(1)Net cash provided by operating activities for the three and twelve months ended January 3, 2025, was recast to reflect a change in accounting policy.(2)After-tax expenses excluded from non-GAAP net income.(3)Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the consolidated statements of operations. BACKGROUNDBeginning in fiscal 2026, Leidos will operate in four reportable segments that are focused on specific, defined capability sets delivered to customers:Intelligence & Digital - provides IT services and solutions to U.S. federal government customers. Services and offerings include technological research and development, digital solutions, software development and other IT services work.Health - delivers services and solutions to federal and commercial customers in areas of public health, care coordination, and life and environmental sciences.Homeland - provides various technological services, power grid engineering, transportation, aviation, and security products primarily to commercial and international customers.Defense - develops and produces advanced space, aerial, surface, and sub-surface manned and un-manned defense systems.We have prepared unaudited historical consolidated financial information based on the new reporting structure set forth below, which includes certain non-GAAP measures. Management believes that these non-GAAP measures provide another representation of the results of operations and financial condition, including its ability to comply with financial covenants. These non-GAAP measures are frequently used by financial analysts covering Leidos and its peers. The computation of non-GAAP measures may not be comparable to similarly titled measures reported by other companies, thus limiting their use for comparability.UNAUDITED HISTORICAL FINANCIAL MEASURES
The following table presents revenues for the four quarters of the year ended January 2, 2026, and fiscal 2025 and 2024 under the new segment structure:
Three Months Ended
Year Ended(in millions)
April 4,
2025
July 4,
2025
October 3,
2025
January 2,
2026
January 2,
2026
January 3,
2025Intelligence & Digital
$ 1,408
$ 1,408
$ 1,525
$ 1,358
$ 5,699
$ 5,584Health
1,188
1,175
1,210
1,109
4,682
4,553Homeland
770
771
775
818
3,134
3,122Defense
879
899
959
922
3,659
3,403Total
$ 4,245
$ 4,253
$ 4,469
$ 4,207
$ 17,174
$ 16,662 UNAUDITED NON-GAAP FINANCIAL MEASURES
The following tables present the reconciliation of operating income by reportable segment to non-GAAP operating income for the four quarters of the year ended January 2, 2026, and fiscal 2025 and 2024 under the new segment structure:
Three Months Ended April 4, 2025(in millions)
Operating
income (loss)
Acquisition,
integration and
restructuring
costs(1)
Amortization of
acquired
intangibles
Non-GAAP
operating
income (loss)Intelligence & Digital
$ 132
$ —
$ 5
$ 137Health
288
—
6
294Homeland
61
4
7
72Defense
74
—
12
86Corporate
(25)
1
—
(24)Total
$ 530
$ 5
$ 30
$ 565
(1)Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the condensed consolidated statements of operations. LEIDOS HOLDINGS, INC.UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
The following tables present the reconciliation of operating income by reportable segment to non-GAAP operating income for the four quarters of the year ended January 2, 2026, and fiscal 2025 and 2024 under the new segment structure:
Three Months Ended July 4, 2025(in millions)
Operating
income (loss)
Acquisition,
integration and
restructuring
costs
Amortization of
acquired
intangibles
Non-GAAP
operating
income (loss)Intelligence & Digital
$ 135
$ —
$ 7
$ 142Health
303
—
6
309Homeland
64
1
7
72Defense
78
—
12
90Corporate
(9)
1
—
(8)Total
$ 571
$ 2
$ 32
$ 605
Three Months Ended October 3, 2025(in millions)
Operating
income (loss)
Acquisition,
integration and
restructuring
costs
Amortization of
acquired
intangibles
Asset
impairment
charges
Non-GAAP
operating
income (loss)Intelligence & Digital
$ 141
$ 2
$ 8
$ —
$ 151Health
324
—
6
—
330Homeland
50
1
7
—
58Defense
79
—
12
3
94Corporate
(59)
1
—
—
(58)Total
$ 535
$ 4
$ 33
$ 3
$ 575
Three Months Ended January 2, 2026(in millions)
Operating
income (loss)
Acquisition,
integration and
restructuring
costs
Amortization of
acquired
intangibles
Asset
impairment
charges
Non-GAAP
operating
income (loss)Intelligence & Digital
$ 135
$ 2
$ 9
$ 1
$ 147Health
256
—
5
—
261Homeland
76
1
8
—
85Defense
88
—
12
—
100Corporate
(82)
5
—
—
(77)Total
$ 473
$ 8
$ 34
$ 1
$ 516 LEIDOS HOLDINGS, INC.UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
The following tables present the reconciliation of operating income by reportable segment to non-GAAP operating income for the four
quarters of the year ended January 2, 2026, and fiscal 2025 and 2024 under the new segment structure:
Year Ended January 2, 2026(in millions)
Operating
income (loss)
Acquisition,
integration and
restructuring
costs(1)
Amortization of
acquired
intangibles
Asset
impairment
charges
Non-GAAP
operating
income (loss)Intelligence & Digital
$ 543
$ 4
$ 29
$ 1
$ 577Health
1,171
—
23
—
1,194Homeland
251
7
29
—
287Defense
319
—
48
3
370Corporate
(175)
8
—
—
(167)Total
$ 2,109
$ 19
$ 129
$ 4
$ 2,261
(1)Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the consolidated statements of operations.
Year Ended January 3, 2025(in millions)
Operating income
(loss)
Acquisition,
integration and
restructuring
costs(1)
Amortization of
acquired
intangibles
Asset
impairment
charges
Non-GAAP
operating
income (loss)Intelligence & Digital
$ 532
$ —
$ 23
$ 5
$ 560Health
1,049
—
27
4
1,080Homeland
198
9
30
2
239Defense
234
—
67
—
301Corporate
(186)
13
—
—
(173)Total
$ 1,827
$ 22
$ 147
$ 11
$ 2,007
(1)Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the consolidated statements of operations.
View original content:https://www.prnewswire.com/news-releases/leidos-posts-strong-fourth-quarter-and-fiscal-year-2025-results-302688967.htmlSOURCE Leidos Holdings, Inc.
Original: Leidos Posts Strong Fourth Quarter and Fiscal Year 2025 Results
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