Leidos(LDOS)2024-10-29 14:57Financial Data and Key Metrics Changes - Revenues for Q3 2024 were 596 million, a 32% increase year-over-year, with an adjusted EBITDA margin of 14.2%, marking a new high for the company [26][27] - Adjusted diluted EPS grew by 44% to 396 million [27] - Free cash flow conversion was 159%, with 200 million in shares, completing 500 million planned share repurchases for the year [7][34] Business Line Data and Key Metrics Changes - National Security and Digital revenues increased by 1% year-over-year, with non-GAAP operating income margin rising to 10.5% [29] - Health & Civil revenues grew by 16% year-over-year, with non-GAAP operating income margin increasing to 24.2% [30] - Commercial & International revenues rose by 5%, with non-GAAP operating margins at 8.8% [31] - Defense Systems revenues increased by 13% year-over-year, with non-GAAP operating margins up 280 basis points to 10.2% [32] Market Data and Key Metrics Changes - The company ended Q3 with a total backlog of 9.1 billion of funded backlog [18] - Net bookings for the quarter were 8.1 billion, resulting in a book-to-bill ratio of over 1.9x [18] Company Strategy and Development Direction - The company is focusing on a new "North Star" growth strategy, with plans to share more details at the upcoming Investors Day in March 2025 [8][24] - Investments are being made in AI, virtual health, and other technologies to enhance service delivery and operational efficiency [12][24] - The company aims to maintain a strong performance in Health & Civil, viewing it as a core growth engine moving forward [52][55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing financial performance of the Health & Civil segment, particularly due to increased funding from the VA [15][51] - The company raised its 2024 revenue guidance to a range of 16.35 billion to 0.40 per share [8] - The company is managing corporate costs effectively, with expected annualized savings of 30 million from real estate footprint reductions [28] Q&A Session Summary Question: Insights on new takeaways and full-spectrum cyber - Management highlighted excitement about the National Security and Digital segment, emphasizing a strong history of winning significant programs [41][42] Question: Update on Health & Civil segment and VA funding - Management confirmed a strong performance in Health & Civil, with clarity on future contracts and a focus on innovation [49][52][55] Question: Update on BuckEye program and unclassified data collection - Management stated that BuckEye remains a strong business with fully utilized assets and plans for future growth [57][58] Question: Visibility on VBA work and recompete timing - Management provided clarity on the current contract and expected new awards, indicating confidence in maintaining high margins [84][87] Question: Factors affecting national security and digital growth - Management noted budget shifts and personnel challenges but remains optimistic about future growth in the segment [89][91] Question: Guidance for Q4 and implications for 2025 - Management indicated a modest step down in Q4 revenue but expects strong performance to continue into 2025 [93][95]