On April 30, 2024 Leidos Holdings, Inc., a FORTUNE 500 innovation company, reported financial results for the first quarter of fiscal year 2024 (Press release, Leidos, APR 30, 2024, View Source [SID1234644729]).

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Thomas Bell, Leidos Chief Executive Officer, commented, "Our strong start to the year demonstrates the team’s ability to deliver for its employees, customers, and shareholders. With greater visibility around customer funding and performance ahead of plan, we are raising guidance on all metrics ahead of our typical pace. We fully expect that 2024 will showcase our commitment to profitable growth. Going forward, our focus remains on operational execution while we develop a robust strategy, invest in disruptive technology-driven solutions, and unlock maximum value through our capability-based organization."

Revenues for the quarter were $3.98 billion, up 7% compared to the first quarter of 2023. Revenues grew year-over-year due to increased demand across all customer segments, especially for managed health services.

For the first quarter, net income was $283 million, or $2.07 per diluted share. Net income and diluted EPS were up 73% and 77% year-over-year, respectively. Net income margin of 7.1% increased from 4.4% in the first quarter of 2023.

Adjusted EBITDA was $490 million for the first quarter, up 42% year-over-year. Record adjusted EBITDA margin of 12.3% increased from 9.4% in the first quarter of 2023. Non-GAAP net income was $313 million for the first quarter, up 53% year-over-year, and non-GAAP diluted EPS for the quarter was $2.29, up 56% year-over-year. The primary drivers of increased profitability were increased volumes on fixed-rate managed health services and improved cost control across the company.

Cash Flow Summary

In the first quarter, Leidos generated $63 million of net cash provided by operating activities and used $12 million in investing activities and $228 million in financing activities. Net cash provided by operating activities was driven by strong EBITDA and collections performance. Days Sales Outstanding (DSO) for the quarter was 62, in line with the first quarter of 2023.

Investing activities consisted primarily of $17 million in property, equipment and software payments, which resulted in quarterly free cash flow of $46 million. Leidos returned $236 million to shareholders in the first quarter, including $183 million in share repurchases and $53 million as part of its regular quarterly cash dividend program. As of March 29, 2024, Leidos had $633 million in cash and cash equivalents and $4.7 billion of debt.

On April 26, 2024, the Leidos Board of Directors declared a cash dividend of $0.38 per share to be paid on June 28, 2024, to stockholders of record at the close of business on June 14, 2024.

Business Development

Net bookings totaled $3.7 billion in the quarter, representing a book-to-bill ratio of 0.9. As a result, backlog at the end of the quarter was $36.6 billion, of which $8.0 billion was funded.

Forward Guidance

Leidos is updating its fiscal year 2024 guidance as follows:

FY24 Guidance

Measure

Current

Prior

Revenues (billions)

$16.0 – $16.4

$15.7 – $16.1

Adjusted EBITDA Margin

Mid-to-High 11%

Mid-to-High 10%

Non-GAAP Diluted EPS

$8.40 – $8.80

$7.50 – $7.90

Cash Flows Provided by Operating Activities (billions)

approximately $1.3

approximately $1.1

For 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 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 at this time. The amounts of these deductions may be material and, therefore, could result in projected net income and diluted EPS being materially less than what may be implied by projected adjusted EBITDA margins and non-GAAP diluted EPS.