Leidos (LDOS) Reports In-Line Q1 EPS; Lowers FY20 EPS/Revenue Guidance

Leidos (NYSE: LDOS) reported Q1 EPS of $1.19, in-line with the analyst estimate of $1.19. Revenue for the quarter came in at $2.89 billion versus the consensus estimate of $2.89 billion.

Roger Krone, Leidos Chairman and Chief Executive Officer, commented: "First quarter results demonstrated the resiliency of our business, as evidenced by strong pro-forma organic revenue growth across all business segments, significant bookings and a new record backlog position. While the COVID-19 pandemic presented some late quarter headwinds, we are confident that the critical nature of our work, coupled with our early business contingency planning, will largely mitigate any long-term impacts."

GUIDANCE:

Leidos sees FY2020 EPS of $5.00-$5.30, versus the consensus of $5.44. Leidos sees FY2020 revenue of $12.5-12.9 billion, versus the consensus of $12.68 billion.

As a result of the Company's year-to-date performance and updated expectations, the Company is revising its fiscal year 2020 guidance as follows:

• Revenues of $12.5 billion to $12.9 billion, from $12.6 billion to $13.0 billion;
• Adjusted EBITDA margins of 9.8% to 10.0%, from 10.0% to 10.2%;
• Non-GAAP diluted EPS of $5.00 to $5.30, from $5.30 to $5.65; and
• Cash flows provided by operating activities at or above $1.0 billion.

The Company's updated forward guidance reflects the currently expected impacts related to COVID-19 and the acquisition of L3 Harris' security detection and automation businesses.

COVID-19

The COVID-19 pandemic is affecting major economic and financial markets, and effectively all industries and governments are facing challenges and has resulted in a period of business disruption, the length and severity of which cannot be predicted. On March 27, 2020, the President signed the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), a $2 trillion coronavirus response bill to provide widespread emergency relief for Americans and the country's economy.

There is the potential that awards and execution of new contracts may also be delayed and our ability to perform on existing contracts has been delayed or impaired. In addition, our costs have increased and may not be fully recoverable or adequately covered by insurance, which could impact our profitability. The continued spread of COVID-19 could also have similar impacts on our customers, subcontractors and suppliers, causing delay or limiting their ability to perform, including in making timely payments to us.

We have experienced delays on certain contracts as a result of standby leave absences, which has caused a portion of our contracts to be less profitable. We expect to recover a portion of these costs through Section 3610 of the CARES Act.

For the quarter, COVID-19 adversely impacted revenues by approximately $50 million. The full extent of the impact of the COVID-19 pandemic on our operational and financial performance, including our ability to execute on programs in the expected timeframe, will depend on future developments, including the duration and spread of the pandemic and related actions taken by the U.S. government, state and local government officials and international governments to prevent disease spread, all of which are uncertain and cannot be predicted.

The CARES Act enabled us to defer our federal and some state income tax payments from the second quarter of fiscal year 2020 to the third quarter of fiscal year 2020 and also to defer payment of the employer portion of social security taxes for the balance of fiscal year 2020.

We have taken measures to protect the health and well-being of our workforce and are working with our customers to minimize the disruption of the performance on our contracts.

For earnings history and earnings-related data on Leidos (LDOS) click here.

You May Also Be Interested In

• Visa (V) stock rises as Q2 earnings, revenue come ahead of estimates
• Enphase Energy tumbles on guidance miss; BMO trims estimates and price target
• United Microelectronics (UMC) Reports In-Line Q1 EPS, provides outlook