Leidos on Tuesday reported strong increases in its top and bottom lines in the third quarter, driven by growth across its operating segments and receipt of a payment going back to the 2004 Olympics in Greece.
The company also reported record bookings and backlog, tallying $5.2 billion in orders that were nearly double sales that drove total backlog to $23.9 billion, up 15% from $20.8 billion since the end of 2018.
Net income was up 10% to $161 million, $1.11 earnings per share (EPS), from $147 million ($0.96 EPS) a year ago. Adjusted earnings, which exclude non-operating expenses and certain tax impacts, were $1.36 EPS, which beat consensus estimates by $0.17.
The company’s earnings benefited from a $59 million cash payment from the Greek government, which more than offset bad debt expense on some international contracts in the Civil segment. At the operating level, the bad debt expense combined with start-up costs on new programs and lower net profit write-ups in the Civil segment, more than offset increased income at the Health and Defense Solutions segments.
Sales increased 10% to $2.8 billion from $2.6 billion, with both the Health and Civil segments up double-digits and Defense Solutions in the high single digits. Growth drivers included new awards and higher program volumes.
For 2019, Leidos raised and narrowed its sales guidance to between $10.9 billion and $11 billion versus the prior outlook of $10.65 billion to $10.95 billion. Adjusted earnings are expected to be between $4.90 and $5.10 EPS versus prior projections of $4.50 to $4.75 EPS.
The earnings guidance is up due to the higher net income in the third quarter and a lower share count due to repurchases of stock.
Leidos is lead partner in Mission Support Alliance (MSA), the Department of Energy’s support services contractor at the Hanford Site in Washington site. Recent reporting indicates the MSA team of Leidos and Centerra formed a new venture that bid on and possibly won the follow-on contract.
Among other work for DOE, Leidos is also a minority partner in Consolidated Nuclear Security, management and operations contractor for the DOE National Nuclear Security Administration’s Y-12 complex in Tennessee and Pantex Plant in Texas.
