# Leidos Holdings Inc. (LDOS) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-29  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/LDOS/thesis · /stocks/LDOS/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: LDOS
step: "04"
title: Financial Snapshot — 3-Year P&L Summary
created: 2026-05-29
---

### Step 04 — Financial Snapshot

#### Three-Year P&L Summary

| Metric | FY2022 | FY2023 | FY2024 |
|--------|--------|--------|--------|
| Revenue | $14.4B | $15.4B | $16.7B |
| Revenue Growth YoY | +5.5% | +7.3% | +8.4% |
| Gross Profit | $2.10B | $2.28B | $2.54B |
| Gross Margin | 14.6% | 14.8% | 15.2% |
| Operating Income (GAAP) | ~$910M | ~$1.01B | ~$1.17B |
| Operating Margin (GAAP) | 6.3% | 6.6% | 7.0% |
| Adjusted Operating Income | ~$1.05B | ~$1.18B | ~$1.35B |
| Adj. Operating Margin | 7.3% | 7.7% | 8.1% |
| Interest Expense | ~($270M) | ~($265M) | ~($255M) |
| Net Income (GAAP) | ~$560M | ~$680M | ~$870M |
| Net Margin | 3.9% | 4.4% | 5.2% |
| Diluted EPS (GAAP) | ~$3.90 | ~$4.85 | ~$6.30 |
| Adj. Diluted EPS (Non-GAAP) | ~$6.10 | ~$7.50 | ~$8.70 |
| D&A | ~$415M | ~$390M | ~$370M |
| EBITDA | ~$1.33B | ~$1.40B | ~$1.54B |
| EBITDA Margin | 9.2% | 9.1% | 9.2% |
| CapEx | ~$150M | ~$145M | ~$160M |
| Free Cash Flow | ~$780M | ~$960M | ~$1.10B |

*Note: FY = fiscal year ending ~December/January. Figures are based on reported and analyst-synthesized data.*

#### GAAP vs. Non-GAAP Reconciliation

The gap between GAAP and non-GAAP earnings is primarily driven by:
1. **Amortization of acquired intangibles**: ~$190-220M annually (primarily from IS&GS and Dynetics acquisitions). This is a large, non-cash charge that inflates the gap between GAAP and adjusted EPS.
2. **Acquisition integration costs**: One-time charges that have largely run off by FY2023-2024.
3. **Pension/OPEB adjustments**: Relatively modest.

Non-GAAP EPS is the metric most closely tracked by sell-side analysts and used in management compensation targets.

#### Margin Profile Analysis

##### Operating Margin Walk (FY2022 → FY2024)
- FY2022 GAAP operating margin: 6.3%
- FY2023: +30bps (scale leverage, fixed-price mix shift)
- FY2024: +40bps (continued scale, program performance)
- Path to 10%+ (management target): Requires sustained fixed-price mix shift, G&A leverage, and successful program execution — achievable over 5-7 years

##### Segment-Level Margins (FY2024 Estimated)
| Segment | Operating Margin |
|---------|-----------------|
| Defense Solutions | ~8.5% |
| Civil | ~7.5% |
| Health | ~5.5% |
| Corporate Allocated | (~1.5%) |
| **Total** | **~7.0%** |

Health margin suppression reflects execution challenges on the VA EHRM contract, which has required incremental investment and generated program losses/penalties. Resolution of EHRM challenges is a meaningful margin catalyst.

#### Dynetics Acquisition Impact

Leidos acquired Dynetics, Inc. in January 2021 for approximately $1.65B. Dynetics contributed:
- Hypersonic strike capabilities (HAWC program)
- Counter-UAS / directed energy systems
- Space propulsion and advanced R&D
- ~4,500 additional cleared employees in Huntsville, Alabama

Impact on financials:
- Added ~$500-600M in annual revenue (included in Defense Solutions)
- Contributed high-value classified programs
- Added ~$1.4B in goodwill and intangible assets
- Net-leverage neutral (funded from existing revolver / commercial paper)
- **ROIC dilution in near-term** due to large intangible asset base, expected to improve as synergies materialize

#### Cash Flow Quality

Free cash flow has been consistently strong and growing:
- FY2022: $780M FCF (54% GAAP net income to FCF conversion)
- FY2023: $960M (higher conversion from working capital improvement)
- FY2024: $1.1B (~125% of GAAP net income)

FCF exceeds GAAP net income because D&A ($370M) far exceeds CapEx ($160M) — confirming the asset-light business model. Working capital is naturally negative (government agencies pay within 30-45 days, while Leidos has some supplier payment timing flexibility).

#### Effective Tax Rate

Leidos's effective tax rate has been relatively stable at 21-24% annually. The company benefits from R&D tax credits (defense research programs qualify) and has some state tax optimization from operations in low-tax jurisdictions. Foreign earnings (7-8% of revenue) create modest ETR complexity.

#### Key Financial Observations

1. **Revenue quality is high**: >95% US government, long-term contracts with high renewal rates
2. **Margins expanding**: Adj. operating margin trajectory 7.3% → 7.7% → 8.1% shows consistent improvement
3. **FCF well above GAAP earnings**: Large D&A tail from acquisitions masks true cash earnings power
4. **Amortization headwind fading**: IS&GS intangibles are ~10 years old (2016 acquisition), increasingly amortized through; charge should decline materially by 2028-2030
5. **Health segment is the margin drag**: VA EHRM resolution would be a meaningful catalyst

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/LDOS/fundamental

## Navigation

- Overview: /stocks/LDOS
- Financials (this page): /stocks/LDOS/financials
- Thesis: /stocks/LDOS/thesis
- Investment Memo: /stocks/LDOS/memo
- Coverage universe: /stocks