TLDR:
- Leidos reports 19% growth in net income, despite slight revenue decline.
- $2.4B acquisition of Entrust expands Leidos’ footprint in the power sector.
- Leidos declares $0.43 dividend, reflecting strong cash flow performance.
- Q4 free cash flow hits $452M; strong operational efficiency boosts growth.
- Leidos focuses on strategic acquisitions and solid shareholder returns.
Leidos Holdings, Inc. (LDOS) ended the day at $176.30 on February 13, marking a 2.83% increase. The company’s fourth-quarter results showcased strong growth in earnings and strategic acquisitions. Leidos reported a 19% increase in quarterly net income, driven by operational efficiencies and improved program execution.
Q4 Financial Results Highlight Profitability Growth
Leidos posted $4.2 billion in revenue for the fourth quarter, reflecting a slight 4% decline from the previous year. This drop was mainly due to a six-week government shutdown in fiscal year 2025 and an extra work week in 2024. Despite this, the company demonstrated resilience with a 19% year-over-year rise in net income, reaching $335 million. Diluted earnings per share (EPS) were $2.53, marking a 19% increase from the same quarter last year.
Leidos reported significant growth in its non-GAAP diluted EPS, reaching $2.76, a 16% year-over-year increase. The company also achieved a robust adjusted EBITDA of $556 million, improving its margin to 13.2%. CEO Tom Bell highlighted the solid financial results, stating that the company’s strategy continues to deliver strong outcomes across various sectors, including national security and digital modernization.
For the fiscal year, Leidos generated $17.17 billion in total revenue, representing a 3% increase from the previous year. The company’s net income for the year was $1.46 billion, with a 21% increase in diluted EPS. This growth reflects the company’s consistent focus on driving efficiencies, improving cost control, and executing programs effectively.
Strategic Acquisition to Enhance Growth in Power Sector
Leidos made a significant move to expand its market presence by acquiring Entrust, a power design firm. The acquisition, valued at $2.4 billion, is expected to enhance Leidos’ capabilities in the utility sector. Entrust’s expertise spans power generation, transmission, and distribution, which complements Leidos’ existing strengths in energy infrastructure.
The acquisition aligns with Leidos’ long-term strategy of expanding into new markets, particularly in the utilities sector. The company plans to leverage Entrust’s capabilities to drive innovation and strengthen its position with utility clients. Leidos anticipates that this acquisition will provide growth opportunities and solidify its role in the evolving power industry.
Leidos expects the acquisition to close in the first half of fiscal 2026, subject to standard closing conditions. The deal is seen as a strategic move to diversify Leidos’ customer base and accelerate its growth in the energy sector. The company’s strong cash flow generation positions it well to support such strategic investments.
Strong Cash Flow and Shareholder Returns Provide a Solid Foundation
Leidos’ cash flow performance in the fourth quarter reached an all-time high, with net cash from operations totaling $495 million. This robust cash flow, driven by strong EBITDA and effective working capital management, enabled the company to generate $452 million in free cash flow. Leidos used a portion of its cash reserves to repurchase shares and pay quarterly dividends, reflecting its commitment to returning value to shareholders.
For the year, Leidos generated $1.75 billion in operating cash flow and $1.63 billion in free cash flow, marking a 26% increase from the previous year. The company’s strong cash flow conversion rate of 104% further underscores its operational efficiency. Leidos’ financial discipline, combined with its strategic investments, sets a solid foundation for future growth.
On February 13, 2026, the Leidos Board of Directors declared a cash dividend of $0.43 per share. The dividend will be paid on March 31, 2026, to stockholders of record by March 16, 2026. This continued commitment to shareholder returns, along with the company’s strategic growth initiatives, positions Leidos for a strong future ahead.
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