Leidos Holdings (LDOS) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

August 1, 2023 8:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Greetings. Welcome to Leidos’ Second Quarter 2023 Earnings Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note, this conference is being recorded.

At this time, I’ll turn the conference over to Stuart Davis, from Investor Relations. Sir, you may now begin.

Stuart Davis

Thank you, and good morning, everyone. I'd like to welcome you to our second quarter fiscal year 2023 earnings conference call. Joining me today are Tom Bell, our CEO, and Chris Cage, our Chief Financial Officer. Today's call is being webcast on the Investor Relations portion of our website, where you'll also find the earnings release and supplemental financial presentation slides that we'll use during today's call.

Turning to Slide 2 of the presentation. Today's discussion contains forward-looking statements based on the environment as we currently see it, and as such, includes risks and uncertainties. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially. Finally, as shown on Slide 3, during the call, we'll discuss GAAP and non-GAAP financial measures. A reconciliation between the two is included in today's press release and presentation slides.

With that, I'll turn the call over to Tom Bell, who will begin on Slide 4.

Tom Bell

Thank you, Stuart, and good morning, everyone. I'm pleased to be with you today leading Leidos into our exciting second decade. I'm also very happy to report that we closed a strong Q2. Driven by a healthy demand environment, we achieved revenue growth of 7% year-over-year, with strong organic growth across all segments. Margins, earnings, and cashflow rebounded from our first quarter, driven by, an improving business mix, a partial recovery in the security products business, and a series of fast-acting initiatives implemented across the business focused on costs and collections. Adjusted EBITDA margin of 10.9% was up 150 basis points from Q1, and non-GAAP diluted earnings per share of $1.80 was up 22% sequentially. Also, operating cashflow of $164 million was up $262 million from last quarter. While putting this quality quarter on the books speaks to the underlying strength of the business, even more important to me, it reflects ability of the Leidos team to focus and deliver when expectations are clear.