PresentationGreening. Welcome to the Leidos conference call to discuss the pending acquisition of ENTRUST Solutions Group. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Stuart Davis from Investor Relations. Stuart, you may now begin.Stuart DavisSenior Vice President of Investor Relations Thank you, and good morning, everyone. I appreciate everyone tuning in on such short notice. Joining me on today's c ...

Leidos (NYSE:LDOS) M&A announcement January 26, 2026 08:00 AM ET Company ParticipantsChris Cage - CFOJonathan Siegmann - Managing DirectorKen Herbert - Managing DirectorNoah Poponak - Managing DirectorPeter Arment - Managing DirectorSeth Seifman - Executive DirectorSheila Kahyaoglu - Managing DirectorStuart Davis - Head of Investor RelationsTobey Sommer - Managing DirectorTom Bell - CEOConference Call ParticipantsGautam Khanna - AnalystJohn Godin - AnalystScott Mikus - AnalystOperatorGreetings. Welcome to t ...

+ MERGING FOR POWER PROPELLING OUR ENERGY INFRASTRUCTURE GROWTH PILLAR FORWARD LEIDOS FORWARD LOOKING STATEMENT Certain statements in this release contain or are based on "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect our belief and assumptions as to future events that may not prove to be accurate. Actual performance and results may differ materially from those results anticipated by our guidance and other forward-looking st ...

Core Insights - Leidos Holdings has agreed to acquire Entrust Solutions Group for approximately $2.4 billion in cash [1] Company Summary - The acquisition involves a utility consulting and engineering services platform, indicating Leidos Holdings' strategic expansion into the utility sector [1] - The seller, Kohlberg & Co., is a private-equity firm, highlighting the involvement of institutional investors in the transaction [1]

Group 1 - Leidos Holdings announced the acquisition of ENTRUST Solutions Group for approximately $2.4 billion to enhance its engineering capabilities [1] - The acquisition is part of Leidos' strategy to expand its offerings in the power design sector [1] - ENTRUST Solutions Group is currently owned by private equity firm Kohlberg [1]

Core Viewpoint - Kohlberg has entered into a definitive agreement to sell ENTRUST Solutions Group to Leidos for approximately $2.4 billion, marking a successful exit for Kohlberg after its acquisition of the company in 2019 and a minority recapitalization in 2023 [1]. Group 1 - The transaction value is approximately $2.4 billion [1]. - ENTRUST Solutions Group is identified as a leading consulting and engineering services platform [1]. - Kohlberg's previous acquisition of ENTRUST occurred in 2019, followed by a minority recapitalization in 2023 [1].

Core Viewpoint - Leidos has signed a definitive agreement to acquire ENTRUST Solutions Group for approximately $2.4 billion, enhancing its position as a leading engineering solutions provider for utilities across the United States [1]. Group 1: Acquisition Details - The acquisition will effectively double the size of Leidos' $600 million energy infrastructure engineering business, which has experienced average double-digit growth and margins over the past eight years [2]. - The transaction is expected to be immediately accretive to Leidos' revenue growth and adjusted EBITDA margin, as well as to non-GAAP diluted earnings per share in 2027 [5]. - The deal is anticipated to close by the end of the second quarter of 2026, pending customary closing conditions and regulatory approvals [6]. Group 2: Strategic Implications - Leidos has provided engineering services for commercial electric utilities for over two decades, focusing on transmission and distribution, while ENTRUST's expertise spans the entire power delivery spectrum for both gas and electric utilities [3]. - The acquisition will broaden Leidos' client base and enhance its ability to drive innovation across a more diverse set of utility customers [3]. - The combined workforce of over 5,500 energy professionals will enable the companies to address complex challenges in the utility and power markets [4]. Group 3: Financial and Market Context - U.S. utilities are projected to invest $1 trillion over the next decade to modernize and strengthen the electrical grid, aligning with Leidos' NorthStar 2030 growth strategy focused on secure energy infrastructure [4]. - Leidos plans to fund the $2.4 billion transaction through a mix of new debt, cash on hand, and commercial paper [5].

Group 1 - Leidos Holdings, Inc. (NYSE:LDOS) is recognized as one of the best cybersecurity stocks to buy in 2026, but analysts have recently lowered their price targets, with TD Cowen reducing it from $210 to $190 and UBS from $216 to $204 while maintaining a Hold rating [1][2] - The demand for Leidos' Veterans Benefits Administration medical exam business remains strong; however, increased competition from a fourth provider poses a threat to the company's market position, especially with major contracts up for rebid in 2027 [2][3] - UBS anticipates headwinds for Leidos in 2026, projecting that margins will remain below consensus but above the long-term historical average, indicating potential challenges ahead for the company [3] Group 2 - The Veterans Benefits Administration is a significant contributor to Leidos' profits, meaning any negative impact from increased competition could substantially affect earnings [2] - The company specializes in digital modernization, cybersecurity, logistics, and defense and mission systems for federal agencies, military, and intelligence clients, positioning it within a critical sector of government contracting [3]

Core Insights - Leidos Holdings Inc. (LDOS) has announced a strategic partnership with OpenAI to implement advanced AI solutions for government and high assurance customers, focusing on enhancing efficiency and effectiveness in mission-critical environments [1][9] Company Strategy - The partnership aims to integrate OpenAI's generative and agentic AI capabilities into Leidos' core workflows across various markets, including digital modernization, health services, national security, infrastructure, and defense, aligning with Leidos' NorthStar 2030 growth strategy [2][3] Operational Impact - The collaboration will embed AI as a core capability within operational systems, enhancing complex knowledge-based activities such as threat analysis and supply-chain monitoring while ensuring high security and reliability standards for government and defense clients [3][4] Internal Efficiency - The use of OpenAI platforms is expected to improve Leidos' internal operations by enhancing automation, streamlining workflows, and accelerating product design and delivery, thereby increasing productivity and fostering innovation [4] Industry Trends - The AI market is rapidly expanding, driven by advancements in machine learning and computer vision, with a forecasted compound annual growth rate of over 41.95% for the global AI market from 2026 to 2031 [5][6]

The collaboration aims to improve how the agencies operate, boosting productivity and accelerating product development, said Leidos' Chief Technology Officer Ted Tanner. ...