Defense Giant Leidos Delivers Record Cash Flow, Secures $2.4B Acquisition

Core Insights - Leidos reported mixed Q4 results, beating earnings expectations but missing revenue estimates due to a government shutdown and timing factors [1] - The company achieved record free cash flow of $452 million, more than doubling from the previous year, and net income increased by 18% year-over-year [1] - Leidos announced a $2.4 billion acquisition of Entrust, enhancing its energy infrastructure capabilities, and reported a total backlog of $49 billion [1] Financial Performance - Non-GAAP diluted EPS for Q4 was $2.76, exceeding the consensus estimate of $2.66 by 3.8% [1] - Revenue for Q4 was $4.21 billion, falling short of the $4.40 billion estimate by 4.4%, reflecting a 3.6% year-over-year decline [1] - Operating cash flow reached $495 million, marking the best Q4 performance ever, with free cash flow achieving a 127% conversion rate [1] Strategic Moves - The acquisition of Entrust for $2.4 billion is aimed at expanding Leidos's capabilities in energy infrastructure [1] - Major contract wins include a $2.2 billion award for Air Force air base defense systems and a position on the MDA's SHIELD IDIQ with a $151 billion ceiling [1] - Total backlog reached $49 billion with a 1.3x book-to-bill ratio in Q4, indicating strong future revenue potential [1] Future Guidance - For fiscal 2026, Leidos provided revenue guidance of $17.2 billion to $17.8 billion and non-GAAP EPS guidance of $12.10 to $12.60, suggesting continued margin expansion and earnings growth [1]