Core Insights - Leidos reported a strong fiscal 2025 performance, with adjusted EBITDA margin expanding to 14.1%, and non-GAAP diluted EPS of $11.99, reflecting a 17% increase year-over-year [1][6] - The company faced challenges in Q4 2025, including a six-week government shutdown and timing factors that impacted revenue growth [2][3] Financial Performance - Fiscal 2025 revenue reached $17.2 billion, a 3.1% increase year-over-year, while Q4 revenue was $4.2 billion, down 3.6% year-over-year [2] - Adjusted EBITDA margin for the year was 14.1%, up 120 basis points, and 13.2% for Q4, up 160 basis points [1][6] - Non-GAAP diluted EPS for Q4 was $2.76, contributing to a full-year EPS that exceeded prior guidance by $0.24 [1][6] Demand and Backlog - Q4 net bookings were $5.6 billion, resulting in a book-to-bill ratio of 1.3x, with a funded backlog increasing by 15% to approximately $49 billion [4][7] - The company has $20 billion in pending awards, with expectations for growth to accelerate as delayed awards convert to funded work [7] Strategic Initiatives - Under the "NorthStar 2030" plan, Leidos is significantly increasing capital investments, with IRAD/capex of $312 million in 2025 and plans to triple capex to $350 million in 2026 [5][9] - The company announced the acquisition of ENTRUST Solutions for $2.4 billion, to be funded through cash, commercial paper, and new bonds [5][11] 2026 Guidance - For 2026, Leidos projects revenue between $17.5 billion and $17.9 billion, with an adjusted EBITDA margin in the mid-13% range and non-GAAP diluted EPS of $12.05 to $12.45 [4][14] - Operating cash flow is expected to be $1.75 billion, despite a $90 million headwind from Section 174 timing, with free cash flow anticipated to decline due to higher capex [15] Segment Performance Expectations - The Intelligence and Digital segment is expected to see mid- to high-single-digit growth, while the Health segment may experience lower revenue and margins due to vendor transitions [16] - The Defense segment is anticipated to grow above the corporate average, although with some margin pressure from high-margin programs [16]