Financial Data and Key Metrics Changes - The company reported a top-line growth of 7% for the quarter, with revenue reaching $4.47 billion, and a year-to-date revenue growth of 5% [4][20] - Adjusted EBITDA margin was 13.8%, with adjusted EBITDA of $616 million, reflecting a 3% year-over-year increase [21] - Non-GAAP diluted EPS grew 4% to $3.05, supported by a lower share count [21] - Operating cash flow for the quarter was $711 million, contributing to a free cash flow of $680 million, resulting in a free cash flow conversion ratio of 171% [25] Business Line Data and Key Metrics Changes - National Security and Digital revenues increased by 8% year-over-year, driven by contract awards and increased volumes for defense IT and mission support [22] - Health and Civil revenues grew by 6% year-over-year, with a record non-GAAP operating income margin of 25.7% due to high volumes in managed health services [23] - Defense Systems segment grew by 11% year-over-year, marking its seventh consecutive period of high single to low double-digit growth [24] Market Data and Key Metrics Changes - The company experienced a 27% sequential increase in funded backlog, indicating strong customer demand [16] - The U.S. utilities are expected to invest over $1 trillion in energy infrastructure over the next decade, presenting significant growth opportunities for the company [10] Company Strategy and Development Direction - The North Star 2030 strategy focuses on five growth pillars: space and maritime, energy infrastructure, digital modernization and cyber, mission software, and managed health services [8] - The company is committed to investing in innovation and technology to enhance customer outcomes and drive down costs [6][7] - The divestiture of Varik, a non-core legacy asset, aligns with the sharpened strategic focus of the company [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current government shutdown, noting that most programs remain unaffected [4] - The company raised its guidance for 2025, reaffirming revenue guidance of $17 billion to $17.25 billion and increasing adjusted EBITDA margin guidance [18][26] - Management highlighted a robust pipeline of near-term opportunities valued at $69 billion, with $24 billion in bids awaiting adjudication [16][54] Other Important Information - The company repurchased $100 million worth of shares and accelerated the payoff of $450 million on its term loan [17] - The company plans to continue investing in growth pillars while returning capital to shareholders [18] Q&A Session Summary Question: Thoughts on M&A in the current environment - Management indicated a shareholder-friendly approach to capital deployment, focusing on both organic and inorganic growth opportunities [31] Question: Growth outlook for defense systems - Management highlighted tracking 10 franchise programs expected to deliver about $15 billion in potential value over the next five years [36] Question: Sustainability of health and civil segment margins - Management expressed confidence in sustaining high margins through innovation and investment in technology [45][48] Question: Bid expectations for next year - Management expects a significant increase in bid submissions next year, with a strong pipeline of opportunities [54][55] Question: Impact of the government shutdown on Q4 - Management acknowledged potential risks from the shutdown but remained optimistic about returning to normal operations quickly [70] Question: Recompete contracts for next year - Management noted that it is too early to specify growth expectations for 2026, but several programs are expected to drive growth momentum [86]

Financial Data and Key Metrics Changes - The company reported a revenue of $4.47 billion, reflecting a 7% increase year-over-year and a 6% organic growth [20][21] - Adjusted EBITDA for the quarter was $616 million, up 3% year-over-year, resulting in an adjusted EBITDA margin of 13.8% [21][25] - Earnings per share (EPS) grew 4% to $3.05, supported by a lower share count [21][25] - Operating cash flow reached $711 million, with a free cash flow conversion ratio of 171% [25] Business Line Data and Key Metrics Changes - National security and digital revenues increased by 8% year-over-year, with 7% coming from organic growth, driven by contract awards and increased volumes [22] - Health and civil revenues rose by 6% year-over-year, with a record non-GAAP operating income margin of 25.7% [23] - Defense systems grew by 11% year-over-year, marking its seventh consecutive period of high single to low double-digit growth [24] Market Data and Key Metrics Changes - The company experienced a 27% sequential increase in funded backlog, indicating strong customer demand [16] - The energy infrastructure business has grown significantly, now representing over $600 million in annual revenues [9] Company Strategy and Development Direction - The company is focused on its North Star 2030 strategy, which includes growth pillars such as space and maritime, energy infrastructure, digital modernization and cyber, mission software, and managed health services [8][12] - The company is investing in AI and automation to enhance operational efficiency and customer outcomes [7][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current government shutdown, noting that most programs remain unaffected [4][19] - The company raised its guidance for 2025, reaffirming revenue guidance of $17 billion to $17.25 billion and increasing EBITDA and EPS guidance [18][26] Other Important Information - The company repurchased $100 million worth of shares and accelerated the payoff of $450 million on its term loan [17] - A dividend of $0.43 per share was announced, marking a 7.5% increase [17] Q&A Session Summary Question: Thoughts on M&A in the current environment - Management indicated a shareholder-friendly approach to capital deployment, focusing on both organic growth and selective M&A opportunities [30][31] Question: Growth in defense systems segment - Management highlighted tracking 10 franchise programs expected to deliver about $15 billion in potential value over the next five years [36] Question: Sustainability of health and civil segment margins - Management expressed confidence in sustaining high margins through innovation and technology investments [45][49] Question: Bid expectations for next year - Management expects a significant increase in bid submissions next year, with a robust pipeline of $69 billion in near-term opportunities [55][58] Question: Impact of the government shutdown on Q4 - Management acknowledged potential risks from the shutdown but remained optimistic about returning to normal operations quickly [74][75] Question: International business performance - Management expressed confidence in growing the international business, particularly in Australia and the U.K., aligned with growth pillars [100] Question: Potential spin-off of Dynetics - Management emphasized the value of Dynetics within the Leidos portfolio and plans to invest in it rather than consider a spin-off [106][108] Question: Recompete contracts for next year - Management noted that it is too early to specify recompete contracts but highlighted several areas with growth momentum [90][92]

Financial Data and Key Metrics Changes - The company reported a top-line growth of 7% for the quarter, with revenue reaching $4.47 billion, and a year-to-date revenue growth of 5% [3][18] - Adjusted EBITDA margin was reported at 13.8%, with adjusted EBITDA of $616 million, reflecting a 3% year-over-year increase [19] - Non-GAAP diluted EPS grew by 4% to $3.05, supported by a lower share count [19] Business Line Data and Key Metrics Changes - National security and digital revenues increased by 8% year-over-year, driven by recent contract awards and increased volumes for defense IT and mission support [20] - Health and civil revenues grew by 6% year-over-year, with a record non-GAAP operating income margin of 25.7% [21] - Defense systems segment grew by 11% year-over-year, marking its seventh consecutive period of high single to low double-digit growth [22] Market Data and Key Metrics Changes - The company experienced a 27% sequential increase in funded backlog, indicating strong customer demand [15] - The energy infrastructure business has grown significantly, now representing over $600 million in annual revenues, driven by robust investments in U.S. energy infrastructure [9] Company Strategy and Development Direction - The North Star 2030 strategy is guiding the company's actions, focusing on five growth pillars: space and maritime, energy infrastructure, digital modernization and cyber, mission software, and managed health services [7][6] - The company is committed to investing in innovation and technology to meet customer needs, particularly in defense tech and energy infrastructure [5][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current government shutdown, noting that most programs have not been impacted [3][18] - The company raised its guidance for 2025, reaffirming revenue guidance of $17 billion to $17.25 billion and increasing adjusted EBITDA margin guidance [24][17] Other Important Information - The company repurchased $100 million worth of shares and accelerated the payoff of $450 million on its term loan [16] - A dividend increase of 7.5% was announced, reflecting confidence in the company's earnings and cash generation potential [16] Q&A Session Summary Question: How does the company view M&A in the current environment? - The company is focused on shareholder-friendly capital deployment and will consider inorganic growth as part of its strategy, particularly in defined growth areas [27] Question: What are the growth prospects for the defense systems segment? - The defense systems business is expected to deliver significant value through various franchise programs, with a focus on air and base defense systems and hypersonic missiles [28] Question: How is the company managing the impact of the government shutdown? - The company has shown resilience, with the FedSiv portfolio performing well despite the shutdown, and expects to continue executing effectively [30] Question: What is the outlook for the health and civil segment? - The health and civil segment is expected to sustain strong performance, driven by ongoing investments in technology and innovation [31] Question: What are the expectations for bid submissions next year? - The company anticipates a significant increase in bid submissions next year, with a robust pipeline of $69 billion in near-term opportunities [35] Question: How is the international business performing? - The international business, particularly in Australia and the U.K., is seen as a growth area, with a focus on aligning with the North Star 2030 strategy [54][55]