Summary
Leidos closed fiscal 2021 with fourth-quarter revenue of $3.49 billion, up 7.3% from $3.25 billion in the prior-year quarter. Full-year revenue reached $13.74 billion, up 11.7% from $12.30 billion. Organic revenue rose 6% for the quarter and 9% for the year after excluding acquired revenue of $52 million and $325 million, respectively. The quarter's growth came from veterans' disability examinations after the COVID-19 pause and the ramp of the Navy NGEN-R SMIT contract. Health and Defense Solutions carried the year, while Civil faced lower security product deliveries.
Profitability was mixed. Fourth-quarter operating income fell to $270 million from $299 million, down 9.7%, and operating margin slipped to 7.7% from 9.2%. Net income attributable to Leidos common stockholders was $174 million, down 11.7% from $197 million. For the full year, operating income rose 15.4% to $1.15 billion, net income rose 19.9% to $753 million, and operating margin improved to 8.4% from 8.1%. Diluted EPS for the full year was $5.27, up 20.9% from $4.36. Non-GAAP diluted EPS was $1.56 for the quarter, down 4%, and $6.62 for the year, up 14%. Adjusted EBITDA was $359 million in the quarter with a 10.3% margin, and $1.51 billion for the year with an 11.0% margin.
Cash generation was uneven. Fourth-quarter operating cash flow was $210 million, up from negative $52 million in the prior-year quarter. Full-year operating cash flow was $1.03 billion, down 22.7% from $1.33 billion. Capital expenditures were $33 million in the quarter, down 47.6% from $63 million, and $104 million for the year, down 43.2% from $183 million. Free cash flow was $177 million in the quarter and $927 million for the year. Deferred revenue, current portion, was $364 million, down 24.3% from $481 million. Remaining performance obligations were $15.6 billion, down 0.6% from $15.7 billion. The company ended the year with a book-to-bill ratio of 1.1 on $15.5 billion of bookings, and backlog was $34.5 billion, of which $7.4 billion was funded.
Guidance and risks. For full fiscal year 2022, Leidos guides revenues of $13.9 billion to $14.3 billion, adjusted EBITDA margin of 10.3% to 10.5%, non-GAAP diluted EPS of $6.10 to $6.50, and cash flows provided by operating activities at or above $1.0 billion. The operating cash flow guidance excludes the effects of a Tax Cuts and Jobs Act provision that requires capitalization and amortization of research and development costs. If the provision remains in effect, Leidos estimates operating cash flow would decrease by approximately $150 million in fiscal 2022 and net deferred tax assets would increase by a similar amount. Other risks include COVID-19, an extended continuing resolution, government budget delays, supply chain pressures, and competition. The Security Products reporting unit is at risk of future impairment, with fair value only about 6% above carrying value. Bookings were $3.2 billion in the quarter and $15.5 billion for the year, with a book-to-bill ratio of 0.9 and 1.1. The company also agreed to sell its Aviation Missile Solutions business for approximately $18 million, expected to close in the first quarter of fiscal 2022.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2021 | Q3 FY2021 | QoQ | Q4 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $2.04B | $3.22B | -36.6% | $2.92B | -30.2% |
| Gross profit | $220.0M | $444.0M | -50.5% | $397.0M | -44.6% |
| Gross margin | 10.8% | 13.8% | -3.0 pp | 13.6% | -2.8 pp |
| Research & development | $73.0M | — | — | $49.0M | +49.0% |
| Sales & marketing | $145.0M | $200.0M | -27.5% | $171.0M | -15.2% |
| Operating income (loss) | $116.0M | $258.0M | -55.0% | $261.0M | -55.6% |
| Operating margin | 5.7% | 8.0% | -2.3 pp | 8.9% | -3.2 pp |
| Net income (loss) | $49.0M | $163.0M | -69.9% | $181.0M | -72.9% |
| Net margin | 2.4% | 5.1% | -2.7 pp | 6.2% | -3.8 pp |
| Diluted EPS | $0.34 | $1.13 | -$0.79 | $1.25 | -$0.91 |
Risks
Approximately 87% of fiscal 2021 total revenues were generated from U.S. government contracts, including all branches of the U.S. military, and DoD and U.S. Intelligence Community revenues represented approximately 44%, making results highly dependent on U.S. government spending and relationships.
U.S. government budget and appropriations risks include continuing resolutions, potential shutdowns and shifting defense priorities; MD&A notes Congress passed a continuing resolution funding the government through December 3, 2021 and then February 18, 2022, which can delay procurement decisions.
DoD Cybersecurity Maturity Model Certification (CMMC) requirements may require third-party certifications; inability to achieve certification or supply chain non-compliance could make the company unable to bid on certain DoD contract awards and adversely impact revenue and profitability.
The Security Products reporting unit held $926 million of goodwill as of December 31, 2021, and its estimated fair value exceeded carrying value by approximately 6%; COVID-19 driven declines in aviation security product sales could require a material impairment.
Beginning in 2022, TCJA research and development cost capitalization becomes effective; MD&A estimates this could decrease cash from operations by approximately $150 million in fiscal 2022 and increase net deferred tax assets by a similar amount if not deferred, modified or repealed.
MD&A highlights a shift toward multiple-award contracts, increased competition, shortened periods of performance and increased pricing pressure; Risk Factors note competitive bidding and bid protests may delay or prevent revenue growth.
U.S. government may terminate, cancel, modify or curtail contracts at any time for convenience and may decline to exercise options; this can adversely affect revenues, revenue growth and profitability.
Competition for skilled science, engineering and technical personnel is intense, and many government programs require security clearances that can be difficult and time-consuming to obtain; failure to attract and retain such employees could impair contract performance.
COVID-19 continues to create uncertainty, including supply chain matters, potential delays in new contract awards and performance, and vaccine mandate litigation; the airport security detection business has been adversely impacted by reduced air travel demand.
Fixed-price contracts represented approximately 37% of fiscal 2021 revenues, exposing the company to cost overruns and rising inflation; failure to accurately estimate costs and resources could reduce profits.
Total backlog was $34.5 billion as of December 31, 2021, including $7.4 billion funded; U.S. government may not exercise options or may terminate contracts, and unfunded backlog may never be realized as revenue.
As a government contractor, the company is subject to audits and reviews, including DCAA indirect cost audits open for fiscal 2016 and subsequent years, and adverse findings could result in retroactive cost adjustments, penalties or debarment.
SaaS KPIs
All quarters →Net bookings
Adjusted EBITDA margin
Book-to-bill ratio
Adjusted EBITDA
Free Cash Flow
Operating cash flow conversion ratio
Free Cash Flow Conversion Ratio
Organic revenue growth
Summary, forecast, risks and KPIs are extracted from Leidos Holdings, Inc.'s SEC filings for Q4 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.