Leidos Holdings, Inc.LDOS
Recorded
Leidos Holdings, Inc. Jefferies Global Industrials Conference 2026
Review the key takeaways and the transcript of this earnings call.
Period 2026Duration35 min
Key takeaways
- Leidos reported 4% organic growth in Q2 and 5% in the first half of the year, with guidance raised to 8% organic growth in the second half.
- The defense business, representing 22% of sales and $3.6 billion in revenue, grew 6% in the quarter with a 2.2 times book-to-bill ratio.
- The Homeland segment grew 32% in revenue and 15% organically, with improving profitability.
- The health segment, including the VBA medical disability exam program, remains highly profitable but faces near-term margin moderation due to paused incentive payments.
- Leidos completed a major acquisition in energy infrastructure (Interest), tripling the addressable market and expanding capabilities.
- The company is manufacturing about four IFPICC units per month, expecting to double production by year-end, contributing to defense growth.
- Leidos is a significant provider to the FAA, supporting multiple air traffic management programs and competing for the common automation platform, part of a $12 billion modernization effort.
- The VBA medical disability exam program generates north of $1 billion in revenue and is highly profitable; an RFP for future procurement is expected in fall with potential consolidation of providers.
- MHS Genesis electronic health record program is on time and under budget; Leidos is negotiating a one-year extension for support with uncertain future software licensing arrangements.
- The defense segment has several growth catalysts including integrated air defense programs, maritime autonomy testing, and a potential award for medium-sized unmanned surface vessels.
- Leidos won an $869 million Army MACRO award, providing new opportunities in command and control software domains.
- Interest acquisition integration is progressing well, with technology deployment improving efficiency and expanding opportunities in utility engineering projects.
- Margins are expected to moderate in health to about 20% in the back half of the year, while defense and Homeland margins are improving.
- Capital expenditures are expected around $250 million for the year, focused on capacity expansion and classified facility modernization.
- Leidos maintains strong cash flow conversion and is optimizing back-end processes with technology and AI to improve billing and payable cycles.
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