-- Revenues: $2.52 billion for fourth quarter; $10.17 billion for the year
RESTON, Va., Feb. 22, 2018 — (PRNewswire) — Leidos Holdings, Inc. (NYSE: LDOS), a FORTUNE 500® science, information technology and engineering leader, today reported financial results for the fourth quarter and fiscal year 2017.Roger Krone, Leidos Chairman and Chief Executive Officer, commented: "We closed out 2017 with another strong quarter of operational performance, enabling us to achieve strong margins and generate more than half a billion dollars of cash from operations for the year. With the successful completion of most of our integration activities, we shift our focus to growth in the year ahead. Our strong balance sheet and increased cash generation allows us to continue to invest for growth while also returning capital to shareholders. Further, the talent and diversity of our employees, combined with their dedication to delivering mission critical solutions gives us confidence in our ability to deliver value to our customers and shareholders."
Fourth Quarter Summary Results
Revenues for the quarter were $2.52 billion, compared to $2.58 billion in the prior year quarter, reflecting a 2.3% decrease.
Operating income for the quarter was $101 million, compared to $152 million in the prior year quarter. Operating margin decreased to 4.0% from 5.9% in the prior year quarter, due to increases in acquisition and integration costs, amortization of intangible assets, restructuring expenses and amortization of equity method investments. Excluding non-GAAP items, operating margin was 9.2%, compared to 9.3% in the prior year quarter.
Diluted earnings per share ("EPS") attributable to Leidos common stockholders for the quarter was $0.74, compared to $0.39 in the prior year quarter. Excluding the items mentioned above, non-GAAP diluted EPS attributable to Leidos common stockholders for the fourth quarter was $0.87 compared to $0.75 in the prior year quarter. The weighted average diluted share count for the quarter was 154 million compared to 153 million in the prior year quarter.
Defense Solutions
Defense Solutions revenues for the quarter of $1.22 billion decreased $48 million, or 3.8%, compared to the prior year quarter. The revenue decline was primarily attributable to completion of certain contracts and net volume decreases, partially offset by growth in its airborne programs.
Defense Solutions operating income margin for the quarter was 7.0%, compared to 6.9% in the prior year quarter. On a non-GAAP basis, operating margin for the quarter was 9.3%, compared to 8.0% in the prior year quarter. Operating margins were favorably impacted by profit write-ups on certain contracts.
Civil
Civil revenues for the quarter of $854 million decreased $8 million, or 0.9%, compared to the prior year quarter. The revenue decline was primarily attributable to the timing of our security products business, partially offset by net volume increases on certain contracts.
Civil operating income margin for the quarter was 6.6%, compared to 7.7% in the prior year quarter. On a non-GAAP basis, operating margin for the quarter was 10.7%, compared to 10.2% in the prior year quarter. Operating margins were favorably impacted by profit write-ups on certain contracts.
Health
Health revenues of $441 million for the quarter decreased $2 million, or 0.5%, as compared to the prior year quarter. The revenue decline is primarily attributable to net volume decreases on certain contracts offset by growth in our federal health business.
Health operating income margin for the quarter was 10.0%, compared to 10.8% in the prior year quarter. On a non-GAAP basis, operating margin for the quarter was 12.0%, compared to 15.1% in the prior year quarter. Operating margins were impacted by lower volume on high margin contracts.
Fiscal Year 2017 Summary Results
Revenues for fiscal year 2017 were $10.17 billion, compared to $7.04 billion in the prior year, reflecting a 44.4% increase.
Operating income for fiscal year 2017 was $559 million, compared to $417 million in the prior year primarily due to the acquired IS&GS Business. Operating margin for fiscal year 2017 was 5.5%, compared to 5.9% in the prior year primarily due to increases in the non-GAAP items previously mentioned above in the fourth quarter summary results. Excluding these items, the non-GAAP operating margin increased to 9.8% from 8.6% in the prior year.
Diluted EPS attributable to Leidos common stockholders for fiscal year 2017 was $2.38, compared to $2.35 for the prior year. Excluding the impact of items mentioned above, the non-GAAP diluted EPS attributable to Leidos common stockholders for fiscal year 2017 was $3.72, compared to $3.51 in the prior year. The diluted share count was 154 million, up from 104 million in the prior year due to the issuance of approximately 77 million shares of Leidos common stock to participating Lockheed Martin stockholders during the third quarter of fiscal year 2016 in connection with the acquisition of the IS&GS Business.
Defense Solutions
Defense Solutions revenues of $4.96 billion for fiscal year 2017 increased $1.12 billion, or 29.0%, compared to the prior year. The revenue growth was primarily attributable to the acquired IS&GS Business and growth in its airborne programs, partially offset by completion of certain contracts, net volume decreases and a contract write-up in fiscal 2016.
Defense Solutions operating income margin for fiscal year 2017 was 6.2%, compared to 8.1% in the prior year. On a non-GAAP basis, operating margin decreased slightly to 8.4%, compared to 8.6% in the prior year.
Civil
Civil revenues of $3.41 billion for fiscal year 2017 increased $1.33 billion, or 63.7%, compared to the prior year. The revenue growth was primarily attributable to the acquired IS&GS Business, partially offset by fiscal 2016 revenues from the divestiture of the heavy construction business, net volume decreases on certain contracts and lower revenues from our international business, including the adverse impact of foreign currency.
