Q2 2026 Leidos Holdings Inc Earnings Call Transcript

Aug 4, 2026 / 12:00 PM GMT

Transcript 8-K

Key Points

Positve

Leidos Holdings Inc (LDOS) reported record Q2 revenue of $4.6 billion, up 7% year-over-year, with a best-in-class adjusted EBITDA margin of 13.8%.
The company raised its full-year 2026 guidance for revenue, EPS, and operating cash flow, reflecting strong portfolio performance and confidence in its North Star 2030 strategy.
Defense segment delivered exceptional results with a 2.2 book-to-bill ratio in Q2 and a 1.9 trailing twelve-month ratio, driven by major wins in munitions, unmanned surface vessels, and space payloads.
Operating cash flow reached a Q2 record of nearly $800 million, and the company paid down the remaining $300 million of commercial paper, ending the quarter with a strong balance sheet and gross leverage of 2.5 times.
The company is diversifying its earnings power, with the rest of Leidos (excluding health) expected to grow approximately 7% in revenues and 19% in adjusted EBITDA in 2026, supported by growth pillars in defense tech, energy, and cyber.
Customer procurement activity is accelerating, with a $23 billion proposal pipeline and a $12 billion defense tech opportunity pipeline over the next 12 months, positioning the company for continued bookings momentum.

Negative

The VA has suspended incentive payments for the medical disability exam business for the rest of 2026, impacting health segment revenue and margins, though the company has incorporated this into its guidance.
Health segment revenues contracted in Q2 due to the full incorporation of a fourth vendor on the VBA Medical Disability Examination Regions contract, with expectations of sustained lower revenue levels for the rest of the year.
The MHS Genesis program faces uncertainty as the DHA plans to procure software directly from commercial vendors and potentially insource systems integration, reducing Leidos' role in future phases.
The company anticipates a potential government shutdown or continuing resolution after the midterms, which could disrupt award activity and revenue timing in the intel and digital segments.
M&A targets are currently expensive relative to Leidos' own valuation, limiting the company's ability to make accretive acquisitions and potentially constraining growth through inorganic means.

Refinitiv StreetEvents Event Transcript
E D I T E D V E R S I O N

LDOS.N - Leidos Holdings, Inc.
Q2 2026 Leidos Holdings Inc Earnings Call
Aug 04, 2026 / 12:00PM GMT

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Presentation
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Unidentified_1 [1]
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Greetings. Welcome to Leido's second quarter 2026 earnings conference call. A brief question-and-answer session will follow the formal presentation. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is. I would now like to hand the conference over to your first speaker, Stuart Davis from Investor Relations. Stuart, please go ahead, sir.

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