Leidos Holdings, Inc.

Greetings. Welcome to Lido's fourth quarter fiscal year 2025 earnings call. At this time, all participants are in a lesson-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Stuart Davies. from Investor Relations. Stuart, you may begin.

Thank you, Operator, and good morning, everyone. I'd like to welcome you to our fourth quarter and fiscal year 2025 earnings conference call. Joining me today are Tom Bell, our CEO, and Chris Cage, our CFO. Today's call is being webcast on the investor relations portion of our website, where you'll also find the earnings release and supplemental financial presentation slides that we're using today. Turning to slide two of the presentation, today's discussion contains forward-looking statements based on the environment as we currently see it, and as such, does include risks and uncertainties. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially. Finally, as shown on slide three, we'll discuss GAAP and non-GAAP financial measures. A reconciliation between the two is included in today's press release and presentation slides. With that, let me turn the call over to Tom Bell. We'll begin on slide four.

Thank you, Stuart, and good morning, everyone. I'm pleased you've been able to join us to discuss another strong quarter for Leidos, capping off an outstanding 2025. Of course, 2025 was a very dynamic year. The complexities of Doge early and the longest U.S. government shutdown toward the end. But despite these challenges, we were able to deliver on our promises, importantly, first to our customers, and as a result, to our shareholders. We're pleased to have recorded 2025 revenue toward the top of our guidance and earnings and cash ended the year above our guidance 2025 adjusted EBITDA margin was 14.1% a year over year increase of 120 basis points non gap diluted earnings per share grew by 17% and free cash flow grew by 26%. Q4 revenue was $4.2 billion, a year-over-year decrease of 3.6%. But normalized for the extra week in our fourth quarter of 2024 and the six-week government shutdown in 2025, Q4 revenue would have grown approximately 4%. Chris will give you all the details on our financials later on this call. In addition to those financials, another significant highlight of our fourth quarter was net bookings of $5.6 billion, delivering a book-to-bill ratio of 1.3 times. This matched the 1.3 book-to-bill ratio we also delivered in the third quarter of 2025. And our year-over-year funded backlog is up 15%. This momentum illustrates our North Star strategy's strong alignment with administration priorities and enduring trends. Let me mention a few of our key awards in the quarter. The Air Force awarded us a five-year, $2.2 billion contract to deploy Leidos' passive radar systems for base defense against fixed and rotary wing aircraft and cruise missiles. This award validates years of investment in our ALPS and Mirada systems that detect threats without emitting a signal. Our continued IRAD investment in this powerful technology is precisely what the administration is asking for, and Leidos is pleased that the U.S. Air Force has recognized our capabilities with this order. Leidos also won a new six-year, $455 million Air Force Cloud One Next Architecture and Common Shared Services program. Leveraging our experience in zero-trust automation and multi-cloud brokering, we will deliver the ubiquitous, secure, commercial-grade technology the Department of War requires across the globe, wherever the mission calls. And we secured positions on two key 10-year IDIQs, the Missile Defense Agency's $151 billion SHIELD program supporting Golden Dome, and the Defense Microelectronics Activities $25 billion program to modernize military technology through advanced engineering and prototyping. Though neither of these IDIQs are counted in our backlog numbers, both vehicles provide streamlined access for Leidos to bring innovative solutions to top priority national security missions. I'm also especially pleased with the building blocks of profitable growth we are assembling. We are maintaining a productive working relationship with this administration, increasing the rate of investment in our growth pillars, and realigning our organization to best implement our North Star 2030 strategy. 2025 has proven that our efforts to anticipate the uniquely challenging national security environment we are in were spot on. Our customers need a new kind of national security company that delivers cutting-edge hardware and software combined to tackle challenges quickly and at scale. They need the best commercial tech integrated into those solutions, from undersea to space to cyber. And they need industry partners that can secure the homeland while enabling global operations to secure the peace. Leidos brings the speed, scale, security, and portfolio that uniquely responds to today's environment. We are redefining what it means to be a national security company, and we are excited to be accelerating outcomes. So we are now firmly in strategy execution mode for our North Star 2030 strategy with a strong bias for velocity and a strong productive sense of urgency. As evidence of this, let me recap a couple of the bigger steps we've taken in line with our North Star 2030 strategy. In May, we acquired Kudu Dynamics, bringing exquisite cyber capabilities to our cyber growth pillar and providing deep differentiators across the company. Kudu represents a highly focused, technology-rich company through which we had a clear strategy to drive increased Leidos value. The acquisition is already performing exceptionally well, generating rapid growth, providing entry into new markets, and sustaining robust profitability. And we have taken steps to tightly align our business around our energy growth pillar. In October, we divested VARIC, a non-core legacy energy asset. And last month, we agreed to acquire and trust Solutions Group, And Trust is a top energy engineering firm with a consistent track record of growth and strong profitability. Together, we have the scale to be a power engineering and design leader in the U.S. And with the deal's clear cross-sell revenue opportunities and cost synergies along with the deployment of our powerful AI-enabled tools, we will increase our competitiveness in this high-growth market. These actions improve our business mix while maintaining our strong balance sheet. And in keeping with our strategy, we are also investing organically in support of our national security priorities. In 2025, we invested $312 million in IRAD and capital expenditures to fund amazing innovations and develop radical solutions. As a result, programs like IFPIC, Wide Field of View, and Maritime Autonomy are ready to scale up to meet customer demand. In fact, we've increased our investments in solutions in each of the last three years, and that will continue in 2026. As I said earlier regarding the U.S. Air Force award, the administration is looking to partner with firms that are willing and able to lean into innovation and put their money behind their technical prowess. We are currently negotiating several important, exciting co-investment opportunities with this administration around critical war fighting and national needs, where we have unique capabilities in the defense tech and mission system space. So to continue to seize on the opportunities in front of us, we will triple our capital expenditure investments this year to $350 million. This will be used to make key capitalized investments, expand production capacity, and expand and upgrade our classified facilities. These investments are for key national priority high return projects for our customers that we expect to accelerate our growth in the near term. And we will accomplish all this while holding on to the profitability that we've proven for this business over the recent years. With our North Star 2030 strategy in place and gaining traction, organic and inorganic investments will become more prevalent in our capital management strategy. Also, I'm pleased to advise that I have realigned our organization to best execute our growth strategy. Form follows function. We will continue to operate in five sectors that roll up into four reporting segments. And we believe this North Star 2030 organizational construct will best align how we report financial performance in line with our North Star strategy and business priorities. Defense, led by Cindy Grunsfelder, takes our portfolio of defense tech programs and adds Department of War programs in the areas of force protection, mission software, and logistics that were formerly in our national security sector. This will better enable Cindy to prosecute integrated defense efforts like Golden Dome and C5ISR. This segment will continue to house our space and maritime growth pillar. Homeland brings together all Leidos' business that play a key role in securing the homeland, the number one priority of this administration. It combines our commercial and international business with our homeland security work and air traffic management portfolio previously in national security and health and civil, respectively. This segment also includes our energy infrastructure growth pillar for a more resilient American energy infrastructure and our mission software for key customers like the FAA. With Vicki Szymanski retiring, Roy Stevens will lead Homeland. Intelligence sharpens our focus on innovative technologies and services for the U.S. intelligence community. This sector leads full spectrum cyber growth pillar and aggressively advances mission software for our IC customers. Serving our intelligence agencies and making sure that we have the smartest government on the face of the earth is a real passion for me. And that passion is shared by Jason O'Connor, a long-time Leidosian who also spearheaded the Kudu acquisition and has stepped up to lead our intelligence sector. Digital modernization, led by Steve Hull, continues as a standalone growth pillar delivering IT modernization services and solutions for all customers while also providing CIO and CISO functions for Leidos. Steve and his team are embracing our AI-first philosophy to exploit AI for a more efficient Leidos and for more effective solutions to our customers. For financial reporting, the intelligence and digital modernization sectors roll up into the intelligence and digital segment. And last but certainly not least, health is led by Liz Porter. Liz is sharpening our focus on accelerating our managed health services growth pillar. Managed health is of keen importance to Leidos and the nation, and we are positioning to expand this business by improved access to rural care and growing our health footprint with both the Department of War and the Veterans Administration. I've also made two other changes to our leadership team. First, Ted Tanner has joined us to be our new Chief Technology Officer. A veteran of multiple Silicon Valley startups, Ted brings a proven track record of bold innovation. He has led the development of AI and machine learning capabilities for the Department of War, intelligence and civilian agencies. Ted embraces the hardest problems, brings clarity to complexity, elevates the teams around him, and delivers outcomes that matter. TED succeeds Jim Carlini, whose leadership laid the technical foundation on which we're building our robust future. I've asked Jim to remain at Leidos as a special advisor to me on national security and other matters. Will Johnson, another longtime Leidosian, has taken on a new role as our enterprise transformation leader. I'm charging Will with driving significant outcomes in workplace efficiency through business process reengineering unlocked via the power of technology, particularly AI. Will's mission is to deliver measurable transformational cost reduction outcomes for us and then help transfer them into our customer solutions. So in summary, 2025 was another very positive year for Leidos. And given that what's past is prologue, I'm convinced that 2026 will be a year that traction from our strategic action becomes even more evident. We will lock in the cultural and financial gains from 2023, 24, and 25. Demonstrate the power of North Star 2030 strategy, its growth pillars, and our alignment with this administration's priorities. and propel ourselves into 2027 with even stronger success and momentum. With that, now I'll pass the call over to Chris for a deeper look at our 2025 results and our financial guidance for 2026. Chris?