LIDDS AB (publ)

Greetings. Welcome to LIDO's Fourth Quarter Fiscal Year 2024 Earnings Call. At this time, all participants are on a listen-only mode. A brief question and answer session will follow the form of presentation. Please note this conference is being recorded. At this time, I'll turn the conference over to Stuart Davis from Investillations. Stuart, you may begin.

Thank you, Operator, and good morning, everyone. I'd like to welcome you to our fourth quarter and fiscal year 2024 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, who will begin on slide four.

Thank you, Stuart, and good morning, everyone. I'm happy you could join us to discuss another outstanding quarter for Leidos, tapping off a very strong year, delivering 2024 results above the high end of our prior guidance. Leidos' excellent recent performance also allowed us to reach and exceed the three-year performance targets we set out at our investor day in 2021. I'm very pleased we were able to over-deliver on those cumulative commitments. Against the targets set then, we delivered an organic revenue growth CAGR of 6.6%, well above our goal. We delivered adjusted EBITDA margin for 2024 of 12.9%, 240 basis points above our goal. And we drove free cash flow conversion of 100%, exactly on our commitment. This delivered cumulative operating cash flow to our target of $3.5 billion. Our excellent multi-year performance enabled us to take our gross debt leverage ratio down from 3.4 times to 2.2 times today. And now our strong balance sheet and core financial engine give us the financial flexibility to deploy capital to support tangible growth initiatives and drive brilliant shareholder value. All on this call will be aware that since 12 November, our stock has traded down about 25%. As a result, we repurchased an additional $400 million worth of shares in the fourth quarter. That brought our open market repurchases for 2024 to $850 million, significantly exceeding our initial commitment. As always, I want to thank each of our 48,000 Leidosians who bring our bold vision for Leidos to life every day. Their passion for our customer's mission Their fortitude, resilience, and ingenuity enable us to deliver exceptional value to our shareholders, even in the most dynamic of environments. Turning to slide five, in addition to delivering exceptional performance last year, 2024 was a year of deep strategic thinking. We're calling our new growth strategy North Star 2030. North Star 2030 keys on a specific group of growth pillars where we know customer needs are growing, market profitability is robust, and Leidos differentiation is evident and accelerating. We'll fully unpack our North Star 2030 strategy for you at our upcoming investors day. But undertaking this strategy effort last year is proving to have been timed perfectly. I mention all this now because a natural question today might be, how does North Star 2030 hold up to the priorities of this new administration? And the answer is, incredibly well. You'll recall that our strategy process last year was grounded in a 10-year future-backed Leidos proprietary hypothesis of the future. That work detailed macro domestic and geopolitical megatrends that we predicted would occur over the next decade. Now we see those megatrends coming through at pace. And therefore, we are even more confident our growth pillars position us for success today and in the future because they are all grounded in one unifying theme. Leidos exists to make our customers' outcomes smarter and more efficient. Everything we do for every one of our customers is linked to that statement. We were created to leverage innovation for our customers, to meet the immense and enduring national security challenges faced by America and its allies, from protecting the homeland to deterring and winning battles abroad. And driving government efficiency is fundamental to everything we do. And of course, that's what's needed to expand America's economic strength.