Leidos Holdings, Inc.’s (LDOS - Free Report) fourth-quarter 2021 adjusted earnings of $1.56 per share missed the Zacks Consensus Estimate of $1.60 by 2.5%. The bottom line also declined 4.3% from $1.63 per share registered a year ago.

The company reported GAAP earnings of $1.23 per share, which deteriorated from the year-ago quarter’s earnings of $1.37.

The company reported adjusted earnings of $6.62 for full-year 2021, which increased from $5.83 reported in 2020. The full-year earnings missed the Zacks Consensus Estimate of $6.63 per share by a whisker.

Leidos Holdings, Inc. Price, Consensus and EPS Surprise

(Click on image to enlarge)

Leidos Holdings, Inc. price-consensus-eps-surprise-chart | Leidos Holdings, Inc. Quote

Total Revenues

Leidos Holdings generated total revenues of $3,491 million in the quarter under consideration, missing the Zacks Consensus Estimate of $3,506 million by 0.4%.

The top line however improved 7.3% year over year. This increase in revenues was primarily attributable to growth from its Defense Solutions and Health segments.

In 2021, Leidos Holdings generated revenues worth $13.74 billion, up 11.7% from the year-ago figure. Full-year sales missed the Zacks Consensus Estimate of $13.75 billion.

Backlog

At the end of 2021, the company’s total backlog was $34.46 billion, up 8% from 2020. Of this, $7.45 billion was funded.

Operational Statistics

The total cost of revenues in the quarter increased 8% to $2,983 million.

Operating income totaled $270 million compared with the year-ago quarter’s income of $290 million.

The operating income margin for the quarter was 7.7% compared with 9.2% in the prior-year quarter.

Interest expenses were $46 million, flat year over year.

Segmental Performance

Defense Solutions: Net revenues in this segment improved 6.9% year over year to $2,061 million in the fourth quarter. This upside can be primarily attributed to the ramp-up of the Navy NGEN-R SMIT contract and other recent contract wins.

The segment’s operating income declined to $140 million from the year-ago quarter’s $147 million, with the operating margin being 6.8%.

Health: The segment recorded revenues of $630 million in the fourth quarter, which soared 22.8% year over year. The uptick was driven by the increase in medical examinations after the pause from the COVID-19 pandemic as well as increased volumes on the Defense Healthcare Management System Modernization (DHMSM) program. Also, the ramp-up of new programs such as the Military and Family Life Counseling (MFLC) program contributed to the unit’s top line.

Operating income was $103 million compared with the year-ago quarter’s income of $86 million. The operating margin came in at 16.3%.

Civil: Revenues in this segment amounted to $800 million, down 1.4%. The revenue decline was on account of lower deliveries of security products.

While operating income improved from $61 million to $89 million, the adjusted operating margin was 7.6%.

Financials

Cash and cash equivalents as of Dec 31, 2021, were $727 million compared with $524 million as of Jan 1, 2021.

Long-term debt, net of current portion, amounted to $4,593 million as of Dec 31, 2021, compared with $4,644 million as of Jan 1, 2021.

Net cash provided by operating activities in 2021 was $1,031 million compared with $1,334 million a year ago.

2022 Guidance

Leidos Holdings offered its 2022 view. The company currently expects to generate adjusted earnings in the range of $6.10-$6.50 per share. The Zacks Consensus Estimate for 2022 earnings, pegged at $6.80 per share, is higher than the company’s new view.

Leidos Holdings currently expects its revenues to be in the range of $13.9-$14.3 billion. The Zacks Consensus Estimate for 2022 revenues, pegged at $14.41 billion, is above the guided range.

The company’s cash flow from operating activities is anticipated to be at or above $1 billion.