Slide 1: Leidos Investor Day
Leidos Investor Day Waldorf Astoria Hotel – New York, NY September 11, 2013
Slide 2: Leidos logo
- leidos
Slide 3: Investor Day agenda
START STOP DURATION (mins) TOPIC 7:30 8:25 Registration and Continental Breakfast 8:25 8:30 Opening Remarks and Introductions: John Sweeney, Investor Relations 8:30 8:50 Introduction and Company Overview: John Jumper, CEO 8:50 9:20 Strategy and Operations: Stu Shea, President & Chief Operating Offic
Slide 4: Leidos logo
- leidos
Slide 5: Introduction and Company Overview—John Jumper
Introduction and Company Overview— John Jumper CEO
Slide 6: Unlocking the Value of Leidos
$200M+ cost savings with more to come in FY15 Emphasize profit growth over top line revenue – Target 10.0% EPS annual growth – Continuous improvement driving lower rates & higher margin Strong cash generation: priority return to shareholders – $400M annual operating cash flow Stable business base: d
Slide 7: Our Transformation
Our Transformation What Has Changed… Old SAIC Leidos 1,000 flowers blooming and internal competition Organizational Conflicts of Interest Higher cost structure M&A-focused capital deployment Cash on the balance sheet Optimized portfolios, shared resources and leveraged technology Free to pursue more
Slide 8: Our Key Leaders With You Today
Our Key Leaders With You Today JOHN JUMPER Chairman and Chief Executive Officer STU SHEA President and Chief Operating Officer MARK SOPP Chief Financial Officer JOE CRAVER President, Health and Engineering Sector LOU VON THAER President, National Security Sector Aligned in Their Vision for the Compa
Slide 9: Our Board of Directors
Our Board of Directors JOHN P. JUMPER Chairman & Chief Executive Officer DAVID G. FUBINI Director JOHN J. HAMRE Director MIRIAM E. JOHN Director ANITA K. JONES Director HARRY M. J. KRAEMER, JR. Director LAWRENCE C. NUSSDORF Director ROBERT S. SHAPARD Director NOEL B. WILLIAMS Director
Slide 10: Investment Rationale
Stable National Security Sector revenues combined with growth opportunities in Health and Engineering Removal of organizational conflicts of interest Continuous improvement to drive down costs Target operating margin of 8.0%+ Low Cap Ex requirements Strong operating cash generation: Target $400M ope
Slide 11: Leidos logo
leidos
Slide 12: Strategy and Operations—Stu Shea
Strategy and Operations— Stu Shea PRESIDENT AND CHIEF OPERATING OFFICER
Slide 13: Executing on Our Vision
Executing on Our Vision Why Leidos Matters Who We Are What Makes Us Distinctive What is Our Value Proposition What You Should Expect From Us We Have a Roadmap for Delivering Value to our Shareholders
Slide 14: Why Leidos Matters: Convergence of Megatrends
Increasingly Impactful Cybersecurity Threats Increasingly Challenging Economics, Geopolitics, and Urbanization Increasingly Global, Interconnected Markets Increasingly Complex, Data Rich Environments Why Leidos Matters: Convergence of Megatrends Giving Rise to Opportunities in Enduring Markets That
Slide 15: Securing the Future
Securing the Future Helping make our communities, our nation and our world a better place for generations to come. Security Delivering innovative solutions that help protect freedom in all domains ~ air, land, ‘sea, space and cyberspace. Health ‘Advancing health technology to improve patient care, r
Slide 16: Who We Are
National Security 68% Health 14% Engineering 17% Who We Are Solutions That Secure Our Future and Our Way of Life FY2014 revenues: ~$6B National Security Sector ~$4B revenue 13,500 employees with >10,500 possessing DoD, TS/SCI, SAP/SAR, and DoE security clearances 99% government, <1% commercial Criti
Slide 17: Diversified and Stable Revenue Base
Revenue Composition Diversified and Stable Revenue Base, Low Concentration Risk Contract Type Prime vs. Subcontract Contract Concentration IDIQ v. Non-IDIQ Employee Location Customers OCO Exposure Intelligence / Cyber Other Commercial Federal Gov Defense Top 5 Top 6-10 Subcontract T&M Fixed Price Co
Slide 18: We Have the Right Team
We Have the Right Team A Balanced, Well-Educated Workforce Capable of Creating the Right Solutions United States Top Operating Locations International Years of Service Degrees Veterans Concentration Washington, DC (26%) Baltimore, MD (16%) San Diego, CA (6%) Boston, MA (3%) Orlando, FL (3%) Dayton,
Slide 19: What Makes Us Distinctive: Rich Markets
Health ($43B) • National Security ($94B) • Engineering ($80B) • One company in three opportunity rich markets of global importance Drive leading C4ISR solutions in challenging mission environments across all operational regimes Improve access and quality of healthcare by driving digitization, intero
Slide 20: What Makes Us Distinctive: Competitive Levers
Deep Customer Domain Knowledge 1 People, Process, and Tools 2 Scalable Capabilities 3 3 Key Levers The Leidos Performance Value Chain What Makes Us Distinctive: Competitive Levers Leidos’ 3 Competitive Levers are Unique, Complete, and Proven Deep scientific, technology, and subject matter expertise
Slide 21: What Makes Us Distinctive: Solutions That Work
1 2 3 One company with Three Unique Levers What Makes Us Distinctive: Solutions That Work Our Strategy Gives Us a Roadmap for Meeting Our Objectives People, Processes, and Tools Deep Customer Domain Knowledge Agile development processes Repeatable processes Reliable integrators Physics-based modelin
Slide 22: What Makes Us Distinctive: Information-Driven Capabilities
What Makes Us Distinctive: Information-Driven Capabilities Achieving technology leverage – Market pull is enabled by technology Provides channel access to customers – Technology push is informed by the market Retains the imperative of innovation Opportunity to scale – Diverse markets share common te
Slide 23: Leidos Investment Thesis
Leidos Investment Thesis Compelling vision and performance objectives Balanced financial strategy Repeatable operating model Aggressive portfolio management Common core of information-driven capabilities Proximity and criticality to operators & customers Continually optimized cost structure
Slide 24: What You Should Expect From Us: Performance
What You Should Expect From Us: Performance Maintain discipline – Laser-focused on core markets – Controlled adjacencies Expanding commercial portfolio Technology sharing – Increased, shared investment Economic profit improvement – Quality revenues – Educated workforce – Higher margin expectations W
Slide 25: National Security, Engineering, Health, Cybersecurity
National Security Engineering Health Cybersecurity
Slide 26: National Security—Lou Von Thaer
National Security— Lou Von Thaer SECTOR PRESIDENT
Slide 27: National Security Sector - Positioned for Success
~$4B in revenues NSS capabilities aligned to address our Nation’s vast Intelligence & Defense requirements Intelligence collection, analysis and exploitation of data expertise are indispensable in today’s world – Comprises 80% of NSS revenues New multibillion dollar OCI-deconflicted markets availabl
Slide 28: Market Shift Plays to Leidos' Advantage
Leidos Information Enabled Solutions Market Shift Plays to Leidos’ Advantage CONVERGENCE In the future, those that control the information will control greater portions of the budget PHYSICAL REALM DIGITAL REALM OPERATIONAL REALM
Slide 29: Disclosed US Government Intelligence Budget
80% of our current revenue National Security Sector Revenue MIP Budget NIP Budget 80% INTELLIGENCE 15% DEFENSE 5% DHS & COMMERCIAL Disclosed US Government Intelligence Budget Intelligence Spending CURRENT DOLLARS $B Key contributors to U.S. intelligence for four decades Sources: DNI disclosure of Na
Slide 30: Expanding Growth Into Defense Market
Expanding Growth Into Defense Market Reagan Era Vietnam Era Iraq/Afghanistan Source: DoD Green Book, USD not adjusted for inflation Long-term growing market DoD Spending CURRENT DOLLARS $B War Funding Current Year $0 $100 $200 $300 $400 $500 $600 $700 $800
Slide 31: Addressable market increases dramatically upon separation
Addressable market increases dramatically upon separation Significant opportunity space in long term Defense budgets National Security Sector Unconstrained Markets $37B AIR FORCE NAVY ARMY SOCOM & UNIFIED COMMANDS $0 $10 $20 $30 $40
Slide 32: National Security
National Security Maritime Systems Space Systems Airborne Systems Ground Systems Readiness & Sustainment Cybersecurity Intelligence Analysis & Production Intelligence Systems Critical Mission Support in all Operational Domains: Air, Land, Sea, Space and Cyberspace
Slide 33: National Security at a Glance
National Security at a Glance 13,500 PROFESSIONALS 10,500 WITH SECURITY CLEARANCES Broad technology, development and integration capabilities CONTRIBUTE TO OUR CUSTOMER MISSIONS… OUR CORE RESOURCES… 5% DHS AND COMMERCIAL 15% DEFENSE 80% INTELLIGENCE
Slide 34: National Security at a Glance: Addressable Market
National Security at a Glance Increase of $37 Billion in Addressable Market BUSINESS SEGMENT REVENUE PERCENTAGE ADDRESSABLE MARKET Technology 25% $47B Intelligence 60% $23B Cybersecurity 15% $24B $94B
Slide 35: National Security at a Glance: Diversified contract base
Diversified contract base Top 10 contracts < 25% of total revenues 9 of Top 10 contracts in stable intelligence market National Security at a Glance FY14 Top Contracts PROGRAM REVENUE BUSINESS SEGMENT Classified $154M Intelligence Saturn Arch $140M Technology GGI $102M Intelligence MRAP JLI $ 99M In
Slide 36: History as a Fierce Competitor
27% Fixed Price 88% PRIME 82% Base Funding Proximity to operators & deep domain expertise Capabilities address emerging market needs Rapidly deploy cost-effective technical solutions Advanced analytics to solve complex information problems Cybersecurity to defend critical missions and systems Well p
Slide 37: Leidos National Security Strategy
BUSINESS SEGMENTS DELIVERY FOCUS MARKETS Horizontally Integrated Solutions into New Markets Leidos National Security Strategy Consistent, Reliable, Secure Technology and Information Globally for all Customers Technology Intelligence Cybersecurity Intelligence Defense Homeland Security Healthcare Eng
Slide 38: Technology Business Segment
Technology Business Segment Technology-driven end-to-end integrated solutions operating in the air, land, sea & space Advanced Technology Solutions to Differentiate Leidos Offerings R&D in air, sea, ground & space Autonomous and distributed solutions Modeling, simulation and training Wide range of t
Slide 39: Success Story: Distributed Airborne Information Solutions
Success Story: Distributed Airborne Information Solutions Deployed technologies on Blue Devil, Buckeye, Desert Owl, Radiant Falcon, Saturn Arch Catching Bad Guys and Protecting our Troops Mission Needs Customer needed to integrate sensor operations to identify and address threats Leidos Response Lei
Slide 40: ACTUV: Anti-Submarine Warfare Continuous Trail Unmanned Vessel
ACTUV: Anti-Submarine Warfare (ASW) Continuous Trail Unmanned Vessel Expanding market for Navy autonomous solutions to address expanding threats Navy developing solution to counter diesel submarines Leidos ability to meet Navy’s need Leading prototype design to track diesel electric submarines for m
Slide 41: Growth Opportunity: Naval Autonomous Technology
Growing market for multiple mission autonomous systems Navy developing affordable, versatile systems for deploying and retrieving equipment Leidos ability to meet Navy’s need Leveraging ACTUV prototype design experience Knowledge in underwater operations, propulsion, and controls Broad experience in
Slide 42: Intelligence Business Segment
Intelligence Business Segment Building wide range of information processing systems solving toughest challenges today Delivering “Glue-ware” to Create Integrated Systems for Decision Makers PRIMARY CUSTOMERS System Engineering & Integration Delivering across Intelligence & Defense Pursuing adjacent
Slide 43: Success Story: Big Data Analytic Solution
Mission Need Intelligence community must review massive amounts of data to make accurate decisions Leidos Response Leidos leveraged our domain knowledge, data analytics and software development capabilities to deliver the leading data analytics platform Result Leidos solution “transformed tactical i
Slide 44: Growth Opportunity: Border Security Surveillance
DHS seeking low-risk near-term solution for U.S. border security – Failed Secure Border Initiative program delayed border security implementation – Seeking proven system to detect and track items of interest along nation's borders Leidos ability to meet DHS’ need – Leverage security and force protec
Slide 45: Cybersecurity Business Segment
Cybersecurity Business Segment Delivering over $700M of Cybersecurity to the Intelligence Community to constantly defend critical infrastructure against the most sophisticated adversaries Leveraging Cyber leadership in Intelligence to address increasing commercial demands Leading Cyber Provider in I
Slide 46: Success Story: Cyber Signature Management
Mission Needs Intelligence community faced with constant, sophisticated cyber attacks Leidos Response Developed solution to identify and defend against new cyber threats Delivers software to defend against new attacks, and protect networks across IC Result Enterprisewide protection from new and emer
Slide 47: Growth Opportunity: Cyber Threat Operations
DHS and commercial companies seeking secure network solutions Cyber threats continue to expand in numbers and sophistication Need for reliable cyber protection expanding Leidos has the ability to meet emerging needs Deliver differentiated solutions to protect networks and information Provide cyberse
Slide 48: Competition
Competition Intelligence & Security Information Systems & Technology Information Systems & Global Solutions National Security Solutions Intelligence, Information & Services Information Systems Defense, Space & Security SERVICES Mission, Cyber & Intelligence Solutions SYSTEM INTEGRATORS & SOLUTIONS
Slide 49: Summary: Leidos – Missions that Matter
NSS brings a 44 year history of performance in good markets and bad – Leidos design drives horizontal technology collaboration in expanded markets – Continual focus on streamlined operations at reduced cost – Expanded focus on increasing earnings to drive shareholder value Continued need for intelli
Slide 50: Health & Engineering—Joe Craver
Health & Engineering— Joe Craver SECTOR PRESIDENT
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Slide 52: Health & Engineering Sector
63% 37% 43% 57% Long-term market presence with solution and service delivery at scale Applied solutions focused on large, receptive commercial markets Core capability leverage with broad impact across multiple market segments Health & Engineering Sector Healthcare Engineering ~$2B Revenues Commercia
Slide 53: Leidos Health
Leidos Health
Slide 54: Leidos Health – Positioned for Long-Term Success
Material presence and scale in more than $35B healthcare IT market Market drivers and business imperatives creating need for health organizations to seek applied solutions Extensive client list, reputation for quality and partnered with all the industry leading software vendors Uniquely positioned w
Slide 55: U.S. Healthcare Provider IT Market
Hardware Telecom Software Internal Services IT Services International Health IT market is more than $90B Total addressable market is much bigger than just Health IT U.S. Healthcare Provider IT Market Source: Gartner Enterprise IT spending by verticals forecast, 2013Q1 CAGR ’11–’13F 4% 4% 2% 6% 7% 0%
Slide 56: Leidos Health in the Marketplace
Leidos Health in the Marketplace #9 Modern Healthcare's 2013 Management Consulting Firms Engaged by largest Academic Medical Centers as listed by Modern Healthcare 2012 Worked with U.S. News and World Report’s 2012-13 Best Hospitals Honor Roll #4 KLAS Ranking of Overall Health Services Firms #18 Hea
Slide 57: Major Shift as Healthcare Becomes More Data-Enabled
Major Shift as Healthcare Becomes More Data-Enabled… A New Era in Healthcare Is Emerging… Leidos’ Analytical Capabilities and Domain Knowledge Allow Us To Excel In Data-Enabled Environments Tomorrow Today Digitization Integration and Interoperability Data Leverage Precision Medicine & Personalizatio
Slide 58: Health Solutions
Health Solutions Electronic Health Record System Implementation & Optimization Health Information Security Behavioral Health Research & Outreach Biomedical Data Integration & Warehousing Health IT Framework & Information Exchange Advanced Data Analytics & Visualization Biomedical Research & Developm
Slide 59: What We Do: Leidos Health Capabilities
EHR implementation Optimization Information integration IT services Application development and maintenance Ongoing system support Legacy system support Strategic IT planning Meaningful use Clinical transformation ICD-10 Revenue cycle management Data analytics; cybersecurity Behavioral health Public
Slide 60: Leidos Health Clients
Federal Health Clients Commercial Clients Leidos Health Clients Helping Drive the Transformation Towards Value-Based Healthcare
Slide 61: EHR Consulting
EHR Consulting Digitization
Slide 62: EHR Consulting: Underdeveloped EHR Capabilities
7 EHR Consulting Majority of Institutions Have Underdeveloped EHR Capabilities Data from HIMSS Analytics Database Q1 2013 Digitization Only 27% of hospitals have reached Healthcare Information and Management Systems Stage 5 or higher
Slide 63: Systems Integration
Developed & support the U.S. military AHLTA/CHCS system, the largest EHR system ever implemented Systems Integration Integration and Interoperability Provided health IT & systems integration support in connecting Inland Northwest Health Services (INHS), one of the nation’s first health information e
Slide 64: VA/DoD EHR Integration Opportunity
VA/DoD EHR Integration Opportunity Servicing over 18 million patients in both VA / MHS Total program cost: ~ $5 - $20 billion High Congressional visibility creating pressure for action Possible Scenarios: Expansion of existing sharing platforms Adoption of existing systems by differing agency Integr
Slide 65: Strategic Services and Solutions
IT Strategy & Program Management Cyber Security ICD-10 Transformation Advanced Data Analytics Clinical Transformation Revenue Cycle Optimization Meaningful Use (MU) Strategic Services and Solutions True Value of Digitization is Unlocked Through Data Leverage STRATEGIC ADVISORY SERVICES VALUE-BASED O
Slide 66: Strategic Services and Solutions: Data Leverage
… directed the full implementation of clinical and revenue cycle applications at 27 hospitals and clinics for one of the top academic medical centers in the country … Revenue cycle transformation … … for one of the largest public hospitals (Grady Health System) in the United States … Advanced Analyt
Slide 67: Behavioral health and resilience research
Leidos has over 25 years of combined programmatic experience providing solutions that enhance health, resilience, readiness, and performance through research, education, training and counseling in areas such as: Performance Enhancement: Prediction of Unplanned Loss Team Resilience Traumatic Brain In
Slide 68: Research and Life Sciences: Leidos Biomedical Research
Research and Life Sciences: Leidos Biomedical Research Frederick National Laboratory for Cancer Research Advanced Technology Research Facility Opened June 2012 Genetics and genomics Proteins and proteomics Imaging and nanotechnology Advanced biomedical computing Translational Research Precision Medi
Slide 69: Competitive Landscape: Commercial and Federal Health
Commercial Health Federal Health Competitive Landscape
Slide 70: Leidos Health Competitive Advantage
Leidos Health Competitive Advantage Life Sciences Clinical SME Health IT Advanced Data Analytics Behavioral Health & Wellness Health IT Clinical SME Life Sciences ADVANCED DATA ANALYTICS BEHAVIORAL HEALTH & WELLNESS
Slide 71: Leidos Engineering
Leidos Engineering
Slide 72: Leidos Engineering
Consistently meets deadlines, budget and delivers on commitments Uses systems approach to integrate engineering, technology, IT and consulting to address emerging challenges Has capabilities to bring clarity and insight to large data Leidos Engineering … a Customer Survey of over Industry Decision M
Slide 73: Interconnected Engineering Market Sectors
Interconnected Engineering Elements Oil and Gas a Infrastructure Engineering Market Sectors > Steady spend to upgrade aging electric power grid > Smart grid digitalization movement > Data analytics > By 2020 expect 100GW of plant retirements > Massive shift to shale oil and gas > Significant interde
Slide 74: Leidos Engineering Approach is Our Advantage
Leidos Engineering Approach is Our Advantage Combining Horizontal Capability & Applying to Industry Sectors Addressing Market Interdependence Through Horizontal Leverage Tomorrow Today Foundational Differentiating Disruptive Architecture Engineering Environmental DesignBuild Systems Engineering Syst
Slide 75: Engineering Solutions
Engineering Solutions Secure Commerce Business and Financial Advisory Water and Waste Energy Management & Efficiency Environmental Services Oil, Gas and Chemicals Renewable Energy Power Delivery and Smart Grid Bringing Engineering and Technology Together in Critical Markets
Slide 76: Industry Rankings and Awards
TOP NATIONAL RANKINGS OTHER SELECT RANKINGS Industry Rankings and Awards Business Information Modeling (BIM) Engineering Firms Building Design+ Constr., July Transmission & Distribution ENR, July #7 Environmental Management ENR, Top in Program Management ENR, June Top Engineering/Architecture Firms
Slide 77: What We Do: Leidos Engineering
What We Do Percentage of Leidos Engineering Business Leidos Engineering 5 Year Growth Trajectory Capabilities Power Oil and Gas Commercial and Industrial Infrastructure 25% 10% 25% 40% Consulting Enterprise IT Energy efficiency T&D and smart grid Renewable integration Shale gas Asset management Reme
Slide 78: Leidos Engineering Capabilities Delivered to Markets
Leidos Engineering Capabilities Delivered to Markets Scale and Experience in Markets that Matter
Slide 79: Leidos Engineering Clients
Leidos Engineering Clients … and Other Fortune 100 Companies
Slide 80: Secure Commerce
Secure Commerce Clients Include: CBP, TSA, DoD, DOS, Mexico, Middle East
Slide 81: Deal of the Year Awards and Engineering Experience
7 R ECENT D EAL OF THE Y EAR A WARDS Project Finance Magazine Prepared reports on nearly 1,000 power, infrastructure and industrial projects in 75 countries and territories Independent engineering on more than 1,000 energy projects, nearing $200 billion in completed transactions Active in independen
Slide 82: Competitive Landscape: Engineering
Large Engineering Specialized Engineering Competitive Landscape
Slide 83: Impact of Leidos Health & Engineering
Impact of Leidos Health & Engineering NASA One-of-a-Kind Vibro- Acoustic Research Facility DesignBuild Responsible Shale Exploration Support San Diego County Airport Design, Engineering, Installation, Testing, and Commissioning Data Analytics Oklahoma Cancer Research Center
Slide 84: Financial Overview—Mark Sopp
Financial Overview— Mark Sopp CHIEF FINANCIAL OFFICER
Slide 85: Leidos Value Creation Roadmap
Profit-Focused Revenues Year-over-year Operating Income Growth Strong Cash Generation Capital Allocation Effectiveness Leidos Value Creation Roadmap Proven Business Model – On a New Path to Drive Shareholder Value
Slide 86: Profitability Actions
Quality revenues; profit focus Stay within our wheelhouse; shape portfolio Capitalize on OCI and commercial opportunities Greater Leidos content, integrated technology Complete transition year costs/charges Full-year benefit of FY14 cost reductions; ongoing Underperforming business areas removed Red
Slide 87: Strong and Improving Capital Efficiency
Strong Cash Flow No Factories Insignificant Pension Variable Cost Structure Human Capital Based Strong Cash Flow Strong and Improving Capital Efficiency
Slide 88: Cash & Credit Statistics
Cash & Credit Statistics Meaningful Near-Term Cash Deployment Opportunity No debt maturities till 12/2020 Total Debt = $1,293M Avg. Debt Rate 5.6% Anticipate maintaining investment grade rating Cash at Spin ~$450M Dividend from NSAIC $295M Est’d Beg. Cash ~$745M Est’d End FY14 ~$950M CASH DEBT
Slide 89: Capital Deployment
1 Capital Deployment $350M Projected FCF * /Year; >$2.5B deployable next 5 years ~1/3 - Maintain/Increase Regular Dividends >1/3 - Buybacks & Special Dividends Selective M&A *FCF = Free Cash Flow; Derived from projected Operating Cash Flow minus projected Capital Expenditures $0.95B $2.6B $- $0.5 $1
Slide 90: Recent Results & Outlook
Recent Results & Outlook
Slide 91: Leidos logo
* leidos
Slide 92: Pro Forma (PF) Financials
Pro Forma (PF) Financials Consolidated + segments; Oct ‘13 Leidos PF includes: – CityTime settlement – >100bps stranded costs – Significant special charges FY12-14 Adjusted Non-GAAP Op Income Discrete items adjusted Provides additional insight into core operating performance Reflects stranded corpor
Slide 93: National Security Segment Financials
7.2% 7.2% 7.9% $368 $334 $153 $0 $100 $200 $300 $400 $500 FY12 FY13 FY14 1H Adjusted Non-GAAP Operating Income ($M) $4,631 $4,646 $2,116 $0 $1,000 $2,000 $3,000 $4,000 $5,000 FY12 FY13 FY14 1H Adjusted Non-GAAP Revenue ($M) Revenue 1HFY14 down due to JLI and Federal spending cuts Adjusted Non-GAAP O
Slide 94: Health & Engineering Segment Financials
8.6% 7.6% 8.1% Revenue Revenue; growth from acquisitions; 1HFY14 internal revenues flat Adjusted Non-GAAP Operating Income Reflects stranded corporate costs; does not reflect cost savings Adds back impairments and EAC adjustments for one program Health & Engineering Segment Financials See Non-GAAP r
Slide 95: Leidos FY14 Guidance
Consistent with SAIC Inc. guidance issued Sept 4, 2013, except: – Separation now assumed; triggers Stranded Corporate Costs ~$60M ($.12 EPS) – Legal expenses previously reported as part of TSIT~$10M ($.02) – EPS, provided on a pre-split and post-split basis Leidos FY 14 Guidance Revenues (billions)
Slide 96: FY15 Margin Improvement Outlook
FY15 Margin Improvement Outlook Major Levers : Full year benefit of $200M+ cost reductions Ongoing streamlining; lower wrap rates NSS removal of non-core under-performing business areas Restoring normative commercial health margins HES focus on higher fee consulting engineering projects Profit-focus
Slide 97: Leidos FY15 to FY17 Targets
Profit-focused Lower cost structure Strong Cash Flow Attractive Regular Dividend (~1/3 FCF) Targeting > 1/3 FCF buybacks/special dividends Playing to our Strengths: Leidos FY15 to FY17 Targets Targeted EPS* Growth/Yr. 10.0%+ Targeted Annual Operating Margin 8.0%+ Targeted Organic Growth: FY15 +/- lo
Slide 98: Summary
1. Attractive, large, enduring, increasingly integrated markets 2. Streamlining, separation, and portfolio moves prep for clean FY15+ 3. Profit growth and capital effectiveness focus 4. Deployment opportunity > $2.5B over the next 5 years – >2/3 FCF targeted for dividends and buybacks – Select, esta
Slide 99: Appendix
Appendix
Slide 100: Pro forma financial information note
The unaudited pro forma consolidated financial information included in this presentation was derived from the Company’s historical consolidated financial statements and is being presented to show the effect of the proposed spin-off of New SAIC. The unaudited pro forma consolidated financial informat
Slide 101: Non-GAAP measure definitions
This presentation includes the financial measures Adjusted Non-GAAP Revenue, Adjusted Non-GAAP Operating Income, and Free Cash Flow, all of which are defined as non-GAAP financial measures by the Securities and Exchange Commission (SEC). These measures may be different than similarly-titled non- GAA
Slide 102: Adjusted Non-GAAP Operating Income definitions
Adjusted Non-GAAP Operating Income is a non-GAAP financial measure that is reconciled to the most directly comparable GAAP financial measure, Operating Income. Adjusted Non-GAAP Operating Income adjusts Operating Income for the following discrete events: CityTime – This adjustment represents to a le
Slide 103: Non-GAAP Reconciliations – Adjusted Revenue and Operating Income
Non-GAAP Reconciliations – Adjusted Non- GAAP Revenue and Operating Income Note: The “as reported” amounts above and throughout this presentation have been recasted to give effect to reorganizations and discontinued operations Non-GAAP Adjusted Operating Income Reconciliation by Sector FY12 FY13 FY1
Slide 104: Non-GAAP Reconciliations – Free Cash Flow
Free Cash Flow is a non-GAAP financial measure that is reconciled to the most directly comparable GAAP financial measure, cash flows used in operating activities. The company believes that reporting free cash flow provides investors with greater visibility into how effectively it generates cash. The
Slide 105: Leidos logo
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