Guidance and Growth Outlook
Q: Can you opine on bookings this year and growth reacceleration in '26 and beyond?
A: Management is very proud of the recent performance, noting a 1.7 book-to-bill ratio in Q4 and 1.4 for the full year, their best since 2020. " They have retooled their business development team, incorporating AI into proposal activities. " Despite current challenges like the continuing resolution, they are confident about future growth due to quality wins and programs with long-term potential. " They anticipate momentum accelerating over the next four years, supported by ample cash generation and a strong balance sheet. "

VBA Contract Impact
Q: How will the VBA recompete affect top and bottom line, considering a new provider?
A: Management is excited about securing the substantial award and is confident they can execute it profitably as previously communicated. " They acknowledge a new entrant in some regions but believe their scope, scale, and technology will maintain volume and profitability. " They emphasize that their growth pillars are not solely reliant on the medical exam business but focus on areas with strong customer demand, robust profitability, and clear Leidos differentiation. "

Earnings Guidance and EPS Growth
Q: Does guidance imply minimal EPS growth; is that due to conservatism?
A: Management acknowledges the observations but explains that they want to invest in the pivot year for the future while delivering strong performance. " They mention higher interest rates leading to a small headwind on interest and taxes affecting EPS guidance. " They had an excellent year on EACs and aim to continue that trend, though variability exists. "

Impact of New Administration
Q: Have you seen any disruption from the new administration's efforts?
A: Management reports that they've not seen significant disruptions. " There were minor perturbations as customers adjusted to the new environment, causing brief pauses in contracting, but activities have picked back up. " They are ready to maneuver in this environment with a prepared playbook if disruptions persist. "

Competition and Profitable Growth
Q: How do you plan to achieve profitable growth amid new competitors with low cost of capital?
A: Management is aware of new entrants and sometimes works with them as part of the ecosystem. " Their growth pillars focus on areas where they have differentiated capabilities and can accelerate ahead. " They are confident in their ability to outperform in markets where they offer something unique and remain open to partnerships to solve customer problems. "

Pivot from Low-Margin Work
Q: What does pivoting away from low-margin work entail?
A: Management plans a gradual shift by not investing further in areas without technical differentiation or robust margins. " Over time, they will allow such work to attrit and focus on growth areas that offer better top-line and bottom-line growth. " Examples include moving away from infrastructure support services and big O&M jobs. "

VBA Transition and EBITDA Growth
Q: Will you grow EBITDA and free cash flow during the VBA contract transition?
A: Absolutely; management is building momentum in other areas to complement the VBA. " They expect opportunities to innovate, driving efficiency and automation through the delivery chain. " Their growth pillars are robust, and they anticipate growth in health and civil businesses along with other segments. "

Fixed Price Contract Opportunities
Q: How do you view growing fixed price mix in defense segments?
A: Management is eager to expand outcome-based contracting, including fixed price models. " They believe they excel in this area, providing cost reductions for customers and profitability for shareholders. " They see opportunities in defense, though currently less than desired, and are investing in program execution capabilities to support this direction. "

Classified Contract Under Protest
Q: Has the multibillion-dollar classified contract under protest been adjudicated?
A: Management prefers not to discuss the amount under protest but confirms that the specific contract has not been adjudicated. " Contracts under protest are not included in the backlog and remain in abeyance. "

IRON DOME and Border Security
Q: What opportunities do you see in IRON DOME and border security projects?
A: Management states that these areas are right in their wheelhouse. " They have prepared big ideas and are engaging with stakeholders. " They feel their capabilities align with the needs in space surveillance, countering cruise missiles, hypersonic weapons, and detecting low-altitude UAVs. " They are optimistic about growth opportunities given the administration's priorities. "