Leidos Holdings Inc (LDOS)

History and Background

Leidos was formed in 1969 as Science Applications International Corporation (SAIC). In 2016, SAIC split into two independent companies: SAIC and Leidos. Leidos retained the government services business, while SAIC focused on technical, engineering, and enterprise IT solutions.

Core Business Areas

• Defense Solutions: Provides a broad range of solutions, including systems integration, engineering, and cybersecurity, to support defense agencies and military branches.
• Civil Group: Offers solutions in areas such as air traffic management, infrastructure modernization, and environmental restoration to civilian government agencies.
• Health Group: Delivers health IT, research & development, and managed health solutions to federal health agencies like the Department of Veterans Affairs and the Department of Health and Human Services.

Leadership and Structure

Leidos is led by Thomas Bell, Chief Executive Officer. The organizational structure is based on business groups, each headed by a group president, reporting to the CEO. These groups are supported by functional departments such as finance, legal, and human resources.

Key Offerings

• Maritime Systems: Development, integration, and support of complex maritime systems for defense and commercial applications. These systems include autonomous vehicles, sensors, and communication networks. Competitors include Lockheed Martin and General Dynamics. Limited specific market share data available, projects are often bespoke and classified.
• Air Traffic Management: Provides advanced air traffic management solutions to improve safety, efficiency, and capacity. Competitors include Raytheon Technologies and Thales Group. Leidos secured a $1.7 billion contract in 2020. Specific market share data is difficult to ascertain as it often depends on specific awarded contracts.
• Cybersecurity: Offers cybersecurity solutions to protect critical infrastructure and government systems. Competitors include Booz Allen Hamilton, CACI International, and Accenture. Revenue and marketshare are difficult to ascertain, due to government contracts being confidential in nature.

Industry Overview

The government services industry is characterized by high barriers to entry, complex regulatory requirements, and intense competition for contracts. Demand is driven by government spending on defense, infrastructure, and healthcare.

Positioning

Leidos is a leading provider of technology and engineering solutions to government and commercial markets. Its competitive advantages include its size, technical expertise, and long-standing relationships with government agencies.

Total Addressable Market (TAM)

The TAM for government services is estimated to be in the hundreds of billions of dollars annually. Leidos is well-positioned to capture a significant portion of this market due to its broad portfolio of services and established relationships with government clients.

Key Competitors

• RTX
• LMT
• GD

Competitive Landscape

Leidos competes with other large government contractors on price, technical capabilities, and past performance. Leidos's size, scale, and diverse portfolio of services provide a competitive advantage.

Gibbs & Cox

• Year: 2021
• Acquisition Price (USD millions): 380
• Strategic Rationale: Enhanced maritime engineering and design capabilities.

1901 Group

• Year: 2021
• Acquisition Price (USD millions): 215
• Strategic Rationale: Cloud computing and IT modernization services.

Historical Growth: Leidos has achieved consistent growth over the past several years, driven by acquisitions and organic expansion. Revenue has grown at a rate of approximately 5-10% per year.

Future Projections: Analysts project continued growth for Leidos, supported by increased government spending and strategic initiatives. Revenue is expected to grow at a similar rate in the coming years.

Recent Initiatives: Recent initiatives include acquisitions to expand capabilities, investments in research and development, and efforts to improve operational efficiency.

Leidos is a strong player in the government services sector, benefiting from its established relationships and diverse portfolio. While reliant on government spending, its size and technical expertise position it well for continued growth. Acquisitions expand capabilities, but economic and political uncertainty need to be monitored.

Data Sources:

• Leidos Investor Relations
• SEC Filings
• Analyst Reports
• Company Press Releases
• Bloomberg

Disclaimers:

This analysis is for informational purposes only and should not be considered investment advice. Market conditions and company performance can change rapidly. Always conduct thorough research and consult with a financial advisor before making investment decisions.