Leidos Holdings Issues $1 Billion in Senior Notes

RESTON, VA - Leidos Holdings , Inc. (NYSE:LDOS), a prominent player in the Professional Services industry with a market capitalization of $17 billion, has entered into a significant financial arrangement, issuing $1 billion in senior unsecured notes, as detailed in a recent 8-K filing with the Securities and Exchange Commission (SEC). According to InvestingPro data, the company maintains a robust financial health score, supporting its ability to manage additional debt effectively.

On February 20, 2025, Leidos Holdings’ subsidiary, Leidos, Inc., sold $500 million of 5.400% senior notes due 2032 and $500 million of 5.500% senior notes due 2035. The proceeds from this offering, referred to as the "Notes Offering," are earmarked for various corporate purposes. With a current ratio of 1.21 and total debt of $5.4 billion, the company’s debt management strategy appears well-structured. InvestingPro analysis reveals over 10 additional key financial metrics and insights available for subscribers.

The company plans to use the net proceeds primarily to repurchase its outstanding 3.625% notes due in 2025 through a tender offer, and to repay any remaining 2025 notes. Additionally, funds will be allocated to repay part of the balance on its senior unsecured term loan facility, repurchase outstanding shares of its common stock, finance potential acquisitions, and cover related fees and expenses.

The notes are guaranteed by Leidos Holdings, Inc. and will be senior unsecured obligations of the issuer. Interest on the 2032 and 2035 notes will be paid semi-annually, with the first payment due on September 15, 2025.

Leidos, Inc. retains the option to redeem these notes before their respective maturity dates at a "make-whole premium," and after specified dates at 100% of their principal amount plus any accrued interest. Additionally, in the event of a change of control, the issuer is obliged to offer to repurchase the notes at 101% of the principal amount plus accrued interest.

The indenture governing the notes includes standard events of default, which, if triggered, may lead to or automatically result in the acceleration of the due amounts.

This financial move comes as part of Leidos’ broader strategy to manage its debt portfolio and invest in growth opportunities. As the company continues to navigate the competitive landscape of the technology sector, these funds provide the flexibility to strengthen its balance sheet and invest in strategic initiatives. While the stock is currently trading near its 52-week low, InvestingPro’s Fair Value analysis suggests the stock may be undervalued, presenting a potential opportunity for investors. Detailed valuation metrics and comprehensive analysis are available in the Pro Research Report, part of InvestingPro’s coverage of over 1,400 US stocks.

The information contained in this article is based on the statements provided in the SEC filing by Leidos Holdings, Inc.

In other recent news, Leidos Holdings reported fourth-quarter earnings that exceeded analyst expectations, with adjusted earnings per share reaching $2.37, surpassing the estimate of $2.26. The company’s revenue for the quarter was $4.37 billion, which also beat the consensus estimate of $4.13 billion, marking a 10% year-over-year increase. Despite these strong results, Jefferies analyst Sheila Kahyaoglu adjusted the price target for Leidos to $155 from $160, maintaining a Hold rating, following the company’s 2024 financial results. Leidos demonstrated an 8% increase in organic revenue growth and a 29% rise in EBITDA, with margins expanding to 12.9% from 10.8% in 2023. The company has shown improvement in free cash flow, achieving a 90% conversion rate in 2024 and anticipating an 87% rate in 2025. Looking ahead, Leidos provided an optimistic outlook for fiscal year 2025, expecting EPS between $10.35 and $10.75, above the consensus of $10.11, and revenue projected between $16.9 billion and $17.3 billion. The company’s net bookings for the quarter totaled $7.6 billion, contributing to a year-end backlog of $43.6 billion, an 18% increase year-over-year. Additionally, Leidos announced a quarterly cash dividend of $0.40 per share, payable on March 28, 2025.

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