Leidos reports 15 percent drop in revenue, loss in the third quarter

THE TAKE: Leidos Holdings Inc. reported a 15 percent drop in revenues and a loss of $3 million during the third quarter because of a reduction in government spending.

The McLean-based national security and health and engineering solutions company reported revenues of $1.42 billion during the third quarter, compared with $1.67 billion during the third quarter of last year. Leidos was created when SAIC was split into two companies earlier this year,

The company’s results were affected by sequestration, the government shutdown, the reduction in military forces overseas, lower government spending and a reduction in IT spending by hospitals, which are receiving lower Medicare reimbursement packages under the Affordable Care Act.

Revenue contraction would have been 14 percent without the effect of one fewer days in the third quarter than the previous year.

Leidos also announced that head of its Health and Engineering Sector was stepping down after its revenues decreased 20 percent in the third quarter. John Jumper, CEO of Leidos, will head the sector while a replacement is found. The company’s national security solutions segment saw a 13 percent reduction in revenues.

THE NUMBERS:

Revenue: Down 15 percent to $1.42 billion, compared with $1.67 billion during the third quarter of the previous year.

Loss: The company reported a loss of $3 million, or 11 cents per share, compared with a profit of $112 million, or 66 cents per share, during the same period last year.

THE COMPANY’S TAKE: “In the third quarter of Fiscal 2014, Leidos performance reflects the impact of several significant challenges we were not able to offset.  Separation expenses and setup costs added to the headwinds of sequestration, the temporary government shutdown, discrete non-cash write-downs, continued delays in the timing of awards and unexpected turbulence in our commercial businesses,” John Jumper, Leidos Chairman and CEO, said in a statement. “Earlier today, we announced a share-repurchase authorization for up to 20 million shares, which underscores the confidence we have in our business and our firm commitment to drive shareholder value as we move forward. This adds to the $450 million in special and regular dividends already returned to shareholders in fiscal 2014 and continues our plan to return substantial value to our shareholders.”