Tom Bell
Chief Executive Officer at Leidos
Thank you, Stuart, and good morning, everyone. I'm happy you could join us to discuss another outstanding quarter for Leidos, capping off a very strong year delivering 2024 results above the high-end of our prior guidance. Leidos' excellent recent performance also allowed us to reach and exceed the three-year performance targets we set-out at our Investor Day in 2021.
I'm very pleased we were able to over-deliver on those cumulative commitments. Against the targets set then, we delivered an organic revenue growth CAGR of 6.6%, well-above our goal. We delivered adjusted EBITDA margin for 2024 of 12.9%, 240 basis-points above our goal. And we drove free-cash flow conversion of 100% exactly on our commitment. This delivered cumulative operating cash-flow to our target of $3.5 billion.
Our excellent multi-year performance enabled us to take our gross debt leverage ratio down from 3.4 times to 2.2 times today. And now our strong balance sheet and core financial engine give us the financial flexibility to deploy capital to support tangible growth initiatives and drive brilliant shareholder value. Thank you. All on this call will be aware that since 12 November, our stock has traded down about 25%. As a result, we repurchased an additional $400 million worth of shares in the 4th-quarter.
That brought our open-market repurchases for 2024 to $850 million, significantly exceeding our initial commitment. As always, I want to thank each of our 48,000 Leidosians who bring our bold vision for Leidos to life every day. Their passion for our customers' mission, their fortitude, resilience and ingenuity enable us to deliver exceptional value to our shareholders even in the most dynamic of environments. Turning to Slide 5, in addition to delivering exceptional performance last year, 2024 was a year of deep strategic thinking. We're calling our new growth strategy North Star 2030.
North Star 2030 keys on a specific group of growth pillars where we know customer needs are growing, market profitability is robust and Leido's differentiation is evident and accelerating. We'll fully unpack our North Star 2030 strategy for you at our upcoming Investors Day. Thank you. But undertaking this strategy effort last year is proving to have been timed perfectly. I mention all this now because a natural question today might be, how does Northstar 2030 hold-up to the priorities of this new administration. And the answer is incredibly well. You'll recall that our strategy process last year was grounded in a 10-year future back Leidos proprietary hypothesis of the future. That work detailed macro domestic and geopolitical megatrends that we predicted would occur over the next decade. Now we see those megatrends coming through at pace.
And therefore, we are even more confident our growth pillars position us for success today and in the future because they are all grounded in one unifying theme. First, Leidos exists to make our customers' outcomes smarter and more efficient. Everything we do for every one of our customers is linked to that statement. We were created to leverage innovation for our customers to meet the immense and enduring national security challenges faced by America and its allies from protecting the homeland to deterring and winning battles abroad, and driving government efficiency is fundamental to everything we do
. And of course, that's what's needed to expand America's economic strength. All that is what we are all about. And that's exactly what our new administration is all about too Too. Therefore, we view the new administration's priorities as an opportunity for Leidos. Over the past months, the administration and the Department of Government Efficiency have begun to unveil an agenda to transform government operations and ensure taxpayer dollars are invested more wisely. This has given us increased confidence in our strategy. The new administration has signaled a focus on eliminating regulations, streamlining procurement and moving to more outcome-based contracting, all of which are exactly in-line with the mission and work of Leidos to make government smarter and more efficient. Three current focus areas are right in our wheelhouse, IT modernization, transformational war fighting capability and increased privatization. First, the new administration has said that IT modernization is low-hanging fruit for government efficiency. We totally agree. The federal government's ability to reduce costs, bridge outdated and desperate data silos and facilitate the adoption of enabling technologies like trusted mission AI hinges on having modern adaptable IT systems. As the leading provider of IT software solutions for the federal government, we have a proven track-record of modernizing and simplifying our customers' complex IT environments, while integrated trust and mission AI and robust cyber security. This allows agencies to achieve their mission objectives smarter, faster and cheaper. For example, the disability case processing system we built for the Social Security Administration has improved processing time of disability claims by over 90%, reducing backlog by over 50% and increasing the accuracy of benefit calculations by 20%. Leidos is delivering significant cost-savings to the SSA through these customer efficiency enhancements and proven anti-fraud tools. In addition, just last year, we also transformed the SSA's National 1800 number. In just 48 days, we reduced wait times by almost 75% for over 80 million callers each year. The administration's focus on IT modernization also affords us a great refreshed opportunity to accelerate adoption of our existing Defense Enclave services program. To date, we've successfully transitioned only three Defense agency and field activities or DAFAs and their 32,000 users, each on-time and on-budget. As a result, those DoD offices now enjoy better user experiences and better service delivery. But even more importantly, they are now operating seamlessly within a single robust, cyber secure, efficient integrated DoD IT system. But there are 11 DAFAs and nearly 330,000 additional users originally envisioned to be served by this program that are yet to be migrated. Thank you we look-forward to helping our new Secretary of Defense greatly enhance user efficiency, harden IT assets and reduce costs by completing the remaining migrations to DISA's standardized, unified and secured IT network. In-turn, this will enable DoD reinvestment of real savings into critical war fighting capabilities. So speaking of critical war fighting capabilities, secondly, administration leadership has indicated that the Pentagon's top-line budget should focus on the right kind of programs with increased investments in cost-effective and high-performance systems. In anticipation of these demands, we've positioned ourselves as a positive disruptor, rapidly transforming innovative ideas into market-ready solutions essential for next-generation water fighting capabilities. For example, we lead the way in maritime autonomy. We recently developed an unmanned undersea multi-mission vessel in less than 18 months with a price that is, to the best of our knowledge, significantly lower than all comparable offerings. However, this success has enabled the Navy to expand our program size and scope, allowing us to enhance underwater ISR capabilities and develop multi-sensor UVs and other unmanned platforms. We also designed and deployed a small unmanned surface vehicle called Archer. Archer is equipped with a modular mission bay designed for anything contested logistics, ISR or weaponry. And we did all that in less than nine months. Archer provides the US and our allies with immediate access to flexible, advanced maritime designs with proven long endurance robust autonomous capabilities. Additionally, we're developing a new class of small cruise missiles, advancing from concept to successful demonstration flights in under two years and we're achieving dramatic cost-savings for this critical capability through a modular design featuring open architecture that incorporates the best, most affordable subsystems and technologies using digital twin philosophies and AI optimization. These groundbreaking developments highlight our defense system team's focus on delivering affordable mass war fighting capabilities with unmatched speed, efficiency and efficacy, which the DoD needs today to prevail across increasingly complex and contested domains. Third, leaders are calling for expanded public-private partnerships for essential citizen services to create more efficient and effective outcomes., we have deep expertise and success here too. For instance, for decades, we've partnered with the Veterans Administration to transform the delivery of healthcare to our nation's deserving veterans. With our proprietary capabilities to anticipate demand and our ability to innovate at-scale, we have established the largest, most flexible network of first-class medical and mobile clinics. This has allowed us to increase veteran throughput by more than 300% and have the average exam timeline. And we've delivered all this efficiency while consistently exceeding VA targets for both timeliness and critically, quality of care. Thank you. As part of this, we're very proud to deliver excellent care coordination for homebound veterans and those in remote locations, bringing first-class care to where the veteran is across all 50 states. These capabilities magnify Leidos' differentiation and recognition as a top managed health services provider for our federal customers. But our VA work is just one of many examples of successful privatization. Another case study of our success in public-private partnerships is the Future Flight Services Program for the FAA. Through this program, we provide critical services to general aviation pilots. By providing this service, we've saved the Federal Aviation Administration more than $2 billion by significantly modernizing underlying technology, all while maintaining at or above 99.9% system availability. 2025 will be an exciting year as we implement our new North Star 2030 strategy, and we're already seeing great traction in our robust growth ambitions. In the 4th-quarter of 2024, we had net bookings of $7.6 billion, delivering a book-to-bill ratio of 1.7, our highest-ever for a December quarter. And 2024 overall was our best growth year since 2020 with an overall book ratio of 1.4% and a year-over-year backlog growth of 18%. I'm very proud of the quality of our backlog achieved through many significant wins, all aligned to durable markets and critical customer missions, which in-turn enjoy bipartisan political support. Let me walk-through a few key awards in the quarter. First, first, the VA has awarded us a two-year multi-billion dollar award for medical disability examinations. This award underscores our ongoing ability to deliver excellence for the VA and our nation's veterans and it aligns with the financial expectations we outlined to you on our last earnings call. Second, we won a $2.6 billion follow-on for our integrated logistics software work for the Transportation Security Administration. This eight-year award comes with significant increases to our contract size and scope and continues to position us very well with the new administration's determined focus on homeland security. Third, we received a $4.1 billion sole-source IDIP for our If Enduring Shield air Defense system. So-far, we've only booked one task order under this IDIQ to provide systems for the defense of Guam. But this IDIQ provides us and our customer all the top-line room they need to ramp-up production of this critical capability for years to come., and fourth, we secured a $670 million task order to advance our nation's long-range hypersonic weapon, specifically our development and production of the common hypersonic glide body and its thermal protection system. So in summary, 2024 was a great year for Leidos. But all that success is just prologue for our exciting future. Enabling disruptive progress is core to our work of making all our customers' outcomes smarter and more efficient. Pure American entrepreneurial spirit was forged at our founding and is alive and growing here today at Leidos. Our passion is to look at problems differently and seek innovative solutions and outstanding customer results. And this drive and culture serve us incredibly well in today's environment. Our new administration is moving quickly with its efficiency agenda, and Leidos is positioned to be a major contributor to the success of that agenda. Building on the bold vision of our North Star 2030 strategy and in light of the new administration's priorities and the core competencies I've outlined, we've developed a set of fast-paced initiatives in the spirit of Doge to make our customers' outcomes smarter and more efficient. And over the next 90 days, we will continue executing a purposeful campaign we've already begun to work with our customers, administration officials and elected representatives on these initiatives for a smarter, more efficient US government now. Now is the time for us to act with pace in this new landscape. We are exceptionally well-placed to be a critical part of the solution. And so seizing this opportunity remains our top corporate priority. And as a result, we look-forward to holding our Investor Day this summer. I'm super-excited about our proven track-record of performance in dynamic environments. Our strong foundation for executing a successful 2025 and beyond, our bold vision for Leidos and our North Star 2030 strategy and our outstanding outlook. Thank you. With that, I'm going to pass the call over to Chris to walk-through our 2024 results and give you our enhanced financial outlook for 2025. Chris?
