The Defense Department and Leidos are negotiating framework agreements for co-investments in key acquisition programs for the company, Leidos CEO Tom Bell said on Tuesday.
The forthcoming co-investment opportunities are in areas where Leidos has already increased capital expenditures, and internal research and development spending over the past three years, Bell said during the company’s fourth quarter 2025 earnings call.
The areas for “potential co-development opportunities” for “exciting franchise programs for Leidos” include the “maritime growth pillar” to expand facilities, increased production capacity for integrated air defense, and hypersonics, Bell said.
Bell highlighted the recent $2.2 billion contract from the Air Force for Air Base Defense-Missile Defense that will include the company’s Affordable Long-Range Persistent Surveillance and Medium-Range Air Defense Radar as an example of co-investment with DoD to increase production capacity. Leidos’ internal research and development (IRAD) funding in this “powerful technology is precisely what the [Trump] administration is asking for,” he said.
Leidos reported strong earnings in its fourth quarter driven by its defense, national security, commercial and international businesses despite a decline in sales.
Net income jumped 19 percent to $335 million, $2.53 earnings per share (EPS), from $282 million ($2.12 EPS) a year ago. Excluding acquisition and restructuring costs, asset impairment charges, other discrete items, interest income, depreciation expense and amortization of certain assets, adjusted income in the quarter of $2.76 EPS topped consensus estimates by 15 cents per share.
Sales in the quarter fell 4 percent to $4.2 billion from $4.4 billion a year ago largely due to one less week versus the same period a year ago, and the shutdown of the federal government last fall. Absent the shorter quarter and shutdown, sales would have increased 3 percent in the quarter, Chris Cage, Leidos’ chief financial officer, told investors.
In 2025, sales increased 3 percent to $17.2 billion versus 2024. Cage said the shutdown and one less work week lopped 2 percent from the top line.
Net income in 2025 increased 17 percent to $1.5 billion ($11.14 EPS) from a year ago. Adjusted earnings were $11.99 EPS and operating margin was 14.1 percent, up 120 basis points from 2024.
Leidos-led Hanford Mission Integration Solutions has a $5-billion contract to basically serve as city manager of the Department of Energy’s Hanford Site in Richland, Wash., overseeing roads, grounds and basic day-to-day services.
The original version of this story appeared in Exchange Monitor’s sister publication, Defense Daily.