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  "documentTitle": "Leidos Holdings, Inc. (LDOS)",
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  "authorName": "Ben Axler",
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  "presentationDate": "2021-02-16 00:00:00",
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  "notes": "Includes a red box highlight on the 'EV / Current Year Sales' column to emphasize the valuation discrepancy.",
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      "text": "Based on current implied run rate revenues of $297m, we estimate Leidos has paid 3.4x sales, or a substantial premium to benchmark deals in the airport security and detection industry.",
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      "text": "EV / Current Year Sales: 3.4x",
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      "text": "While forking over $1bn in cash, Leidos confidently claimed on its deal conference call that the Security Detection and Automation Business is growing in the low to mid teens, and that EBITDA will grow from $75m in 2020 to $105m in 2021, or +40% YoY. This allowed it to claim a low multiple paid for the business. Spruce Point believes this is disingenuous. Based on current implied run rate revenues of $297m, we estimate Leidos has paid 3.4x sales, or a substantial premium to benchmark deals in the airport security and detection industry.",
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      "text": "Source: Company press releases, Spruce Point analysis. 1) Leidos EV of $1,035m as per Note 4 of the recent 10-Q. If we exclude ~$100m of automation revenues from MacDonald Humfrey, Leidos paid a staggering 5.3x sales for security and detection. 2) SAIC, predecessor to Leidos, impaired Reveal in Q2'2014 by taking a $30m charge and admitting they overpaid. 3) Per the founder's biography",
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      "text": "Benchmark Industry Deals In Airport Baggage Security and Threat Detection Deals",
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      "kind": "title",
      "text": "We Believe Management Vastly Overpaid For A Crumbling Business",
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