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  "documentTitle": "Leidos Holdings, Inc. (LDOS)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2021-02-16 00:00:00",
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  "pageNumber": 38,
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      "text": "Spruce Point believes there are multiple signs that Leidos is trying to mitigate operating cash flow (OCF) pressures. We identify at least four factors that are temporarily inflating OCF by an estimated 67%-78%. We also point out numerous errors and inconsistencies with management’s figures. We believe at best, these are just sloppy errors, and at worst case these are intentional acts by management to obscure its strains from investors. We observe that Free Cash Flow (OCF – Capex) was recently added as a new factor influencing management short term annual incentive bonus. We believe this provides greater incentive to manipulate results",
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      "text": "We identify at least four factors that are temporarily inflating OCF by an estimated 67%-78%. We also point out numerous errors and inconsistencies with management's figures. We believe at best, these are just sloppy errors, and at worst case these are intentional acts by management to obscure its strains from investors.",
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      "text": "FY 2020 Cash From Operations Bridge: Leidos Report vs. Spruce Point Adjusted",
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      "text": "Operating Cash Flow: 67%-78%",
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      "text": "Source: Leidos SEC filings and Spruce Point Analysis",
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      "text": "Factor Affecting Cash Flow and Concern descriptions",
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      "kind": "title",
      "text": "We Believe Operating Cash Flow Is Inflated By Multiple Factors That Will Be Headwinds",
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      "evidence": "chart/waterfall-bridge: FY 2020 Cash From Operations Bridge: Leidos Report vs. Spruce Point Adjusted",
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      "evidence": "Explicitly claims management is inflating OCF and manipulating results for bonuses.",
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      "evidence": "The document agitates the problems, highlighting accounting irregularities, flawed business practices, and potential corruption.",
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      "evidence": "The document reveals divergence between adjusted metrics and cash flow, suggesting pulled-forward earnings and impending reversal.",
      "position": 1,
      "objective": "To expose Leidos' cash flow struggles",
      "structure": "The Symptom (Visible) -> The System (Hidden) -> The Root Cause",
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