Leidos says nearly all employees are back to work

Leidos has about 97% of its employees working regular hours, despite the ongoing pandemic, according to the company's chief executive.

Speaking with analysts today, Roger Krone said 1.5% of its employees are "at a reduced standing" and relying on Section 3610 of COVID-19 relief legislation, which calls for reimbursing companies that keep employees at a "ready state" during the crisis. The remaining 1.5%, he said, is categorized as "miscellaneous."

Krone said because it affects such a small percentage of its employees, Section 3610 is no longer a major issue.

"There's some things around 3610 that may be more important for some of the bigger aerospace primes relative to factories and things, but that doesn't affect many of our programs because of the nature of our work, which is really people come into work and [are] writing software and doing mission and things like that," he said.

Industry associations have called for the government to maintain Section 3610, which was due to expire Sept. 30, but has since been extended into December.

Krone said the provision for Leidos is "not as important as it was at the beginning of this journey. Would still be nice to have. but we don't see a major impact."

Meanwhile, Leidos said today sales in its defense solutions business totaled nearly $2 billion, up 22% from the same three-month period a year earlier, which Leidos attributed to its acquisition of Dynetics and program wins.

Jim Reagan, Leidos' chief financial officer, said COVID-19 resulted in cuts of $26 million because of reduced volumes on programs and $14 million of anticipated growth.