No. 1 Leidos keeps focus on growth

James Reagan, Leidos' retiring chief financial officer, shares how the company has delivered strong growth by keeping its focus on the right opportunities and understanding what it does best.

James Reagan’s career at Leidos as its executive vice president and chief financial officer is coming to a close after six years and it has been a remarkable ride at the No. 1 company on the 2021 Washington Technology Top 100.

Reagan has been integral to many of the critical decisions that have shaped the biggest company in the federal market. He was there for the acquisition of Lockheed Martin’s IT services business in 2016 and has played a role in every other deal and integration that has followed. He's kept a steady hand on financial aspect of every move the company has made.

The Reston, Virginia-headquartered company has gone from $5 billion in revenue and 16,000 employees to roughly $14 billion and 41,000 employees during his tenure as CFO.

For the 2021 Top 100, Leidos had $9.2 billion in prime contracts during government fiscal year 2020 to solidify its hold on the top spot.

Leidos expects that number will be higher next year. Reagan said the company expects organic growth of between 10 percent and 12 percent. For its 2021 first quarter, Leidos reported 9-percent organic growth.

Reagan Ends Near His Beginning

James Reagan can look across the Reston skyline from his glass-walled office in Leidos’ new corporate headquarters building.

In the distance, he can see the Reston International Center: one of the tallest and earliest office buildings erected in the planned community.

When he was 15, Reagan got his first job at the hotel next door.

Since then, he went to college and earned an undergraduate degree from William and Mary and masters from Loyola College. He later became a certified public accountant.

He began his finance career at PricewaterhouseCoopers and since then he’s been a chief financial officer at several well-known government contracting firms -- Vencore, PAE, Vangent, Deltek, Aspect Communications and American Management Systems.

Now he is about to leave his last job, the irony is not lost on him that now 47 years later he has a view of his first job.

“I’ve come full circle,” he said.

“We’ll see some upward pressure as we shake off the COVID headwinds from the second quarter last year and we’ll start ramping up a couple of our key wins,” Reagan said.

Among those wins are two large takeaways: the $7.7 billion Navy Next Generation Enterprise Network contract that has finally cleared protest hurdles. Leidos wrestled that away from Perspecta. A second was the $2 billion Military & Family Life Counseling Program.

Even 9-percent organic growth means winning a lot of contracts when your top line is $14 billion, but Leidos isn’t using a shotgun approach to hit as many targets as possible.

“Bidding on everything you can is a recipe for failure,” Reagan said.

Even multi-billion dollar companies have to realize they have limitations including resources and hiring people.

“We want to remain focused on the kinds of work where we can differentiate ourselves,” Reagan said. “And where customers are willing to pay us for the good work we do.”

Leidos still has some lower-margin business it is moving away from.

“We don’t want to compete on the basis of price but on our ability to innovate,” he said.

Preparation is a key for winning that kind of work, Reagan said.

In the 2016-2017 time frame, Leidos revamped its business development processes.

“These are disciplined ways to go about capturing new business and making sure that if you are going after something big that you start years before the RFP (request for proposals) drops," Reagan said.

That means talking to the right people and understanding and shaping requirements to increase the probability of a win.

“You also have to have the ability to filter out the things that you don’t have a high probability of winning so you aren’t waiting money on it,” he said.

Leidos also has been building a library of repeatable and reusable proposal content.

“That enables us to be more judicious and efficient with how we allocate our resources,” Reagan said.

He declined to go into more detail because “I don’t want to give out too much of the special sauce here.”

Ever the CFO, Reagan said they apply a similar approach to their mergers and acquisition strategy.

“This is a really vibrant M&A market and we’ve had to pass on multiple things because they don’t fit our strategy and aren’t the best use of our capital,” he said.

Leidos wants to spend its M&A dollars on targets that generate the kind of return the company expects, he said.

In the last two years, Leidos has made a pair of large acquisitions such as Dynetics for $1.65 billion and an airport security business from L3Harris Technologies for $1 billion. Smaller deals have followed in the past year, including managed IT services provider 1901 Group for $215 million and naval design firm Gibbs & Cox for $380 million.

Each deal brought new customers and capabilities in areas that are expected to grow going forward. Dynetics brought manufacturing and prototyping capabilities around weapons platforms and space development work with NASA.

The 1901 Group brought automation capabilities around cloud migration. Gibbs & Cox brought maritime engineering and design capabilities that complement what Leidos is doing in the uncrewed vessel arena.

All three of those deals have brought positive financial results to Leidos. Because of COVID, the airport security business has been slower to grow because there has been less demand for screening equipment at airports.

“They have great products and capabilities but that was not the best-timed acquisition given COVID,” Reagan said.

Air travel has been off by more than 40 percent which delayed sales for that business but Reagan said “we’ll be in much better shape there" as air travel recovers.

In looking back at his six years at Leidos, Reagan said there are many things he looks back at with pride. The Lockheed transaction stands out to him because he still sees that deal paying dividends today five years on.

“To combine those two and see a business that’s growing at or above the market at higher margins and then being able to reinvest earnings to keep the business on that kind of growth trajectory, that’s probably among the things I look back on with the most pride,” he said.

He’s also proud of the team that he’s built.

“I’ve been mentoring my replacement for five years,” Reagan said of Chris Cage, Leidos' current chief accounting officer who will become CFO on July 5.

(A future episode of the Project 38 podcast will feature my full conversation with Reagan where he goes into more detail about Leidos’ strategy, its approach to diversity and inclusion, and his retirement.)

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.