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Leonardo DRS receives a Buy rating, driven by operational progress, robust upgrade cycles, and strong positioning in defense electronics and power systems. DRS's business model leverages installed hardware, recurring upgrade opportunities, and integration advantages, supporting durable revenue streams across multiple military platforms. Valuation reflects a growth premium—current multiples require sustained earnings improvement, with a 12-month target price of $43 offering 17% upside.

ARLINGTON, Va., Sept. 01, 2026 (GLOBE NEWSWIRE) -- Leonardo DRS, Inc. (Nasdaq: DRS) announced it has been awarded an Other Transaction Agreement contract for Prototype by the U.S. Space Force to advance next-generation technology designed to further strengthen U.S. national defense capabilities. 

Under the award, Leonardo DRS will further develop affordable and scalable sensor technology that helps defense systems detect, identify, track, and target fast-moving threats in challenging conditions in support of mission needs for U.S. space superiority and space control efforts. 

A key focus of the program is improving affordability and producibility, leveraging advancements in sensing and processing and moving toward designs that can be manufactured more efficiently, scaled to meet demand, and built with a resilient supply chain to support urgent national security needs. 

“This award recognizes our innovative best-in-class sensor technology, proven experience and continued investment in space-based capabilities for critical national security programs,” said John Baylouny, President and CEO of Leonardo DRS. “These investments allow our company to push the boundaries of advanced sensing and targeting and implement scaled manufacturing to support national security priorities.” 

“We are incredibly proud to support this vital space-based mission,” said Jerry Hathaway, senior vice president and general manager, Leonardo DRS Electro-Optical and Infrared Systems. “This award builds upon our current and next-generation affordable sensing technologies developed by our innovative space and sensor engineering teams and leverages our proven performance and expertise in sensor design and manufacturing.” 

Leonardo DRS is a leading provider of advanced infrared sensing systems used by the U.S. government and allied nations across ground, sea, air, and space missions. The company’s advanced sensing, secure communications, and laser technologies support critical efforts including Counter-UAS, autonomous maritime fleet protection, and mounted and dismounted ground combat systems.

About Leonardo DRS

Leonardo DRS, Inc. (Nasdaq: DRS) is at the forefront of developing transformative defense technologies using its proven agility and delivering innovative solutions for U.S. national security customers and allies worldwide. We specialize in rapidly providing high-performance, multi-domain capabilities across next-generation advanced sensing, network computing, force protection, and electric power and propulsion. Our reputation as a trusted provider is built on a continuous focus on practical innovation, delivering quality, and meeting our customers’ most demanding mission requirements. For further information on our complete range of capabilities, visit www.LeonardoDRS.com.

Forward-Looking Statements

This communication contains statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements reflect current expectations, assumptions and estimates of future performance and economic conditions. The company cautions investors that any forward-looking statements which include contract values, contract performance and our development and production of products are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those matters expressed in or implied by such forward-looking statements.

Leonardo DRS Investor Relations Contact
Steve Vather
Senior Vice President, Corporate Development (M&A) and Investor Relations
+1 703 409 2906
[email protected]  

Leonardo DRS Media Contact
Charles Jones
Director, Marketing and Corporate Communications
+1 571 737 8800
[email protected]

For more information regarding this OTA award, please click here.

BlackRock Inc. purchased a new position in shares of Leonardo DRS, Inc. (NASDAQ:DRS – Free Report) during the second quarter, according to the company in its most recent filing with the Securities and Exchange Commission (SEC). The fund purchased 4,989,059 shares of the company’s stock, valued at approximately $212,883,000. BlackRock Inc. owned 1.87% of Leonardo DRS as of its most recent filing with the Securities and Exchange Commission (SEC).

Other institutional investors also recently modified their holdings of the company. Pallas Capital Advisors LLC bought a new stake in Leonardo DRS in the second quarter valued at approximately $309,000. Deutsche Bank AG bought a new stake in shares of Leonardo DRS in the 2nd quarter valued at $4,726,000. Global Retirement Partners LLC bought a new stake in shares of Leonardo DRS in the 2nd quarter valued at $31,000. Bank of New York Mellon Corp acquired a new stake in shares of Leonardo DRS during the second quarter worth $21,437,000. Finally, Focus Partners Advisor Solutions LLC bought a new position in Leonardo DRS during the second quarter worth $527,000. Institutional investors own 18.76% of the company’s stock.

Analysts Set New Price Targets Several equities analysts recently issued reports on DRS shares. JPMorgan Chase & Co. boosted their target price on shares of Leonardo DRS from $48.00 to $53.00 and gave the company a “neutral” rating in a report on Friday, July 31st. Wall Street Zen raised Leonardo DRS from a “hold” rating to a “buy” rating in a research report on Sunday, May 10th. Weiss Ratings raised Leonardo DRS from a “hold (c+)” rating to a “buy (b-)” rating in a research note on Thursday, August 6th. Canaccord Genuity Group upped their target price on Leonardo DRS from $52.00 to $54.00 and gave the company a “buy” rating in a research report on Wednesday, May 6th. Finally, Truist Financial raised Leonardo DRS to a “strong-buy” rating in a research note on Friday, May 1st. One analyst has rated the stock with a Strong Buy rating, three have issued a Buy rating and two have given a Hold rating to the company. According to data from MarketBeat, the stock presently has an average rating of “Moderate Buy” and a consensus price target of $53.60.

Get Our Latest Report on Leonardo DRS Insider Buying and Selling In related news, EVP Sally Wallace sold 1,300 shares of the stock in a transaction on Thursday, June 11th. The stock was sold at an average price of $50.00, for a total value of $65,000.00. Following the completion of the sale, the executive vice president directly owned 57,053 shares of the company’s stock, valued at approximately $2,852,650. This represents a 2.23% decrease in their position. The transaction was disclosed in a filing with the SEC, which can be accessed through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, EVP Jason Rinsky sold 3,864 shares of the company’s stock in a transaction dated Tuesday, August 4th. The stock was sold at an average price of $45.81, for a total transaction of $177,009.84. Following the completion of the sale, the executive vice president directly owned 23,581 shares of the company’s stock, valued at $1,080,245.61. The trade was a 14.08% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last three months, insiders have sold 57,683 shares of company stock worth $2,650,769. 0.25% of the stock is owned by corporate insiders.

Leonardo DRS Stock Up 0.8% Shares of NASDAQ:DRS opened at $38.92 on Friday. The company has a debt-to-equity ratio of 0.05, a quick ratio of 1.56 and a current ratio of 1.92. Leonardo DRS, Inc. has a 52-week low of $32.43 and a 52-week high of $50.59. The business’s 50 day simple moving average is $44.25 and its two-hundred day simple moving average is $44.21. The firm has a market cap of $10.39 billion, a P/E ratio of 32.71, a PEG ratio of 2.35 and a beta of 0.35.

Leonardo DRS (NASDAQ:DRS – Get Free Report) last issued its earnings results on Friday, July 31st. The company reported $0.35 earnings per share for the quarter, topping analysts’ consensus estimates of $0.27 by $0.08. The company had revenue of $913.00 million for the quarter, compared to analyst estimates of $903.27 million. Leonardo DRS had a return on equity of 12.97% and a net margin of 8.52%.Leonardo DRS’s revenue for the quarter was up 10.1% on a year-over-year basis. During the same period in the prior year, the firm earned $0.23 earnings per share. As a group, research analysts forecast that Leonardo DRS, Inc. will post 1.39 EPS for the current fiscal year.

Leonardo DRS Announces Dividend The business also recently disclosed a quarterly dividend, which was paid on Thursday, August 27th. Shareholders of record on Thursday, August 13th were issued a dividend of $0.09 per share. This represents a $0.36 dividend on an annualized basis and a yield of 0.9%. The ex-dividend date of this dividend was Thursday, August 13th. Leonardo DRS’s payout ratio is currently 30.25%.

Leonardo DRS Company Profile (Free Report)

Leonardo DRS is a U.S.-based defense technology company and wholly owned subsidiary of Italy’s Leonardo S.p.A. The firm specializes in developing and integrating mission-critical systems for military and government customers, with a primary focus on command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR). Its core offerings encompass advanced sensors, targeting systems, radars and electronic warfare solutions designed to enhance situational awareness and operational effectiveness across land, sea and air domains.

The company’s portfolio includes naval combat management systems, unmanned vehicle sensors, power generation and distribution equipment, and training and simulation solutions.

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Have you been paying attention to shares of Moog (MOG.A - Free Report) ? Shares have been on the move with the stock up 11.7% over the past month. The stock hit a new 52-week high of $433.79 in the previous session. Moog has gained 75.4% since the start of the year compared to the 7% gain for the Zacks Aerospace sector and the 9.7% return for the Zacks Aerospace - Defense Equipment industry.

What's Driving the Outperformance?The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on July 31, 2026, Moog reported EPS of $3.72 versus consensus estimate of $2.67.

For the current fiscal year, Moog is expected to post earnings of $11.41 per share on $4.37 in revenues. This represents a 31.3% change in EPS on a 12.99% change in revenues. For the next fiscal year, the company is expected to earn $11.8 per share on $4.67 in revenues. This represents a year-over-year change of 3.42% and 6.96%, respectively.

Valuation MetricsThough Moog has recently hit a 52-week high, what is next for Moog? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Moog has a Value Score of D. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 37.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 36.7X. On a trailing cash flow basis, the stock currently trades at 35.4X versus its peer group's average of 32.7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks RankWe also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Moog currently has a Zacks Rank of #2 (Buy) thanks to a solid earnings estimate revision trend.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Moog meets the list of requirements. Thus, it seems as though Moog shares could have a bit more room to run in the near term.

How Does MOG.A Stack Up to the Competition?Shares of MOG.A have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Leonardo DRS, Inc. (DRS - Free Report) . DRS has a Zacks Rank of #2 (Buy) and a Value Score of D, a Growth Score of A, and a Momentum Score of B.

Earnings were strong last quarter. Leonardo DRS, Inc. beat our consensus estimate by 29.63%, and for the current fiscal year, DRS is expected to post earnings of $1.37 per share on revenue of $3.95 billion.

Shares of Leonardo DRS, Inc. have gained 3.8% over the past month, and currently trade at a forward P/E of 32.6X and a P/CF of 29.67X.

The Aerospace - Defense Equipment industry is in the top 20% of all the industries we have in our universe, so it looks like there are some nice tailwinds for MOG.A and DRS, even beyond their own solid fundamental situation.

ARLINGTON, Va., Aug. 11, 2026 (GLOBE NEWSWIRE) -- Leonardo DRS, Inc. (Nasdaq: DRS) announced today that the company's SGT STOUT M-SHORAD Mission Equipment Package (MEP) successfully defeated Group 1–2 small, unmanned aircraft system (UAS) threats during a U.S. Government test event, demonstrating the system's ability to adapt rapidly to evolving air threats through a modular, open-architecture design.

The Aerospace group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Leonardo DRS, Inc. (DRS - Free Report) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? Let's take a closer look at the stock's year-to-date performance to find out.

Leonardo DRS, Inc. is one of 76 individual stocks in the Aerospace sector. Collectively, these companies sit at #3 in the Zacks Sector Rank. The Zacks Sector Rank gauges the strength of our 16 individual sector groups by measuring the average Zacks Rank of the individual stocks within the groups.

The Zacks Rank emphasizes earnings estimates and estimate revisions to find stocks with improving earnings outlooks. This system has a long record of success, and these stocks tend to be on track to beat the market over the next one to three months. Leonardo DRS, Inc. is currently sporting a Zacks Rank of #2 (Buy).

Over the past three months, the Zacks Consensus Estimate for DRS' full-year earnings has moved 8.5% higher. This is a sign of improving analyst sentiment and a positive earnings outlook trend.

Based on the most recent data, DRS has returned 34.4% so far this year. Meanwhile, the Aerospace sector has returned an average of 6.2% on a year-to-date basis. This means that Leonardo DRS, Inc. is performing better than its sector in terms of year-to-date returns.

Another stock in the Aerospace sector, Outdoor Holding Company (POWW - Free Report) , has outperformed the sector so far this year. The stock's year-to-date return is 27.5%.

Over the past three months, Outdoor Holding Company's consensus EPS estimate for the current year has increased 80%. The stock currently has a Zacks Rank #1 (Strong Buy).

To break things down more, Leonardo DRS, Inc. belongs to the Aerospace - Defense Equipment industry, a group that includes 36 individual companies and currently sits at #61 in the Zacks Industry Rank. On average, stocks in this group have gained 8.8% this year, meaning that DRS is performing better in terms of year-to-date returns. Outdoor Holding Company is also part of the same industry.

Going forward, investors interested in Aerospace stocks should continue to pay close attention to Leonardo DRS, Inc. and Outdoor Holding Company as they could maintain their solid performance.

Leonardo DRS NASDAQ: DRS reported second-quarter fiscal 2026 revenue growth of 10% and sharply higher profitability, supported by demand across tactical radar, naval propulsion, infrared sensing and force-protection programs. The company also raised its full-year profit outlook and announced an agreement to acquire mission software provider Raft for $450 million in cash.

President and CEO John Baylouny said bookings exceeded $1 billion during the quarter, resulting in a book-to-bill ratio of 1.2 times. The company has now recorded book-to-bill of at least 1.0 times for 18 consecutive quarters and exited the period with record funded backlog, according to management.

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“Demand was apparent throughout the portfolio,” Baylouny said, citing customer modernization priorities and an elevated global threat environment. He said the company remains aligned with demand for layered air defense, counter-unmanned aircraft systems, resilient sensing architectures, munitions and naval capabilities.

Revenue and Profitability Rise Revenue totaled $913 million, up 10% from the prior-year period. Growth accelerated from the first quarter and was led by tactical radar, electric power and propulsion, infrared sensing, and force-protection programs, Chief Financial Officer Mike Dippold said.

The Integrated Mission Systems, or IMS, segment posted 15% revenue growth, while the Advanced Sensing and Computing, or ASC, segment grew 8%. Dippold said the first-half results showed balanced growth contributions from both segments.

Adjusted EBITDA increased 33% year over year to $128 million, while adjusted EBITDA margin rose 240 basis points to 14%. The company attributed the improvement to program execution, favorable program mix, higher production volume and the retirement of program risk under fixed-price contract accounting.

IMS adjusted EBITDA rose 55% from the prior-year quarter, with margin expanding 460 basis points. ASC adjusted EBITDA increased 19%, with margin up 110 basis points. Dippold said the favorable risk retirement occurred in the naval business on a surface ship program, though execution improvements were broader across the segment. Excluding that risk retirement, IMS margin would have been closer to 15% for the quarter, he said.

Net earnings increased 59% to $86 million. Diluted earnings per share rose 60% to $0.32. Adjusted net earnings increased 52% to $94 million. Adjusted diluted EPS increased 52% to $0.35. The company generated positive free cash flow in the quarter, aided by profitability and working-capital efficiency, while continuing capital investments intended to expand production capacity.

Raft Deal Expands Software and AI Capabilities Leonardo DRS announced an agreement to acquire Raft, a provider of open-architecture mission software for multi-domain data fusion and artificial intelligence, for $450 million in cash. Management expects the transaction to close in the fourth quarter, subject to closing conditions and regulatory approvals.

Baylouny said Raft’s software capabilities complement DRS’s existing sensing, computing, networking and mission-systems portfolio. Raft has been selected for the U.S. Army’s next-generation command-and-control software architecture data layer, according to Baylouny, and also expands DRS’s access to customers in the Air Force, Space Force, special operations and the intelligence community.

The acquisition is intended to help the company provide integrated hardware-and-software solutions rather than individual components and subsystems. Baylouny described the combination as a way to bring sensing, computing and integration closer to where battlefield decisions are made.

Dippold said the company does not expect Raft to make a meaningful contribution to 2026 results because of the anticipated late-year close. However, management expects the acquisition to be accretive to adjusted diluted EPS in its first full year of ownership. The company did not provide Raft revenue or margin figures, but said the acquisition is expected to be accretive to DRS’s growth and margin profile.

Defense Demand Supports Investments Management highlighted continued demand for counter-UAS systems, tactical radars, aircraft survivability systems, missile-related components, drone sensing payloads and naval propulsion and computing systems.

Baylouny said order flow for the company’s tactical radars continues to exceed supply and that DRS is adding production capacity. He also cited international demand for air-defense capabilities, particularly as allies seek to address gaps exposed by recent conflicts.

In infrared sensing, the company secured an initial order for 50,000 camera-core units from a low-cost drone manufacturer. Baylouny said the munitions and drone-related business remains a small part of DRS today but is expected to grow faster than the company overall.

For naval programs, the company booked orders across power capabilities for Columbia-class and Virginia-class submarines, DDG 51 destroyers and LPD platforms. Dippold said the first phase of the Charleston facility expansion is nearing completion and is designed to support the insourcing of Columbia-class work, with margin benefits expected to begin in the second half of 2027. A second phase could support additional work, including a potential second-source opportunity for steam turbine generators.

Research and development spending increased 16% year over year in the first half and approached 4% of revenue. DRS is investing in infrared sensing for space-based interception, modular counter-UAS offerings, tactical radar enhancements and naval propulsion. Capital expenditures are expected to be in the mid-4% range of full-year revenue.

2026 Profit Outlook Raised Leonardo DRS maintained its full-year revenue outlook of $3.9 billion to $3.975 billion, representing projected organic growth of 7% to 9%. The company said its forecast reflects the timing of material receipts and program milestones, with a larger contribution expected in the second half of the year.

Management raised its adjusted EBITDA outlook to $525 million to $540 million, from a prior range of $515 million to $530 million. The company also increased its adjusted diluted EPS forecast to $1.34 to $1.39 and updated its full-year tax-rate assumption to 16.5%.

For the third quarter, DRS expects revenue above $1 billion, adjusted EBITDA margin in the mid-13% range and free cash flow that is modestly positive and above the second-quarter level. Dippold said the anticipated sequential margin decline reflects the nonrecurring program-risk retirement benefit recorded in the second quarter rather than a change in underlying execution.

About Leonardo DRS (NASDAQ:DRS)Leonardo DRS is a U.S.-based defense technology company and wholly owned subsidiary of Italy's Leonardo S.p.A. The firm specializes in developing and integrating mission-critical systems for military and government customers, with a primary focus on command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR). Its core offerings encompass advanced sensors, targeting systems, radars and electronic warfare solutions designed to enhance situational awareness and operational effectiveness across land, sea and air domains.

The company's portfolio includes naval combat management systems, unmanned vehicle sensors, power generation and distribution equipment, and training and simulation solutions.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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Leonardo DRS, Inc. (DRS - Free Report) reported $913 million in revenue for the quarter ended June 2026, representing a year-over-year increase of 10.1%. EPS of $0.35 for the same period compares to $0.23 a year ago.

The reported revenue compares to the Zacks Consensus Estimate of $899.45 million, representing a surprise of +1.51%. The company delivered an EPS surprise of +29.63%, with the consensus EPS estimate being $0.27.

While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance.

Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance.

Here is how Leonardo DRS, Inc. performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

Revenue- Integrated Mission Systems (IMS): $333 million versus the two-analyst average estimate of $324.9 million. The reported number represents a year-over-year change of +14.8%.Revenue- Advanced Sensing and Computing (ASC): $587 million versus $585.36 million estimated by two analysts on average. Compared to the year-ago quarter, this number represents a +8.3% change.Adjusted EBITDA- Integrated Mission Systems (IMS): $59 million versus $48.4 million estimated by two analysts on average.Adjusted EBITDA- Advanced Sensing and Computing (ASC): $69 million compared to the $65.86 million average estimate based on two analysts.View all Key Company Metrics for Leonardo DRS, Inc. here>>>

Shares of Leonardo DRS, Inc. have returned +9% over the past month versus the Zacks S&P 500 composite's -1.5% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.

Revenue: $913 million, up 10% year-over-yearNet Earnings: $86 million, up 59% year-over-yearAdjusted EBITDA: $128 million, up 33% year-over-yearDiluted EPS: $0.32, up 60% year-over-yearAdjusted Diluted EPS: $0.35, up 52% year-over-yearBookings: $1.1 billion (book-to-bill ratio of 1.2x)Record Funded Backlog: $5.1 billion, up 17% year-over-yearIncreases 2026 guidance for Adjusted EBITDA and Adjusted Diluted EPSAnnounced the $450 million acquisition of Raft, expanding DRS’s multi-domain AI, data fusion and mission software capabilitiesDividend: Company declares cash dividend of $0.09 per share to be paid on August 27, 2026 ARLINGTON, Va., July 30, 2026 (GLOBE NEWSWIRE) -- Leonardo DRS, Inc. (Nasdaq: DRS), a leading provider of advanced defense technologies, today reported financial results for the second quarter 2026, which ended June 30, 2026.

CEO Commentary
“Leonardo DRS delivered an exceptional second quarter. Our results reflect disciplined execution and sustained demand for DRS’s differentiated technologies. We captured over $1 billion in bookings, which increased funded backlog to record levels, drove double-digit organic revenue growth and meaningfully expanded margins and profitability. We are encouraged by our first half performance, which gives us the conviction to support increasing our full year guidance for Adjusted EBITDA and Adjusted Diluted EPS. Building on this momentum, the announced acquisition of Raft accelerates our multi-domain AI, data fusion and mission software position and reflects the disciplined capital deployment that underpins our long-term strategy. We are confident that our continued dedication to solving our customers’ toughest challenges will drive consistent, profitable growth and create meaningful long-term value for our stockholders,” said John Baylouny, President and CEO of Leonardo DRS.

Summary Financial Results

(In millions, except per share amounts)Three Months Ended   Six Months Ended  June 30,   June 30,   2026
 2025
 Change 2026
 2025
 ChangeRevenues         $913           $829          10%          $1,759           $1,628          8%            Net Earnings         $86           $54          59%          $148           $104          42%Net Margin         9.4%          6.5% 290 bps          8.4%          6.4% 200 bps            Diluted weighted average number of shares outstanding (WASO) 268.935   269.025     268.661   268.802   Diluted Earnings Per Share (EPS)         $0.32           $0.20          60%          $0.55           $0.39          41%            Non-GAAP Financial Measures (1)     Adjusted EBITDA         $128           $96          33%          $233           $178          31%Adjusted EBITDA Margin         14.0%          11.6% 240 bps          13.2%          10.9% 230 bps            Adjusted Net Earnings         $94           $62          52%          $163           $116          41%Adjusted Diluted EPS        $0.35           $0.23          52%          $0.61           $0.43          42%
(1) The company reports its financials in accordance with U.S. generally accepted accounting principles (“GAAP”). Information about the company’s use of non-GAAP financial measures, including a reconciliation of the non-GAAP financial measures to the most comparable financial measures calculated and presented in accordance with U.S. GAAP, is provided under "Non-GAAP Financial Measures."

The company delivered 10% revenue growth in the second quarter 2026. The year-over-year growth was primarily led by programs related to tactical radars, electric power and propulsion, infrared sensing and force protection.

Disciplined program execution across the portfolio, favorable mix and leverage from increased volume fueled robust Adjusted EBITDA growth and margin expansion. Additionally, strong operational performance, lower net interest expense and a lower tax rate supported year-over-year growth in second quarter net earnings, Adjusted Net Earnings, diluted EPS and Adjusted Diluted EPS.

Cash Flow
Net cash flow provided by operating activities was $35 million for the second quarter. The company’s Free Cash Flow was $6 million in the quarter. Both operating and Free Cash Flow increased year-over-year in the second quarter due to higher profitability and better working capital efficiency. The strong second quarter cash flow performance continues the trend of improved quarterly linearity versus the prior year.

Dividends and Stock Repurchases
During the second quarter, the company paid dividends to stockholders totaling approximately $24 million or $0.09 per share of common stock. Leonardo DRS today announced that its Board of Directors declared a cash dividend of $0.09 per share of common stock payable on August 27, 2026, to stockholders of record on August 13, 2026.

Additionally, the company repurchased 261,526 shares of its common stock for approximately $12 million in the second quarter, pursuant to a previously announced stock repurchase program.

Balance Sheet
At the end of the second quarter, the company held $270 million of cash and had no outstanding borrowings under its credit facility. This balance sheet strength provides the flexibility to fund organic and inorganic growth initiatives to create stockholder value.

Bookings and Funded Backlog

(Dollars in millions)Three Months Ended
 Six Months Ended
 June 30,
 June 30,
  2026   2025   2026   2025 Bookings         $1,085           $853           $1,970          $1,844 Book-to-Bill1.2x  1.0x  1.1x  1.1x Funded Backlog         $5,092           $4,355           $5,092           $4,355 
Second quarter new funded bookings totaled $1.1 billion. Customer demand remained resilient, with the strongest contributions from electric power and propulsion, infrared sensing, tactical radars and naval network computing. At quarter end, funded backlog stood at a record $5.1 billion, a 17% increase year-over-year and also up sequentially.

Segment Results
Advanced Sensing and Computing (ASC) Segment

(Dollars in millions)Three Months Ended   Six Months Ended   June 30,   June 30,   2026
 2025
 Change 2026
 2025
 ChangeRevenues         $587           $542          8%          $1,146           $1,053          9%Operating Earnings         $49           $37          32%          $89           $62          44%Operating Margin         8.3%          6.8% 150 bps          7.8%          5.9% 190 bpsBookings         $691           $559             $1,120           $1,228   Book-to-Bill1.2x 1.0x   1.0x 1.2x              Non-GAAP Financial Measures (1)           Segment Adjusted EBITDA         $69           $58          19%          $131           $100          31%Segment Adjusted EBITDA Margin         11.8%          10.7% 110 bps          11.4%          9.5% 190 bps
(1) The company reports its financials in accordance with U.S. GAAP. Information about the company’s use of non-GAAP financial measures, including a reconciliation of the non-GAAP financial measures to the most comparable financial measures calculated and presented in accordance with U.S. GAAP, is provided under "Non-GAAP Financial Measures."

ASC quarterly bookings were supported by healthy demand for infrared sensing, tactical radars and naval network computing. The segment’s revenue growth was primarily attributable to programs related to tactical radars and infrared sensing. Adjusted EBITDA and margin rose versus second quarter 2025 on favorable mix, strong operational execution and leverage from higher volume, despite increased investment in internal research and development.

Integrated Mission Systems (IMS) Segment

(Dollars in millions)Three Months Ended   Six Months Ended   June 30,   June 30,   2026
 2025
 Change 2026
 2025
 ChangeRevenues         $333           $290          15%          $628           $581          8%Operating Earnings         $53           $33          61%          $90           $67          34%Operating Margin         15.9%          11.4% 450 bps          14.3%          11.5% 280 bpsBookings         $394           $294             $850           $616   Book-to-Bill1.2x 1.0x   1.4x 1.1x              Non-GAAP Financial Measures (1)           Segment Adjusted EBITDA         $59           $38          55%          $102           $78          31%Segment Adjusted EBITDA Margin         17.7%          13.1% 460 bps          16.2%          13.4% 280 bps
(1) The company reports its financials in accordance with U.S. GAAP. Information about the company’s use of non-GAAP financial measures, including a reconciliation of the non-GAAP financial measures to the most comparable financial measures calculated and presented in accordance with U.S. GAAP, is provided under "Non-GAAP Financial Measures."

Electric power and propulsion programs drove quarterly bookings in the IMS segment. Broad-based revenue growth reflected momentum across the segment. Adjusted EBITDA and margin expanded significantly over second quarter 2025, reflecting outstanding program execution and operational leverage from higher volume.

2026 Guidance
Leonardo DRS is increasing 2026 guidance for Adjusted EBITDA and Adjusted Diluted EPS based on strong first half performance, as specified in the table below:

MeasureCurrent 2026 Guidance Prior 2026 GuidanceRevenue$3,900 million - $3,975 million $3,900 million - $3,975 millionAdjusted EBITDA$525 million - $540 million $515 million - $530 millionTax Rate16.5% 18.5%Diluted WASO269.0 million 269.0 millionAdjusted Diluted EPS$1.34 - $1.39 $1.26 - $1.30
The guidance excludes the pending acquisition of Raft.

The company does not provide a reconciliation of forward-looking Adjusted EBITDA and Adjusted Diluted EPS due to the inherent difficulty in forecasting and quantifying the adjustments that are necessary to calculate such non-GAAP measures without unreasonable effort. Material changes to any one of these items could have a significant effect on future GAAP results.

Conference Call
Leonardo DRS management will host a conference call beginning at 10:00 a.m. ET on July 30, 2026 to discuss the financial results for its second quarter 2026.

A live audio broadcast of the conference call along with a supplemental presentation will be available to the public through links on the Leonardo DRS Investor Relations website (https://investors.leonardodrs.com).

A replay of the conference call will be available on the Leonardo DRS website approximately 2 hours after the conclusion of the conference call.

About Leonardo DRS
Headquartered in Arlington, VA, Leonardo DRS, Inc. is an innovative and agile provider of advanced defense technology to U.S. national security customers and allies around the world. We specialize in the design, development and manufacture of advanced sensing, network computing, force protection, electric power and propulsion and other leading mission-critical technologies. Our innovative people are leading the way in developing disruptive technologies for autonomous, dynamic, interconnected and multi-domain capabilities to defend against new and emerging threats. For more information and to learn more about our full range of capabilities, visit www.LeonardoDRS.com.

Leonardo DRS Contacts

Investors MediaSteve Vather Carrie RobinsonSVP, Corporate Development & Investor Relations VP, Marketing and Corporate Communications+1 703 409 2906 +1 321 266 [email protected] [email protected]
Forward-Looking Statements
In this press release, when using the terms the “company”, “Leonardo DRS”, “we”, “us” and “our,” unless otherwise indicated or the context otherwise requires, we are referring to Leonardo DRS, Inc. This press release contains forward-looking statements and cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,” “strives,” “targets,” “projects,” “guidance,” “intends,” “plans,” “estimates,” “anticipates” or other comparable terms. Forward-looking statements include, without limitation, all matters that are not historical facts. They appear in a number of places throughout this press release and include, without limitation, statements regarding our intentions, beliefs, assumptions or current expectations concerning, among other things, financial goals, financial position, results of operations, cash flows, prospects, strategies or expectations, the proposed acquisition of Raft LLC (“Raft”), including the expected timing of completion of the transaction, the satisfaction of closing conditions, the receipt of regulatory approvals, the anticipated benefits of the transaction, the expected impact of the transaction on DRS or Raft LLC’s financial results, including expected accretion and tax benefits, the expected financing of the transaction, plans for the integration of the acquired business, and the impact of prevailing economic conditions.

Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if future performance and outcomes are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods. New factors emerge from time to time that may cause our business not to develop as we expect and it is not possible for us to predict all of them. Factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation: disruptions, including from government shutdowns, or deteriorations in our relationship with the relevant agencies of the U.S. government, as well as any failure to pass routine audits or otherwise comply with governmental requirements including those related to security clearance or procurement rules, including the False Claims Act; significant delays, including from government shutdowns, or reductions in appropriations for our programs and changes in U.S. government priorities and spending levels more broadly; any failure to comply with the amended and restated proxy agreement with the U.S. Department of War (“DoW”); the effect of inflation and other cost pressures on our supply chain and/or our labor costs; our mix of fixed-price, cost-plus and time-and-materials type contracts and any resulting impact on our cash flows due to cost overruns; failure to properly comply with various covenants of the agreements governing our debt could negatively impact our business; our dependence on U.S. government contracts, which often are only partially funded and are subject to immediate termination, some of which are classified and the concentration of our customer base in the U.S. defense industry; our use of estimates in pricing and accounting for many of our programs that are inherently uncertain and which may not prove to be accurate; our ability to realize the full value of our backlog; our ability to predict future capital needs or to obtain additional financing if needed, on terms acceptable to us, if at all; our ability to respond to the rapid technological changes in the markets in which we compete; the effect of global and regional economic downturns and rising interest rates; our ability to maintain an effective system of internal control over financial reporting; our inability to appropriately manage our inventory; our inability to fully realize the value of our total estimated contract value or bookings; our ability to compete efficiently, including due to U.S. government organizational conflict of interest rules which may limit new contract opportunities or require us to wind down existing contracts; our relationships with other industry participants, including any contractual disputes or the inability of our key suppliers to timely deliver our components, parts or services; preferences or set-asides for small or small disadvantaged businesses could impact our ability to be a prime contractor; any failure to meet our contractual obligations including due to potential impacts to our business from supply chain risks, such as longer lead times and shortages of electronics and other components; any security breach, including any cyber-attack, cyber intrusion, insider threat, or other significant disruption of our IT networks and related systems, as well as any act of terrorism or other threat to our physical security and personnel; our ability to fully exploit or obtain patents or other intellectual property protections necessary to secure our proprietary technology, including our ability to avoid infringing upon the intellectual property of third parties or prevent third parties from infringing upon our own intellectual property; the conduct of our employees, agents, affiliates, subcontractors, suppliers, business partners or joint ventures in which we participate which may impact our reputation and ability to do business; the outcome of litigation, arbitration, investigations, claims, disputes, enforcement actions and other legal proceedings in which we are involved; various geopolitical and economic factors, laws and regulations including the Foreign Corrupt Practices Act, the Export Control Act, the International Traffic in Arms Regulations, the Export Administration Regulations, recent U.S. tariffs imposed or threatened to be imposed on other countries and any related retaliatory actions taken by such countries and those that we are exposed to as a result of our international business; our ability to obtain export licenses necessary to conduct certain operations abroad, including any attempts by Congress to prevent proposed sales to certain foreign governments; our ability to attract and retain technical and other key personnel; the occurrence of prolonged work stoppages; the unavailability or inadequacy of our insurance coverage, customer indemnifications or other liability protections to cover all of our significant risks or to pay for material losses we incur; future changes in U.S. tax laws and regulations or interpretations thereof; future changes in the DoW’s and other governments’ budgets; certain limitations on our ability to use our net operating losses to offset future taxable income; termination of our leases or our inability to renew our leases on acceptable terms; changes in estimates used in accounting for our pension plans, including with respect to the funding status thereof; changes in future business or other market conditions that could cause business investments and/or recorded goodwill or other long-term assets to become impaired; risks related to our proposed acquisition of Raft, including the failure to complete the transaction on the anticipated timeline or at all, the failure to realize the anticipated benefits of the transaction, including expected accretion and tax benefits, integration difficulties, retention of key personnel, transaction and integration costs, and increased indebtedness incurred to fund the transaction; adverse consequences from any acquisitions such as operating difficulties, dilution and other harmful consequences or any modification, delay or prevention of any future acquisition or investment activity by the Committee on Foreign Investment in the United States; natural disasters, severe weather or other significant disruptions; failure to properly contain a global pandemic in a timely manner could materially affect how we and our business partners operate; our compliance with environmental laws and regulations and any environmental liabilities that may affect our reputation or financial position; any conflict of interest that may arise because Leonardo US Holding, LLC, our majority stockholder, or Leonardo S.p.A., our indirect majority stockholder, may have interests that are different from, or conflict with, those of our other stockholders, including as a result of any ongoing business relationships Leonardo S.p.A. may have with us and their significant ownership in us may discourage change of control transactions (our amended and restated certificate of incorporation provides that we waive any interest or expectancy in corporate opportunities presented to Leonardo S.p.A); or our obligations to provide certain services to Leonardo S.p.A., which may divert human and financial resources from our business.

You should read this press release completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements made in this press release are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this press release and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise and changes in future operating results over time or otherwise.

Other risks, uncertainties and factors, including those discussed in our latest SEC filings under “Risk Factors” of our latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, all of which may be viewed or obtained through the investor relations section of our website at www.LeonardoDRS.com, could cause our actual results to differ materially from those projected in any forward-looking statements we make. Readers should read the discussion of these factors carefully to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements.

 Consolidated Statements of Earnings (Unaudited)
 (Dollars in millions, except per share amounts)Three Months Ended Six Months Ended June 30, June 30,  2026   2025   2026   2025 Revenues         913           829           1,759           1,628 Cost of revenues         (676)          (632)          (1,310)          (1,250)Gross profit         237           197           449           378 General and administrative expenses         (129)          (121)          (259)          (238)Amortization of acquired intangible assets         (6)          (6)          (11)          (11)Operating earnings         102           70           179           129 Interest income (expense), net         2           (2)          2           (3)Other, net         (4)          (1)          (4)          (1)Earnings before taxes         100           67           177           125 Income tax provision         (14)          (13)          (29)          (21)Net earnings         $86           $54           $148           $104         Net earnings per share from common stock:       Basic earnings per share         $0.33           $0.20           $0.56           $0.39 Diluted earnings per share         $0.32           $0.20           $0.55           $0.39      Consolidated Balance Sheets (Unaudited)
    (Dollars in millions, except per share amounts)June 30, December 31,  2026   2025 ASSETS   Current assets:   Cash and cash equivalents         $270           $647 Accounts receivable, net         319           334 Contract assets         1,002           931 Inventories         383           352 Prepaid expenses         29           26 Other current assets         37           36 Total current assets         2,040           2,326 Noncurrent assets:   Property, plant and equipment, net         526           512 Intangible assets, net         100           112 Goodwill         1,238           1,238 Deferred tax assets         81           88 Other noncurrent assets         212           210 Total noncurrent assets         2,157           2,160 Total assets         $4,197           $4,486 LIABILITIES AND STOCKHOLDERS' EQUITY   Current liabilities:   Short-term borrowings and current portion of long-term debt         $10           $26 Accounts payable         182           351 Contract liabilities         598           585 Other current liabilities         275           269 Total current liabilities         1,065           1,231 Noncurrent liabilities:   Long-term debt         139           321 Pension and other postretirement benefit plan liabilities         31           35 Deferred tax liabilities         3           3 Other noncurrent liabilities         156           166 Total noncurrent liabilities         $329           $525 Stockholders' equity:   Preferred stock, $0.01 par value: 10,000,000 shares authorized; none issued         $—           $— Common stock, $0.01 par value: 350,000,000 shares authorized; 266,832,196 and 265,822,404 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively         3           3 Additional paid-in capital         5,010           5,083 Accumulated deficit         (2,167)          (2,315)Accumulated other comprehensive loss         (43)          (41)Total stockholders' equity         2,803           2,730 Total liabilities and stockholders' equity         $4,197           $4,486    Consolidated Statements of Cash Flows (Unaudited)
  (Dollars in millions)Six Months Ended June 30,  2026   2025 Operating activities   Net earnings         $148           $104 Adjustments to reconcile net earnings to net cash used in operating activities:   Depreciation and amortization         50           46 Deferred income taxes         —           1 Stock-based compensation expense         11           14 Changes in assets and liabilities:   Accounts receivable         15           (12)Contract assets         (72)          (144)Inventories         (31)          (42)Prepaid expenses         (3)          1 Other current assets         (3)          20 Other noncurrent assets         6           9 Defined benefit obligations         (4)         (5)Accounts payable         (159)          (156)Contract liabilities         13           37 Other current liabilities         13           (32)Other noncurrent liabilities         (15)          (7)Net cash used in operating activities         (31)          (166)Investing activities   Capital expenditures         (59)          (60)Proceeds from sales of assets         1           — Net cash used in investing activities         (58)          (60)Financing activities   Net decrease in borrowings (maturities of 90 days or less)         (5)          (3)Repayments of borrowings         (191)          (6)Proceeds from stock issuance         5           3 Repurchases of common stock         (16)          (14)Payments of employee taxes withheld from stock-based awards         (25)          (21)Dividends paid         (14)          (14)Dividends paid to related party         (34)          (34)Other         (8)          (5)Net cash used in financing activities         (288)          (94)Effect of exchange rate changes on cash and cash equivalents         —           — Net decrease in cash and cash equivalents         (377)          (320)Cash and cash equivalents at beginning of year         647           598 Cash and cash equivalents at end of period         $270           $278 
Non-GAAP Financial Measures (Unaudited)
In addition to the results reported in accordance with U.S. GAAP included throughout this document, the company has provided information regarding “Adjusted EBITDA,” “Adjusted EBITDA Margin,” “Segment Adjusted EBITDA,” “Segment Adjusted EBITDA Margin,” “Adjusted Net Earnings,” “Adjusted Diluted Earnings Per Share” and “Free Cash Flow” (each, a non-GAAP financial measure).

We believe the non-GAAP financial measures presented in this document will help investors understand our financial condition and operating results and assess our future prospects. We believe these non-GAAP financial measures, each of which is discussed in greater detail below, are important supplemental measures because they exclude unusual or non-recurring items as well as non-cash items that are unrelated to or may not be indicative of our ongoing operating results. Further, when read in conjunction with our GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as a tool to help make financial, operational and planning decisions. Finally, these measures are often used by analysts and other interested parties to evaluate companies in our industry by providing more comparable measures that are less affected by factors such as capital structure.

We recognize that these non-GAAP financial measures have limitations, including that they may be calculated differently by other companies or may be used under different circumstances or for different purposes, thereby affecting their comparability from company to company. In order to compensate for these and the other limitations discussed below, management does not consider these measures in isolation from or as alternatives to the comparable financial measures determined in accordance with U.S. GAAP. Readers should review the reconciliations below and should not rely on any single financial measure to evaluate our business.

We define these non-GAAP financial measures as:

Adjusted EBITDA and Adjusted EBITDA Margin are defined as net earnings before income taxes, net interest expense, amortization of acquired intangible assets, depreciation, deal-related transaction costs, restructuring costs and other one-time non-operational events (which include non-service pension expense, legal liability accrual reversals, executive transition costs and foreign exchange impacts), then in the case of Adjusted EBITDA Margin dividing Adjusted EBITDA by revenues.

(Dollars in millions)Three Months Ended Six Months EndedJune 30,June 30, 2026
 2025
 2026
 2025
Net earnings         $86            $54            $148            $104  Income tax provision         14            13            29            21  Interest (income) expense, net         (2)           2            (2)           3  Amortization of intangibles         6            6            11            11  Depreciation         20            17            39            35  Other one-time non-operational events         4            4            8            4  Adjusted EBITDA         $128            $96            $233            $178  Adjusted EBITDA Margin         14.0 %          11.6 %          13.2 %          10.9 %
Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin are defined as operating earnings before amortization of acquired intangible assets, depreciation, deal-related transaction costs, restructuring costs and other one-time non-operational events, then in the case of Segment Adjusted EBITDA Margin dividing Segment Adjusted EBITDA by revenues.

Advanced Sensing & Computing (ASC) Segment Adjusted EBITDA

(Dollars in millions)Three Months Ended Six Months Ended June 30,June 30, 2026
 2025
 2026
 2025
Operating earnings         $49            $37            $89            $62  Amortization of intangibles         6            6            11            11  Depreciation         14            12            27            24  Other one-time non-operational events         —            3            4            3  Segment Adjusted EBITDA         $69            $58            $131            $100  Segment Adjusted EBITDA Margin         11.8 %          10.7 %          11.4 %          9.5 %
Integrated Mission Systems (IMS) Segment Adjusted EBITDA

(Dollars in millions)Three Months Ended Six Months Ended June 30,June 30, 2026
 2025
 2026
 2025
Operating earnings         $53            $33            $90            $67  Depreciation         6            5            12            11  Segment Adjusted EBITDA         $59            $38            $102            $78  Segment Adjusted EBITDA Margin         17.7 %          13.1 %          16.2 %          13.4 %
Adjusted Net Earnings and Adjusted Diluted EPS are defined as net earnings excluding amortization of acquired intangible assets, deal-related transaction costs, restructuring costs and other one-time non-operational events (which include non-service pension expense, legal liability accrual reversals, executive transition costs and foreign exchange impacts) and the related tax impacts, then in the case of Adjusted Diluted EPS dividing Adjusted Net Earnings by the diluted weighted average number of shares outstanding (WASO).

(In millions, except per share amounts)Three Months Ended Six Months EndedJune 30,June 30,  2026   2025   2026   2025 Net earnings         $86           $54           $148           $104 Amortization of intangibles         6           6           11           11 Other one-time non-operational events         4           4           8           4 Tax effect of adjustments (1)         (2)          (2)          (4)          (3)Adjusted Net Earnings         $94           $62           $163           $116         Per share information       Diluted WASO 268.935   269.025   268.661   268.802         Diluted EPS         $0.32           $0.20           $0.55           $0.39 Adjusted Diluted EPS         $0.35           $0.23           $0.61           $0.43 
(1) Calculation uses an estimated statutory tax rate on non-GAAP adjustments.

Free Cash Flow is defined as the sum of the cash flows provided by (used in) operating activities, transaction-related expenditures (net of tax), capital expenditures and proceeds from sale of assets.

(Dollars in millions)Three Months Ended Six Months EndedJune 30, June 30,  2026   2025   2026   2025 Net cash provided by (used in) operating activities         $35           ($28)          ($31)          ($166)Capital expenditures         (29)          (28)          (59)          (60)Proceeds from sales of assets         —           —           1           — Free Cash Flow         $6           ($56)          ($89)          ($226)

ARLINGTON, Va., July 28, 2026 (GLOBE NEWSWIRE) -- Leonardo DRS, Inc. (Nasdaq: DRS) today announced that it has entered into a definitive agreement to acquire Raft LLC (“Raft”) in an all-cash transaction valued at $450 million. Founded in 2018 and headquartered in McLean, Virginia, Raft provides open-architecture mission software, specializing in multi-domain data fusion and artificial intelligence (AI) that supports real-time situational awareness and faster operational decision-making for national security customers.

The acquisition is aligned with DRS’s strategy and enhances its ability to deliver integrated, mission-focused technologies that help customers operate with greater speed, clarity and confidence in complex operational environments. Defense customers increasingly manage large volumes of data from distributed sensors and systems; fragmented data architectures can slow decision-making. Raft’s technology is designed to address this challenge by fusing disparate data into a common operating picture and helping reduce the cognitive burden on operators across domains and mission threads. Raft’s open-architecture software, AI and data integration capabilities are highly complementary and additive to DRS’s existing technology portfolio and customer relationships, enhancing the company’s ability to deliver integrated, advanced sensing and network computing capabilities with software to turn sensor data into actionable decision advantage.

“Our customers increasingly require integrated hardware, software, data and autonomy to support mission outcomes. The acquisition of Raft will build on and accelerate the organic investment that DRS has made in that evolution,” said John Baylouny, President and Chief Executive Officer of Leonardo DRS. “Raft adds proven software talent and open-architecture technology that complement our existing sensing and computing capabilities and strengthen our ability to deliver AI-enabled mission solutions at the speed our customers demand.”

“Joining DRS is a natural next step for our team and our mission,” said Shubhi Mishra, Founder and Chief Executive Officer of Raft. “Our open-architecture platform was built to integrate across systems, not lock customers in, and pairing it with DRS’s sensing and computing franchises will accelerate our ability to deliver mission capability at a global scale.”

The $450 million all-cash transaction is subject to customary post-closing purchase price adjustments. As a result of the transaction, DRS expects to realize a tax benefit over the next 15 years, the present value of which is calculated to be approximately $50 million. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the fourth quarter of 2026. The acquisition is expected to be accretive to Adjusted Diluted Earnings Per Share (1) in the first full year of ownership. DRS expects to fund the transaction through cash on hand and borrowings under its revolving credit facility.

Advisors

Morgan Stanley & Co. LLC is serving as financial advisor to Leonardo DRS and J.P. Morgan Securities LLC is serving as exclusive financial advisor to Raft. Sullivan & Cromwell LLP, Kirkland & Ellis LLP and Kilpatrick Townsend & Stockton LLP are serving as legal advisors to Leonardo DRS and Greenberg Traurig, LLP is serving as legal advisor to Raft.

Conference Call

Leonardo DRS will discuss the acquisition in conjunction with its previously announced second quarter 2026 earnings conference call on Thursday, July 30, 2026, beginning at 10:00 a.m. (ET).

The live audio broadcast of Leonardo DRS’s conference call will be available on the company’s investor relations website. To attend the conference call or webcast, participants should register online at https://investors.leonardodrs.com.

A replay will be available on the company’s website approximately two hours after the conclusion of the conference call and will remain available for 90 days.

About Leonardo DRS

Leonardo DRS, Inc. (Nasdaq: DRS) is at the forefront of developing transformative defense technologies using its proven agility and delivering innovative solutions for U.S. national security customers and allies worldwide. We specialize in rapidly providing high-performance, multi-domain capabilities across next-generation advanced sensing, network computing, force protection, and electric power and propulsion. Our reputation as a trusted provider is built on a continuous focus on practical innovation, delivering quality, and meeting our customers’ most demanding mission requirements. For further information on our complete range of capabilities, visit www.LeonardoDRS.com.

About Raft

Founded in 2018 and headquartered in McLean, Virginia, Raft is a leading provider of open-standard mission software, specializing in multi-domain data fusion and artificial intelligence that enable real-time awareness and faster operational decision-making for U.S. government and defense customers. Raft’s operator-focused, software-first products fuse and stream data and enable trusted human-AI partnership from the tactical edge to the enterprise.

Forward-Looking Statements

In this release, when using the terms the “company,” “DRS,” “we,” “us” and “our,” unless otherwise indicated or the context otherwise requires, we are referring to Leonardo DRS, Inc. This release contains forward-looking statements and cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,” “strives,” “targets,” “projects,” “guidance,” “intends,” “plans,” “estimates,” “anticipates” or other comparable terms. Forward-looking statements include, without limitation, all matters that are not historical facts. They appear in a number of places throughout this release and include, without limitation, statements regarding our intentions, beliefs, assumptions or current expectations concerning, among other things, financial goals, financial position, results of operations, cash flows, prospects, strategies or expectations, the proposed acquisition of Raft LLC, including the expected timing of completion of the transaction, the satisfaction of closing conditions, the receipt of regulatory approvals, the anticipated benefits of the transaction, the expected impact of the transaction on DRS or Raft LLC’s financial results, including expected accretion and tax benefits, the expected financing of the transaction and plans for the integration of the acquired business, and the impact of prevailing economic conditions.

These statements are subject to numerous assumptions, risks, and uncertainties, many of which are outside of our control, and include the risks and uncertainties that are identified in the Risk Factors section in our latest Annual Report on Form 10-K, and in other periodic and current reports we file with the SEC as well as risks and uncertainties relating to the proposed acquisition of Raft LLC, including: the possibility that regulatory approvals are not obtained on the expected timeline or at all; the risk that the closing conditions are not satisfied or that the transaction does not close within the anticipated timeframe or at all; the risk that the anticipated benefits of the transaction, including expected accretion and tax benefits, are not realized in whole or in part or within the expected timeframe; higher-than-expected transaction, integration or financing costs; difficulties in integrating Raft’s business, personnel, systems or operations; potential disruption to our or Raft’s ongoing operations or relationships with customers, suppliers or employees as a result of the announcement or pendency of the transaction; the diversion of management’s time and attention; and potential unknown or contingent liabilities of the acquired business. While the forward-looking statements herein reflect our current expectations, no assurance can be given that the results or events described in such statements will be achieved, and our actual results may differ materially from the results we anticipate. We undertake no obligation, other than as may be required by law, to revise or update any of these forward-looking statements (whether as a result of new information, subsequent events or circumstances, changes in expectations or otherwise) that may arise after the date of this release.

Non-GAAP Financial Measures

(1) The company references Adjusted Diluted Earnings Per Share, a non-GAAP financial measure, in this release. Adjusted Diluted EPS is defined as net earnings excluding amortization of acquired intangible assets, deal-related transaction costs, restructuring costs and other one-time non-operational events (which include non-service pension expense, legal liability accrual reversals, executive transition costs and foreign exchange impacts) and the related tax impacts, divided by the diluted weighted average number of shares outstanding (WASO).

We believe the non-GAAP financial measures presented in this document will help investors understand our financial condition and operating results and assess our future prospects. We believe these non-GAAP financial measures are important supplemental measures because they exclude unusual or non-recurring items as well as non-cash items that are unrelated to or may not be indicative of our ongoing operating results. Further, when read in conjunction with our GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as a tool to help make financial, operational and planning decisions. Finally, these measures are often used by analysts and other interested parties to evaluate companies in our industry by providing more comparable measures that are less affected by factors such as capital structure.

We recognize that these non-GAAP financial measures have limitations, including that they may be calculated differently by other companies or may be used under different circumstances or for different purposes, thereby affecting their comparability from company to company. In order to compensate for these and the other limitations, management does not consider these measures in isolation from or as alternatives to the comparable financial measures determined in accordance with U.S. GAAP and should not rely on any single financial measure to evaluate our business.

Leonardo DRS Investor Relations Contact
Steve Vather
Senior Vice President, Corporate Development (M&A) and Investor Relations
+1 703 409 2906
[email protected]   

Leonardo DRS Media Contact
Carrie Robinson
Vice President, Marketing and Corporate Communications
+1 321 266 7691
[email protected]  

Leonardo DRS remains a buy, driven by robust demand for radar, power management, and defense electronics in a multi-domain defense supercycle. DRS is positioned to benefit from expanding defense budgets, sensor-rich battlefield trends, and program ramp-ups across naval, air, and land domains. Valuation is attractive with 13–20% upside, supported by EBITDA margin expansion, strong free cash flow growth, and a net cash balance.

Leonardo DRS, Inc. (NASDAQ: DRS - Get Free Report) has been assigned a consensus rating of "Moderate Buy" from the eight analysts that are covering the stock, Marketbeat Ratings reports. Three research analysts have rated the stock with a hold rating and five have issued a buy rating on the company. The average 1 year target

ARLINGTON, Va.--(BUSINESS WIRE)--Leonardo DRS, Inc. (Nasdaq: DRS) announced today the introduction of THOR - Tactical, High-Performance Embedded Computing, Open Architecture, Rugged - a rugged, open-architecture 3U VPX embedded computing chassis purpose-built to deliver high-performance processing at the tactical edge. Designed for combat vehicles, tactical platforms, and emerging mission environments, THOR provides the scalable computing backbone warfighters need to run artificial intelligence.

Leonardo DRS, Inc. (NASDAQ: DRS - Get Free Report) EVP Sally Wallace sold 28,960 shares of Leonardo DRS stock in a transaction on Thursday, April 2nd. The shares were sold at an average price of $46.35, for a total value of $1,342,296.00. Following the completion of the sale, the executive vice president owned 58,353 shares in

Leonardo DRS's growth is propelled by advanced sensing, electric propulsion, and tactical radar, but supply chain risks—especially rare earths—threaten operational continuity. ASC segment shows margin improvement, but IMS faces profit conversion challenges; Q4 2025 saw IMS margins drop sharply despite revenue growth. Expansion initiatives, including a new naval facility and increased capex, support future ambitions, yet rare earth supply risks remain unresolved and material.

ARLINGTON, Va.--(BUSINESS WIRE)--Leonardo DRS, Inc. (Nasdaq: DRS) announced today it is introducing a new 2 kVA AC Uninterruptible Power Supply (UPS) in the company's uninterruptible power supply family of products, delivering clean, conditioned backup power to help keep mission-critical electronics online through shipboard power disturbances. The product is designed and positioned as IP54-hardened, and military-qualified—built for harsh and unforgiving operating environments. “We designed this.

ARLINGTON, Va.--(BUSINESS WIRE)--Leonardo DRS, Inc. (Nasdaq: DRS), a leading provider of advanced defense technologies, today reported financial results for the first quarter 2026, which ended March 31, 2026.

CEO Commentary

“Leonardo DRS delivered a strong start to the year. Our first quarter 2026 results meaningfully outperformed expectations thanks to disciplined execution, program momentum and sustained demand for our differentiated technologies. We expanded profitability, while simultaneously increasing investment in innovation and expanding capacity to support the critical missions of our customers. We are encouraged by the performance in the first quarter but remain focused on delivering differentiated capabilities to our customers to generate consistent, profitable growth and long-term value for our stockholders,” said John Baylouny, President and CEO of Leonardo DRS.

Summary Financial Results

(In millions, except per share amounts)

First Quarter

2026

2025

Change

Revenues

$846

$799

6

%

Net Earnings

$62

$50

24

%

Net Margin

7.3

%

6.3

%

100 bps

Diluted weighted average number of shares outstanding (WASO)

268.670

268.775

Diluted Earnings Per Share (EPS)

$0.23

$0.19

21

%

Non-GAAP Financial Measures (1)

Adjusted EBITDA

$105

$82

28

%

Adjusted EBITDA Margin

12.4

%

10.3

%

210 bps

Adjusted Net Earnings

$69

$54

28

%

Adjusted Diluted EPS

$0.26

$0.20

30

%

  (1) The company reports its financials in accordance with U.S. generally accepted accounting principles (“GAAP”). Information about the company’s use of non-GAAP financial measures, including a reconciliation of the non-GAAP financial measures to the most comparable financial measures calculated and presented in accordance with U.S. GAAP, is provided under "Non-GAAP Financial Measures."

First quarter 2026 revenue growth was 6% year-over-year, reflecting increases on programs supporting tactical radars, infrared sensing and electric power and propulsion.

Adjusted EBITDA grew 28% over the prior year and was accompanied by meaningful margin expansion. Increased Adjusted EBITDA profitability was driven by strong program execution across the portfolio, including Columbia Class, and also reflected operating leverage on higher volume.

First quarter net earnings, Adjusted Net Earnings, diluted EPS and Adjusted Diluted EPS were all higher year-over-year, driven primarily by higher operational profitability and lower net interest expense.

Cash Flow

Net cash flow used in operating activities was $66 million for the first quarter. The company’s free cash outflow was $95 million in the quarter. Both operating and free cash outflows narrowed compared to first quarter 2025 driven by higher profitability and better working capital efficiency.

Dividends and Stock Repurchases

During the first quarter, the company paid dividends to stockholders totaling approximately $24 million or $0.09 per share of common stock. Leonardo DRS today announced that its Board of Directors declared a cash dividend of $0.09 per share of common stock payable on June 2, 2026, to stockholders of record on May 19, 2026.

Additionally, the company repurchased 91,238 shares of its common stock for approximately $4 million in the first quarter, pursuant to a previously announced stock repurchase program.

Balance Sheet

At first quarter end, the company had $328 million of cash and no outstanding borrowings under the company’s credit facility. The company’s strong balance sheet provides ample financial flexibility to fund growth initiatives and return capital over time.

Bookings and Funded Backlog (Dollars in millions)

First Quarter

2026

2025

Bookings

$885

$991

Book-to-Bill

1.0x

1.2x

Funded Backlog

$4,686

$4,354

The company received $885 million in new funded bookings in the first quarter. Customer demand was resilient across the portfolio, with the greatest momentum in electric power and propulsion, tactical radars and force protection. Exiting the first quarter, funded backlog reached a new record of $4.7 billion and was up 8% over the prior year.

Segment Results

Advanced Sensing and Computing (ASC) Segment

(Dollars in millions)

First Quarter

2026

2025

Change

Revenues

$559

$511

9

%

Operating Earnings

$40

$25

60

%

Operating Margin

7.2

%

4.9

%

230 bps

Bookings

$429

$669

Book-to-Bill

0.8x

1.3x

Non-GAAP Financial Measures (1)

Segment Adjusted EBITDA

$62

$42

48

%

Segment Adjusted EBITDA Margin

11.1

%

8.2

%

290 bps

(1) The company reports its financials in accordance with U.S. GAAP. Information about the company’s use of non-GAAP financial measures, including a reconciliation of the non-GAAP financial measures to the most comparable financial measures calculated and presented in accordance with U.S. GAAP, is provided under "Non-GAAP Financial Measures."

ASC quarterly bookings reflected solid demand for multi-modal sensing, including tactical radars, infrared and RF-based sensing technologies. Revenue growth in the segment came from programs related to tactical radars and infrared sensing. Adjusted EBITDA increased meaningfully, driven by improved program execution, favorable mix and higher volume.

Integrated Mission Systems (IMS) Segment

(Dollars in millions)

First Quarter

2026

2025

Change

Revenues

$295

$291

1

%

Operating Earnings

$37

$34

9

%

Operating Margin

12.5

%

11.7

%

80 bps

Bookings

$456

$322

Book-to-Bill

1.5x

1.1x

Non-GAAP Financial Measures (1)

Segment Adjusted EBITDA

$43

$40

8

%

Segment Adjusted EBITDA Margin

14.6

%

13.7

%

90 bps

(1) The company reports its financials in accordance with U.S. GAAP. Information about the company’s use of non-GAAP financial measures, including a reconciliation of the non-GAAP financial measures to the most comparable financial measures calculated and presented in accordance with U.S. GAAP, is provided under "Non-GAAP Financial Measures." Programs related to electric power and propulsion and force protection drove robust quarterly bookings in the IMS segment. Revenue increased modestly over first quarter 2025 on higher contribution from electric power and propulsion programs. Adjusted EBITDA growth and margin expansion were primarily driven by strong program execution throughout the segment, led by Columbia Class.

2026 Guidance

Leonardo DRS is increasing 2026 guidance as specified in the table below:

Measure

Current 2026 Guidance

Prior 2026 Guidance

Revenue

$3,900 million - $3,975 million

$3,850 million - $3,950 million

Adjusted EBITDA

$515 million - $530 million

$505 million - $525 million

Tax Rate

18.5%

18.5%

Diluted WASO

269.0 million

269.0 million

Adjusted Diluted EPS

$1.26 - $1.30

$1.20 - $1.26

The company does not provide a reconciliation of forward-looking Adjusted EBITDA and Adjusted Diluted EPS due to the inherent difficulty in forecasting and quantifying the adjustments that are necessary to calculate such non-GAAP measures without unreasonable effort. Material changes to any one of these items could have a significant effect on future GAAP results.

Conference Call

Leonardo DRS management will host a conference call beginning at 10:00 a.m. ET on May 5, 2026 to discuss the financial results for its first quarter 2026.

A live audio broadcast of the conference call along with a supplemental presentation will be available to the public through links on the Leonardo DRS Investor Relations website (https://investors.leonardodrs.com).

A replay of the conference call will be available on the Leonardo DRS website approximately 2 hours after the conclusion of the conference call.

About Leonardo DRS

Headquartered in Arlington, VA, Leonardo DRS, Inc. is an innovative and agile provider of advanced defense technology to U.S. national security customers and allies around the world. We specialize in the design, development and manufacture of advanced sensing, network computing, force protection and electric power and propulsion and other leading mission-critical technologies. Our innovative people are leading the way in developing disruptive technologies for autonomous, dynamic, interconnected and multi-domain capabilities to defend against new and emerging threats. For more information and to learn more about our full range of capabilities, visit www.LeonardoDRS.com.

Forward-Looking Statements

In this press release, when using the terms the “company”, “Leonardo DRS”, “we”, “us” and “our,” unless otherwise indicated or the context otherwise requires, we are referring to Leonardo DRS, Inc. This press release contains forward-looking statements and cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,” “strives,” “targets,” “projects,” “guidance,” “intends,” “plans,” “estimates,” “anticipates” or other comparable terms. Forward-looking statements include, without limitation, all matters that are not historical facts. They appear in a number of places throughout this press release and include, without limitation, statements regarding our intentions, beliefs, assumptions or current expectations concerning, among other things, financial goals, financial position, results of operations, cash flows, prospects, strategies or expectations and the impact of prevailing economic conditions.

Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if future performance and outcomes are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods. New factors emerge from time to time that may cause our business not to develop as we expect and it is not possible for us to predict all of them. Factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation: disruptions, including from government shutdowns, or deteriorations in our relationship with the relevant agencies of the U.S. government, as well as any failure to pass routine audits or otherwise comply with governmental requirements including those related to security clearance or procurement rules, including the False Claims Act; significant delays, including from government shutdowns, or reductions in appropriations for our programs and changes in U.S. government priorities and spending levels more broadly; any failure to comply with the amended and restated proxy agreement with the U.S. Department of War (“DoW”); the effect of inflation and other cost pressures on our supply chain and/or our labor costs; our mix of fixed-price, cost-plus and time-and-materials type contracts and any resulting impact on our cash flows due to cost overruns; failure to properly comply with various covenants of the agreements governing our debt could negatively impact our business; our dependence on U.S. government contracts, which often are only partially funded and are subject to immediate termination, some of which are classified and the concentration of our customer base in the U.S. defense industry; our use of estimates in pricing and accounting for many of our programs that are inherently uncertain and which may not prove to be accurate; our ability to realize the full value of our backlog; our ability to predict future capital needs or to obtain additional financing if needed, on terms acceptable to us, if at all; our ability to respond to the rapid technological changes in the markets in which we compete; the effect of global and regional economic downturns and rising interest rates; our ability to maintain an effective system of internal control over financial reporting; our inability to appropriately manage our inventory; our inability to fully realize the value of our total estimated contract value or bookings; our ability to compete efficiently, including due to U.S. government organizational conflict of interest rules which may limit new contract opportunities or require us to wind down existing contracts; our relationships with other industry participants, including any contractual disputes or the inability of our key suppliers to timely deliver our components, parts or services; preferences or set-asides for small or small disadvantaged businesses could impact our ability to be a prime contractor; any failure to meet our contractual obligations including due to potential impacts to our business from supply chain risks, such as longer lead times and shortages of electronics and other components; any security breach, including any cyber-attack, cyber intrusion, insider threat, or other significant disruption of our IT networks and related systems, as well as any act of terrorism or other threat to our physical security and personnel; our ability to fully exploit or obtain patents or other intellectual property protections necessary to secure our proprietary technology, including our ability to avoid infringing upon the intellectual property of third parties or prevent third parties from infringing upon our own intellectual property; the conduct of our employees, agents, affiliates, subcontractors, suppliers, business partners or joint ventures in which we participate which may impact our reputation and ability to do business; the outcome of litigation, arbitration, investigations, claims, disputes, enforcement actions and other legal proceedings in which we are involved; various geopolitical and economic factors, laws and regulations including the Foreign Corrupt Practices Act, the Export Control Act, the International Traffic in Arms Regulations, the Export Administration Regulations, recent U.S. tariffs imposed or threatened to be imposed on other countries and any related retaliatory actions taken by such countries and those that we are exposed to as a result of our international business; our ability to obtain export licenses necessary to conduct certain operations abroad, including any attempts by Congress to prevent proposed sales to certain foreign governments; our ability to attract and retain technical and other key personnel; the occurrence of prolonged work stoppages; the unavailability or inadequacy of our insurance coverage, customer indemnifications or other liability protections to cover all of our significant risks or to pay for material losses we incur; future changes in U.S. tax laws and regulations or interpretations thereof; future changes in the DoW’s and other governments’ budgets; certain limitations on our ability to use our net operating losses to offset future taxable income; termination of our leases or our inability to renew our leases on acceptable terms; changes in estimates used in accounting for our pension plans, including with respect to the funding status thereof; changes in future business or other market conditions that could cause business investments and/or recorded goodwill or other long-term assets to become impaired; adverse consequences from any acquisitions such as operating difficulties, dilution and other harmful consequences or any modification, delay or prevention of any future acquisition or investment activity by the Committee on Foreign Investment in the United States; natural disasters, severe weather or other significant disruptions; failure to properly contain a global pandemic in a timely manner could materially affect how we and our business partners operate; our compliance with environmental laws and regulations and any environmental liabilities that may affect our reputation or financial position; any conflict of interest that may arise because Leonardo US Holding, LLC, our majority stockholder, or Leonardo S.p.A., our indirect majority stockholder, may have interests that are different from, or conflict with, those of our other stockholders, including as a result of any ongoing business relationships Leonardo S.p.A. may have with us and their significant ownership in us may discourage change of control transactions (our amended and restated certificate of incorporation provides that we waive any interest or expectancy in corporate opportunities presented to Leonardo S.p.A); or our obligations to provide certain services to Leonardo S.p.A., which may divert human and financial resources from our business.

You should read this press release completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements made in this press release are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this filing and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise and changes in future operating results over time or otherwise.

Other risks, uncertainties and factors, including those discussed in our latest SEC filings under “Risk Factors” of our latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, all of which may be viewed or obtained through the investor relations section of our website at www.LeonardoDRS.com, could cause our actual results to differ materially from those projected in any forward-looking statements we make. Readers should read the discussion of these factors carefully to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements.

Consolidated Statements of Earnings (Unaudited)

(Dollars in millions, except per share amounts)

Three Months Ended

March 31,

2026

2025

Revenues

846

799

Cost of revenues

(634

)

(618

)

Gross profit

212

181

General and administrative expenses

(130

)

(117

)

Amortization of acquired intangible assets

(5

)

(5

)

Operating earnings

77

59

Interest expense, net

—

(1

)

Earnings before taxes

77

58

Income tax provision

(15

)

(8

)

Net earnings

$62

$50

Net earnings per share from common stock:

Basic earnings per share

$0.23

$0.19

Diluted earnings per share

$0.23

$0.19

Consolidated Balance Sheets (Unaudited)

(Dollars in millions, except per share amounts)

March 31,

December 31,

2026

2025

ASSETS

Current assets:

Cash and cash equivalents

$328

$647

Accounts receivable, net

324

334

Contract assets

975

931

Inventories

371

352

Prepaid expenses

27

26

Other current assets

31

36

Total current assets

2,056

2,326

Noncurrent assets:

Property, plant and equipment, net

512

512

Intangible assets, net

106

112

Goodwill

1,238

1,238

Deferred tax assets

89

88

Other noncurrent assets

210

210

Total noncurrent assets

2,155

2,160

Total assets

$4,211

$4,486

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Short-term borrowings and current portion of long-term debt

$11

$26

Accounts payable

187

351

Contract liabilities

640

585

Other current liabilities

267

269

Total current liabilities

1,105

1,231

Noncurrent liabilities:

Long-term debt

140

321

Pension and other postretirement benefit plan liabilities

32

35

Deferred tax liabilities

4

3

Other noncurrent liabilities

160

166

Total noncurrent liabilities

$336

$525

Stockholders' equity:

Preferred stock, $0.01 par value: 10,000,000 shares authorized; none issued

$—

$—

Common stock, $0.01 par value: 350,000,000 shares authorized; 265,965,593 and 265,822,404 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

3

3

Additional paid-in capital

5,062

5,083

Accumulated deficit

(2,253

)

(2,315

)

Accumulated other comprehensive loss

(42

)

(41

)

Total stockholders' equity

2,770

2,730

Total liabilities and stockholders' equity

$4,211

$4,486

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in millions)

Three Months Ended

March 31,

2026

2025

Operating activities

Net earnings

$62

$50

Adjustments to reconcile net earnings to net cash used in operating activities:

Depreciation and amortization

24

23

Deferred income taxes

—

1

Stock-based compensation expense

4

8

Changes in assets and liabilities:

Accounts receivable

10

(1

)

Contract assets

(44

)

(110

)

Inventories

(19

)

(27

)

Prepaid expenses

(1

)

(1

)

Other current assets

4

14

Other noncurrent assets

4

6

Defined benefit obligations

(3

)

(5

)

Accounts payable

(152

)

(126

)

Contract liabilities

55

68

Other current liabilities

(3

)

(32

)

Other noncurrent liabilities

(7

)

(6

)

Net cash used in operating activities

(66

)

(138

)

Investing activities

Capital expenditures

(30

)

(32

)

Proceeds from sales of assets

1

—

Net cash used in investing activities

(29

)

(32

)

Financing activities

Net (decrease) increase in borrowings (maturities of 90 days or less)

(4

)

2

Repayments of borrowings

(191

)

(3

)

Proceeds from stock issuance

3

—

Repurchases of common stock

(4

)

(3

)

Payments of employee taxes withheld from stock-based awards

—

(17

)

Dividends paid

(7

)

(7

)

Dividends paid to related party

(17

)

(17

)

Other

(4

)

(3

)

Net cash used in financing activities

(224

)

(48

)

Effect of exchange rate changes on cash and cash equivalents

—

—

Net decrease in cash and cash equivalents

(319

)

(218

)

Cash and cash equivalents at beginning of year

647

598

Cash and cash equivalents at end of year

$328

$380

Non-GAAP Financial Measures (Unaudited)

In addition to the results reported in accordance with U.S. GAAP included throughout this document, the company has provided information regarding “Adjusted EBITDA,” “Adjusted EBITDA Margin,” “Segment Adjusted EBITDA,” “Segment Adjusted EBITDA Margin,” “Adjusted Net Earnings,” “Adjusted Diluted Earnings Per Share” and “Free Cash Flow” (each, a non-GAAP financial measure).

We believe the non-GAAP financial measures presented in this document will help investors understand our financial condition and operating results and assess our future prospects. We believe these non-GAAP financial measures, each of which is discussed in greater detail below, are important supplemental measures because they exclude unusual or non-recurring items as well as non-cash items that are unrelated to or may not be indicative of our ongoing operating results. Further, when read in conjunction with our GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as a tool to help make financial, operational and planning decisions. Finally, these measures are often used by analysts and other interested parties to evaluate companies in our industry by providing more comparable measures that are less affected by factors such as capital structure.

We recognize that these non-GAAP financial measures have limitations, including that they may be calculated differently by other companies or may be used under different circumstances or for different purposes, thereby affecting their comparability from company to company. In order to compensate for these and the other limitations discussed below, management does not consider these measures in isolation from or as alternatives to the comparable financial measures determined in accordance with U.S. GAAP. Readers should review the reconciliations below and should not rely on any single financial measure to evaluate our business.

We define these non-GAAP financial measures as:

Adjusted EBITDA and Adjusted EBITDA Margin are defined as net earnings before income taxes, interest expense, amortization of acquired intangible assets, depreciation, deal-related transaction costs, restructuring costs and other one-time non-operational events (which include non-service pension expense, legal liability accrual reversals, executive transition costs and foreign exchange impacts), then in the case of Adjusted EBITDA Margin dividing Adjusted EBITDA by revenues.

(Dollars in millions)

Three Months Ended

March 31,

2026

2025

Net earnings

$62

$50

Income tax provision

15

8

Interest expense, net

—

1

Amortization of intangibles

5

5

Depreciation

19

18

Other one-time non-operational events

4

—

Adjusted EBITDA

$105

$82

Adjusted EBITDA Margin

12.4

%

10.3

%

Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin are defined as operating earnings before amortization of acquired intangible assets, depreciation, deal-related transaction costs, restructuring costs and other one-time non-operational events, then in the case of Segment Adjusted EBITDA Margin dividing Segment Adjusted EBITDA by revenues.

Advanced Sensing & Computing (ASC) Segment Adjusted EBITDA

(Dollars in millions)

Three Months Ended

March 31,

2026

2025

Operating earnings

$40

$25

Amortization of intangibles

5

5

Depreciation

13

12

Other one-time non-operational events

4

—

Segment Adjusted EBITDA

$62

$42

Segment Adjusted EBITDA Margin

11.1

%

8.2

%

Integrated Mission Systems (IMS) Segment Adjusted EBITDA

(Dollars in millions)

Three Months Ended

March 31,

2026

2025

Operating earnings

$37

$34

Depreciation

6

6

Segment Adjusted EBITDA

$43

$40

Segment Adjusted EBITDA Margin

14.6

%

13.7

%

Adjusted Net Earnings and Adjusted Diluted EPS are defined as net earnings excluding amortization of acquired intangible assets, deal-related transaction costs, restructuring costs and other one-time non-operational events (which include non-service pension expense, legal liability accrual reversals, executive transition costs and foreign exchange impacts) and the related tax impacts, then in the case of Adjusted Diluted EPS dividing Adjusted Net Earnings by the diluted weighted average number of shares outstanding (WASO).

(In millions, except per share amounts)

Three Months Ended

March 31,

2026

2025

Net earnings

$62

$50

Amortization of intangibles

5

5

Other one-time non-operational events

4

—

Tax effect of adjustments (1)

(2

)

(1

)

Adjusted Net Earnings

$69

$54

Per share information

Diluted WASO

268.670

268.775

Diluted EPS

$0.23

$0.19

Adjusted Diluted EPS

$0.26

$0.20

(1) Calculation uses an estimated statutory tax rate on non-GAAP adjustments. Free Cash Flow is defined as the sum of the cash flows provided by (used in) operating activities, transaction-related expenditures (net of tax), capital expenditures and proceeds from sale of assets.

(Dollars in millions)

Three Months Ended

March 31,

2026

2025

Net cash used in operating activities

($66

)

($138

)

Capital expenditures

(30

)

(32

)

Proceeds from sales of assets

1

—

Free Cash Flow

($95

)

($170

)

More News From Leonardo DRS, Inc.

For the quarter ended March 2026, Leonardo DRS, Inc. (DRS - Free Report) reported revenue of $846 million, up 5.9% over the same period last year. EPS came in at $0.26, compared to $0.20 in the year-ago quarter.

The reported revenue represents a surprise of +3.47% over the Zacks Consensus Estimate of $817.61 million. With the consensus EPS estimate being $0.21, the EPS surprise was +26.83%.

While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance.

Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance.

Here is how Leonardo DRS, Inc. performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

Revenue- Integrated Mission Systems (IMS): $295 million compared to the $300.28 million average estimate based on two analysts. The reported number represents a change of +1.4% year over year.Revenue- Advanced Sensing and Computing (ASC): $559 million compared to the $526.33 million average estimate based on two analysts. The reported number represents a change of +9.4% year over year.Adjusted EBITDA- Integrated Mission Systems (IMS): $43 million versus the two-analyst average estimate of $42.58 million.Adjusted EBITDA- Advanced Sensing and Computing (ASC): $62 million versus $51.86 million estimated by two analysts on average.View all Key Company Metrics for Leonardo DRS, Inc. here>>>

Shares of Leonardo DRS, Inc. have returned -14.4% over the past month versus the Zacks S&P 500 composite's +9.5% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.

Leonardo DRS, Inc. (DRS) has been upgraded to a Zacks Rank #2 (Buy), reflecting growing optimism about the company's earnings prospects. This might drive the stock higher in the near term.

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Thermal Payload Optimized for High-Volume OEM Integration in Multiple Applications

ARLINGTON, Va.--(BUSINESS WIRE)--Leonardo DRS, Inc. (Nasdaq: DRS) announced today the launch of Tenum® 640 Orbit™, an advanced uncooled long-wave infrared (LWIR) thermal camera module optimized for unmanned air, ground, and maritime platforms. The company will debut Tenum® 640 Orbit™ at SOF Week in Tampa, FL (May 18-21).

“Unmanned systems are fielding at scale. Integrators and operators need thermal cameras that are both mission-capable and integration-friendly,” said Greg Christison, vice president, Sensors & Aviation, at Leonardo DRS. “Tenum® 640 Orbit™ is a size, weight, power and cost (SWAP-c) optimized OEM camera module to help accelerate integration timelines and enable broader deployment across small, unmanned platforms without compromising performance.”

Configured for high-volume integration for Group 1-3 UAV, Tenum® 640 Orbit™ is an ideal cost-optimized payload for unmanned aerial vehicle (UAV), unmanned ground vehicle (UGV), and unmanned surface vessel (USV) applications. The module is built around an uncooled VOx microbolometer and delivers 640 x 512 resolution with 10 µm pixel pitch in the 8-14 µm spectral band.

Tenum® 640 Orbit™ provides persistent high frame-rate thermal imagery for detection, tracking, navigation, and collision/obstacle avoidance in day/night and degraded-visibility environments, extending endurance for small unmanned systems in an ultra-compact footprint. The camera core supports 60 frames per second (fps) and delivers <20 mK thermal sensitivity. Built to streamline OEM integration, Tenum® 640 Orbit™ is Mobile Industry Processor Interface (MIPI) camera serial interface (CSI) / camera command set (CCS) compatible with optional USB connectivity and configurable video outputs.

Leonardo DRS will provide additional information and product demonstrations of Tenum® 640 Orbit™ at SOF Week (May 18-21). Attendees are invited to visit Leonardo DRS to learn how our uncooled camera technology enables scalable thermal imaging for unmanned platforms through simplified integration and cost-efficient deployment.

For more information, please visit LeonardoDRS.com/TenumOrbit.

About Leonardo DRS

Leonardo DRS, Inc. (Nasdaq: DRS) is at the forefront of developing transformative defense technologies using its proven agility and delivering innovative solutions for U.S. national security customers and allies worldwide. We specialize in rapidly providing high-performance, multi-domain capabilities across next-generation advanced sensing, network computing, force protection, and electric power and propulsion. Our reputation as a trusted provider is built on a continuous focus on practical innovation, delivering quality, and meeting our customers’ most demanding mission requirements. For further information on our complete range of capabilities, visit www.LeonardoDRS.com.

Forward-Looking Statements

This communication contains statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements reflect current expectations, assumptions and estimates of future performance and economic conditions. The company cautions investors that any forward-looking statements which include contract values, contract performance and our development and production of products are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those matters expressed in or implied by such forward-looking statements.

More News From Leonardo DRS, Inc.

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