Leonardo DRS revenue rises 10% as defense demand lifts Q2 results

Leonardo DRS Inc. reported second-quarter revenue of $913 million, up 10% from a year earlier, as demand across tactical radar, naval propulsion and infrared sensing programs drove double-digit growth and a record funded backlog.

"The results reflect disciplined execution and sustained demand for DRS's differentiated technologies," Chief Executive Officer John Baylouny said. The company captured over $1 billion in bookings during the quarter, producing a book-to-bill ratio of 1.2 times and pushing funded backlog to a record $5.1 billion, he said.

Adjusted EBITDA rose 33% to $128 million, with margin expanding 240 basis points to 14%. Adjusted diluted earnings per share climbed 52% to $0.35, beating the company's internal expectations. The Integrated Mission Systems segment posted 15% revenue growth, while the Advanced Sensing and Computing segment grew 8%. Net earnings increased 59% to $86 million, or $0.32 per diluted share.

Leonardo DRS raised its full-year adjusted EBITDA guidance to $525 million to $540 million from a prior range of $515 million to $530 million, and lifted adjusted diluted EPS guidance to $1.34 to $1.39 from $1.26 to $1.30. The company maintained its revenue outlook of $3.9 billion to $3.975 billion, representing organic growth of 7% to 9%. It also announced an agreement to acquire mission software provider Raft for $450 million in cash, a deal expected to close in the fourth quarter and become accretive to adjusted EPS in its first full year.

The guidance raise signals management expects demand to remain elevated as the U.S. and allies prioritize layered air defense, counter-unmanned aircraft systems and naval modernization. Investors will watch the third-quarter earnings call for updates on the Raft integration and production capacity expansion at the company's Charleston facility.

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