Leonardo DRS Announces Financial Results for Third Quarter 2024

• Revenue: $812 million, up 16% year-over-year
• Net Earnings: $57 million, up 21% year-over-year
• Adjusted EBITDA: $100 million, up 22% year-over-year
• Diluted EPS: $0.21, up 17% year-over-year
• Adjusted Diluted EPS: $0.24, up 20% year-over-year
• Bookings: $1.1 billion (book-to-bill ratio of 1.3x)
• Backlog: $8.3 billion, up 75% year-over-year
• Raises 2024 guidance across all metrics
• Initiates preliminary 2025 guidance framework

ARLINGTON, Va.: Leonardo DRS, Inc. (Nasdaq: DRS), a leading provider of advanced defense technologies, today reported financial results for the third quarter 2024, which ended September 30, 2024.

CEO Commentary

“We delivered strong third quarter results, highlighted by robust bookings, mid-teens organic revenue growth, increases to all of our key profit metrics and healthy free cash flow generation. Our strategy, execution focus and steadfast commitment to our customers are driving outcomes that continue to exceed our expectations,” said Bill Lynn, Chairman and CEO of Leonardo DRS.

Summary Financial Results

(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."

Year-over-year revenue growth reflected strong continued momentum and was 16% for the third quarter 2024. In the quarter, our programs related to advanced infrared sensing, force protection and tactical radars were the primary catalysts for the solid revenue growth.

Higher volume was the primary driver for the year-over-year adjusted EBITDA growth and margin expansion in the quarter. Our volume expansion coupled with crisp operational performance translated to increases in our bottom-line metrics with quarterly net earnings, adjusted net earnings, diluted EPS and adjusted diluted EPS all higher compared to the prior year, despite a higher tax rate and expense.

Cash Flow and Balance Sheet

Net cash flow provided by operating activities was $59 million for the third quarter. The company's free cash flow generation was $48 million in the quarter. Operating and free cash flow were both up significantly compared to last year primarily as a result of increased profitability and better working capital efficiency, which was aided by favorable timing of cash receipts from customers. At quarter end, the balance sheet had $198 million of cash and $205 million of outstanding borrowings under the company’s credit facility, which provides the company with sufficient financial capacity to deploy capital for growth, while maintaining a healthy balance sheet.

Bookings and Backlog

The company recorded $1.1 billion in new funded bookings in the quarter. Steady customer demand for our naval network computing, electric power and propulsion, force protection and advanced infrared sensing technologies drove our quarterly bookings. Total backlog at quarter end reached a new company record of $8.3 billion, which represents a 75% increase year-over-year and was also up sequentially.

Segment Results
Advanced Sensing and Computing (“ASC”) Segment

While ASC bookings for the third quarter were lower than the prior year, Q3 bookings continued to reflect solid customer demand for our naval network computing, advanced infrared sensing and tactical communications technologies. Revenue growth on advanced infrared sensing and tactical radar programs remained as the major contributors for the year-over-year increase in the segment. Favorable program mix, improved program execution and higher volume drove the adjusted EBITDA growth and margin expansion for the quarter.

Integrated Mission Systems (“IMS”) Segment