Leonardo DRS, Inc. (Nasdaq: DRS), a leading provider of advanced defense technologies, today reported financial results for the second quarter 2024, which ended June 30, 2024. CEO Commentary “Our st...
ARLINGTON, Va.: Leonardo DRS, Inc. (Nasdaq: DRS), a leading provider of advanced defense technologies, today reported financial results for the second quarter 2024, which ended June 30, 2024.
CEO Commentary
“Our strong second quarter 2024 results reflect the solid momentum evident across the business. Healthy customer demand continues to propel our bookings and backlog growth. This demand along with an improving supply chain is unlocking revenue growth above our expectations. Overall, I am pleased with our year-to-date performance, however, we are maintaining a clear focus on execution to deliver on our commitments to customers and shareholders,” said Bill Lynn, Chairman and CEO of Leonardo DRS.
Summary Financial Results | |||||||||||||||||||||
(In millions, except per share amounts) | Three Months Ended |
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| Six Months Ended |
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June 30, |
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| June 30, |
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| 2024 |
| 2023 |
| Change |
| 2024 |
| 2023 |
| Change | ||||||||||
Revenues | $ | 753 |
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| $ | 628 |
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| 20 | % |
| $ | 1,441 |
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| $ | 1,197 |
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| 20 | % |
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Net Earnings | $ | 38 |
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| $ | 35 |
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| 9 | % |
| $ | 67 |
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| $ | 47 |
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| 43 | % |
Diluted WASO |
| 267.457 |
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| 263.675 |
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| 266.906 |
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| 263.126 |
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Diluted Earnings Per Share (EPS) | $ | 0.14 |
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| $ | 0.13 |
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| 8 | % |
| $ | 0.25 |
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| $ | 0.18 |
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| 39 | % |
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Non-GAAP Financial Measures (1) |
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Adjusted EBITDA | $ | 82 |
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| $ | 62 |
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| 32 | % |
| $ | 152 |
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| $ | 111 |
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| 37 | % |
Adjusted EBITDA Margin |
| 10.9 | % |
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| 9.9 | % |
| 100 bps |
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| 10.5 | % |
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| 9.3 | % |
| 120 bps | ||
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Adjusted Net Earnings | $ | 47 |
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| $ | 39 |
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| 21 | % |
| $ | 85 |
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| $ | 58 |
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| 47 | % |
Adjusted Diluted EPS | $ | 0.18 |
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| $ | 0.15 |
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| 20 | % |
| $ | 0.32 |
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| $ | 0.22 |
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| 45 | % |
(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." |
Leonardo DRS continued to deliver remarkable year-over-year revenue growth, which stood at 20% for the second quarter. Our programs related to advanced infrared sensing, electric power and propulsion and tactical radars were key drivers behind the robust revenue growth in the quarter.
Higher volume spurred the significant year-over-year adjusted EBITDA growth and margin expansion in the quarter. Quarterly net earnings, adjusted net earnings, diluted EPS and adjusted diluted EPS were all higher as a result of strong operational performance, which outweighed a higher tax rate and expense compared to the prior year.
Cash Flow and Balance Sheet
Net cash flow provided by operating activities was $34 million for the second quarter. The company's free cash flow generation was $1 million in the quarter. The operating and free cash flow trends were largely consistent with the historical patterns of the business but showed year-over-year improvement on both metrics due to increased profitability and better working capital efficiency.
At quarter end, the balance sheet had $149 million of cash and $208 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 | |||||||||||
(Dollars in millions) | Three Months Ended |
| Six Months Ended | ||||||||
| June 30, |
| June 30, | ||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | ||||
Bookings | $ | 941 |
| $ | 698 |
| $ | 1,756 |
| $ | 1,447 |
Book-to-Bill | 1.2x |
| 1.1x |
| 1.2x |
| 1.2x | ||||
Backlog | $ | 7,925 |
| $ | 4,357 |
| $ | 7,925 |
| $ | 4,357 |
The company received $941 million in new funded awards during the quarter. The bookings strength came from healthy customer demand for our differentiated technologies and solutions in advanced infrared sensing, electric power and propulsion, ground network computing as well as ground systems integration. At quarter end, backlog stood at a record of $7.9 billion, representing an 82% increase year-over-year.
Segment Results | |||||||||||||||||||||
Advanced Sensing and Computing (“ASC”) Segment | |||||||||||||||||||||
(Dollars in millions) | Three Months Ended |
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| Six Months Ended |
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| June 30, |
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| June 30, |
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| 2024 |
| 2023 |
| Change |
| 2024 |
| 2023 |
| Change | ||||||||||
Revenues | $ | 492 |
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| $ | 404 |
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| 22 | % |
| $ | 925 |
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| $ | 795 |
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| 16 | % |
Adjusted EBITDA | $ | 55 |
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| $ | 36 |
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| 53 | % |
| $ | 96 |
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| $ | 73 |
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| 32 | % |
Adjusted EBITDA Margin |
| 11.2 | % |
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| 8.9 | % |
| 230 bps |
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| 10.4 | % |
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| 9.2 | % |
| 120 bps | ||
Bookings | $ | 616 |
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| $ | 469 |
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| $ | 1,203 |
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| $ | 873 |
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Book-to-Bill | 1.3x |
| 1.2x |
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| 1.3x |
| 1.1x |
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ASC bookings continued to exceed expectations with solid demand for our advanced infrared sensing as well as our naval and ground network computing technologies. Revenue growth on advanced infrared sensing and tactical radar programs were 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 | |||||||||||||||||||||
(Dollars in millions) | Three Months Ended |
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| Six Months Ended |
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| June 30, |
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| June 30, |
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| 2024 |
| 2023 |
| Change |
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| 2024 |
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| 2023 |
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