Leonardo DRS, Inc. (NASDAQ:DRS) reported fourth-quarter results that topped expectations on Tuesday, and the stock was trading higher following the announcement.
Fourth-quarter revenue rose 8% to $1.06 billion from $981 million a year earlier, while full-year revenue increased 13% to $3.65 billion from $3.23 billion.
Fourth-quarter net earnings were $102 million, or 38 cents per share, compared with $89 million, or 33 cents per share, a year earlier. For 2025, net earnings totaled $278 million, or $1.03 per share, versus $213 million, or 80 cents per share, in 2024.
On an adjusted basis, fourth-quarter net earnings were $114 million, or 42 cents per share, up from 38 cents per share and ahead of a 37-cent estimate. Quarterly sales of $1.060 billion also beat a $1.003 billion estimate.
“Our 2025 results exemplify another year of exceptional customer demand and double-digit revenue growth. We are investing, innovating, and delivering mission-critical capabilities at speed for our customers,” said John Baylouny, President and CEO of Leonardo DRS.
“As we look forward, we will leverage our platform-agnostic approach, differentiated technology portfolio, and innovation to drive continued, sustainable growth,” added Baylouny.
In Advanced Sensing and Computing (ASC), fourth-quarter revenue rose 9% to $722 million, and operating earnings increased to $133 million from $82 million. Operating margin improved to 18.4% from 12.4%, and segment adjusted EBITDA was $152 million with a 21.1% margin.
In the fourth quarter, ASC bookings were driven by demand for the company’s advanced infrared sensing, tactical radars, lasers and ground network computing technologies.
In Integrated Mission Systems (IMS), fourth-quarter revenue increased 5% to $343 million. Operating earnings were wiped out in the period, compared with $40 million in the prior year. Segment adjusted EBITDA totaled $6 million with a 1.7% margin.
IMS revenue growth in the fourth quarter came from electric power and propulsion programs offset by the headwind from the legacy foreign ground surveillance program conclusion.
Operating cash flow was $425 million in the quarter and $366 million for the year. Free cash flow was $376 million in the quarter and $227 million for 2025. Year-end cash was $647 million, and outstanding borrowings under the credit facility were $191 million.
Fourth-quarter bookings were $1.09 billion and full-year bookings were $4.25 billion, producing a 2025 book-to-bill ratio of 1.2x. Backlog totaled $8.73 billion, up from $8.51 billion, with a funded backlog of $4.6 billion.
The Board declared a cash dividend of 9 cents per common share, payable March 24, 2026, to shareholders of record as of March 10, 2026.
Results included two non-routine items: a 10-year laser IP license agreement totaling $100 million, with a net present value of $73 million, reflected in revenue and adjusted EBITDA, and the conclusion of a legacy foreign ground surveillance program that reduced full-year revenue by $67 million and adjusted EBITDA by $65 million.
The company issued 2026 guidance for revenue of $3.85 billion to $3.95 billion, versus a $3.822 billion estimate; adjusted EBITDA of $505 million to $525 million; and adjusted diluted EPS of $1.20 to $1.26, versus a $1.26 estimate.
DRS Price Action: Leonardo DRS shares were up 13.27% at $43.20 at the time of publication on Tuesday, according to Benzinga Pro data.
Photo by JHVEPhoto via Shutterstock
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