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.
Segment Performance
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.
Cash Flow and Balance Sheet
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.
Bookings and Backlog
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.
Non-Routine Items
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.
2026 Guidance
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.
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