Key Highlights

  • Consensus EPS of 0.35 matches second-quarter adjusted diluted EPS of 0.35 and compares with diluted EPS of 0.32.
  • Consensus revenue of USD 1.03 billion compares with second-quarter revenue of USD 913 million, up 10% year over year.
  • Management expects third-quarter revenue above USD 1 billion with an adjusted EBITDA margin in the mid-13% range.
  • Management raised 2026 adjusted diluted EPS guidance to 1.34 to 1.39 from a previous range of 1.26 to 1.30.

Leonardo DRS (NASDAQ:DRS) reports third-quarter results on Wednesday, Oct. 28, with the timing not given in the estimates table. Consensus stands at EPS of 0.35 on revenue of USD 1.03 billion, and the company has a market capitalization of USD 9.57 billion.

Leonardo DRS provides defense technology including tactical radars, infrared sensing, force protection and naval propulsion. Second-quarter revenue was USD 913 million against USD 829 million, and net income was USD 86 million against USD 54 million.

Estimates Against Third-Quarter Outlook and Second-Quarter Results

The EPS estimate of 0.35 matches second-quarter adjusted diluted EPS of 0.35, which was up 52%, and is above diluted EPS of 0.32, which compared with 0.20 a year earlier. The estimates table does not state its EPS basis.

The revenue estimate of USD 1.03 billion compares with management's third-quarter outlook of revenue above USD 1 billion and with second-quarter revenue of USD 913 million. Management put the third-quarter adjusted EBITDA margin in the mid-13% range, citing the absence of nonrecurring program risk retirement gains that benefited the second quarter.

What Management Guided and What It Left Open

For 2026, management maintained revenue guidance of USD 3.9 billion to USD 3.975 billion, raised adjusted EBITDA guidance to USD 525 million to USD 540 million and raised adjusted diluted EPS guidance to 1.34 to 1.39 from 1.26 to 1.30. It updated its expected tax rate to 16.5%.

Management left open the Raft LLC acquisition, an all-cash agreement of USD 450 million announced to expand multi-domain AI, data fusion and mission software capabilities. It guided capital expenditures in the mid-4% range of revenue and free cash flow conversion of 75% of adjusted net earnings, and said supply chain risks for critical materials such as germanium have been mitigated.

Bookings, Backlog and Segment Detail

Bookings were USD 1,085 million, up 27.2%, for a book-to-bill ratio of 1.2 times, and backlog was USD 8,787 million, up 5.0%. IMS revenue grew 15% and ASC revenue grew 8%. Adjusted EBITDA was USD 128 million at a 14% margin.

The company received a USD 533 million production IDIQ contract for Distributed Aperture Infrared Countermeasure systems and an order for 50,000 uncooled long-wave infrared camera cores from a drone manufacturer.

Income Statement Lines, Cash and Debt

Gross profit was USD 237 million against USD 197 million, and operating income was USD 102 million against USD 70 million. Cost of revenues was USD 676 million against USD 632 million, and income before income taxes was USD 100 million against USD 67 million.

Cash and cash equivalents were USD 270 million against USD 647 million at the prior year end, and long-term debt was USD 139 million against USD 321 million. The dividend declared was 0.09 per share. The estimates table lists a market capitalization of USD 9.57 billion.

Comparisons to Make in the Report

Reported EPS against 0.35 and revenue against USD 1.03 billion are the headline comparisons. Other markers are bookings, backlog and the third-quarter margin outlook.