Leonardo DRS : Q1 Financial Results (83ed01)

Published: 2026-05-05 07:37:12 ET DRS

Published on 05/05/2026 at 07:37 am EDT

Quarterly Earnings Presentation

Q1 | 2026

May 5, 2026

Excellent start to 2026 with strong execution driving growth and profit expansion

Healthy customer demand continues to materialize throughout the portfolio

- Q1 2026 marks the 17th consecutive quarter of a book-to-bill ratio at or above 1.0x, providing enhanced visibility and supporting continued growth

Organic revenue growth and profitability exceeded internal expectations, reflecting rigorous operational execution

Free cash outflow improved in Q1, driven by higher profitability and more efficient working capital

Clear alignment with customer needs and priorities

Ongoing global conflicts in Eastern Europe and the Middle East are reinforcing demand for resilient, multi-layered air and missile

defense solutions to counter more sophisticated and proliferating threats

DRS remains well positioned for sustained growth as customer demand accelerates across multi-modal sensing, force protection (including counter UAS), electric power and propulsion and network computing

Strategic focus remains on delivering consistent, profitable organic growth

Disciplined investment in internal research and development and capital expenditure to support continued innovation and increased capacity to meet strong and sustained customer demand

Well positioned to gain share and capture upside from robust defense investment in priority areas including counter UAS, air defense,

space, missiles and naval platforms

Raising 2026 guidance across key metrics

Strong customer demand reflected in record funded backlog and favorable timing of material receipts support increased confidence in

higher organic revenue growth in 2026

Solid year-to-date program execution and a more favorable mix support a path to increased Adjusted EBITDA and margin expansion

Continued focus on backlog conversion, disciplined execution and targeted investment to drive sustained growth

Revenue

Adjusted EBITDA *

Adjusted Net Earnings *

(Dollars in millions)

▲ 6%

Tactical radars, infrared

sensing and electric power and propulsion programs drove revenue growth

$799

$846

(Dollars in millions)

$105

(Dollars in millions)

$54

▲ 28%

Higher operational

profitability and lower net interest expense resulted in increased Adjusted Net Earnings

$69

$82

▲ 28%

Adjusted EBITDA growth

was driven by strong program execution and operating leverage

Q1 '25 Q1 '26

Funded Backlog

(Dollars in millions)

$4,354

$4,686

▲ 8%

Resilient customer demand across the portfolio, most evident for electric power and propulsion, tactical radars and force protection technologies

Q1 '25 Q1 '26

Adjusted EBITDA Margin *

12.4%

10.3%

▲ 210 bps

Strong execution and higher

volume drove meaningful margin expansion

Q1 '25 Q1 '26

Adjusted Diluted EPS *

$0.26

$0.20

▲ 30%

Q1 '25 Q1 '26

* See slides 7-8 "Non-GAAP Financial Measures" for definitions and reconciliations of the non-GAAP financial measures to the most comparable financial measures calculated and presented in accordance with GAAP 4

Revenue

(Dollars in millions)

Segment Adjusted EBITDA *

(Dollars in millions)

Advanced Sensing and Computing (ASC)

Segment Adjusted EBITDA Margin *

$511

$559

▲ 9%

Growth driven by tactical

radars and infrared sensing programs

$62 11.1%

$42

▲ 48%

Adjusted EBITDA growth

driven by improved program execution, favorable mix and higher volume

8.2%

▲ 290 bps

Margin expansion came

from improved program execution, favorable mix and higher volume

$291

$295

▲ 1%

Electric power and

propulsion programs drove the majority of growth

Q1 '25 Q1 '26

Integrated Mission Systems (IMS)

$40

▲ 8%

$43

Growth driven by strong

program execution throughout the segment, led by Columbia Class

Q1 '25 Q1 '26

Strong program execution throughout the segment, led by Columbia Class propelled margin expansion

13.7% ▲ 90 bps 14.6%

Q1 '25 Q1 '26

Margin improvement is expected to be driven by continued improvements in Columbia Class program profitability, favorable program mix and operational leverage from higher volume

Adjusted EBITDA

Strong backlog-driven visibility into revenue range

Timing and level of material receipts and labor execution progress remain the primary factors influencing revenue

Revenue

(In millions, except per share amounts)

2026 Guidance

Prior

Revenue

$3,900 - $3,975

$3,850 - $3,950

% Δ from 2025

7% - 9%

6% - 8%

Adjusted EBITDA *

$515 - $530

$505 - $525

% Δ from 2025

14% - 17%

11% - 16%

Tax Rate

18.5%

Diluted Shares Outstanding

269

Adjusted Diluted EPS *

$1.26 - $1.30

$1.20 - $1.26

% Δ from 2025

10% - 13%

4% - 10%

Now targeting approximately 75% Free Cash Flow Conversion of Adjusted Net Earnings

Consistent with prior years, second half expected to drive

greater contribution across metrics

Other Modeling Items

Assumptions for effective tax rate and diluted shares

outstanding remain unchanged from prior guidance

The benefit of stronger operational profitability and lower net interest expense is reflected in the revised guidance

Adjusted

Diluted EPS

* The company does not provide a reconciliation of forward-looking Adjusted EBITDA and Adjusted Diluted EPS, due to the inherent difficulty in forecasting and quantifying the non-GAAP exclusions that are necessary for such reconciliation 6

without unreasonable effort. Material changes to any one of these items could have a significant effect on future GAAP results

Three Months Ended

March 31,

2025

2026

Net earnings

$50

$62

In addition to the results reported in accordance with U.S. GAAP included throughout this presentation, the company has provided information regarding "Adjusted EBITDA," "Adjusted EBITDA Margin," "Segment Adjusted EBITDA," "Segment Adjusted EBITDA Margin," "Adjusted Net Earnings" and "Adjusted Diluted Earnings Per Share" (each, a non-GAAP financial measure).

(Dollars in millions)

Income tax provision

Interest expense, net

Amortization of intangibles

Depreciation

Other one-time non-operational events

Adjusted EBITDA

$82

$105

Adjusted EBITDA Margin

(Dollars in millions)

10.3%

12.4%

Three Months Ended

Advanced Sensing & Computing (ASC) March 31,

2025 2026

Amortization of intangibles 5 5

Operating earnings $25 $40

Depreciation 12 13

Other one-time non-operational events 0 4

Segment Adjusted EBITDA $42 $62

Segment Adjusted EBITDA Margin 8.2% 11.1%

(Dollars in millions)

Three Months Ended

Integrated Mission Systems (IMS) March 31,

2025

2026

Operating earnings

$34

$37

Depreciation

Segment Adjusted EBITDA

$40

$43

Segment Adjusted EBITDA Margin

13.7%

14.6%

Three Months Ended

March 31,

2025

2026

Net earnings

$50

$62

(In millions, except per share amounts)

Amortization of intangibles

Other one-time non-operational events

Tax effect of adjustments (1)

(1)

(2)

Adjusted Net Earnings

$54

$69

Diluted WASO

268.775

268.670

Diluted earnings per share

$0.19

$0.23

Adjusted Diluted EPS

$0.20

$0.26

(1) Calculation uses an estimated statutory tax rate on non-GAAP adjustments 8

Disclaimer

Leonardo DRS Inc. published this content on May 05, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 05, 2026 at 11:36 UTC.