Leonardo DRS Raises 2026 Outlook After Record Bookings

The Tip Desk · October 31, 2026 · 3 min read

Third-quarter revenue reached $1.066 billion, up 11%, as bookings hit $1.6 billion and funded backlog rose to a record $5.6 billion.

Leonardo DRS, Inc. (DRS) reported third-quarter revenue of $1.066 billion, up 11% from a year earlier, as year-over-year growth accelerated from 10% in the second quarter and 6% in the first.

The defense-technology supplier said the increase was led by tactical radars, naval power and propulsion, and space sensing programs. Adjusted EBITDA was $149 million, up 27%, with the margin holding at 14.0%. Net earnings were $115 million, up 60%, and diluted earnings were $0.43 a share, up 65%. Adjusted diluted earnings were $0.46 a share, up 59%. The company said program execution, favorable mix and volume leverage drove the EBITDA gain, and that a lower tax rate also supported the net-earnings increase.

Bookings were the sharper turn. New funded bookings totaled $1.6 billion, a 1.5 times book-to-bill ratio, versus $1.1 billion and 1.2 times in the second quarter and $885 million and 1.0 times in the first. President and CEO John Baylouny said both figures were the strongest since the company became public four years ago. Funded backlog reached a record $5.6 billion, up 21% year-over-year, from $5.1 billion at the end of the second quarter and $4.7 billion at the end of the first. The company said demand was led by naval power and propulsion, tactical radars and force protection.

Advanced Sensing and Computing, the larger of the two reportable segments, generated $659 million of revenue, up 14%, with segment Adjusted EBITDA of $78 million and an 11.8% margin. Bookings in the segment were $1.017 billion, a 1.5 times book-to-bill ratio. The company said revenue growth was driven primarily by tactical radars and space sensing, and that bookings were supported by naval network computing and tactical radars.

Integrated Mission Systems posted $428 million of revenue, up 12%, with segment Adjusted EBITDA of $71 million and a 16.6% margin. Bookings were $622 million, also a 1.5 times book-to-bill ratio. The company said quarterly IMS bookings were balanced across electric power and propulsion and force protection, that revenue growth reflected naval power and propulsion, and that EBITDA expansion came from volume leverage and execution in electric power and propulsion despite higher internal research and development.

Leonardo DRS raised 2026 guidance for revenue to $3.950 billion to $3.985 billion from $3.900 billion to $3.975 billion, for Adjusted EBITDA to $545 million to $555 million from $525 million to $540 million, and for Adjusted diluted EPS to $1.50 to $1.53 from $1.34 to $1.39. The assumed tax rate in the outlook fell to 13.0% from 16.5%. The company said the raise was based on strong year-to-date performance and that the guidance excludes the pending acquisition of Raft LLC.

Net cash from operations was $96 million in the quarter, and free cash flow was $61 million, versus $6 million in the second quarter and a $95 million outflow in the first. The company said operating and free cash flow were lower than the third quarter of 2025 because of higher working-capital use, partially offset by increased earnings. Cash and cash equivalents were $294 million at quarter-end, with no outstanding borrowings under the credit facility. The board declared a $0.09 cash dividend payable November 25, 2026. The company repurchased 288,633 shares for about $12 million in the quarter.