Leonardo DRS (DRS) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue rose 10–10.1% year-over-year to $829 million, with net earnings up 42–42.1% to $54 million and diluted EPS at $0.20, driven by strong performance in electric power, propulsion, advanced sensing, and both operating segments.

• Adjusted EBITDA increased 17% to $96 million, with margin expanding by 70 basis points to 11.6%.

• Bookings totaled $853 million with a book-to-bill ratio of 1.0x; backlog reached $8.6 billion, up 8.6–9% year-over-year, reflecting robust customer demand.

• The company is well positioned to benefit from increased U.S. and global defense spending, including new U.S. legislation and rising NATO commitments.

• Dividend of $0.09 per share declared, payable September 2025; share repurchases continued in Q2.

Financial highlights

• Six-month revenue was $1.63 billion, up 13% year-over-year; net earnings for the period were $104 million, up 55%.

• Adjusted net earnings were $62 million and adjusted diluted EPS $0.23, up 32% and 28% year-over-year.

• Gross margin improved to 23.8% in Q2 (from 22.4%); operating margin for the quarter at 8.4%.

• Free cash outflow improved year-over-year despite higher capital expenditures and working capital investment.

• Cash and cash equivalents at quarter end were $278 million; outstanding borrowings were $197 million.

Outlook and guidance

• Full-year 2025 revenue guidance raised to $3.525–$3.6 billion, implying 9–11% year-over-year growth.

• Adjusted EBITDA guidance narrowed to $437–$453 million; adjusted diluted EPS expected between $1.06 and $1.11.

• Q3 revenue expected around $925 million, with adjusted EBITDA margin in the mid-12% range.

• Approximately 90% of full-year revenue is already realized or in backlog.

• Targeting approximately 80% free cash flow conversion of adjusted net earnings for the full year.