Leonardo DRS (DRS) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue grew 16% year-over-year to $812 million, with net earnings up 21% to $57 million and adjusted EBITDA up 22% to $100 million, driven by strong demand and operational execution.

• Bookings reached $1.1 billion with a book-to-bill ratio of 1.3x; backlog hit a record $8.3 billion, up 75% year-over-year, supported by major U.S. Navy contracts.

• Free cash flow improved significantly, with Q3 at $48 million and nine-month usage down $109 million year-over-year, reflecting higher profitability and working capital efficiency.

• Innovation milestones included new contract awards, expansion into over-the-horizon radar, and rapid development of directed-energy counter-drone solutions.

• 2024 guidance was raised across all key metrics, and preliminary 2025 outlook projects 5–8% revenue growth and ~13% adjusted EBITDA margin.

Financial highlights

• Q3 2024 revenue was $812 million, up 16% year-over-year; adjusted EBITDA was $100 million (12.3% margin), up 22% year-over-year.

• Net earnings for Q3 were $57 million; diluted EPS was $0.21, up 17% year-over-year; adjusted diluted EPS was $0.24, up 20%.

• Nine-month revenue was $2.25 billion, up 19% year-over-year; net earnings for the period were $124 million, up 32%.

• Adjusted EBITDA margin expanded by 60 bps to 12.3% in Q3; nine-month margin up 100 bps to 11.2%.

• Free cash flow for Q3 was $48 million; cash and cash equivalents stood at $198 million at quarter end.

Outlook and guidance

• 2024 revenue guidance raised to $3,150–$3,200 million, representing 11%–13% year-over-year growth.

• Adjusted EBITDA guidance increased to $387–$397 million, with continued margin expansion expected.

• Adjusted diluted EPS guidance raised to $0.88–$0.91, reflecting a lower tax rate of 19%.

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

• Preliminary 2025 outlook projects 5%–8% revenue growth and ~13% adjusted EBITDA margin.