Leonardo DRS (DRS) Q4 2024 earnings summary

Executive summary

• Achieved record bookings and backlog in 2024, with 14% organic revenue growth and 23% adjusted EBITDA growth year-over-year, and a 1.3x book-to-bill ratio, reflecting strong customer demand and execution.

• Bookings reached $4.1 billion for 2024, driving backlog to a record $8.5 billion, providing strong visibility for continued growth into 2025.

• Focused on advanced defense technologies, with robust demand across advanced sensing, network computing, electric power, propulsion, and force protection segments.

• Initiated a $0.09/share cash dividend and a $75 million share buyback program, enhancing shareholder returns.

• Increased internal R&D and CapEx investments by 25% year-over-year to support innovation and new facilities.

Financial highlights

• Q4 revenue was $981 million, up 6% year-over-year; full-year revenue reached $3.23 billion, up 14% organically.

• Adjusted EBITDA for Q4 was $148 million (up 13% YoY); full-year adjusted EBITDA was $400 million (up 23% YoY).

• Adjusted diluted EPS for Q4 was $0.38 (up 23%); full year $0.93 (up 27%).

• Free cash flow for the year was $190 million, with Q4 generation at $416 million and 80% conversion of adjusted net earnings.

• Year-end cash was $598 million, with outstanding borrowings of $203 million.

Outlook and guidance

• FY2025 revenue guidance is $3.425–$3.53 billion, implying 6–9% organic growth.

• Adjusted EBITDA guidance for 2025 is $435–$455 million, with 30–50 bps margin improvement expected.

• Adjusted diluted EPS guidance is $1.02–$1.08, assuming a 19% tax rate and 270 million diluted shares.

• CapEx expected to trend around 4% of revenue in 2025, with increased investment in R&D and business development.

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