Key Highlights

  • Revenue of USD 1,066 million rose 11% year over year, above the consensus estimate of USD 1.03 billion.
  • Adjusted diluted EPS of USD 0.46 topped the consensus estimate of USD 0.35, while GAAP diluted EPS was USD 0.43.
  • Funded Backlog hit a record USD 5.6 billion on bookings of USD 1.6 billion and a 1.5x book to bill.
  • Full year adjusted diluted EPS guidance rose to USD 1.50 to USD 1.53 from USD 1.34 to USD 1.39.

Leonardo DRS, Inc. (NASDAQ:DRS) reported third quarter 2026 Revenue of USD 1,066 million, up 11% from USD 960 million and above the consensus estimate of USD 1.03 billion. Adjusted Diluted Earnings per Share were USD 0.46 against a consensus estimate of USD 0.35 and USD 0.29 a year earlier, while GAAP diluted earnings per share rose 65% to USD 0.43. Net earnings climbed 60% to USD 115 million, a net Margin of 10.8% compared with 7.5%.

President and Chief Executive Officer John Baylouny said bookings and book to bill were the strongest since the company went public four years ago, and that record backlog and improved fourth quarter visibility supported the higher outlook.

Segment Margins and Cash Position

Adjusted EBITDA rose 27% to USD 149 million, a margin of 14.0% versus 12.2%. The Advanced Sensing and Computing segment posted revenue of USD 659 million, up 14%, with operating earnings of USD 57 million at an 8.6% margin, led by tactical radars and space sensing programs. The Integrated Mission Systems segment recorded revenue of USD 428 million, up 12%, with operating earnings of USD 64 million at a 15.0% margin, supported by naval power and propulsion work despite higher internal Research and Development spending.

Operating cash flow was USD 96 million and free cash flow was USD 61 million, both below the prior year quarter because of Working Capital funding, though nine month cash generation remains well ahead of last year. The company held USD 294 million of cash with no borrowings under its Credit facility.

Raised Guidance and Capital Returns

The company raised 2026 guidance for revenue to USD 3,950 million to USD 3,985 million from USD 3,900 million to USD 3,975 million, and for adjusted EBITDA to USD 545 million to USD 555 million from USD 525 million to USD 540 million. The tax rate assumption was cut to 13.0% from 16.5%, and diluted share count was held at 269.0 million. The guidance excludes the pending Acquisition of Raft LLC.

Dividends paid in the quarter totaled about USD 24 million, or USD 0.09 per share, and the board declared another USD 0.09 per share payable on November 25, 2026 to holders of record on November 12. The company also repurchased 288,633 shares for about USD 12 million under its existing program.

Metrics to Track Into Year End

Year to date figures can be set against the guided ranges. Nine month revenue stands at USD 2,825 million against the full year range of USD 3,950 million to USD 3,985 million, and nine month adjusted diluted EPS is USD 1.07 against the guided USD 1.50 to USD 1.53.

Other markers include funded backlog of USD 5,640 million versus USD 4,678 million a year ago, book to bill of 1.5x in both segments, and the 13.0% tax rate assumption. The pending Raft acquisition is outside guidance, and the Dividend Record Date of November 12 is the next dated capital return item.