Leonardo DRS, Inc. reported fourth‑quarter 2025 revenue of $1.060 billion, up 8% year‑over‑year, and net earnings of $102 million, or $0.38 per diluted share. The diluted earnings per share of $0.38 beat the consensus estimate of $0.37, a $0.01 or 2.7% beat, while the adjusted diluted EPS of $0.42 surpassed the $0.37 estimate by $0.05, a 13.5% beat.
Revenue growth was driven by the Advanced Sensing and Computing (ASC) segment, which grew 9% in Q4 and 11% for the full year, and the Integrated Mission Systems (IMS) segment, which grew 5% in Q4 and 15% for the full year. Adjusted EBITDA margin for the quarter was 14.9%, slightly down from 15.1% in Q4 2024, and the full‑year margin of 12.4% remained flat year‑to‑year, reflecting modest pressure from higher material costs and a shift in program mix.
The company posted a record backlog of $8.73 billion and a book‑to‑bill ratio of 1.2x, underscoring strong order flow. Non‑routine items contributed $73 million in benefit from a quantum laser intellectual‑property license and $67 million in headwinds from the conclusion of a legacy foreign ground surveillance program, netting a $6 million benefit for the quarter.
Leonardo DRS raised its full‑year 2025 guidance to revenue of $3.85 billion to $3.95 billion and adjusted EBITDA of $505 million to $525 million. The revenue guidance midpoint of $3.90 billion is roughly 2% above analyst consensus, while the adjusted EPS guidance midpoint of $1.23 is slightly below the $1.26 consensus, indicating confidence in revenue growth but caution on earnings dilution.
"Our 2025 results exemplify another year of exceptional customer demand and double‑digit revenue growth. We are investing, innovating and delivering mission‑critical capabilities at speed for our customers. Our company's success is intrinsically tied to the success of our customers and is powered by our talented people. As we look forward, we will leverage our platform‑agnostic approach, differentiated technology portfolio and innovation to drive continued, sustainable growth," said John Baylouny, President and CEO. Investors responded positively to the earnings beat and the strong guidance, citing the company’s robust backlog, consistent book‑to‑bill ratio and the strategic benefit of the quantum laser license as key drivers of confidence.
The results reinforce Leonardo DRS’s position as a leading defense‑technology provider. Strong demand in both ASC and IMS segments, coupled with a healthy backlog, suggests continued revenue momentum. The modest margin compression highlights the impact of higher input costs and program mix shifts, but the company’s ability to maintain profitability and raise guidance signals effective cost management and a resilient business model.
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