On July 30, 2024, Leonardo DRS Inc (DRS, Financial) released its 8-K filing for the second quarter of 2024, showcasing impressive financial results that surpassed analyst estimates. Leonardo DRS Inc is a provider of defense products and technologies used across land, air, sea, space, and cyber domains. The company specializes in the design, development, and manufacture of advanced sensing, network computing, force protection, and electric power and propulsion technologies and solutions. It operates through two segments: Advanced Sensing and Computing (ASC) and Integrated Mission Systems (IMS).
Financial Performance Overview
Leonardo DRS Inc reported revenue of $753 million for Q2 2024, a 20% increase year-over-year, surpassing the analyst estimate of $680.36 million. Net earnings rose by 9% to $38 million, while diluted earnings per share (EPS) increased by 8% to $0.14, exceeding the estimated EPS of $0.12. Adjusted EBITDA grew by 32% to $82 million, and adjusted diluted EPS was $0.18, up 20% year-over-year.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Revenue | $753 million | $628 million | 20% |
| Net Earnings | $38 million | $35 million | 9% |
| Diluted EPS | $0.14 | $0.13 | 8% |
| Adjusted EBITDA | $82 million | $62 million | 32% |
| Adjusted Diluted EPS | $0.18 | $0.15 | 20% |
Segment Performance
The Advanced Sensing and Computing (ASC) segment reported a 22% increase in revenue to $492 million, driven by strong demand for advanced infrared sensing and tactical radar programs. Adjusted EBITDA for ASC grew by 53% to $55 million, with an adjusted EBITDA margin of 11.2%, up 230 basis points year-over-year.
The Integrated Mission Systems (IMS) segment saw an 18% increase in revenue to $266 million, supported by growth in electric power and propulsion, force protection, and ground systems integration programs. Adjusted EBITDA for IMS rose by 4% to $27 million, although the adjusted EBITDA margin contracted by 130 basis points to 10.2% due to unfavorable program mix and less efficient execution in a ground surveillance integration program.
Bookings and Backlog
Leonardo DRS Inc reported $941 million in new funded awards during the quarter, resulting in a book-to-bill ratio of 1.2x. The company's backlog reached a record $7.9 billion, an 82% increase year-over-year, reflecting strong customer demand for its differentiated technologies and solutions.
Cash Flow and Balance Sheet
Net cash flow provided by operating activities was $34 million for the second quarter, with free cash flow generation of $1 million. The company ended the quarter with $149 million in cash and $208 million in outstanding borrowings under its credit facility, providing sufficient financial capacity for growth initiatives.
CEO Commentary
“Our strong second quarter 2024 results reflect the solid momentum evident across the business. Healthy customer demand continues to propel our bookings and backlog growth. This demand along with an improving supply chain is unlocking revenue growth above our expectations. Overall, I am pleased with our year-to-date performance however, we are maintaining a clear focus on execution to deliver on our commitments to customers and shareholders,” said Bill Lynn, Chairman and CEO of Leonardo DRS.
2024 Guidance
Leonardo DRS Inc has increased its 2024 guidance across key metrics. The company now expects revenue between $3,075 million and $3,175 million, up from the prior range of $2,925 million to $3,025 million. Adjusted EBITDA is projected to be between $375 million and $395 million, and adjusted diluted EPS is expected to range from $0.82 to $0.88, up from the previous guidance of $0.74 to $0.82.
For more detailed insights and to access the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Leonardo DRS Inc for further details.
