PART I [Business](index=7&type=section&id=Item%201.%20Business) Leonardo DRS provides advanced defense technology to the U.S. government and allies, operating through two segments and heavily reliant on U.S. government contracts under FOCI regulations - The company is organized into two primary operating segments: Advanced Sensing and Computing (ASC) and Integrated Mission Systems (IMS)[21](index=21&type=chunk) - The Advanced Sensing and Computing (ASC) segment focuses on technologies for situational awareness, including advanced sensors (EO/IR, SIGINT, EW, radar) and rugged network computing for battle management and command and control[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - The Integrated Mission Systems (IMS) segment specializes in power conversion, ship propulsion systems (notably for the Columbia Class submarine), force protection systems (like C-UAS), and transportation/logistics systems[25](index=25&type=chunk)[26](index=26&type=chunk)[29](index=29&type=chunk) Revenue by Customer (2022) | Customer Group | Percentage of Total Revenue (2022) | | :--- | :--- | | U.S. Government (Total) | 84% | | - U.S. Army | 37% | | - U.S. Navy | 32% | | - U.S. Air Force | 5% | | - Other DoD Agencies | 10% | | Foreign Governments & Commercial | 16% | Revenue by Contract Type | Contract Type | 2022 ($M) | 2021 ($M) | 2020 ($M) | | :--- | :--- | :--- | :--- | | Firm fixed price | $2,347 | $2,498 | $2,408 | | Flexibly priced | $346 | $381 | $370 | Backlog Summary | Backlog Type | 2022 ($M) | 2021 ($M) | 2020 ($M) | | :--- | :--- | :--- | :--- | | Funded | $2,783 | $2,510 | $2,847 | | Unfunded | $1,486 | $351 | $444 | | **Total Backlog** | **$4,269** | **$2,861** | **$3,291** | Company-Funded R&D Expenses | Year | Amount ($M) | | :--- | :--- | | 2022 | $58 | | 2021 | $48 | | 2020 | $41 | - Key strategic activities in 2022 include the merger with RADA Electronic Industries Ltd., the sale of the Global Enterprise Solutions (GES) business, and the divestiture of its interest in Advanced Acoustic Concepts LLC[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) - Due to its majority ownership by Leonardo S.p.A., the company operates under a proxy agreement with the DoD to mitigate Foreign Ownership, Control, or Influence (FOCI) and maintain security clearances for classified programs[68](index=68&type=chunk) [Risk Factors](index=15&type=page&id=Item%201A.%20Risk%20Factors) The company faces significant risks from U.S. defense spending dependence, fixed-price contract exposure, stringent government regulations including FOCI, supply chain disruptions, and potential conflicts of interest with its majority stockholder - The company is heavily dependent on U.S. government contracts, which accounted for approximately **84%**, **86%**, and **84%** of total revenues in 2022, 2021, and 2020, respectively, where reductions in defense spending could materially impact the business[104](index=104&type=chunk)[105](index=105&type=chunk) - A significant portion of revenue (approximately **87%** for 2020-2022) comes from fixed-price contracts, which carry the risk of cost overruns and reduced profitability if costs are not accurately estimated or controlled[108](index=108&type=chunk) - As a company deemed to be under Foreign Ownership, Control, or Influence (FOCI) due to its ownership by Italy's Leonardo S.p.A., DRS must operate under a proxy agreement with the DoD to maintain security clearances for classified contracts, where failure to comply could result in contract termination[111](index=111&type=chunk)[112](index=112&type=chunk)[222](index=222&type=chunk) - U.S. government contracts are often only partially funded and can be terminated for convenience, meaning the full value of backlog and bookings may not be realized[115](index=115&type=chunk)[132](index=132&type=chunk) - The business is susceptible to security breaches, including cyber-attacks and insider threats, which could disrupt operations, compromise sensitive government information, and result in significant financial and reputational damage[158](index=158&type=chunk)[159](index=159&type=chunk) - The ultimate majority stockholder, Leonardo S.p.A., may have interests that conflict with those of other stockholders, and this relationship may discourage change of control transactions and requires US Holding's approval for certain major corporate actions like material M&A or incurring significant debt[231](index=231&type=chunk)[233](index=233&type=chunk)[237](index=237&type=chunk) - As a 'foreign person' under CFIUS regulations, future acquisitions or investments by DRS in U.S. businesses may be subject to review, which could block, delay, or impose conditions on such transactions[228](index=228&type=chunk)[229](index=229&type=chunk) [Unresolved Staff Comments](index=51&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[242](index=242&type=chunk) [Properties](index=52&type=section&id=Item%202.%20Properties) Leonardo DRS is headquartered in a leased facility in Arlington, Virginia, operating a mix of owned and leased properties across 16 U.S. states, Canada, and Israel, considered adequate for current operational needs - The company's principal executive offices are leased in Arlington, Virginia[244](index=244&type=chunk) Significant Facilities | Location | Operating Segment | Approx. Sq. Footage | Owned/Leased | | :--- | :--- | :--- | :--- | | Milwaukee, WI | Integrated Mission Systems | 610,800 | Leased | | West Plains, MO | Integrated Mission Systems | 447,067 | Owned | | Menomonee Falls, WI | Integrated Mission Systems | 372,856 | Leased | | Melbourne, FL | Advanced Sensing and Computing | 336,287 | Leased | [Legal Proceedings](index=56&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, including a notable CERCLA matter where a subsidiary is a potentially responsible party for radioactive material at a national park site - A subsidiary received a Request for Information from the National Park Service under CERCLA regarding radioactive material at a site operated by an alleged predecessor over **50 years ago**, where the NPS may seek reimbursement for investigative and remedial efforts[252](index=252&type=chunk)[253](index=253&type=chunk) [Mine Safety Disclosures](index=56&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[254](index=254&type=chunk) [Information about our Executive Officers](index=56&type=section&id=Supplementary%20Item%20-%20Information%20about%20our%20Executive%20Officers) This section provides biographical information for the company's key executive officers as of December 31, 2022, including the CEO, COO, CFO, General Counsel, and EVP of Business Operations Executive Officers (as of Dec 31, 2022) | Name | Age | Position | | :--- | :--- | :--- | | William J. Lynn III | 68 | Chief Executive Officer and Chairman | | John A. Baylouny | 61 | Executive Vice President, Chief Operating Officer | | Michael D. Dippold | 42 | Executive Vice President, Chief Financial Officer | | Mark A. Dorfman | 48 | Executive Vice President, General Counsel & Secretary | | Sally A. Wallace | 56 | Executive Vice President, Business Operations | PART II [Market for the Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=59&type=section&id=Item%205.%20Market%20for%20the%20Company%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters) The company's common stock is listed on the Nasdaq and the Tel Aviv Stock Exchange under the ticker symbol "DRS", and it does not currently pay cash dividends or have a share repurchase program - The company's stock is listed on the Nasdaq and the Tel Aviv Stock Exchange under the symbol "**DRS**"[270](index=270&type=chunk) - The company does not currently pay cash dividends and does not expect to in the future[271](index=271&type=chunk) - The company does not currently have a common stock share repurchase program[273](index=273&type=chunk) [Reserved](index=61&type=section&id=Item%206.%20Selected%20Historical%20Consolidated%20Financial%20Data) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=62&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, revenue decreased due to divestitures, but operating and net earnings surged from asset sales, while backlog grew significantly, and free cash flow declined due to supply chain investments [Results of Operations](index=65&type=section&id=Results%20of%20Operations) In 2022, total revenues decreased due to divestitures and supply chain issues, while gross profit and margins improved, and operating and net earnings significantly increased due to gains on business disposals Consolidated Results of Operations Summary | (In millions, except per share amounts) | 2022 | 2021 | 2020 | % Change (22 vs 21) | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $2,693 | $2,879 | $2,778 | (6.5)% | | Gross profit | $575 | $547 | $494 | 5.1% | | Gross margin | 21.4% | 19.0% | 17.8% | +2.4 p.p. | | Operating earnings | $561 | $236 | $181 | 137.7% | | Net earnings | $405 | $154 | $85 | 163.0% | | Diluted EPS | $1.88 | $0.73 | $0.40 | 157.5% | | Backlog | $4,269 | $2,861 | $3,291 | 49.2% | | Bookings | $3,156 | $2,595 | $3,055 | 21.6% | - The **6.5%** revenue decline in 2022 was primarily due to the disposal of the GES business (**$109 million** impact) and supply chain component availability issues in the ASC segment (over **$100 million** impact)[318](index=318&type=chunk) - Operating and net earnings growth was largely attributed to the pre-tax gain of **$354 million** realized on the GES and AAC disposals[314](index=314&type=chunk)[327](index=327&type=chunk) - General and administrative expenses increased by **$64 million** (**21.8%**) in 2022, driven by **$38 million** in transaction costs for the GES/AAC dispositions and RADA merger, and a **$10 million** increase in IR&D investment[325](index=325&type=chunk) - Backlog increased by **$1.4 billion** (**49.2%**) to **$4.3 billion**, primarily driven by a multi-submarine contract for the Columbia Class program which added **$1.083 billion** in unfunded backlog[348](index=348&type=chunk) [Key Non-GAAP Operating Measures](index=73&type=section&id=Key%20Non-GAAP%20Operating%20Measures) In 2022, Adjusted EBITDA and margin improved, Adjusted Diluted EPS remained flat, and free cash flow decreased due to increased investments in inventory and contract assets from supply chain delays Key Non-GAAP Operating Measures | (In millions, except per share amounts) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $318 | $310 | $268 | | Adjusted EBITDA Margin | 11.8% | 10.8% | 9.6% | | Adjusted diluted EPS | $0.83 | $0.83 | $0.58 | | Free cash flow | $74 | $122 | $82 | Adjusted EBITDA Reconciliation | (In millions) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net earnings | $405 | $154 | $85 | | Income tax provision | $120 | $46 | $27 | | Amortization of intangibles | $10 | $9 | $9 | | Depreciation | $55 | $49 | $44 | | Restructuring costs | $3 | $5 | $12 | | Interest expense | $34 | $35 | $64 | | Deal related transaction costs | $43 | $5 | $9 | | Other non-operating expense | $2 | $7 | $18 | | Gain on sale of dispositions | ($354) | — | — | | **Adjusted EBITDA** | **$318** | **$310** | **$268** | - Free cash flow decreased by **$48 million** in 2022, attributed to supply chain delays that resulted in increased investment in inventory and contract assets[373](index=373&type=chunk) [Review of Operating Segments](index=82&type=section&id=Review%20of%20Operating%20Segments) In 2022, ASC revenue declined due to divestitures and supply chain issues, while IMS revenue and Adjusted EBITDA significantly grew, driven by key programs and strong execution, leading to a substantial increase in IMS backlog Segment Performance Summary (2022 vs 2021) | (In millions) | ASC | IMS | | :--- | :--- | :--- | | **Revenue** | | | | 2022 | $1,733 | $983 | | 2021 | $1,940 | $959 | | % Change | (10.7)% | 2.5% | | **Adjusted EBITDA** | | | | 2022 | $199 | $119 | | 2021 | $220 | $90 | | % Change | (9.5)% | 32.2% | | **Adj. EBITDA Margin** | | | | 2022 | 11.5% | 12.1% | | 2021 | 11.3% | 9.4% | | **Backlog** | | | | 2022 | $1,868 | $2,401 | | 2021 | $1,762 | $1,099 | | % Change | 6.0% | 118.5% | - ASC segment revenue decreased by **$207 million**, primarily due to the net negative impact of the GES divestiture and RADA acquisition (**$108 million**) and supply chain delays[407](index=407&type=chunk) - IMS segment revenue increased by **$24 million**, driven by growth in Counter UAS/Short range air defense (**$26 million**) and Columbia Class submarine propulsion (**$70 million**)[418](index=418&type=chunk) - IMS Adjusted EBITDA increased by **$29 million** (**32.2%**), with margin expanding to **12.1%**, attributed to improved performance on the Columbia Class program, including a **$15 million** positive impact from a contract modification[420](index=420&type=chunk) [Liquidity and Capital Resources](index=88&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2022, cash decreased due to lower operating cash flow impacted by tax payments and increased working capital, offset by proceeds from divestitures, while financing activities included a significant dividend payment Cash Flow Summary | (In millions) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $33 | $178 | $125 | | Net cash provided by (used in) investing activities | $436 | $39 | ($70) | | Net cash used in financing activities | ($403) | ($38) | ($80) | | Net increase (decrease) in cash | $66 | $179 | ($24) | - The decrease in operating cash flow was attributed to tax payments from the GES and AAC dispositions (**$79 million**) and transaction-related outlays (**$29 million**)[432](index=432&type=chunk) - Financing activities included a **$396 million** dividend paid to US Holding following the asset divestitures[398](index=398&type=chunk)[437](index=437&type=chunk) [Critical Accounting Policies and Estimates](index=91&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies involve significant management judgment and estimates in revenue recognition, goodwill impairment, pension assumptions, business combinations, and income taxes - Key critical accounting policies involve significant judgments and estimates in the areas of Revenue Recognition, Goodwill Impairment, Pension Assumptions, Business Combinations, and Income Taxes[448](index=448&type=chunk)[449](index=449&type=chunk) - Revenue on the majority of contracts is recognized over time using the cost-to-cost percentage of completion method, which requires significant estimation of total contract costs and is subject to cumulative catch-up adjustments[450](index=450&type=chunk)[451](index=451&type=chunk) [Quantitative and Qualitative Disclosure of Market Risks](index=94&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20of%20Market%20Risks) The company's market risks include interest rate fluctuations on variable-rate debt, limited foreign currency exposure, and inflationary pressures on supply chain costs impacting fixed-price contracts - The company is exposed to interest rate risk on its variable-rate borrowings, where a **0.5%** increase or decrease in the weighted average interest rate would change annual interest expense by approximately **$1 million**[468](index=468&type=chunk) - Foreign currency risk is limited, with primary exposure to the Canadian dollar on receivables of **$46 million** as of year-end 2022[469](index=469&type=chunk) - The company has experienced inflationary pressures on supply chain costs, which could negatively impact profitability, particularly on longer-term firm fixed-price contracts[470](index=470&type=chunk)[471](index=471&type=chunk) [Financial Statements and Supplementary Data](index=96&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2020-2022, including the auditor's report and detailed notes - The financial statements were audited by Ernst & Young LLP for the year ended December 31, 2022, and by KPMG LLP for the two-year period ended December 31, 2021[475](index=475&type=chunk)[489](index=489&type=chunk) - Critical Audit Matters identified by the auditor for 2022 were: 1) Revenue recognition based on the percentage of completion method, due to the judgment involved in estimating costs at completion for long-term contracts, and 2) Valuation of acquired intangible assets from the RADA merger, due to significant estimation in determining fair value[481](index=481&type=chunk)[486](index=486&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=155&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[788](index=788&type=chunk) [Controls and Procedures](index=155&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2022, excluding the recently acquired RADA business from the latter assessment - Management concluded that disclosure controls and procedures were effective as of December 31, 2022[789](index=789&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2022[790](index=790&type=chunk) - The assessment of internal control over financial reporting excluded the operations of RADA, which was acquired on November 28, 2022[792](index=792&type=chunk) [Other Information](index=156&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[795](index=795&type=chunk) [Disclosure Regarding Foreign Jurisdictions and Prevents Inspections](index=156&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20and%20Prevents%20Inspections) This item is not applicable to the company - Not applicable[796](index=796&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=156&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2023 definitive proxy statement - The information required by this item is incorporated by reference from the company's 2023 definitive proxy statement[797](index=797&type=chunk) [Executive Compensation](index=159&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2023 definitive proxy statement - The information required by this item is incorporated by reference from the company's 2023 definitive proxy statement[801](index=801&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=160&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the company's 2023 definitive proxy statement - The information required by this item is incorporated by reference from the company's 2023 definitive proxy statement[803](index=803&type=chunk) [Certain Relationships and Related Party Transactions and Director Independence](index=161&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Party%20Transactions%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the company's 2023 definitive proxy statement - The information required by this item is incorporated by reference from the company's 2023 definitive proxy statement[804](index=804&type=chunk) [Principal Accountant Fees and Services](index=161&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's 2023 definitive proxy statement - The information required by this item is incorporated by reference from the company's 2023 definitive proxy statement[804](index=804&type=chunk) PART IV [Exhibits and Financial Statement Schedule](index=162&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedule) This section lists the consolidated financial statements and provides an index of all exhibits filed with the Form 10-K, including key agreements - This item lists the financial statements and schedules filed as part of the annual report[805](index=805&type=chunk) - An index of exhibits is provided, incorporating by reference key agreements such as the RADA merger agreement, the new Credit Agreement, and the Tax Allocation Agreement[807](index=807&type=chunk)[809](index=809&type=chunk)

` UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number 333-266494 Leonardo DRS, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 13-2632319 (State o ...

RADA Electronic Industries Ltd. (RADA) Q2 2022 Earnings Conference Call August 17, 2022 9:00 AM ET Company Participants Dov Sella - Chief Executive Officer Avi Israel - Chief Financial Officer Ehud Helft - EK Global Investor Relations Conference Call Participants Ellen Page - Jefferies Jeff Bernstein - Cowen Austin Moeller - Canaccord Scott Huntington - Brighton Securities Operator Ladies and gentlemen, thank you for standing by. Welcome to the RADA Electronics Industries second quarter 2022 results confere ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number 333-253583 Leonardo DRS, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 13-2632319 (State or Other ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number 333-253583 Leonardo DRS, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 13-2632319 (State or Othe ...

Rada Electronic Industries Ltd (RADA) Q1 2022 Earnings Conference Call May 10, 2022 9:00 AM ET Company Participants Ehud Helft - GK Investor Relations Dov Sella - Chief Executive Officer Avi Israel - Chief Financial Officer Conference Call Participants Peter Arment - Baird Scott Forbes - Jefferies Austin Moeller - Canaccord Brian Kinstlinger - Alliance Global Partners Arnold Ursaner - CJS Securities Operator Ladies and gentlemen, thank you for standing by. Welcome to the RADA Electronic Industries' First Qu ...

PART I [Business Overview](index=7&type=section&id=Item%201.%20Business) Leonardo DRS is a leading U.S. defense contractor operating in advanced sensing, computing, and mission systems, with 86% of 2021 revenue from the U.S. government and operations governed by a DoD proxy agreement - DRS is a leading provider of defense products and technologies, organized into **three operating segments: Advanced Sensor Technologies, Network Computing & Communications, and Integrated Mission Systems**[16](index=16&type=chunk)[22](index=22&type=chunk) Key Financial Growth (2017-2021) | Metric | CAGR (2017-2021) | | :--- | :--- | | Company Revenue | 10% | | DoD Budget | 3.8% | | Adjusted EBITDA | 14% | Revenue by Customer (FY 2021) | Customer | Percentage of Total Revenue | | :--- | :--- | | U.S. Government (Direct/Indirect) | 86% | | U.S. Department of Defense (DoD) | 86% | | U.S. Army | 38% | | U.S. Navy | 31% | Revenue by Contract Type (in millions) | Contract Type | 2021 (in millions) | 2020 (in millions) | 2019 (in millions) | | :--- | :--- | :--- | :--- | | Firm fixed price | $2,498 | $2,408 | $2,334 | | Flexibly priced | $381 | $370 | $381 | Backlog (in millions) | Backlog Type | Dec 31, 2021 (in millions) | Dec 31, 2020 (in millions) | Dec 31, 2019 (in millions) | | :--- | :--- | :--- | :--- | | Funded | $2,510 | $2,847 | $2,547 | | Unfunded | $351 | $444 | $297 | | **Total Backlog** | **$2,861** | **$3,291** | **$2,844** | - The company's workforce consists of approximately **6,575 people**, including **1,350 engineers**, with employees maintaining **over 2,000 security clearances** for classified programs[97](index=97&type=chunk)[98](index=98&type=chunk) [Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from its 86% dependence on U.S. defense spending, fixed-price contract cost overruns, FOCI compliance, cybersecurity threats, and supply chain disruptions - The vast majority of revenue depends on U.S. defense spending, with U.S. government contracts accounting for approximately **86%**, **84%**, and **89%** of total revenues in 2021, 2020, and 2019, respectively[113](index=113&type=chunk)[114](index=114&type=chunk) - The COVID-19 pandemic continues to pose risks, with **$6 million** and **$12 million** in safety expenditures incurred in 2021 and 2020, respectively, and potential impacts from federal vaccine mandates[121](index=121&type=chunk)[126](index=126&type=chunk) - A significant portion of revenue, **87%** in 2021, is derived from fixed-price contracts, exposing the company to financial loss from cost overruns or higher inflation[130](index=130&type=chunk)[132](index=132&type=chunk) - As a company under **Foreign Ownership, Control, or Influence (FOCI)**, DRS operates under a **proxy agreement** with the DoD, with non-compliance risking termination of classified U.S. government contracts[138](index=138&type=chunk)[139](index=139&type=chunk)[293](index=293&type=chunk) - The company is susceptible to cybersecurity breaches and must comply with evolving DoD requirements, including the **Cybersecurity Maturity Model Certification (CMMC)**, for future contract eligibility[205](index=205&type=chunk)[209](index=209&type=chunk) [Unresolved Staff Comments](index=55&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - No unresolved staff comments are reported[319](index=319&type=chunk) [Properties](index=56&type=section&id=Item%202.%20Properties) The company operates a mix of owned and leased properties across 17 U.S. states, D.C., and Canada, including its Arlington, Virginia headquarters, supporting its three segments Selected Significant Facilities | Location | Segment | Approx. Square Footage | Owned/Leased | | :--- | :--- | :--- | :--- | | Milwaukee, WI | Integrated Mission Systems | 610,800 | Leased | | West Plains, MO | Integrated Mission Systems | 447,067 | Owned | | Menomonee Falls, WI | Integrated Mission Systems | 372,856 | Leased | | Melbourne, FL | Network Computer & Communications | 311,287 | Leased | [Legal Proceedings](index=59&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary legal proceedings, including a notable CERCLA investigation by the NPS regarding a site operated by an alleged predecessor over 50 years ago - The company is a potentially responsible party in a **CERCLA investigation** by the **National Park Service (NPS)** for a site operated by an alleged predecessor over 50 years ago[329](index=329&type=chunk)[330](index=330&type=chunk) [Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - This item is not applicable[331](index=331&type=chunk) PART II [Market for the Company's Common Equity, Related Stockholder Matters](index=60&type=section&id=Item%205.%20Market%20for%20the%20Company%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters) There is no public trading market for the company's common stock, with 100% owned by Leonardo US Holding, Inc., and no anticipated near-term cash dividends - There is no established public trading market for the company's common stock, with US Holding owning **100%** of the outstanding shares[333](index=333&type=chunk) [Selected Historical Consolidated Financial Data](index=61&type=section&id=Item%206.%20Selected%20Historical%20Consolidated%20Financial%20Data) This item is reserved in the report - This item is marked as **'RESERVED'**[335](index=335&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=62&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2021, Leonardo DRS achieved revenue growth and significant increases in operating earnings and Adjusted EBITDA, driven by the Integrated Mission Systems segment, and announced the sale of its Global Enterprise Solutions business Consolidated Financial Performance (in millions, except percentages) | Metric | 2021 (in millions) | 2020 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $2,879 | $2,778 | 3.6% | | Gross Profit | $547 | $494 | 10.7% | | Operating Earnings | $236 | $181 | 30.4% | | Net Earnings | $154 | $85 | 81.2% | | Adjusted EBITDA | $310 | $268 | 15.7% | | Adjusted EBITDA Margin | 10.8% | 9.6% | +1.2% | Key Operating Metrics (in millions) | Metric | 2021 (in millions) | 2020 (in millions) | | :--- | :--- | :--- | | Bookings | $2,595 | $3,055 | | Backlog | $2,861 | $3,291 | | Free Cash Flow | $118 | $74 | Segment Revenue Performance (in millions) | Segment | 2021 Revenue (in millions) | 2020 Revenue (in millions) | % Change | | :--- | :--- | :--- | :--- | | Advanced Sensor Technologies (AST) | $970 | $940 | 3.2% | | Network Computing & Communications (NC&C) | $972 | $1,026 | (5.3)% | | Integrated Mission Systems (IMS) | $959 | $834 | 15.1% | Segment Adjusted EBITDA Performance (in millions) | Segment | 2021 Adj. EBITDA (in millions) | 2020 Adj. EBITDA (in millions) | % Change | | :--- | :--- | :--- | :--- | | Advanced Sensor Technologies (AST) | $125 | $123 | 1.7% | | Network Computing & Communications (NC&C) | $95 | $90 | 5.9% | | Integrated Mission Systems (IMS) | $90 | $55 | 62.7% | - The company agreed on March 21, 2022, to sell its **Global Enterprise Solutions (GES)** business to SES Government Solutions, Inc. for **$450 million** in cash[395](index=395&type=chunk) Consolidated Cash Flow Summary (in millions) | Cash Flow Activity | 2021 (in millions) | 2020 (in millions) | 2019 (in millions) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $178 | $125 | $157 | | Net cash provided by (used in) investing activities | $39 | $(70) | $(151) | | Net cash used in financing activities | $(38) | $(80) | $(1) | [Quantitative and Qualitative Disclosure of Market Risks](index=95&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20of%20Market%20Risks) The company's primary market risks include interest rate fluctuations, limited foreign currency exposure to the Canadian dollar, and inflation risk, particularly from supply chain cost pressures - The company is exposed to **interest rate risk** on **variable-rate borrowings** under its revolving credit facilities, with no outstanding amounts as of December 31, 2021[530](index=530&type=chunk) - Foreign currency risk is limited, primarily to the **Canadian dollar**, with **$54 million** in receivables as of December 31, 2021[531](index=531&type=chunk) - The company has experienced **inflationary pressures** on **supply chain costs** for micro-electronics and commodities, which could negatively affect future financial results if not mitigated[532](index=532&type=chunk) [Financial Statements and Supplementary Data](index=96&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2019-2021, with an unqualified opinion from KPMG LLP, highlighting long-term contract cost estimation as a critical audit matter - KPMG LLP issued an **unqualified opinion** on the consolidated financial statements, identifying the **estimation of costs to complete** certain long-term contracts as a **critical audit matter**[536](index=536&type=chunk)[539](index=539&type=chunk)[543](index=543&type=chunk) Consolidated Statement of Earnings (in millions) | Line Item | 2021 (in millions) | 2020 (in millions) | 2019 (in millions) | | :--- | :--- | :--- | :--- | | Total Revenues | $2,879 | $2,778 | $2,714 | | Gross Profit | $547 | $494 | $459 | | Operating Earnings | $236 | $181 | $163 | | Net Earnings | $154 | $85 | $75 | | Basic and Diluted EPS | $1.06 | $0.59 | $0.52 | Consolidated Balance Sheet Summary (in millions) | Line Item | Dec 31, 2021 (in millions) | Dec 31, 2020 (in millions) | | :--- | :--- | :--- | | **Assets** | | | | Total Current Assets | $1,389 | $1,263 | | Total Noncurrent Assets | $1,680 | $1,693 | | **Total Assets** | **$3,069** | **$2,956** | | **Liabilities & Equity** | | | | Total Current Liabilities | $989 | $975 | | Total Noncurrent Liabilities | $487 | $554 | | Total Shareholder's Equity | $1,593 | $1,427 | | **Total Liabilities & Equity** | **$3,069** | **$2,956** | - Company-funded R&D costs charged to cost of revenues totaled **$48 million**, **$41 million**, and **$31 million** in 2021, 2020, and 2019, respectively[581](index=581&type=chunk) - In March 2022, the company agreed to sell its **Global Enterprise Solutions (GES)** business for **$450 million** in cash[799](index=799&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=143&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - No changes in or disagreements with accountants are reported[801](index=801&type=chunk) [Controls and Procedures](index=143&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of December 31, 2021, with no material changes to internal control over financial reporting during Q4 2021 - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the reporting period[802](index=802&type=chunk) - The Annual Report omits a management report on internal control over financial reporting due to a **transition period** for **newly public companies** under SEC rules[806](index=806&type=chunk) [Other Information](index=144&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - No other information is reported for this item[807](index=807&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=145&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This section is not applicable to the company - This item is not applicable[809](index=809&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=145&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section outlines the company's nine-member board of directors and executive officers, whose structure and committee functions are influenced by a DoD proxy agreement requiring independent proxy holders Board of Directors and Executive Officers (as of Dec 31, 2021) | Name | Age | Title | | :--- | :--- | :--- | | William J. Lynn III | 68 | Chief Executive Officer and Chairman | | David W. Carey | 77 | Lead Independent Director | | John A. Baylouny | 60 | Executive Vice President, Chief Operating Officer | | Michael D. Dippold | 41 | Executive Vice President, Chief Financial Officer | - The board comprises **nine directors**, with its composition governed by a **proxy agreement** with the DoD requiring **five independent proxy holders** to mitigate **Foreign Ownership, Control, or Influence (FOCI)**[848](index=848&type=chunk)[849](index=849&type=chunk) - The board maintains **four committees: Audit, Compensation, Nominating and Corporate Governance, and a Government Security Committee**, with the latter required by the proxy agreement for classified information safeguarding[851](index=851&type=chunk)[859](index=859&type=chunk) [Executive Compensation](index=154&type=section&id=Item%2011.%20Executive%20Compensation) The company's executive compensation program is performance-based, with a significant portion 'at risk', comprising base salary, annual cash incentives (ICP), and a cash-based long-term incentive plan (LTIP) with performance and retention components - The executive compensation philosophy emphasizes **pay-for-performance**, with **81%** of CEO target compensation and **69%** for other NEOs being 'at risk'[869](index=869&type=chunk)[877](index=877&type=chunk) 2021 Summary Compensation Table (Select NEOs) | Name and Principal Position | Fiscal Year | Salary ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | William Lynn, CEO | 2021 | 1,156,439 | 5,067,533 | 99,632 | 6,323,603 | | John Baylouny, COO | 2021 | 515,584 | 1,441,400 | 52,865 | 2,009,849 | | Michael Dippold, CFO | 2021 | 468,341 | 1,198,567 | 51,904 | 1,718,811 | - The 2021 Annual Incentive Compensation (ICP) was based **75%** on **financial metrics** and **25%** on **individual strategic, operational, and ESG goals**[902](index=902&type=chunk)[905](index=905&type=chunk) - The Long-Term Incentive Plan (LTIP) is a **cash-based plan**, with **50%** as a **performance component** over a three-year cycle and **50%** as a **time-based retention component** for 2021 and future awards[934](index=934&type=chunk)[936](index=936&type=chunk) - The company's **Executive Severance Plan** provides benefits for termination without cause, with change in control benefits requiring a **'double trigger'**[963](index=963&type=chunk)[965](index=965&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=184&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of March 28, 2022, **100%** of the company's common stock is owned by Leonardo US Holding, Inc., a subsidiary of Leonardo S.p.A., with no beneficial ownership by directors or executive officers Security Ownership | Name | Number of Shares Owned | Percent of Class (%) | | :--- | :--- | :--- | | Leonardo S.p.A. | 145,000,000 | 100.0 | | All directors and executive officers as a group (13 persons) | — | — | [Certain Relationships and Related Party Transactions, and Director Independence](index=186&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Party%20Transactions%2C%20and%20Director%20Independence) The company's relationship with its parent, Leonardo S.p.A., is governed by a DoD Proxy Agreement to mitigate FOCI, alongside other agreements like a Tax Allocation Agreement and financing arrangements with US Holding - The company operates under a **Proxy Agreement** with the DoD to mitigate **FOCI**, granting **five independent, security-cleared proxy holders** voting rights over shares owned by its parent, US Holding[1031](index=1031&type=chunk)[1032](index=1032&type=chunk)[1036](index=1036&type=chunk) - The Proxy Agreement **restricts the ability** of Leonardo S.p.A. and US Holding to **control operations**, **share facilities and personnel**, and **regulates communications** between the entities[1034](index=1034&type=chunk)[1035](index=1035&type=chunk) - The company has a **Tax Allocation Agreement** with US Holding and affiliates to allocate consolidated U.S. federal and state tax liabilities[1059](index=1059&type=chunk) - Financing from US Holding includes a **7.5% Term Loan ($139M outstanding)** and a **5.0% Daylight Term Loan ($78M outstanding)** as of year-end 2021, following **$300 million** of debt forgiveness in 2020[1074](index=1074&type=chunk)[1075](index=1075&type=chunk) [Principal Accountant Fees and Services](index=195&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) KPMG LLP serves as the company's independent auditor, with total fees of approximately **$4.7 million** in 2021, a decrease from **$7.9 million** in 2020 due to lower audit-related fees Fees Paid to KPMG LLP (in thousands) | Fee Category | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Audit Fees | $3,870,549 | $5,554,293 | | Audit-related services | $65,000 | $2,351,440 | | Tax Services | $— | $— | | All Other Services | $811,097 | $— | | **Total Fees** | **$4,746,646** | **$7,905,733** | [Exhibits and Financial Statement Schedules](index=196&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements and exhibits filed with the Form 10-K, including key documents like the Amended and Restated Proxy Agreement and the Tax Allocation Agreement

Rada Electronic Industries Ltd (RADA) Q4 2021 Earnings Conference Call February 9, 2022 9:00 AM ET Company Participants Ehud Helft - GK Investor Relations Dov Sella - CEO Avi Israel - CFO Conference Call Participants Gregory Konrad - Jefferies Peter Arment - Robert W. Baird & Co. Brian Kinstlinger - Alliance Global Partners Austin Moeller - Canaccord Genuity Operator Ladies and gentlemen, thank you for standing by. Welcome to the RADA Electronic Industries Fourth Quarter 2021 Results Conference Call. [Opera ...

PART I. [Financial Information](index=5&type=section&id=PART%20I.%20Financial%20Information) This section provides the company's unaudited financial statements and management's discussion and analysis [Financial Statements (Unaudited)](index=5&type=section&id=ITEM%201.%20Financial%20Statements%20%28Unaudited%29) Unaudited financial statements for September 30, 2021, reveal significant net earnings growth and improved operating cash flow [Consolidated Statements of Earnings](index=5&type=section&id=Consolidated%20Statements%20of%20Earnings) Presents consolidated earnings for the three and nine months ended September 30, detailing revenues, gross profit, and net earnings Consolidated Statements of Earnings (Three Months Ended Sep 30) | Indicator (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Total revenues | $720 | $719 | | Gross profit | $131 | $122 | | Operating earnings | $53 | $37 | | Net earnings | $35 | $15 | | Basic and diluted EPS | $0.24 | $0.10 | Consolidated Statements of Earnings (Nine Months Ended Sep 30) | Indicator (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Total revenues | $2,059 | $1,952 | | Gross profit | $394 | $337 | | Operating earnings | $155 | $102 | | Net earnings | $96 | $38 | | Basic and diluted EPS | $0.66 | $0.26 | - For the nine months ended September 30, 2021, net earnings increased by **153% to $96 million** from $38 million in the prior year, and EPS grew to **$0.66** from $0.26[18](index=18&type=chunk) [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) Outlines the company's financial position, detailing assets, liabilities, and equity, as of September 30, 2021, and December 31, 2020 Consolidated Balance Sheet Highlights | Indicator (in millions) | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $78 | $61 | | Total current assets | $1,225 | $1,263 | | Goodwill | $1,071 | $1,057 | | Total assets | $2,886 | $2,956 | | **Liabilities & Equity** | | | | Total current liabilities | $832 | $975 | | Long-term debt | $372 | $374 | | Total liabilities | $1,356 | $1,529 | | Total shareholder's equity | $1,530 | $1,427 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Details the sources and uses of cash from operating, investing, and financing activities for the nine months ended September 30 Consolidated Statements of Cash Flows (Nine Months Ended Sep 30) | Indicator (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(111) | $(230) | | Net cash provided by investing activities | $58 | $62 | | Net cash provided by financing activities | $70 | $181 | | Net change in cash and cash equivalents | $17 | $12 | - Net cash used in operating activities significantly improved, decreasing to **$(111) million** for the nine months ended Sep 30, 2021, from $(230) million in the prior-year period[29](index=29&type=chunk) [Notes to Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Details the company's segments, major customer, revenue recognition, recent acquisition, and total backlog - The company operates through three reportable segments: **Advanced Sensor Technologies (AST)**, **Network Computing & Communications (NC&C)**, and **Integrated Mission Systems (IMS)**[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - The U.S. Department of Defense (DoD) is the largest customer, accounting for approximately **84%** and **85%** of total revenues for the third quarter and nine months of 2021, respectively[39](index=39&type=chunk) - On July 28, 2021, the company acquired substantially all assets of Ascendant Engineering Solutions (AES) for a purchase price of **$11 million** with an additional **$5 million** of contingent consideration, adding **$14 million** to goodwill in the AST segment[91](index=91&type=chunk)[135](index=135&type=chunk) - Total backlog, representing the value of remaining performance obligations, was **$3.152 billion** as of September 30, 2021, with approximately **28%** expected to be recognized as revenue over the next three months[115](index=115&type=chunk)[119](index=119&type=chunk) [Management's Discussion and Analysis (MD&A)](index=36&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strong financial performance for the nine months ended September 30, 2021, highlighting growth in revenue, net earnings, and Adjusted EBITDA, and improved cash flow - For the nine months ended Sep 30, 2021, revenue grew **5.5% to $2,059 million**, operating earnings grew **52% to $155 million**, and net earnings grew **152% to $96 million** compared to the prior year period[258](index=258&type=chunk) - Adjusted EBITDA for the nine months ended Sep 30, 2021 increased by **35% to $210 million**, and Adjusted EBITDA margin expanded by **270 basis points to 10.2%**[258](index=258&type=chunk) - The company is taking steps to comply with the federal executive order requiring U.S. based federal contractors' employees to be vaccinated by January 4, 2022[205](index=205&type=chunk) Key Financial and Operating Data (Nine Months Ended Sep 30) | Indicator (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Total revenues | $2,059 | $1,952 | | Bookings | $1,919 | $2,542 | | Backlog | $3,152 | $3,454 | | Adjusted EBITDA | $210 | $156 | | Adjusted EPS | $0.73 | $0.34 | | Free Cash Flow | $(153) | $(267) | [Results from Operations](index=44&type=section&id=Results%20from%20Operations) Analyzes the company's operational performance for the nine months ended September 30, 2021, detailing revenue, gross profit, and the impact of reduced interest expense on net earnings - Revenue for the nine months ended Sep 30, 2021 increased by **$107 million (5.5%)**, driven by growth in the **AST segment ($75 million)** and **IMS segment ($31 million)**[260](index=260&type=chunk) - Gross profit for the nine-month period increased by **$57 million (17%)** due to higher revenue and improved program performance, including cost savings from the APEX operational excellence program[261](index=261&type=chunk)[262](index=262&type=chunk) - Interest expense for the nine-month period decreased by **45% to $27 million**, primarily due to the forgiveness of **$300 million** of principal on a term loan in December 2020[268](index=268&type=chunk) - Backlog decreased by **8.8% to $3.15 billion**, and bookings decreased by **24.5% to $1.92 billion** for the nine-month period, reflecting the burn-down of significant multi-year awards received in 2020[278](index=278&type=chunk)[279](index=279&type=chunk) [Review of Operating Segments](index=50&type=section&id=Review%20of%20Operating%20Segments) Examines the performance of AST, NC&C, and IMS segments for the nine months ended September 30, 2021, highlighting revenue and Adjusted EBITDA trends, and key profitability drivers Segment Performance (Nine Months Ended Sep 30, 2021 vs 2020) | Segment | Revenue (M) | Revenue % Chg | Adj. EBITDA (M) | Adj. EBITDA % Chg | | :--- | :--- | :--- | :--- | :--- | | AST | $743 | 11.3% | $99 | 23.4% | | NC&C | $747 | (0.3%) | $72 | 20.0% | | IMS | $584 | 5.6% | $39 | 168.3% | - AST revenue growth was driven by the transition to production for next-generation soldier sensing programs and increased deliveries of ground vehicle sensing systems[286](index=286&type=chunk) - NC&C's Adjusted EBITDA margin improved from **8.0% to 9.6%** due to better program performance across its naval computing portfolio[285](index=285&type=chunk)[292](index=292&type=chunk) - IMS profitability surged due to improved performance on key design programs like submarine electric propulsion and increased revenue from force protection programs[296](index=296&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's liquidity and capital resources, highlighting improved cash, reduced operating cash outflow, and enhanced free cash flow for the nine months ended September 30, 2021 Cash Flow Summary (Nine Months Ended Sep 30) | Indicator (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(111) | $(230) | | Net cash provided by investing activities | $58 | $62 | | Net cash provided by financing activities | $70 | $181 | | Free cash flow | $(153) | $(267) | - The improvement in operating cash flow was primarily due to higher net income and a decrease in cash used to fund working capital[302](index=302&type=chunk) - Net cash from financing activities decreased by **$111 million**, mainly due to lower net borrowings under the revolving credit facility as profitability and working capital management improved[304](index=304&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=54&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Details the company's limited market risk exposure, primarily focusing on interest rate risk from variable-rate debt and minimal foreign currency risk from Canadian dollar receivables - Interest rate risk is limited to variable-rate borrowings under revolving credit facilities, with an outstanding balance of **$75 million** as of September 30, 2021[307](index=307&type=chunk) - Foreign currency exposure is primarily with the Canadian dollar, limited to receivables of **$33 million** as of September 30, 2021, with a 10% exchange rate fluctuation not having a material impact[308](index=308&type=chunk) [Controls and Procedures](index=56&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting - Management concluded that as of September 30, 2021, the company's disclosure controls and procedures were effective[312](index=312&type=chunk) - No changes in internal control over financial reporting occurred during the third quarter of 2021 that materially affected, or are reasonably likely to materially affect, internal controls[314](index=314&type=chunk) PART II. [Other Information](index=57&type=section&id=PART%20II.%20Other%20Information) This section covers legal proceedings, updated risk factors, equity security sales, and exhibits [Legal Proceedings](index=57&type=section&id=ITEM%201.%20Legal%20Proceedings) Information regarding legal proceedings is detailed in Note 13 to the unaudited Consolidated Financial Statements - For details on legal proceedings, refer to Note 13 of the financial statements[317](index=317&type=chunk) [Risk Factors](index=58&type=section&id=ITEM%201A.%20Risk%20Factors) Highlights updated risk factors, primarily focusing on the potential adverse impacts of the federal executive order mandating COVID-19 vaccination for federal contractor employees - A key risk factor update relates to the COVID-19 pandemic and the federal vaccine mandate for contractor employees[319](index=319&type=chunk) - The executive order requiring U.S. based federal contractors' employees to be vaccinated by January 4, 2022, could materially and adversely affect the company's financial condition, results of operations, and cash flows, including through employee attrition[320](index=320&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds during the period - None[322](index=322&type=chunk) [Exhibits](index=59&type=section&id=ITEM%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including certifications by principal executive and financial officers, and XBRL data files - The report includes required certifications from the CEO and CFO, as well as XBRL interactive data files[326](index=326&type=chunk)

RADA Electronic Industries Ltd. (RADA) Q3 2021 Earnings Conference Call November 3, 2021 9:00 AM ET Company Participants Kenny Green - GK Investor & Public Relations Dov Sella - CEO Avi Israel - CFO Conference Call Participants Greg Konrad - Jefferies Peter Arment - Baird Brian Kinstlinger - Alliance Global Partners Austin Moeller - Canaccord Jeff Bernstein - Cowan Operator Ladies and gentlemen, thank you for standing by. Welcome to the RADA Third Quarter 2021 Results Conference Call. All participants are a ...