Q3 2025 Performance Highlights - The company reported quarterly bookings of $1.3 billion, resulting in a 1.4x book-to-bill ratio in Q3 [8] - Revenue increased by 18% to $960 million in Q3 2025, compared to $812 million in Q3 2024 [10] - Adjusted EBITDA grew by 22% to $117 million in Q3 2025, up from $78 million in Q3 2024 [10] - Adjusted Diluted EPS increased by 21% to $0.29 in Q3 2025, compared to $0.24 in Q3 2024 [10] - Total backlog increased by 8% to $8.909 billion, compared to $8.264 billion [10] Segment Performance - Advanced Sensing and Computing (ASC) revenue increased by 9% to $580 million [13] - Integrated Mission Systems (IMS) revenue increased significantly by 34% to $383 million [13] - ASC Adjusted EBITDA increased significantly by 47% to $53 million [13] Revised 2025 Guidance - The company is raising the lower end of its prior revenue guidance and now expects revenue between $3.55 billion and $3.60 billion for full year 2025, reflecting double-digit growth [8, 15] - Adjusted EBITDA is maintained in the range of $437 million to $453 million [15] - Adjusted Diluted EPS is increased to a range of $1.07 to $1.11, reflecting a slightly lower tax rate of 18% [8, 15] - Free Cash Flow (FCF) is still expected to track towards approximately 80% of Adjusted Net Earnings [8]

Core Points - Leonardo DRS, Inc. announced the retirement of William J. (Bill) Lynn as Chairman and CEO after 14 years, with John Baylouny appointed as the new President & CEO effective January 1, 2026 [1][4] - Frances (Fran) Fragos Townsend has been elected as the new Chair of the Board of Directors, also effective January 1, 2026 [1][4] Company Leadership Transition - Bill Lynn has transformed Leonardo DRS into a technology-driven organization, focusing on advanced sensing, network computing, force protection, and electric power and propulsion technologies [2][3] - Under Lynn's leadership, the company achieved significant contract wins, including propulsion content for the Columbia Class submarine and counter-UAS positions, contributing to durable growth [2] - John Baylouny, with over 35 years of experience at Leonardo DRS, has served as COO since late 2018 and is expected to ensure a seamless leadership transition [4][5] Board of Directors - Fran Townsend has been a Board director since 2009 and has extensive experience in both private and public sectors, including roles in the Department of Justice and as Assistant to President George W. Bush [6] - Townsend's deep understanding of the company and its strategic journey positions her well for the role of Board Chair [3][6] Company Overview - Leonardo DRS specializes in developing transformative defense technologies and delivering innovative solutions for U.S. national security customers and allies [7] - The company focuses on high-performance, multi-domain capabilities across next-generation advanced sensing, network computing, force protection, and electric power and propulsion [7]

Financial Performance - Revenue for Q3 2025 was $960 million, an 18% increase year-over-year[4] - Net earnings reached $72 million, up 26% compared to Q3 2024[5] - Adjusted EBITDA was $117 million, reflecting a 17% year-over-year growth[5] - Adjusted diluted EPS for Q3 2025 was $0.29, a 21% increase from the previous year[5] - Revenues for Q3 2025 reached $960 million, a 18.2% increase from $812 million in Q3 2024[27] - Gross profit for Q3 2025 was $222 million, up 24.0% from $179 million in Q3 2024[27] - Net earnings for the nine months ended September 30, 2025, were $176 million, compared to $124 million for the same period in 2024, reflecting a 42.0% increase[27] - Adjusted Net Earnings for Q3 2025 were $78 million, compared to $64 million in Q3 2024, reflecting a 21.9% increase[38] - Diluted EPS rose to $0.26 in Q3 2025, up from $0.21 in Q3 2024, marking a 23.8% increase[38] - For the nine months ended September 30, 2025, net earnings reached $176 million, compared to $124 million in the same period of 2024, a 42% increase[38] - Adjusted Diluted EPS for the nine months ended September 30, 2025, was $0.73, compared to $0.56 in the same period of 2024, reflecting a 30.4% increase[38] Cash Flow and Investments - Cash flow from operating activities was $107 million, with free cash flow of $77 million for the quarter[8] - Cash and cash equivalents decreased to $309 million as of September 30, 2025, from $598 million at the beginning of the year[30] - The company reported a net cash used in operating activities of $59 million for the nine months ended September 30, 2025, an improvement from $172 million in the same period of 2024[30] - Free Cash Flow for Q3 2025 was $77 million, compared to $48 million in Q3 2024, indicating a 60.4% increase[40] - Free Cash Flow for the nine months ended September 30, 2025, was negative $149 million, an improvement from negative $226 million in the same period of 2024[40] - The company invested $15 million in Hoverfly Technologies, increasing its stake to approximately 25%[10] Guidance and Future Outlook - The company revised its 2025 revenue guidance to $3.550 billion - $3.600 billion[15] - Bookings totaled $1.3 billion with a book-to-bill ratio of 1.4x, indicating strong demand[5] - Backlog increased by 8% year-over-year to a record $8.9 billion[12] Capital Expenditures - The company incurred capital expenditures of $90 million for the nine months ended September 30, 2025, compared to $56 million in the same period of 2024[30] - Capital expenditures in Q3 2025 were $30 million, up from $12 million in Q3 2024, representing a 150% increase[40] Dividends and Stockholder Equity - A cash dividend of $0.09 per share was declared, payable on December 2, 2025[9] - Total stockholders' equity rose to $2,648 million as of September 30, 2025, up from $2,557 million at the end of 2024[29]

Core Insights - Leonardo DRS, Inc. reported strong financial results for Q3 2025, highlighting exceptional bookings and organic revenue growth driven by broad-based customer demand [1] Financial Performance - The company is on track to achieve double-digit revenue growth for the year 2025, supported by solid year-to-date performance [1]

Core Insights - Leonardo DRS, Inc. has launched SAGEcore™, an integrated software platform that combines artificial intelligence, advanced sensors, and edge computing for tactical platforms in multi-domain environments [1] - SAGEcore is specifically designed for real-time battlefield operations and is optimized to run AI on ruggedized edge computers [1] - The platform is engineered to rapidly process complex data on-platform, ensuring high efficiency in operational scenarios [1]

Market Overview - Wall Street experienced a decline on October 9, 2025, as major stock indices fell due to investor uncertainty regarding AI-led growth and recession fears, despite Delta Air Lines exceeding expectations [1][10] Investment Recommendations - Recommended low-leverage stocks include ResMed Inc. (RMD), Safran (SAFRY), Pentair (PNR), Casey's General Stores (CASY), and Leonardo DRS, Inc. (DRS), which are considered safer options during market volatility [2][10] Significance of Low-Leverage Stocks - Low-leverage stocks are preferred as they are less risky, especially in volatile markets, and are characterized by lower debt-to-equity ratios [4][6] Debt-to-Equity Ratio Analysis - The debt-to-equity ratio is a key metric indicating a company's financial risk, with lower ratios reflecting better solvency [7] Company Profiles - **ResMed**: Focuses on sleep-disordered breathing and respiratory disorders, with a projected revenue increase of 7.8% for 2025 and a long-term earnings growth rate of 13.8% [15][16] - **Safran**: Engaged in aerospace and defense, with a sales growth estimate of 36.3% for 2025, supported by a recent contract with Singapore Airlines [17][18] - **Pentair**: Provides sustainable water solutions, with a sales growth estimate of 1.5% for 2025 following a strategic acquisition for $290 million [19][20] - **Casey's General Stores**: Reports a 4.3% increase in same-store sales and a 19.5% growth in earnings, with a sales improvement estimate of 10.6% for fiscal 2026 [20][21] - **Leonardo DRS**: Develops advanced defense products, with a sales growth estimate of 10.9% for 2025 and a long-term earnings growth rate of 17.3% [22][23]

Core Points - Leonardo DRS, Inc. is celebrating its seventh year of supporting the "Stick It to Cancer" fundraiser at the 2025 AUSA Annual Meeting & Exposition in Washington, D.C. [1] - The initiative recognizes Breast Cancer Awareness Month and aims to support military members and families affected by breast cancer [1] - Leonardo DRS will collaborate again with The Henry M. Jackson Foundation for the Advancement of Military Medicine for this ongoing initiative [1]

Core Insights - Aerospace-Defense Equipment stocks are expected to benefit from strategic mergers and acquisitions that enhance operational scale and market presence, despite ongoing supply-chain challenges affecting aircraft deliveries and profitability [1][3][5] Industry Overview - The Zacks Aerospace-Defense Equipment industry includes companies that manufacture essential components for aerospace and defense, such as aerostructures, propulsion systems, and defense electronics, while also providing aftermarket support and services [2] Trends Influencing the Industry - Mergers and Acquisitions: Recent acquisitions, such as TransDigm's purchase of Simmonds Precision Products for $765 million and AAR Corp.'s acquisition of American Distributors for $146 million, are expected to improve economies of scale and revenue growth across the industry [3] - Air Traffic Growth: Global air passenger traffic increased by 4.6% year-over-year in August 2025, with projections of a 5.8% growth for 2025, indicating a positive outlook for aerospace and defense companies serving the commercial aviation market [4] - Supply-Chain Disruptions: Ongoing supply-chain issues have led to aircraft deliveries being approximately 30% below previous peaks, resulting in a backlog of 17,000 units, which may hinder production and profitability in the near term [5] Industry Performance - The Zacks Aerospace-Defense Equipment industry has outperformed both the S&P 500 and the broader Aerospace sector, with a collective stock increase of 37.3% over the past year compared to 25.7% for the sector and 18.1% for the S&P 500 [8] Valuation Metrics - The industry is currently trading at a trailing 12-month EV/Sales ratio of 11.49X, significantly higher than the S&P 500's 5.73X and the sector's 3.43X, indicating strong market valuation [10] Notable Companies - **Curtiss-Wright Corp. (CW)**: This company focuses on high-performance products for aerospace and defense, with a projected 9.7% sales growth and 18.4% earnings growth for 2025. It has announced a $200 million expansion of its share repurchase program [13][14] - **Leonardo DRS, Inc. (DRS)**: Specializing in advanced defense technologies, DRS is expected to see a 10.9% increase in sales and 19.4% growth in earnings for 2025, bolstered by the launch of new AI-enabled display systems [17][18] - **BWX Technologies (BWXT)**: This company provides nuclear solutions and has secured a $1.6 billion contract from the Department of Energy, with projected sales growth of 15.1% and earnings growth of 11.7% for 2025 [20][21]

Core Insights - Hoverfly Technologies successfully closed a $20 million Series B funding round, led by Leonardo DRS and Korea Robot Manufacturing (KRM) [1][2] - This funding is the largest in the company's history and will enhance Hoverfly's position in the tethered drone sector, crucial for U.S. defense initiatives [2][11] Investment Details - Leonardo DRS invested $15 million, demonstrating confidence in Hoverfly's business model and growth vision, and signed a manufacturing agreement to expand production [3][4] - KRM contributed $5 million and will establish a facility for domestic production of key components, enhancing supply chain resilience for the U.S. defense sector [4][5] Strategic Partnerships - KRM's partnership with Hoverfly aims to create a U.S.-based supply chain for critical UAV components, aligning with national security priorities [6][7] - Both DRS and KRM will act as official resellers and integrators of Hoverfly's Sentry and Spectre systems, expanding the company's global reach [6][7] Market Position and Growth - The tethered drone market is projected to grow from approximately $140 million in 2023 to over $2.6 billion by 2032, with a CAGR of 38% [11] - Hoverfly has sold over 800 tethered drones to U.S. and allied defense customers, indicating strong market traction [11] Technological Advancements - Hoverfly's NEXUS capability supports unmanned ecosystems, enhancing operational ranges for various military applications [10] - The technology aligns with U.S. Department of Defense priorities for secure, domestically sourced unmanned systems [7][10]

Core Points - Leonardo DRS, Inc. will host a conference call on October 29, 2025, at 9:30 a.m. (ET) to discuss its third quarter 2025 results [1] - The company plans to issue its quarterly earnings press release prior to the conference call [1] - A live audio broadcast of the conference call, along with the corresponding press release and supplemental information, will be available on the company's investor relations website [1]