Leonardo DRS, Inc. (DRS) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.Individual ...

Revenue Sources - The U.S. government accounted for 79% of total revenues in 2024, with the Department of Defense (DoD) representing 37% of total revenues[33]. - Approximately 63% of revenue in 2024 was derived from subcontractor positions, indicating a reliance on partnerships for contract fulfillment[36]. - The company generated $2.710 billion from firm-fixed price contracts in 2024, an increase from $2.373 billion in 2023[38]. - The company’s total revenues for 2024 were significantly supported by long-term programs and incumbent supplier relationships[37]. Backlog and Contracts - Total backlog increased to $8.509 billion in 2024, up from $7.751 billion in 2023, with funded backlog at $4.177 billion and unfunded backlog at $4.332 billion[42]. - The DoD's fiscal year 2025 budget request includes $850 billion for national defense programs, remaining largely flat compared to prior year levels[32]. - The company has a diverse business mix, with no single contract representing more than 10% of revenues for 2024[37]. Research and Development - Company-funded R&D expenses rose to $92 million in 2024, compared to $82 million in 2023 and $58 million in 2022[46]. - Leonardo S.p.A., the company's indirect majority stockholder, reported preliminary consolidated revenues of €17.8 billion and invested €2.5 billion in R&D in 2024[69]. Workforce and Employee Relations - The workforce included approximately 7,000 employees as of December 31, 2024, with 7% represented by labor unions[49]. - The company maintains a strong commitment to employee development and community support, emphasizing ethical business practices and safety in the workplace[55]. Financial Performance and Risks - The company generated a significant portion of its revenue, profit, and cash flows in the fourth quarter of its fiscal year, influenced by the U.S. federal government's budget cycle[60]. - The company reported an outstanding balance of $203 million under its 2022 Term Loan A, with a potential annual interest expense fluctuation of approximately $1 million for a 0.5% change in interest rates[399]. - The company has limited foreign currency exposure, primarily with receivables of $27 million in Canadian dollars, where a 10% fluctuation in exchange rates would not materially impact financial statements[400]. - The company experienced inflationary pressures affecting supply chain costs, particularly in micro-electronics and commodities, which could negatively impact future financial results[401]. - The company is subject to various procurement regulations and legal requirements, which could increase costs and risks, potentially affecting profitability[62]. Mergers and Acquisitions - The company completed the merger with RADA Electronic Industries Ltd. on November 28, 2022, resulting in RADA becoming a wholly-owned subsidiary and providing a 10% interest in RadSee Technologies Ltd.[57]. - The divestiture of the Global Enterprise Solutions business to SES Government Solutions, Inc. was completed on August 1, 2022, generating net cash proceeds of $427 million after adjustments[58]. - The company divested its equity investment in Advanced Acoustic Concepts LLC to Thales Defense & Security, Inc., resulting in proceeds of $56 million[59].

Group 1 - Aerospace and defense stocks are experiencing a sell-off due to potential reductions in defense budgets, impacting companies like Leonardo DRS, which has seen a 22% decline in stock value since November [1] - The Aerospace Forum aims to identify investment opportunities within the aerospace, defense, and airline sectors, leveraging data analytics for informed analysis [1] - The analyst behind the report has a background in aerospace engineering, providing context to industry developments and their potential effects on investment strategies [1] Group 2 - The article emphasizes that past performance does not guarantee future results, and no specific investment recommendations are provided [2] - It is noted that the analysts contributing to the platform may not be licensed or certified by any regulatory body, indicating a diverse range of perspectives [2]

Financial Data and Key Metrics Changes - In Q4 2024, revenue was $981 million, a 6% year-over-year increase, while full-year revenue reached $3.2 billion, representing a 14% organic growth over 2023 [40][41] - Adjusted EBITDA for Q4 was $148 million, up 13% year-over-year, and for the full year, it was $400 million, reflecting a 23% increase [42][43] - Diluted EPS and adjusted diluted EPS increased by 18% and 23% year-over-year in Q4, respectively, and for the full year, they rose by 25% and 27% [45][46] - Free cash flow for Q4 was robust at $416 million, leading to a total of $190 million for the full year [46][47] Business Line Data and Key Metrics Changes - Advanced Sensing and Computing segment revenue grew by 9% in Q4 and 16% for the full year, while Integrated Mission Systems segment revenue decreased slightly by 1% in Q4 but increased by 11% for the full year [41][44] - Adjusted EBITDA for the Advanced Sensing and Computing segment increased by 9% in Q4 and 22% for the full year, while the Integrated Mission Systems segment saw a 24% increase in Q4 and 27% for the full year [44] Market Data and Key Metrics Changes - International revenue rose to 13% in 2024, marking the fourth consecutive year of increased international business [30] - The company secured over $4 billion in contract awards throughout the year, resulting in a 1.3% book-to-bill ratio for both Q4 and the year [10][11] Company Strategy and Development Direction - The company plans to increase investments in R&D and capital expenditures by approximately 25% year-over-year, focusing on advanced sensing modalities, directed energy capabilities, and AI applications [12][51] - The company maintains a strong focus on execution excellence and aims to drive innovation and capability to meet customer needs while generating value for shareholders [19][38] Management's Comments on Operating Environment and Future Outlook - The management highlighted an elevated global threat environment, which is expected to drive continued defense investment from the US and allied nations [13][14] - The company anticipates 2025 to be another strong year, with revenue guidance set between $3.425 billion and $3.525 billion, implying 6% to 9% organic growth [48][49] Other Important Information - The company announced a cash dividend of $0.09 per share and a share buyback program totaling $75 million over the next two years [35][36] - The new facility in Charleston, South Carolina, is expected to enhance capabilities in steam turbine systems and support the Columbia class program [26][27] Q&A Session Summary Question: Impact of Doge effort on the company - Management indicated that the Doge effort has not yet reached the Department of Defense and remains focused on the new administration's strategic priorities [60] Question: Clarification on one-off items in Q4 - The CFO explained that the adjustments were primarily due to currency shifts affecting balance sheet items [63] Question: Margin targets for 2026 and other contributing areas - Management noted that smaller sensing and force protection programs transitioning from development to production phases would contribute to margin improvements alongside the Columbia program [68][69] Question: Status of KDDX and DDGX programs - Management confirmed ongoing engagement with the Korean customer for KDDX and noted growing interest in electric propulsion for DDGX [79][80] Question: Concerns about raw material supply - The CFO stated that while germanium remains a focus, overall supply chain stability has improved, with no significant concerns outside of germanium [85][86] Question: Implications of potential budget cuts - Management expressed confidence in their balanced exposure across services and highlighted growth areas in counter UAS and AI-supported computing [92][94] Question: Foreign military sales impact due to geopolitical tensions - Management noted a slight increase in revenue from Ukraine but anticipated a tapering off as negotiations progress, while European demand for American systems may rise [111][112]

Quarterly Earnings Presentation Q4 | 2024 February 20, 2025 Disclaimers Forward-Looking Statements In this presentation, when using the terms the "company," "DRS," "we," "us" and "our," unless otherwise indicated or the context otherwise requires, we are referring to Leonardo DRS, Inc. This presentation contains forward-looking statements and cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of the forward-looking statements can be identified by the use o ...

Core Insights - Leonardo DRS, Inc. reported revenue of $981 million for the quarter ended December 2024, reflecting a year-over-year increase of 5.9% [1] - The earnings per share (EPS) for the quarter was $0.38, up from $0.31 in the same quarter last year, indicating a positive trend in profitability [1] - The reported revenue exceeded the Zacks Consensus Estimate of $942.62 million by 4.07%, and the EPS also surpassed the consensus estimate of $0.36 by 5.56% [1] Financial Performance Metrics - Revenue from the IMS segment was $326 million, slightly below the average estimate of $329.20 million from three analysts [4] - Revenue from the ASC segment was $660 million, exceeding the average estimate of $619.13 million from three analysts [4] - Adjusted EBITDA for the IMS segment was $46 million, surpassing the estimated $44.69 million, while the ASC segment's adjusted EBITDA was $102 million, above the average estimate of $96.86 million [4] Stock Performance - Over the past month, shares of Leonardo DRS, Inc. have declined by 20.2%, contrasting with a 2.6% increase in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

分组1 - Leonardo DRS, Inc. reported quarterly earnings of $0.38 per share, exceeding the Zacks Consensus Estimate of $0.36 per share, and up from $0.31 per share a year ago, representing an earnings surprise of 5.56% [1] - The company achieved revenues of $981 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.07%, compared to $926 million in the same quarter last year [2] - Over the last four quarters, Leonardo DRS has consistently surpassed consensus EPS and revenue estimates [2] 分组2 - The stock has underperformed, losing about 8.6% since the beginning of the year, while the S&P 500 has gained 4.5% [3] - The current consensus EPS estimate for the upcoming quarter is $0.18 on revenues of $756.87 million, and for the current fiscal year, it is $1.07 on revenues of $3.43 billion [7] - The Aerospace - Defense Equipment industry is currently ranked in the bottom 49% of over 250 Zacks industries, which may impact the stock's performance [8]

Financial Performance - Revenue for Q4 2024 was $981 million, a 6% increase from Q4 2023, and full year revenue reached $3.234 billion, up 14% year-over-year[4]. - Net earnings for Q4 2024 were $89 million, a 20% increase compared to Q4 2023, with full year net earnings of $213 million, reflecting a 27% growth[4]. - Adjusted EBITDA for Q4 2024 was $148 million, a 13% increase from Q4 2023, and full year adjusted EBITDA was $400 million, up 23% year-over-year[4]. - Gross profit for the year ended December 31, 2024, was $736 million, up 13.5% from $648 million in 2023[31]. - Net earnings for the year increased to $213 million, representing a 26.8% rise from $168 million in 2023[31]. - Basic earnings per share rose to $0.81 for the year, compared to $0.64 in 2023, marking a 26.6% increase[31]. - Adjusted Net Earnings for the twelve months ended December 31, 2024, reached $249 million, compared to $194 million in 2023, reflecting a 28.4% increase[43]. - Diluted EPS for the twelve months ended December 31, 2024, was $0.80, up from $0.64 in 2023, marking a 25% increase[43]. Bookings and Backlog - Bookings for Q4 2024 totaled $1.27 billion, with a book-to-bill ratio of 1.3, and full year bookings reached $4.077 billion, also with a ratio of 1.3[14]. - The backlog at year-end 2024 was $8.5 billion, representing a 10% increase from the previous year[6]. Cash Flow and Capital Expenditures - Net cash provided by operating activities for the year was $271 million, compared to $205 million in 2023, indicating a 32.1% increase[36]. - Free Cash Flow for Q4 2024 was $416 million, down from $494 million in Q4 2023, indicating a decrease of 15.8%[45]. - The company reported a net cash provided by operating activities of $443 million for Q4 2024, compared to $515 million in Q4 2023, a decrease of 13.9%[45]. - Capital expenditures for the year totaled $85 million, up from $60 million in 2023, representing a 41.7% increase[36]. - Capital expenditures for the twelve months ended December 31, 2024, totaled $85 million, an increase from $60 million in 2023, representing a 41.7% rise[45]. Assets and Liabilities - Total assets as of December 31, 2024, were $4,184 million, up from $3,921 million in 2023, reflecting a 6.7% growth[34]. - Cash and cash equivalents increased to $598 million from $467 million, a 27.9% increase year-over-year[34]. - The company reported a decrease in long-term debt to $340 million from $349 million, a reduction of 2.6%[34]. - Contract liabilities increased to $399 million from $335 million, reflecting a 19.1% rise year-over-year[34]. Segment Performance - The Advanced Sensing and Computing segment reported revenues of $660 million for Q4 2024, a 9% increase from Q4 2023, and $2.118 billion for the full year, up 16%[16]. - The Integrated Mission Systems segment achieved adjusted EBITDA margin growth to 14.1% in Q4 2024, a 290 basis points increase from the prior year[18]. Dividends and Stock Repurchase - A cash dividend of $0.09 per common share was declared, payable on March 27, 2025[12]. - A stock repurchase program was authorized for up to $75 million of common stock, commencing in March 2025[13]. Other Financial Metrics - The income tax provision for Q4 2024 was $22 million, slightly up from $21 million in Q4 2023, indicating a 4.8% increase[41]. - Restructuring costs for the twelve months ended December 31, 2024, were $8 million, down from $11 million in 2023, showing a decrease of 27.3%[41]. - The company experienced a decrease in interest expense, which fell to $4 million in Q4 2024 from $9 million in Q4 2023, a reduction of 55.6%[41].

Core Viewpoint - Leonardo DRS, Inc. is positioned as a strong investment opportunity within the Zacks Aerospace Defense Equipment industry due to its robust backlog, increasing earnings estimates, and effective debt management [1] Growth Projections & Surprise History - The Zacks Consensus Estimate for DRS' 2025 earnings per share (EPS) has risen by 0.9% to $1.07 per share over the past 60 days [2] - Total revenue for DRS in 2025 is projected at $3.43 billion, reflecting a year-over-year growth of 7.4% [2] - The company's long-term earnings growth rate is estimated at 21.2%, with an average earnings surprise of 22.27% over the last four quarters [2] Debt Position - DRS has a total debt to capital ratio of 12.92%, significantly lower than the industry average of 54.03% [3] - The times interest earned (TIE) ratio for DRS at the end of Q3 2024 was 10.5, indicating strong capability to meet interest obligations [3] Liquidity - The current ratio for DRS at the end of Q3 2024 was 2.11, surpassing the industry average of 1.43, demonstrating the company's ability to cover short-term liabilities [4] Rising Backlog - DRS' total backlog as of September 30, 2024, increased by 75.1% to $8.26 billion compared to the same quarter last year, primarily driven by a multi-boat contract with the U.S. Navy for electric propulsion activities on the Columbia Class submarine program [5] Stock Price Performance - Over the past six months, DRS shares have increased by 27.2%, outperforming the industry's growth of 18.4% [6]

Company Performance - Leonardo DRS, Inc. has returned 72% year-to-date, significantly outperforming the average return of 2.3% for Aerospace companies [4] - The Zacks Consensus Estimate for DRS' full-year earnings has increased by 8.6% over the past three months, indicating improved analyst sentiment and a stronger earnings outlook [4] - Leonardo DRS, Inc. currently holds a Zacks Rank of 1 (Strong Buy), reflecting its favorable characteristics for outperforming the market [3] Industry Context - Leonardo DRS, Inc. is part of the Aerospace - Defense Equipment industry, which includes 23 companies and has gained approximately 32.6% year-to-date [6] - The Aerospace sector, which includes 46 individual stocks, currently holds a Zacks Sector Rank of 6, indicating its relative performance compared to other sectors [2] - Another notable performer in the Aerospace sector is Mercury Systems (MRCY), which has increased by 9.4% year-to-date and has a Zacks Rank of 2 (Buy) [5][6]