Leonardo DRS Q1 2025 slides: revenue jumps 16%, company confirms strong guidance

Leonardo DRS Inc (NASDAQ:DRS), a defense technology provider, released its Q1 2025 investor presentation on May 1, 2025, showcasing robust financial performance and reaffirming its positive outlook for the full year. The company reported significant revenue growth and margin expansion, supported by strong bookings and a substantial backlog.

Q1 2025 Performance Highlights

Leonardo DRS delivered impressive first-quarter results, with revenue reaching $799 million, representing a 16% increase compared to the same period last year. This growth trajectory continues the momentum seen in previous quarters, as the company had also reported 16% year-over-year revenue growth in Q3 2024.

The company’s Q1 bookings totaled $1 billion, resulting in a book-to-bill ratio of 1.2x, indicating strong future revenue potential. Adjusted EBITDA came in at $82 million with a 10.3% margin, while adjusted diluted EPS reached $0.20, marking a substantial 43% increase year-over-year.

As shown in the following financial highlights from the presentation:

The company’s backlog grew to $8.6 billion, a 10% increase that provides significant revenue visibility for the coming quarters. However, free cash flow was negative at $(170) million for the quarter, though this is not unusual for the first quarter in the defense industry due to timing of payments and program milestones.

2025 Guidance and Financial Outlook

Leonardo DRS confirmed its strong guidance for the full year 2025, projecting revenue between $3,425 million and $3,525 million, representing growth of 6% to 9% compared to 2024. The company expects adjusted EBITDA to reach between $435 million and $455 million, a 9% to 14% increase from the previous year.

The detailed 2025 guidance is illustrated in the following slide:

Adjusted diluted EPS is forecasted to be between $1.02 and $1.08, reflecting growth of 10% to 16% from 2024. The company’s tax rate is projected at 19% with approximately 270 million shares outstanding.

The presentation also highlighted Leonardo DRS’s solid financial track record, showing a revenue CAGR of 5% (6% organic) and an adjusted EBITDA CAGR of 11% from 2020 to 2025E. This demonstrates the company’s consistent growth trajectory and improving profitability over time.

As shown in the following financial performance chart:

The company emphasized that its diverse program portfolio provides stability, with no single program comprising more than 10% of revenue. Additionally, Leonardo DRS noted that over 60% of its revenue is derived from sole-source positions, contributing to strong revenue visibility and limited near-term recompete risk.

Strategic Positioning and Technology Focus

Leonardo DRS operates in four key technology areas: Advanced Sensing (30% of revenue), Network Computing (19%), Force Protection (19%), and Electric Power & Propulsion (22%). This diversified portfolio allows the company to address a wide range of defense needs across air, land, sea, space, and cyber domains.

The following slide illustrates the company’s technological capabilities and their applications:

The company is strategically positioned to benefit from several market tailwinds, including the substantial $832 billion FY25 Department of Defense budget, bipartisan support for defense spending growth focused on near-peer threats, and an elevated global threat environment. Leonardo DRS also highlighted the continued digitization of platforms as a driver for its technology solutions.

Leonardo DRS operates through two main segments: Integrated Mission Systems (IMS) and Advanced Sensing & Computing (ASC). The ASC segment is the larger of the two, generating $2.1 billion in revenue with $262 million in adjusted EBITDA and a 1.2x book-to-bill ratio. The IMS segment contributes $1.1 billion in revenue with $138 million in adjusted EBITDA and a 1.3x book-to-bill ratio.

The breakdown of these operating segments is shown here:

Forward-Looking Statements

Looking ahead, Leonardo DRS is focused on several strategic priorities, including aligning with national security priorities, leveraging its technology differentiation, increasing organic investment, executing with operational excellence, strengthening its talent base, and deploying capital prudently.

The company’s platform-agnostic business model has resulted in a balanced portfolio across various defense domains. Leonardo DRS provides content for numerous platforms, including naval vessels like the Columbia and Virginia-class submarines, ground vehicles such as the Bradley and Abrams tanks, and airborne systems including Apache helicopters and F-35 fighter jets.

Chairman and CEO Bill Lynn, along with the executive team, emphasized the company’s position to address evolving customer requirements in areas such as power projection, electrification, and next-generation sensing capabilities. The company’s technologies are well-aligned with the Department of Defense’s focus on countering near-peer threats and enhancing platform capabilities.

With a strong Q1 performance and confirmed guidance for 2025, Leonardo DRS appears well-positioned to continue its growth trajectory in the defense technology market, supported by favorable budget environments and its diversified portfolio of critical defense technologies.

Full presentation:

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