Leonardo DRS Reports 59% Jump in Q2 Earnings, Raises Full-Year Guidance
The defense technology supplier posted revenue of $913 million and announced a $450 million acquisition as funded backlog reached a record $5.1 billion.
Strong Quarter Drives Guidance Increase
Leonardo DRS, Inc. reported second-quarter net earnings of $86 million, up 59% year-over-year, alongside revenue of $913 million, representing 10% growth from the prior-year period (8-K filing, 2026-07-30). The Arlington, Virginia-based defense technology provider raised its full-year 2026 guidance for adjusted EBITDA and adjusted diluted earnings per share based on what CEO John Baylouny characterized as "exceptional" performance.
Diluted earnings per share reached $0.32, a 60% increase year-over-year, while adjusted diluted EPS rose 52% to $0.35 (8-K filing, 2026-07-30). The company attributed the growth primarily to programs related to tactical radars, electric power and propulsion, infrared sensing, and force protection.
Record Backlog and Strong Bookings
Leonardo DRS secured $1.1 billion in new funded bookings during the quarter, achieving a book-to-bill ratio of 1.2x (8-K filing, 2026-07-30). Funded backlog climbed to a record $5.1 billion, up 17% year-over-year and higher sequentially from the first quarter. Customer demand remained "resilient," with the strongest contributions from electric power and propulsion, infrared sensing, tactical radars, and naval network computing, according to the filing.
Adjusted EBITDA totaled $128 million, up 33% from the second quarter of 2025 (8-K filing, 2026-07-30). The company attributed the margin expansion to "disciplined program execution across the portfolio, favorable mix and leverage from increased volume."
Capital Deployment and Raft Acquisition
The company announced a $450 million acquisition of Raft, which it said would expand its "multi-domain AI, data fusion and mission software capabilities" (8-K filing, 2026-07-30). The raised guidance excludes any impact from the pending Raft transaction.
Leonardo DRS reported net cash flow from operating activities of $35 million and free cash flow of $6 million for the quarter, both improvements from the prior year due to "higher profitability and better working capital efficiency" (8-K filing, 2026-07-30).
The board declared a quarterly dividend of $0.09 per share, payable August 27, 2026, to shareholders of record on August 13 (8-K filing, 2026-07-30). According to MarginX data, this dividend payment date is among the company's upcoming calendar events. During the quarter, the company paid approximately $24 million in dividends and repurchased 261,526 shares for approximately $12 million.
Balance Sheet and Segment Performance
At quarter-end, Leonardo DRS held $270 million in cash with no outstanding borrowings under its credit facility (8-K filing, 2026-07-30). The company cited this "balance sheet strength" as providing flexibility for organic and inorganic growth initiatives.
The Advanced Sensing and Computing segment saw revenue growth primarily from tactical radars and infrared sensing programs, with adjusted EBITDA and margins rising despite increased internal research and development investment. The Integrated Mission Systems segment posted "significant" margin expansion driven by "outstanding program execution and operational leverage from higher volume," with electric power and propulsion programs leading bookings (8-K filing, 2026-07-30).
MarginX data shows recent insider activity including a sale by Jason Rinsky of 3,865 shares and options exercises by Frances F. Townsend.
This article was generated by MarginX from the 8-K filing on 2026-07-30. It is not investment advice.