Leonardo DRS raises 2026 profit forecast as Q3 sales rise 11%

Leonardo DRS, Inc. (Nasdaq: DRS) said on Oct. 29, 2026 that third-quarter revenue rose 11% to $1,066 million and that it raised its 2026 adjusted diluted EPS forecast. The company, which develops advanced sensing, network computing, force protection, and electric power and propulsion technologies for U.S. national security customers and allies, reported the results in a news release furnished with its 8-K.

Adjusted diluted EPS for the quarter was 46 cents per share, compared with 29 cents a year earlier. Revenue growth was led by tactical radars, naval power and propulsion programs and progress on space sensing programs, according to the release.

Here's how the company did:

• Revenue: $1,066 million vs. $960 million a year earlier
• Adjusted diluted EPS: 46 cents vs. 29 cents a year earlier
• Diluted EPS: 43 cents vs. 26 cents a year earlier
• Net earnings: $115 million vs. $72 million a year earlier
• Adjusted EBITDA: $149 million vs. $117 million a year earlier

Adjusted EBITDA margin was 14.0%, up from 12.2% a year earlier. The company said rigorous program execution, favorable mix and operating leverage from higher volume drove the growth, and a lower tax rate supported the rise in net earnings.

Bookings totaled $1.6 billion in the quarter, a book-to-bill ratio of 1.5x. Funded backlog reached a new record of $5.6 billion, up 21% from a year earlier.

CEO John Baylouny framed the quarter in terms of the company's guidance decision. “Our record funded backlog, together with improved visibility into the fourth quarter, gives us confidence to raise and narrow our full-year revenue and profitability outlook,” said John Baylouny, President and CEO of Leonardo DRS.

2026 guidance

Leonardo DRS is raising 2026 guidance for revenue, Adjusted EBITDA and Adjusted Diluted EPS, the company said. Its adjusted diluted EPS forecast is now $1.50 to $1.53, from the $1.34 to $1.39 range it gave on July 30.

The guidance table also lowers the 2026 tax rate assumption to 13.0%, from 16.5%, and keeps diluted weighted average shares at 269.0 million. The release does not give new revenue or Adjusted EBITDA ranges in its text. The guidance excludes the pending acquisition of Raft LLC.

Segment results

The Advanced Sensing and Computing segment reported revenue of $659 million, up 14% from a year earlier, and operating earnings of $57 million, up 27%. Its bookings were $1,017 million.

The Integrated Mission Systems segment reported revenue of $428 million, up 12%, and operating earnings of $64 million, up 33%. Its bookings were $622 million, and its operating margin was 15.0%, up from 12.5%.

Cash and capital returns

Free cash flow was $61 million in the quarter, compared with $77 million a year earlier. The company said working capital needs were higher, partly offset by increased earnings.

The board declared a cash dividend of 9 cents per share, payable Nov. 25, 2026, to stockholders of record on Nov. 12, 2026. During the quarter the company repurchased 288,633 shares for about $12 million under a previously announced program. It held $294 million of cash at quarter end and had no outstanding borrowings under its credit facility.