Leonardo DRS (DRS) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue rose 10.1% year-over-year to $829 million, with net earnings up 42% to $54 million and diluted EPS at $0.20, driven by strong performance in electric power, propulsion, and advanced sensing programs across both ASC and IMS segments.

• Adjusted EBITDA increased 17% to $96 million, with margin expanding by 70 basis points to 11.6%.

• Bookings totaled $853 million with a book-to-bill ratio of 1.0x; backlog grew 9% year-over-year to $8.6 billion, reflecting robust customer demand.

• The company is well positioned to benefit from increased U.S. and global defense spending, supported by new legislation and rising NATO commitments.

• Free cash outflow improved year-over-year despite higher capital expenditures and increased working capital investment to support anticipated second half growth.

Financial highlights

• Q2 2025 revenue was $829 million, up 10.1% year-over-year; six-month revenue reached $1.63 billion, up 13%.

• Net earnings for Q2 were $54 million, up 42.1% year-over-year; diluted EPS was $0.20, up 43%; adjusted net earnings were $62 million and adjusted diluted EPS $0.23, up 32% and 28% respectively.

• Adjusted EBITDA was $96 million, up 17% year-over-year, with margin expanding to 11.6%.

• Gross margin improved to 23.8% in Q2, up from 22.4% year-over-year.

• Free cash flow usage was $56 million in Q2, reflecting higher working capital investment; cash and cash equivalents at quarter end were $278 million.

Outlook and guidance

• Full-year 2025 revenue guidance raised to $3.525–$3.6 billion, implying 9–11% year-over-year growth.

• Adjusted EBITDA guidance narrowed to $437–$453 million; adjusted diluted EPS expected between $1.06 and $1.11, up 14–19% year-over-year.

• Q3 revenue expected around $925 million, with adjusted EBITDA margin in the mid-12% range.

• Approximately 90% of full-year revenue is already realized or in backlog, providing strong visibility.