Leonardo DRS has raised its financial guidance fiscal 2026 (FY26) after reporting higher revenue, earnings and bookings for the third quarter (Q3) ended 30 September.
During the quarter, the company reported revenue of $1.1bn, up 11% from $960m a year earlier, driven primarily by growth in tactical radar, naval power and propulsion, and space sensing programmes.
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Net earnings climbed to $115m, a 60% year-on-year rise from $72m in Q3 FY25, while adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) grew by 27% to reach $149m.
The company’s diluted earnings per share (EPS) rose 65% to $0.43 over the quarter, with adjusted diluted EPS up 59% to $0.46.
Leonardo DRS linked the growth in adjusted EBITDA and margin expansion to “rigorous programme execution” across its portfolio, as well as a favourable mix and increased operating leverage from higher volumes.
In addition, the strong operational performance, together with a lower tax rate, contributed to the year-over-year rise in third-quarter net earnings, adjusted net earnings, diluted EPS, and adjusted diluted EPS.
In the third quarter, the company secured $1.6bn in new funded bookings, resulting in a book-to-bill ratio of 1.5x, which it described as its “strongest since becoming a public company four years ago.”
This performance was supported by robust customer demand, particularly in naval power and propulsion, tactical radars, and force protection programmes.
Its funded backlog at the end of the quarter reached a record $5.6bn, marking a 21% year-on-year increase.
Leonardo DRS president and CEO John Baylouny said: “These results reinforce a strategy that is working — investing ahead of demand, in both differentiated capability and capacity, to help our customers maintain overmatch and enable us to scale when the mission requires it.”
Reflecting its performance, the company raised its full-year 2026 revenue guidance to a range of $3.95bn to $3.99bn, up from its previous forecast of $3.9bn to $3.98bn.
Adjusted EBITDA guidance was also increased to between $545m and $555m, compared to the earlier range of $525m to $540m.
Leonardo DRS now expects its adjusted diluted EPS for 2026 to fall between $1.50 and $1.53 per share, up from a prior projection of $1.34 to $1.39.
The updated guidance incorporates an expected tax rate of 13.0%, down from 16.5%, and maintains an unchanged weighted average share outstanding of 269 million.
“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.
In September, the US Space Force selected Leonardo DRS for a prototype contract to develop scalable sensor systems aimed at enhancing national defence capabilities.
