DRS is a leading provider of defense products and technologies that are used across land, air, sea, space and cyber domains. Our diverse array of defense systems and solutions is offered to all branches of the U.S. military, major aerospace and defense prime contractors, government intelligence agencies and international military customers for deployment on a wide range of military platforms. We focus our capabilities in areas of critical importance to the U.S. military, such as sensing, electronic warfare (“EW”), cyber security, network computing, communications, force protection and electrical power conversion and propulsion. As a mid-tier defense company with a portfolio that includes internally developed proprietary intellectual property (“IP”) and offerings at the component, sub-system and system level, we are able to serve as either prime contractor or a sub-contractor on key contracts, affording us flexibility in how we approach the market. Our alignment with the nation’s top defense priorities has allowed us to achieve a 12% compounded annual growth rate (“CAGR”) in revenues from the year ended December 31, 2016 through the year ended December 31, 2020. This growth, which exceeded the DoD budget CAGR of 5.3% during such period and drove our annual revenue to approximately $2.8 billion for the year ended December 31, 2020, was driven by organic growth. During the same period, our net earnings (loss) improved by $247 million to $85 million, our operating earnings grew $178 million to$181 million and our Adjusted EBITDA grew $117 million to $268 million (CAGR of 16%). Adjusted EBITDA is a non-GAAP measure. We have a 50-year legacy of designing and manufacturing innovative and differentiated products and solutions for military applications. From our earliest sonar systems that were instrumental in detecting enemy submarines, to today’s best-in-class electro-optical sensors, we have continually developed advanced technologies to address complex military challenges. Throughout much of our history, we have targeted our investments towards the highest growth areas of the DoD defense budgets. Today, we employ approximately 6,500 people including a substantial number of highly trained engineers and personnel with security clearances to support classified programs for the U.S military. We focus on products, systems and solutions that can be adapted for installation on a wide range of military platforms. This allows us to leverage our technology investments to expand revenue opportunities. Our high-technology solutions are designed to transition from one military platform to another. In addition, we have a significant installed base of products and solutions, which allows us to enhance revenue opportunities by providing upgrades to existing platforms. This gives us a resilient position to offer new solutions and technology in changing budget environments. Our growth has been facilitated by our longstanding relationships and position as a trusted partner with the U.S. military, intelligence community and industry customers. Together, these characteristics allow us to pivot quickly to address emerging needs for our customers and generate growth opportunities in today’s dynamic defense market. We operate in three segments: Advanced Sensor Technologies, Network Computing & Communications and Integrated Mission Systems. We have achieved significant growth over the past five years by aligning our investments and technology development to address the greatest threats to U.S. defense interests. Advanced Sensor Technologies: Our Advanced Sensor Technologies segment provides world-class electro-optical sensor technologies, laser systems, EW systems and intelligence and surveillance solutions to U.S. military and intelligence community customers. We are a leading provider of ground vehicle targeting and surveillance sensors, including electro-optical and advanced detection systems. We are also a leading provider of soldier sensor systems in high priority modernization areas such as infrared imaging and precision targeting systems. Our infrared focal plane array foundry is recognized as a leading provider of high performance and small sized cryogenically cooled and uncooled detector arrays. We are also a leading and world-recognized provider of signals intelligence high-performance radio frequency receivers and transceivers for U.S. and international customers. Our quantum cascade laser technology has promising military and commercial medical applications. Collectively, these sensor technologies provide our warfighters with a distinct battlefield advantage. Network Computing & Communications: Our Network Computing & Communications segment provides advanced defense electronics solutions across warfare domains. Our technologies and products are used on legacy and new military platforms, end-to-end network communication systems, network services and cyber solutions. We are a leading provider of ruggedized computing equipment, having provided advanced tactical computing units for ground combat vehicles and command post operations for more than two decades. During this period we have delivered more than 125,000 units. For the U.S. Navy and its allies, we provide naval computing infrastructure, network and data distribution, radar and rugged naval control systems, which are present on naval surface and subsurface combatant vessels. Across the full spectrum of our network computing capabilities, we have leadership positions at both the product and sub-systems levels. Our global communications network is a worldwide network of terrestrial and satellite bandwidth that ensures our customers’ data is secure and reliable. As a result of this capability, we are positioned as one of the leading providers of secured commercial satellite communications to the U.S. military. Integrated Mission Systems: Our Integrated Mission Systems segment provides critical force protection, vehicle integration, transportation and logistics and electrical conversion and ship propulsion systems to the U.S. military. Our force protection systems protect service members and military assets from evolving threats and include solutions for counter-unmanned aerial systems, short-range air defense systems and active protection systems on ground vehicles. In 2018, we were awarded the Expedited Active Protection System program by bringing the TROPHY™ Active Protection System (“APS”) to the U.S. market, making us the leading U.S. provider of active protection systems for the U.S. Army. We were also awarded the Initial Maneuver Short-Range Air Defense (“IM-SHORAD”) Mission Equipment Package Program for the U.S. Army that year, culminating an 18-month cycle from development to customer delivery. We have military transportation and logistics offerings and ground vehicle integration capabilities to support U.S. forces in a wide range of operational environments. We provide power conversion and propulsion systems for the U.S. Navy’s top priority shipbuilding programs, building on our legacy of providing power components and systems for nearly all naval combat vessels for three decades, positioning us to continue as a leading provider of electrical ship propulsion systems and components for the U.S. Navy. We are a Delaware corporation. Our principal executive offices are located at 2345 Crystal Drive Suite 1000, Arlington, Virginia.
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Here are 1-3 brief analogies for Leonardo DRS:
- Like a specialized Raytheon or Northrop Grumman, focusing on advanced defense electronics and systems.
- The Intel or NVIDIA of advanced defense electronics and systems.
- Similar to the defense technology arm of L3Harris, providing critical communication, sensor, and power systems for the military.
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- Naval Power Systems: Provides integrated electric power generation, distribution, and propulsion systems for naval vessels.
- Electro-Optical Infrared Systems: Develops and manufactures advanced thermal imaging, night vision, and sensor systems for various defense applications.
- Network Computing and Communication Systems: Offers ruggedized computers, displays, and secure communication solutions for military platforms and personnel.
- Integrated Diagnostics and Test Systems: Supplies automated test equipment and diagnostic solutions for military readiness and maintenance.
- Mission Command Technologies: Provides C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) solutions for enhanced battlefield awareness and decision-making.
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Leonardo DRS (symbol: DRS) primarily sells its advanced defense products and technologies to government entities and other defense prime contractors, rather than individuals. The company's business model is predominantly Business-to-Government (B2G) and Business-to-Business (B2B).
Major Customers:
- U.S. Government: This is Leonardo DRS's principal customer, primarily through the U.S. Department of Defense (DoD), including the Army, Navy, Air Force, Marine Corps, and Special Operations Forces. Sales to the U.S. Government typically account for over 80% of the company's total consolidated net sales.
- International Governments: Leonardo DRS also supplies advanced defense technologies to various allied international governments worldwide.
- Defense Prime Contractors: The company serves as a key supplier to major defense prime contractors who integrate DRS's components, subsystems, and systems into their larger platforms and programs. Examples of such customers include:
- Lockheed Martin (symbol: LMT)
- RTX Corporation (symbol: RTX)
- Northrop Grumman (symbol: NOC)
- General Dynamics (symbol: GD)
- The Boeing Company (symbol: BA)
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William J. Lynn III, Chairman and Chief Executive Officer
William J. Lynn III is the Chairman and Chief Executive Officer of Leonardo DRS. He was appointed CEO in January 2012. Prior to joining DRS, Mr. Lynn served as the 30th U.S. Deputy Secretary of Defense from 2009 to 2011, managing three million personnel and overseeing an annual budget of $700 billion. In this role, he also led efforts in cybersecurity, space strategy, and energy policy. From 2002 to 2009, he was the Senior Vice President of Government Operations and Strategy at the Raytheon Company, where he directed strategic planning and oversaw merger and acquisition activities. Earlier in his career, he served as Under Secretary of Defense (Comptroller) from 1997 to 2001 and as Director of Program Analysis and Evaluation in the Office of the Secretary of Defense from 1993 to 1997.
Michael Dippold, Executive Vice President, Chief Financial Officer
Michael Dippold has served as the Executive Vice President and Chief Financial Officer of Leonardo DRS since 2017. Before this role, he held various positions within the company, including Senior Vice President, Corporate Controller from December 2015 to January 2017, and Vice President, Assistant Controller from December 2010 to December 2015.
John Baylouny, Executive Vice President, Chief Operating Officer
John Baylouny is the Executive Vice President and Chief Operating Officer of Leonardo DRS. He has served for over 35 years at Leonardo DRS and will be named President and CEO, as well as a member of the board, effective January 1, 2026. He held the COO position since 2018. Previously, he served as the Chief Technology Officer from 2017 to 2018 and as Vice President and General Manager of Land Systems and Advanced ISR businesses from 2014 to 2017.
Mark A. Dorfman, Executive Vice President, General Counsel and Secretary
Mark A. Dorfman serves as the Executive Vice President, General Counsel and Secretary for Leonardo DRS.
Dr. Philip Perconti, Chief Technology Officer
Dr. Philip Perconti is the Chief Technology Officer of Leonardo DRS since 2021. Prior to joining Leonardo DRS, he served as the Deputy Assistant Secretary of the Army for Research and Technology and Army Chief Scientist. He also held the role of Director at the U.S. Army Research Laboratory and was a Senior Executive at the Army's Corporate Research Lab.
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One clear emerging threat for Leonardo DRS is the increasing push by the U.S. Department of Defense (DoD) to leverage commercial technologies and the associated entry of large, non-traditional defense contractors, particularly major technology companies (e.g., Amazon, Microsoft, Google), into key defense technology sectors. These tech giants bring massive commercial research and development budgets, agile software development methodologies, advanced cloud computing infrastructure, and leading-edge artificial intelligence and machine learning capabilities. While Leonardo DRS often partners with or supplies components to prime contractors, the direct involvement of these tech companies in developing solutions for areas like secure cloud environments, data analytics, and AI-driven command and control systems could disrupt traditional procurement models and reduce reliance on specialized, bespoke hardware and software solutions traditionally provided by companies like DRS. The historical parallels include how software-centric companies disrupted hardware-centric industries by offering more flexible, scalable, and rapidly updated solutions, potentially shifting market share or demanding a fundamental change in business models for traditional defense suppliers.
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Leonardo DRS (DRS) operates in several key markets for its defense products and technologies. The addressable market sizes for their main products and services are as follows:
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Electro-Optical/Infrared (EO/IR) Systems: The global electro-optical infrared system market was valued at USD 10.8 billion in 2024 and is projected to grow to USD 13.15 billion by 2032, exhibiting a Compound Annual Growth Rate (CAGR) of 2.46%. North America held the largest market share, at 35.19%, in 2024. Another estimate places the global EO/IR systems market at USD 15.07 billion in 2024, with a projection to reach USD 21.67 billion by 2034 at a CAGR of 3.70%. For military EO/IR systems specifically, the global market was valued at USD 8.25 billion in 2023 and is projected to reach USD 10.86 billion by 2030, with a CAGR of 4.2%. North America dominated this market with a 36.85% revenue share in 2023.
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Defense Electronics (broad category, including various DRS products such as advanced sensing, network computing, and force protection): The global defense electronics market is projected to grow from USD 231.84 billion in 2024 to USD 244.38 billion in 2025, with a CAGR of 5.4%, and is expected to reach USD 301.53 billion by 2029. Other reports indicate the global market size was USD 175.2 billion in 2024, with an estimated growth to USD 302.8 billion by 2034 at a CAGR of 5.8% from 2025. North America is a significant region in this market, expected to reach over USD 125 billion by 2034, and held 39.5% of the market share, valued at USD 69.32 billion, in 2023.
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Naval and Maritime Systems (including naval power and propulsion): The global warship and naval vessels market was valued at USD 71.14 billion in 2024 and is estimated to reach USD 110.25 billion by 2033, exhibiting a CAGR of 5.63%. North America held over 32.7% of this market share in 2024. A broader category, the global naval vessels and surface combatants market, was valued at USD 460.38 billion in 2023 and is projected to reach USD 674.81 billion by 2030, with a CAGR of 5.6%. Asia Pacific dominated this market with a 44.63% share in 2022, and North America also witnessed significant growth in 2022.
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Integrated Sensor Systems: The global market size for Integrated Sensor Systems (ISS) was approximately USD 35.2 billion in 2023 and is anticipated to reach USD 85.9 billion by 2032, growing at a CAGR of 10.7%. More broadly, the global sensors market was valued at USD 243.1 billion in 2023 and is poised to grow to USD 498.1 billion by 2032, with a CAGR of 8.3%. North America's strong R&D environment supports continuous innovation in high-precision sensor integration.
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Network Computing and Communications (including Mission Management Systems): The global Network Management System market is estimated to be valued at USD 11.08 billion in 2025 and is expected to reach USD 21.06 billion in 2032, with a CAGR of 9.6%. North America is projected to hold the largest market share of 33.6% by 2025. Another source indicates the global network management system market was valued at USD 10.02 billion in 2024 and is predicted to reach USD 25.94 billion by 2034, expanding at a CAGR of 9.98% from 2025. North America led the market with a 34% revenue share in 2024. For Mission Management Systems specifically, the global market was valued at USD 8.2 billion in 2024 and is projected to reach USD 15.7 billion by 2034, registering a CAGR of 6.8%. North America holds the largest Mission Management System market share, accounting for 45.2% of the global market.
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Leonardo DRS (DRS) is anticipated to drive future revenue growth over the next 2-3 years through several key areas, primarily fueled by robust demand in the defense sector and strategic technological advancements.
Here are the expected drivers:
* Strong Backlog and Continued Program Wins: Leonardo DRS has demonstrated consistent strong bookings and a growing backlog, reaching a record $8.9 billion in Q3 2025 (some sources refer to Q3 2024 earnings calls as well, with backlog at $8.3 billion). This substantial backlog provides a solid foundation for future revenue, as existing contracts translate into recognized sales. Management has emphasized strong operational execution and alignment with customer priorities, which has been reflected in these strong bookings.
* Demand for Core Advanced Defense Technologies: The company is experiencing sustained customer demand across its core technologies, including naval network computing, electric power and propulsion, force protection, and advanced infrared sensing. These areas are critical for U.S. national security customers and allies, indicating a stable and growing market for DRS's established product lines.
* Growth in Counter-UAS and Sensing Solutions: There is robust demand specifically for counter-unmanned aerial systems (C-UAS) and advanced sensing solutions. Leonardo DRS has secured significant contracts in ground-based C-UAS and short-range air defense programs, highlighting this as a strong growth area.
* Launch of New, Innovative Products and AI-Enabled Solutions: Leonardo DRS is actively investing in research and development and launching new products that integrate advanced technologies. Examples include the introduction of SAGEcore™, an integrated operating system that combines AI, advanced sensors, and edge computing for real-time threat detection, and THOR, a new product in the counter-UAS space. These new offerings are expected to capture new market opportunities and enhance the company's competitive position.
* Strategic Alignment with Increased Defense Spending: Analysts and company commentary suggest that Leonardo DRS is well-positioned to benefit from increased U.S. and NATO defense spending, as well as broader global defense budget increases. This geopolitical trend is expected to sustain demand for the company's advanced defense technologies and drive continued revenue expansion.
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Capital Allocation Decisions (Last 3-5 Years) - Leonardo DRS (DRS)
Share Repurchases
- Leonardo DRS repurchased 247,558 shares for approximately $10 million in the third quarter of 2025.
- In the second quarter of 2025, the company repurchased 265,120 shares for approximately $10.43 million, completing a buyback of 353,170 shares valued at $13.29 million under a plan announced on February 20, 2025.
- From July to September 2025, Leonardo DRS completed the buyback of 600,728 shares valued at $23.29 million.
Share Issuance
- Proceeds from stock issuance were $9 million in the third quarter of 2025 and $13 million in the third quarter of 2024.
- In November 2023, Leonardo S.p.A. completed a secondary offering of 20,700,000 shares of Leonardo DRS common stock at $17.75 per share; however, Leonardo DRS did not receive any proceeds from this offering.
Outbound Investments
- In the third quarter of 2025, Leonardo DRS made a $15 million investment in Hoverfly Technologies, increasing its stake to approximately 25%.
- Leonardo DRS has made one investment in Hoverfly Tech and acquired six companies, including RADA Electronic Industries and Ascendant Engineering Solutions.
- The company is actively seeking new mergers and acquisitions opportunities as part of its balanced capital allocation strategy.
Capital Expenditures
- Capital expenditures were $90 million in the third quarter of 2025 and $56 million in the third quarter of 2024.
- For the full years, capital expenditures were $60 million in 2023, $65 million in 2022, and $60 million in 2021.
- Increased capital expenditure investments in 2025 are focused on areas such as quantum lasers, AI sensor fusion, counter-UAS, space, and missile seeker capabilities.
RADA Electronic Industries and Ascendant Engineering Solutions.
The company is actively seeking new mergers and acquisitions opportunities as part of its balanced capital allocation strategy.
Capital Expenditures
- Capital expenditures were $90 million in the third quarter of 2025 and $56 million in the third quarter of 2024.
- For the full years, capital expenditures were $60 million in 2023, $65 million in 2022, and $60 million in 2021.
- Increased capital expenditure investments in 2025 are focused on areas such as quantum lasers, AI sensor fusion, counter-UAS, space, and missile seeker capabilities.
