Leonardo DRS, Inc. reported a revenue increase of 5.9% for the first quarter of 2026, reaching $846 million compared to $799 million in the same period of 2025. The company's gross profit also rose significantly, up 17.1% to $212 million, resulting in a gross margin of 25.1%, an increase of 240 basis points from the previous year. Operating earnings improved by 30.5% to $77 million, while net earnings increased by 24% to $62 million, translating to a basic and diluted earnings per share of $0.23, up from $0.19 in the prior year.
The financial performance reflects a strategic focus on advanced sensing, electric power, and propulsion activities, which contributed to the revenue growth. The cost of revenues increased by 2.6% to $634 million, primarily due to the higher revenue levels, although improved program performance helped mitigate some of these costs. General and administrative expenses rose by 11.1% to $130 million, driven by increased investments in independent research and development and bid proposal efforts.
In terms of operational metrics, the company reported a total backlog of $8.382 billion as of March 31, 2026, a slight increase from $8.372 billion a year earlier. Funded backlog rose to $4.686 billion, while unfunded backlog decreased to $3.696 billion. Bookings for the quarter totaled $885 million, down 10.7% from $991 million in the previous year, with a notable decline in the Advanced Sensing and Computing (ASC) segment, which saw bookings drop by 35.9%. Conversely, the Integrated Mission Systems (IMS) segment experienced a 41.6% increase in bookings, reflecting strong demand for naval power and propulsion efforts.
The company continues to rely heavily on U.S. government contracts, which accounted for approximately 79% of total revenues in both the first quarters of 2026 and 2025. The U.S. Department of Defense remains the largest customer, with significant contributions from the U.S. Navy and Army. Looking ahead, Leonardo DRS anticipates that ongoing geopolitical tensions and increased defense spending will drive demand for its products and services. However, the company also acknowledges potential risks related to government budget uncertainties and the impact of inflation on supply chain costs, which could affect future profitability.
About Leonardo DRS, Inc.
Leonardo DRS, Inc. provides advanced defense technology, specializing in sensing, network computing, power systems, and force protection for U.S. military and allied forces. Its core offerings include electro-optical sensors, electronic warfare, naval propulsion, and electrical systems. Serving primarily the U.S. government, the company operates through long-term contracts, emphasizing innovation, system integration, and multi-domain defense solutions across land, sea, air, space, and cyber markets.
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