DRS Earnings, Strategic Expansion
Leonardo DRS Reports Robust Q2 Earnings, Raises Guidance, Acquires Raft LLC for $450 Million
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Key Points
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Bookings exceeded $1 billion with a 1.2x book-to-bill ratio, and Leonardo DRS finished Q2 with a record funded backlog, extending a streak of 18 quarters at or above 1.0x.
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The Leonardo group raised its 2026 targets, now guiding for new orders of about €28.2 billion and EBITA of around €2.21 billion, with six-month orders up roughly 38.8% and revenues up about 8.2% on a like-for-like basis.
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The Raft LLC acquisition for $450 million in cash will add open-architecture mission software, AI and data-fusion capabilities, expanding Leonardo DRS’s footprint with U.S. Air Force, Space Force, special operations and intelligence customers, and is expected to be EPS-accretive in the first full year (not yet reflected in the group’s debt outlook).
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Leonardo DRS also announced a quarterly cash dividend of $0.09 per share with a payout around 28.8% and a roughly 0.8% yield, while insiders including an EVP and the CEO reported stock sales in recent weeks.
Leonardo DRS posted Q2 2026 revenue of $913 million, up 10% year over year, and beat earnings expectations, according to Yahoo Finance. Adjusted EBITDA surged 33%, bookings topped $1 billion, and the company hit a record funded backlog — its 18th straight quarter at or above a 1.0x book-to-bill ratio.
The defense electronics firm also struck a deal to buy Raft LLC for $450 million in cash, adding AI and data-fusion software to its portfolio. And it raised its full-year profit outlook, now guiding for adjusted EPS of $1.34–$1.39 and adjusted EBITDA of $525–$540 million, per Watchlist News.
Q2 Beat Fueled by Radars, Ships, and Space Systems
Leonardo DRS saw broad demand across its business in Q2, according to Yahoo Finance. Tactical radars, electric propulsion systems, and infrared sensing all drove growth. Adjusted EBITDA margins reached 24%, up sharply from the prior year. The company kept its full-year revenue guidance at $3.90–$3.975 billion and forecast Q3 revenue above $1 billion with positive free cash flow.
The 1.2x book-to-bill ratio means the company booked more new orders than it recognized in revenue — a sign of strong future demand. Counter-drone systems, air defense, naval platforms, and space programs all contributed to the record backlog. Management called the demand environment across U.S. defense programs a key driver of confidence in the outlook.
$450 Million Raft Deal Adds AI and Mission Software
Leonardo DRS agreed to acquire Raft LLC for $450 million in cash, Yahoo Finance reported. Raft builds open-architecture mission software — systems designed to work across different platforms without being locked into one vendor. The deal expands Leonardo DRS's reach with U.S. Air Force, Space Force, special operations, and intelligence customers.
Management said the deal is expected to add to earnings per share in its first full year. The acquisition brings AI and data-fusion tools — software that pulls together information from multiple sources to support faster decisions. The Raft deal is not yet reflected in the parent Leonardo group's updated debt outlook, according to Reuters.
Parent Leonardo Group Raises Orders and Profit Targets
Italy's Leonardo group, which owns Leonardo DRS, also lifted its full-year 2026 targets. New orders guidance rose to €28.2 billion, up from a prior target of €25 billion, while core profit guidance climbed to €2.21 billion, according to Reuters. New CEO Lorenzo Mariani praised the company's performance as the group reported six-month orders up roughly 39% from a year earlier.
Market Screener reported that adjusted net profit for the first half of 2026 hit €476 million, a 74% jump from the same period in 2025. Orders reached €16.3 billion in the first six months, up 45% year over year. Group revenues rose about 8.2% on a like-for-like basis, reflecting strong demand across Leonardo's aerospace and defense divisions.
Dividend Announced, Insiders Sell Shares Amid Mixed Momentum
Leonardo DRS declared a quarterly cash dividend of $0.09 per share, according to Yahoo Finance. That works out to a payout ratio of about 28.8% and a yield of roughly 0.8%. The dividend signals management confidence in cash generation, even as the company funds the $450 million Raft acquisition.
Despite the strong results, market commentary flagged near-term price softness, with the stock trading in the mid-$40s range. Insiders — including an executive vice president and the CEO — reported stock sales in recent weeks. Analysts still view the longer-term outlook as constructive, pointing to steady U.S. defense spending and the company's growing backlog as key supports.
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