News

Aerospace and defense company Leonardo DRS (NASDAQ:DRS) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, with sales up 16.1% year on year to $799 million. The company expects the full year’s revenue to be around $3.48 billion, close to analysts’ estimates. Its non-GAAP profit of $0.20 per share was 21.7% above analysts’ consensus estimates.

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Leonardo DRS (DRS) Q1 CY2025 Highlights:

StockStory’s Take

Leonardo DRS began the year with results that surpassed Wall Street expectations, driven by robust customer demand across its defense technology portfolio and the favorable timing of material receipts. CEO Bill Lynn emphasized that the company’s backlog reached $8.61 billion, underpinned by continued order strength in advanced infrared sensing, electric power and propulsion, and tactical radars. Management credited the acceleration of supplier deliveries and operational improvements for the quarter’s revenue growth, noting that domestic programs were the primary contributors while international sales saw a temporary dip due to delivery timing.

Looking ahead, management reaffirmed its full-year revenue and adjusted profit guidance, pointing to strong backlog visibility and consistent demand from U.S. defense customers. CFO Mike Dippold highlighted that quarterly results benefitted from early material receipts, which are expected to improve revenue linearity throughout the year. However, the team also acknowledged potential headwinds, including volatile germanium prices impacting margins and ongoing scrutiny of supply chain resilience. Management stressed that investments in facility expansion and technology development are intended to align DRS with evolving defense priorities and ensure readiness for future opportunities.

Key Insights from Management’s Remarks

Leonardo DRS’s first quarter was shaped by a combination of strong domestic demand, operational shifts, and supply chain adjustments. Management outlined several business dynamics that influenced both the quarter’s results and their expectations for the remainder of the year.

Drivers of Future Performance

Management’s outlook for the remainder of the year centers on sustaining organic growth through a strong backlog and ongoing investments, while navigating input cost pressures and potential defense budget shifts.

Top Analyst Questions

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) whether DRS can maintain its strong backlog growth and healthy book-to-bill ratios, (2) how effectively the company mitigates input cost pressures—especially around germanium—and maintains margin expansion, and (3) progress on capital projects such as the Charleston facility and new technology rollouts. Execution in these areas will provide key evidence of DRS’s ability to deliver on its stated strategy amid a dynamic defense environment.

Leonardo DRS currently trades at a forward P/E ratio of 37.1×. Should you load up, cash out, or stay put? See for yourself in our free research report .

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