Buoyed by strong performance across its operating segments, Leonardo DRS [DRS] on Wednesday reported that net income in its first quarter more than doubled and sales were up handsomely, and strong orders helped drive backlog to a record.
Net income surged 140 percent to $29 million, 11 cents earnings per share (EPS), from $12 million (5 cents EPS) a year ago. Adjusted earnings, which exclude acquisition-related costs, restructuring costs, amortization of acquired intangible assets, and one-time non-operational event, were 14 cents per share and beat consensus estimates by 2 cents.
Sales increased 21 percent to $688 million from $569 million a year ago.
Despite the strong results, Leonardo DRS maintained its guidance for 2024.
The company’s Integrated Mission Systems segment was the primary contributor to the top and bottom-line gains due broad growth and the Navy’s Columbia-class nuclear missile submarine. The Advanced Sensing and Computing segment help boost results with work on infrared sensing and naval network computing programs.
Leonardo DRS tallied $815 million in orders in the quarter, representing a book-to-bill ratio above 1.2 times sales, and backlog stood at $7.8 billion, up 84 percent from $4.3 billion a year ago.
Bill Lynn, the company’s chairman and CEO, said on an earnings call that one driver of bookings has been the tactical radar business, which is benefitting from demand related to air defense, counter-drone activity, and force protection. Demand has also strengthened for infrared countermeasures to protect fixed- and rotary-wing aircraft from surface to air missiles, he said.
The company is currently targeting the mid-point of its guidance range for 2024, forecasting sales between $2.9 billion and $3 billion, and adjusted earnings between 74 cents and 82 cents EPS. Free cash flow is expected to be 80 percent of adjusted net earnings. In the first quarter, free cash flow was negative $275 million.