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Leonardo DRS bookings reach 1.5 times quarterly revenue

Leonardo DRS raised its 2026 outlook with record funded backlog, while quarterly free cash flow fell from a year earlier.

Leonardo DRS booked $1,639 million in the third quarter of 2026.1 Its book-to-bill ratio reached 1.5x, up from 1.2x in the second quarter.1–2 DRS said demand was led by naval power and propulsion, tactical radars and force protection programs.1

Leonardo DRS book-to-bill rises to 1.5x

Quarterly bookings divided by revenue; Q2 and Q3 2026

Q2 20261.2x
Q3 20261.5x

Source: Leonardo DRS Q2 and Q3 2026 earnings releases, filed with the SEC. As of Oct. 29, 2026.

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Funded backlog reached a record $5,640 million, up 21% from a year earlier. President and CEO John Baylouny said that backlog and improved fourth-quarter visibility gave DRS confidence to raise its full-year revenue and profitability outlook.1

The full-year outlook, which excludes the pending Raft acquisition, now calls for revenue of $3,950 million to $3,985 million. DRS also raised its non-GAAP adjusted EBITDA outlook to $545 million to $555 million.1

Quarterly revenue rose 11% to $1,066 million, growth the company described as organic.1

Company-defined, non-GAAP free cash flow fell to $61 million from $77 million a year earlier. DRS attributed the decline to higher cash used for working capital, partially offset by increased earnings. Nine-month free cash flow was negative $28 million, improved from negative $149 million in the comparable prior-year period.1

By our calculation, the revenue outlook implies $1,125 million to $1,160 million in fourth-quarter sales, excluding Raft and exceeding the third-quarter level.1

Sources (2)
  1. Leonardo DRS third quarter 2026 results release, Oct. 29, 2026 www.sec.gov
  2. Leonardo DRS second quarter 2026 results release, July 30, 2026 www.sec.gov
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Contracts · Directed energy

The U.S. Army’s Enduring-High Energy Laser (E-HEL) system represents the service’s transition of high-energy laser technology from prototype development to production.
Archive photograph · The U.S. Army’s Enduring-High Energy Laser (E-HEL) system represents the service’s transition of high-energy laser technology from prototype development to production. Darrell Ames / DVIDS Taken 2026-08-25. public-domain; reuse terms. The appearance of U.S. Department of War (DoW) visual information does not imply or constitute DoW endorsement.

Leonardo DRS joins AeroVironment's Army laser production program, DefenseScoop reports

DefenseScoop reports Leonardo DRS will provide integration expertise for AeroVironment's Army high-energy laser production effort, applying experience in vehicle integration, power and thermal management.

Leonardo DRS has received a subcontract from AeroVironment to support the Army's Enduring-High Energy Laser (E-HEL) production program, DefenseScoop reported Nov. 2, citing a DRS announcement.1

Leonardo DRS landed a subcontract to provide “rugged integration expertise”

Army’s Enduring-High Energy Laser production program

Leonardo DRS landed a subcontract to provide “rugged integration expertise” to support the Army’s Enduring-High Energy Laser production program, the company announced Monday.

AeroVironment$464.8 millionactual

The Army awarded AeroVironment a $464.8 million deal for its Enduring-High Energy Laser (E-HEL) program

Prime contractor AeroVironment tapped DRS, per a press release

Leonardo DRS and AV did not immediately respond to questions Monday about the dollar value of the subcontract.

Reported by DefenseScoop, Sept. 2 and Nov. 2, 2026

Sources
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Aaron Hankins, vice president and general manager of DRS's land systems business, said the company is applying experience in vehicle integration, power and thermal management. The goal is to help AeroVironment deliver a mobile high-energy laser capability for the Army, he said.1

AeroVironment holds the Army's $464.8 million other transaction agreement for E-HEL, announced in September with the intent of moving the system from prototype to production.1–2 DRS and AeroVironment did not immediately respond to DefenseScoop's questions on Nov. 2 about the subcontract's dollar value.1

DRS cited earlier directed-energy work, including a rapid prototyping effort to integrate a high-energy laser into an armored vehicle for live-fire evaluations.1

DefenseScoop reports that officials envision integrating E-HEL with Army platforms such as the Joint Light Tactical Vehicle or Infantry Squad Vehicle, or in palletized setups. Fielding powerful lasers that work effectively and reliably in combat remains technically challenging; DRS aims to help address those challenges under the subcontract.1

Sources (2)
  1. DefenseScoop, Nov. 2, 2026: Leonardo DRS tapped to support Army's high-energy laser program defensescoop.com
  2. DefenseScoop, Sept. 2, 2026: Army awards AeroVironment nearly $500M contract for laser weapons defensescoop.com
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Industry · Unmanned systems

Kratos plans a turbojet production ramp ahead of expected sales

Kratos targets up to 3,000 engines produced in 2027. It forecasts about 1,500 sold, with cash flow estimates including working capital for the ramp.

Kratos plans to increase turbojet production to address expected customer demand for jet engines for small cruise missiles and drones. Its 2027 forecast assumes about 1,500 engines sold, with most deliveries in the second half.1

Kratos plans turbojet production ahead of forecast sales

Turbojet engines, 2027: company production target and sales forecast

Planned productionUp to 3,000
Forecast salesApproximately 1,500

Kratos forecasts the significant majority of engine deliveries in the second half of 2027.

Source: Kratos third-quarter 2026 results. As of Nov. 5, 2026.

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Kratos's fiscal 2026 and 2027 cash flow estimates include working capital for materials, components and equipment to increase production of turbojet engines up to 3,000 engines produced in 2027.1

Third-quarter 2026 revenue grew 35.7% year over year. Organic growth, excluding the current-year contribution from acquisitions, was 23.2%. Turbine Technologies posted 27.1% organic revenue growth.1

Growth is already absorbing cash. Third-quarter 2026 operations used $5.2 million, which Kratos attributed primarily to receivables growth, alongside inventory increases tied to production ramps and development investments.1

For full year 2026, Kratos forecasts free cash flow use of $110 million to $120 million. It forecasts capital expenditures of $100 million to $110 million. It expects investments in inventory, property, plant, equipment and facilities to continue at least throughout fiscal 2027.1

Kratos raised $1,348.4 million from common stock issuance, net of issuance costs, in the first nine months of fiscal 2026. It ended the quarter with $1,404.3 million in cash and cash equivalents.1

Separately, third-quarter Unmanned Systems revenue fell to $74.6 million from $87.2 million a year earlier. Kratos attributed the decline to a prior-year shipment of Valkyries to an international customer that generated $16.1 million.1

Kratos says continuing resolutions typically restrict production-rate increases and new program starts. Its guidance assumes a continuing resolution into its first fiscal quarter of 2027. If it extends beyond March 31, 2027, the company says it will need to reassess its initial forecast for that year.1

Sources (1)
  1. Kratos Reports Third Quarter 2026 Financial Results, Nov. 5, 2026 ir.kratosdefense.com
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