Revenue growth accelerated to 10.1% in 2026Q2, with gross margin expanding to 26.0% and operating margin reaching 11.2%, up from 6.2% in 2024Q1, reflecting strong operating leverage and a favorable product mix.
Leonardo DRS, Inc. (DRS) annual income statement — 10-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Mar'08 | Mar'07 | Mar'06 |
|---|
| Sales/Revenue | 3.78B | 3.65B | 3.23B | 2.83B | 2.69B | 2.88B | 2.78B | 2.71B | 3.3B | 2.82B | 1.74B |
| Revenue Growth % | 10.46% | 12.8% | 14.44% | 4.94% | -6.46% | 3.64% | 2.36% | -17.64% | 16.81% | 62.55% | - |
| Cost of Goods Sold | 2.84B | 2.8B | 2.5B | 2.18B | 2.12B | 2.33B | 2.28B | 2.25B | 2.87B | 2.46B | 1.5B |
| COGS % of Revenue | - | 76.78% | 77.24% | 77.07% | 78.65% | 81% | 82.22% | 83.09% | 87.06% | 87.15% | 86.15% |
| Gross Profit | 940M | 847M | 736M | 648M | 575M | 547M | 494M | 459M | 426.48M | 362.48M | 240.31M |
| Gross Margin % | 24.87% | 23.22% | 22.76% | 22.93% | 21.35% | 19% | 17.78% | 16.91% | 12.94% | 12.85% | 13.85% |
| Gross Profit Growth % | - | 15.08% | 13.58% | 12.7% | 5.12% | 10.73% | 7.63% | 7.63% | 17.65% | 50.84% | - |
| Operating Expenses | 542M | 499M | 443M | 417M | 14M | 311M | 313M | 296M | 66.1M | 50.9M | 47.6M |
| OpEx % of Revenue | - | 13.68% | 13.7% | 14.76% | 0.52% | 10.8% | 11.27% | 10.91% | 2.01% | 1.8% | 2.74% |
| Selling, General & Admin | 518M | 497M | 414M | 384M | 357M | 293M | 283M | 277M | 0 | 0 | 0 |
| SG&A % of Revenue | - | 13.62% | 12.8% | 13.59% | 13.26% | 10.18% | 10.19% | 10.21% | - | - | - |
| Research & Development | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 66.1M | 50.9M | 47.6M |
| R&D % of Revenue | - | - | - | - | - | - | - | - | 2.01% | 1.8% | 2.74% |
| Other Operating Expenses | 4M | 2M | 29M | 33M | -343M | 18M | 30M | 19M | 0 | 0 | 0 |
| Operating Income | 398M | 348M | 293M | 231M | 561M | 236M | 181M | 163M | 360.38M | 311.58M | 192.71M |
| Operating Margin % | 10.53% | 9.54% | 9.06% | 8.17% | 20.83% | 8.2% | 6.52% | 6.01% | 10.94% | 11.04% | 11.1% |
| Operating Income Growth % | - | 18.77% | 26.84% | -58.82% | 137.71% | 30.39% | 11.04% | -54.77% | 15.66% | 61.68% | - |
| EBITDA | 475M | 441M | 384M | 316M | 626M | 294M | 234M | 214M | 438.57M | 388.25M | 241.69M |
| EBITDA Margin % | 12.57% | 12.09% | 11.87% | 11.18% | 23.25% | 10.21% | 8.42% | 7.89% | 13.31% | 13.76% | 13.93% |
| EBITDA Growth % | 14.18% | 14.84% | 21.52% | -49.52% | 112.93% | 25.64% | 9.35% | -51.2% | 12.96% | 60.63% | - |
| D&A (Non-Cash Add-back) | 77M | 93M | 91M | 85M | 65M | 58M | 53M | 51M | 78.19M | 76.66M | 48.98M |
| EBIT | 399M | 344M | 285M | 228M | 559M | 235M | 176M | 160M | 361.71M | 308.51M | 198.14M |
| Net Interest Income | -3M | -8M | -21M | -36M | -34M | -35M | -64M | -65M | -108.36M | -118.64M | -55.83M |
| Interest Income | 2M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2.06M | 1.27M | 7.25M |
| Interest Expense | 5M | 8M | 21M | 36M | 34M | 35M | 64M | 65M | 110.42M | 119.91M | 63.09M |
| Other Income/Expense | -10M | -12M | -29M | -39M | -36M | -36M | -69M | -68M | -109.09M | -122.99M | -57.66M |
| Pretax Income | 388M | 336M | 264M | 192M | 525M | 200M | 112M | 95M | 251.29M | 188.59M | 135.05M |
| Pretax Margin % | 10.27% | 9.21% | 8.16% | 6.79% | 19.5% | 6.95% | 4.03% | 3.5% | 7.63% | 6.69% | 7.78% |
| Income Tax | 66M | 58M | 51M | 24M | 120M | 46M | 27M | 20M | 83.75M | 60.1M | 51.99M |
| Effective Tax Rate % | 17.01% | 17.26% | 19.32% | 12.5% | 22.86% | 23% | 24.11% | 21.05% | 33.33% | 31.87% | 38.5% |
| Net Income | 322M | 278M | 213M | 168M | 405M | 154M | 85M | 75M | 165.77M | 127.06M | 81.49M |
| Net Margin % | 8.52% | 7.62% | 6.59% | 5.94% | 15.04% | 5.35% | 3.06% | 2.76% | 5.03% | 4.5% | 4.7% |
| Net Income Growth % | 28.8% | 30.52% | 26.79% | -58.52% | 162.99% | 81.18% | 13.33% | -54.76% | 30.47% | 55.91% | - |
| Net Income (Continuing) | 322M | 278M | 213M | 168M | 405M | 154M | 85M | 75M | 167.53M | 128.49M | 83.06M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 1.20 | 1.03 | 0.80 | 0.64 | 1.88 | 1.06 | 0.57 | 0.52 | 2.01 | 6.23 | 15.99 |
| EPS Growth % | 29.03% | 28.75% | 25% | -65.96% | 77.36% | 85.96% | 9.62% | -74.06% | -67.82% | -61.04% | - |
| EPS (Basic) | - | 1.05 | 0.81 | 0.64 | 1.88 | 1.06 | 0.57 | 0.52 | 2.01 | 6.38 | 16.51 |
| Diluted Shares Outstanding | 268.9M | 268.8M | 267.7M | 264M | 215M | 145M | 149.78M | 145M | 82.69M | 20.39M | 5.1M |
| Basic Shares Outstanding | 268.75M | 265.3M | 264M | 262.5M | 215M | 145M | 149.78M | 145M | 82.46M | 19.93M | 4.94M |
| Dividend Payout Ratio | - | 34.53% | - | - | 97.78% | - | - | - | 2.98% | 3.91% | 4.55% |
Quick answers to the most common questions about buying DRS stock.
For fiscal year 2025, Leonardo DRS, Inc. (DRS) reported total revenue of $3.65B. This represents a 110.2% increase compared to $1.74B in 2005.
Leonardo DRS, Inc. (DRS) is profitable, generating $278.0M in net income for the fiscal year ending 2025 with a net profit margin of 7.6%.
Leonardo DRS, Inc. (DRS) reported an operating income of $348.0M, resulting in an operating profit margin of 9.5%. This margin reflects the operational efficiency of the business before interest and taxes.
Leonardo DRS, Inc. (DRS) generated $847.0M in gross profit for the year, representing a gross profit margin of 23.2%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Backlog conversion execution risk
Metrics are mathematically derived from official filings.
Accelerating Growth on Navy Programs
Revenue growth accelerated to 10.1% in 2026Q2, up from 5.9% in 2026Q1, driven by record backlog and strong demand for naval propulsion and sensing systems, as per recent earnings reports.
The sequential acceleration in revenue growth, from 5.9% to 10.1%, suggests that the company is converting its record backlog into sales at a faster pace. This is likely supported by increased funding for Columbia-class submarines and C-UAS systems. The durability of this growth appears tied to multi-year defense contracts, which provide visibility, but investors should monitor the book-to-bill ratio to ensure continued momentum.
Gross Margin Expansion Signals Mix Shift
Gross margin improved to 26.0% in 2026Q2, up from 22.2% in 2024Q1, indicating a favorable shift toward higher-margin proprietary sensing and propulsion technologies, as reported in financial statements.
The 380 basis point expansion in gross margin over the past ten quarters suggests that DRS is increasingly selling more differentiated, higher-value products rather than lower-margin integration work. This trend may reflect the growing contribution of RADA's radar technology and the Columbia-class propulsion systems. If the mix continues to favor proprietary content, gross margin could sustain this upward trajectory, though input cost inflation for specialized components remains a risk.
Operating Leverage Emerging from Scale
Operating margin rose to 11.2% in 2026Q2 from 6.2% in 2024Q1, as SG&A grew only 28% while revenue increased 33%, indicating improving operating leverage, based on reported figures.
The operating margin expansion from 6.2% to 11.2% demonstrates that DRS is scaling its revenue without a commensurate increase in overhead costs. SG&A as a percentage of revenue declined from 14.7% in 2024Q1 to 14.1% in 2026Q2, suggesting that the company is gaining efficiency as it grows. This trend may continue if the company can maintain its cost discipline while converting its record backlog, but any execution missteps on fixed-price contracts could reverse this leverage.
Earnings Quality Supported by Low SBC
Net income grew 60% year-over-year in 2026Q2, with stock-based compensation only $7M, representing less than 1% of revenue, indicating high-quality earnings, as per SEC filings.
The modest level of stock-based compensation relative to revenue suggests that reported EPS is not significantly inflated by non-cash charges. Additionally, the effective tax rate appears stable, and there are no notable non-operating items in the income statement. This supports the quality of reported earnings, though investors should remain alert to potential cumulative catch-up adjustments from percentage-of-completion accounting, which could cause volatility.
COGS Efficiency Drives Margin Gains
COGS as a percentage of revenue fell to 74.0% in 2026Q2 from 77.8% in 2024Q1, indicating improved cost management and a favorable product mix, as reported in financial statements.
The reduction in COGS ratio by 380 basis points over the past ten quarters suggests that DRS is either achieving better pricing on its contracts or benefiting from a shift toward higher-margin products. This cost efficiency is a key driver of the gross margin expansion. However, the company remains exposed to supply chain risks for specialized semiconductors and rare earth materials, which could pressure COGS if input costs rise unexpectedly.
2024Q1 Marks Margin Inflection Point
Operating margin bottomed at 6.2% in 2024Q1 and has since expanded to 11.2% in 2026Q2, driven by revenue growth and cost discipline, as per quarterly earnings data.
The period from 2024Q1 to 2026Q2 represents a clear inflection in profitability, with operating margin nearly doubling. This inflection appears to be driven by a combination of higher revenue volumes, a favorable mix shift, and disciplined SG&A management. The lasting impact is that DRS has established a higher profitability baseline, which may support a re-rating if sustained. Investors should monitor whether this margin expansion can be maintained as the company scales further.
What Could Invalidate the Base Case
Despite strong margin expansion, the 9.5% operating margin remains below peers like CW at 18.2%, and reliance on fixed-price contracts could expose DRS to cost overruns, as per reported figures.
The most significant challenge to the bullish narrative is the sustainability of margin expansion. While DRS has improved operating margin to 11.2%, it still lags peers like Curtiss-Wright (18.2%) and HEICO (22.7%), suggesting potential structural disadvantages. Additionally, the company's use of percentage-of-completion accounting introduces risk of negative EAC adjustments if cost estimates rise, particularly given supply chain fragility for specialized components. If backlog conversion encounters execution issues, the recent margin gains could reverse, pressuring the stock.