Cover
Cover - shares shares in Millions | 6 Months Ended | |
Jun. 30, 2023 | Aug. 01, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 333-253583 | |
Entity Registrant Name | Leonardo DRS, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 13-2632319 | |
Entity Address, Address Line One | 2345 Crystal Drive | |
Entity Address, Address Line Two | Suite 1000 | |
Entity Address, City or Town | Arlington | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 22202 | |
City Area Code | 703 | |
Local Phone Number | 416-8000 | |
Title of 12(b) Security | Common stock, $0.01 par value | |
Trading Symbol | DRS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 262 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001833756 | |
Current Fiscal Year End Date | --12-31 |
Consolidated Statements of Earn
Consolidated Statements of Earnings (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenues: | ||||
Total revenues | $ 628 | $ 627 | $ 1,197 | $ 1,239 |
Cost of revenues: | ||||
Total cost of revenues | (483) | (500) | (921) | (978) |
Gross profit | 145 | 127 | 276 | 261 |
General and administrative expenses | (90) | (84) | (190) | (160) |
Amortization of intangibles | (5) | (2) | (11) | (4) |
Other operating expenses, net | (8) | 1 | (8) | 1 |
Operating earnings | 42 | 42 | 67 | 98 |
Interest expense | (9) | (10) | (17) | (18) |
Other, net | 0 | 0 | (1) | 0 |
Earnings before taxes | 33 | 32 | 49 | 80 |
Income tax provision (benefit) | (2) | 7 | 2 | 19 |
Net earnings | $ 35 | $ 25 | $ 47 | $ 61 |
Net earnings per share from common stock: | ||||
Basic earnings per share (in dollars per share) | $ 0.14 | $ 0.12 | $ 0.18 | $ 0.29 |
Diluted earnings per share (in dollars per share) | $ 0.13 | $ 0.12 | $ 0.18 | $ 0.29 |
Products | ||||
Revenues: | ||||
Total revenues | $ 590 | $ 549 | $ 1,110 | $ 1,090 |
Cost of revenues: | ||||
Total cost of revenues | (458) | (445) | (861) | (867) |
Services | ||||
Revenues: | ||||
Total revenues | 38 | 78 | 87 | 149 |
Cost of revenues: | ||||
Total cost of revenues | $ (25) | $ (55) | $ (60) | $ (111) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 35 | $ 25 | $ 47 | $ 61 |
Other comprehensive income (loss): | ||||
Foreign currency translation gain, net of income taxes | 1 | (1) | 1 | 0 |
Gain from pension settlements | 0 | 0 | 0 | 3 |
Net unrecognized gain (loss) on postretirement obligations, net of income taxes | 1 | (1) | 1 | 1 |
Other comprehensive income (loss), net of income tax | 2 | (2) | 2 | 4 |
Total comprehensive income | $ 37 | $ 23 | $ 49 | $ 65 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 35 | $ 306 |
Accounts receivable, net | 198 | 166 |
Contract assets | 1,018 | 872 |
Inventories | 378 | 319 |
Prepaid expenses | 17 | 20 |
Other current assets | 51 | 24 |
Total current assets | 1,697 | 1,707 |
Noncurrent assets: | ||
Property plant and equipment, net | 402 | 404 |
Intangible assets, net | 161 | 172 |
Goodwill | 1,236 | 1,236 |
Deferred tax assets | 68 | 66 |
Other noncurrent assets | 98 | 92 |
Total noncurrent assets | 1,965 | 1,970 |
Total assets | 3,662 | 3,677 |
Current liabilities: | ||
Short-term borrowings and current portion of long-term debt | 136 | 29 |
Accounts payable | 290 | 457 |
Contract liabilities | 292 | 233 |
Other current liabilities | 225 | 323 |
Total current liabilities | 943 | 1,042 |
Noncurrent liabilities: | ||
Long-term debt | 357 | 365 |
Pension and other postretirement benefit plan liabilities | 41 | 45 |
Deferred tax liabilities | 8 | 0 |
Other noncurrent liabilities | 124 | 98 |
Total noncurrent liabilities | 530 | 508 |
Commitments and contingencies (Note 14) | ||
Shareholders' equity | ||
Preferred stock,$0.01 par value: 10,000,000 shares authorized; none issued | 0 | 0 |
Common stock, $0.01 par value: 350,000,000 shares authorized; 261,723,423 issued | 3 | 3 |
Additional paid-in capital | 5,160 | 5,147 |
Accumulated deficit | (2,927) | (2,974) |
Accumulated other comprehensive loss | (47) | (49) |
Total shareholders' equity | 2,189 | 2,127 |
Total liabilities and shareholders' equity | $ 3,662 | $ 3,677 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Shareholders' equity | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 350,000,000 | 350,000,000 |
Common stock, issued (in shares) | 261,723,423 | 261,723,423 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Operating activities | ||
Net earnings | $ 47 | $ 61 |
Adjustments to reconcile net earnings to net cash used in operating activities: | ||
Depreciation and amortization | 42 | 31 |
Deferred income taxes | 6 | 14 |
Other | 8 | 0 |
Changes in assets and liabilities: | ||
Accounts receivable | (32) | 24 |
Contract assets | (146) | (131) |
Inventories | (59) | (47) |
Prepaid expenses | 3 | (3) |
Other current assets | (25) | (7) |
Other noncurrent assets | 6 | 22 |
Defined benefit obligations | (2) | (3) |
Other current liabilities | (91) | (9) |
Other noncurrent liabilities | 5 | (17) |
Accounts payable | (167) | (165) |
Contract liabilities | 59 | (12) |
Net cash used in operating activities | (346) | (242) |
Investing activities | ||
Capital expenditures | (27) | (22) |
Proceeds from sales of assets | 1 | 0 |
Net cash used in investing activities | (26) | (22) |
Financing activities | ||
Net (decrease) increase in third party borrowings (maturities of 90 days or less) | (4) | (17) |
Repayment of third party debt | (291) | 0 |
Borrowings of third party debt | 395 | 0 |
Repayment of related party debt | 0 | (335) |
Borrowings from related parties | 0 | 445 |
Proceeds from stock issuance | 6 | 0 |
Cash outlay to reacquire equity instruments | (1) | 0 |
Other | (4) | 0 |
Net cash provided by financing activities | 101 | 93 |
Effect of exchange rate changes on cash and cash equivalents | 0 | 0 |
Net decrease in cash and cash equivalents | (271) | (171) |
Cash and cash equivalents at beginning of year | 306 | 240 |
Cash and cash equivalents at end of period | $ 35 | $ 69 |
Consolidated Statements of Shar
Consolidated Statements of Shareholder's Equity (Unaudited) - USD ($) $ in Millions | Total | Common stock | Additional paid- in capital | Accumulated other comprehensive loss | Accumulated deficit |
Balance at beginning of period at Dec. 31, 2021 | $ 1,593 | $ 1 | $ 4,633 | $ (58) | $ (2,983) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Total comprehensive income | 65 | 4 | 61 | ||
Balance at end of period at Jun. 30, 2022 | 1,658 | 1 | 4,633 | (54) | (2,922) |
Balance at beginning of period at Dec. 31, 2022 | 2,127 | 3 | 5,147 | (49) | (2,974) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Total comprehensive income | 49 | 2 | 47 | ||
Stock compensation expense | 13 | 13 | |||
Balance at end of period at Jun. 30, 2023 | $ 2,189 | $ 3 | $ 5,160 | $ (47) | $ (2,927) |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies A. Organization Leonardo DRS, Inc., together with its wholly owned subsidiaries (hereinafter, “DRS,” “the Company,” “us,” “our,” or “we”) is a supplier of defense electronics products, systems and military support services. The Company’s largest shareholder is Leonardo S.p.A (hereinafter, “Leonardo S.p.A.,”), an Italian multi-national aerospace, defense and security company headquartered in Rome, Italy, through its ultimate sole ownership of Leonardo US Holding, LLC (“US Holding”). US Holding is the majority stockholder of the Company. DRS is a provider of defense products and technologies that are used across land, air, sea, space and cyber domains. Our diverse array of defense systems and solutions are offered to all branches of the U.S. military, major aerospace and defense prime contractors, government intelligence agencies, international military customers and industrial markets for deployment on a wide range of military platforms. We focus our capabilities in areas of critical importance to the U.S. military, such as advanced sensing, network computing, force protection and electrical power and propulsion. These capabilities directly align with our two reportable segments: Advanced Sensing and Computing and Integrated Mission Systems. The U.S. DoD is our largest customer and accounts for approximately 73% and 82% of our total revenues as an end-user for the periods ended June 30, 2023 and June 30, 2022, respectively. Specific international and commercial market opportunities exist within these segments and make up approximately 27% and 18% of our total revenues for the periods ended June 30, 2023 and June 30, 2022, respectively. Our two reportable segments reflect the way performance is assessed and resources are allocated by our Chief Executive Officer, who is our chief operating decision maker (“CODM”). Advanced Sensing and Computing (“ASC”) The Advanced Sensing and Computing (“ASC”) segment designs, develops and manufactures sensing and network computing technology that enables real-time situational awareness required for enhanced operational decision making and execution by our customers. Our leading sensing capabilities span applications including missions requiring advanced detection, precision targeting and surveillance sensing, long range electro-optic/infrared (“EO/IR”), signals intelligence (“SIGINT”) and other intelligence systems, electronic warfare (“EW”), ground vehicle sensing, next generation active electronically scanned array (“AESA”) tactical radars, dismounted soldier sensing and space sensing. Across our offering, we are focused on advancing sensor distance, precision, clarity, definition, spectral depth and effectiveness. Furthermore, we seek to leverage our multi-decade experience to optimize size, weight, power and cost tailored to our customers’ specific mission requirements, including in space-based applications for earth surveillance and missile tracking. Our sensing capabilities are complemented by our rugged, trusted and cyber resilient network computing products. Our network computing offering is utilized across a broad range of mission applications including platform computing on ground and shipboard (both surface ship and submarine) for advanced battle management, combat systems, radar, command and control (“C2”), tactical networks, tactical computing and communications. Our network computing products support the DoD’s need for greater situational understanding at the tactical edge and permits data to be rapidly transmitted securely from command centers to forward-positioned defense assets. Integrated Mission Systems (“IMS”) Our Integrated Mission Systems (“IMS”) segment designs, develops, manufactures and integrates power conversion, control and distribution systems, ship propulsion systems, motors and variable frequency drives, force protection systems, transportation and logistics systems for the U.S. and allied defense customers. Our naval power and propulsion systems are providing next-generation power capabilities for the future fleet. DRS is currently a leading provider of next-generation electrical propulsion systems for the U.S. Navy. We provide power conversion, control, distribution and propulsion systems for the Navy’s top priority shipbuilding programs, including the Columbia Class ballistic missile submarine, the first modern U.S. electric drive submarine. We believe DRS is well positioned to meet the needs of an increasingly electrified fleet with our high-efficiency, power dense permanent magnet motors, energy storage systems and associated efficient, rugged and compact power conversion, electrical actuation systems, and advanced cooling technologies. DRS has a long history of providing a number of other critical products to the U.S. Navy with a significant installed base on submarines, aircraft carriers and other surface ships including motor controllers, instrumentation and control equipment, electrical actuation systems, and thermal management systems for electronics and ship stores refrigeration. Our technologies and systems help protect U.S. forces and assets against increasingly sophisticated and proliferating threats. DRS is an integrator of systems in ground vehicles for short-range air defense, counter-Unmanned Aerial Systems (“C-UAS”), and vehicle survivability and protection. This integrator role includes utilizing radars, EW equipment, reconnaissance and surveillance systems, modular combat vehicle turrets, and stabilized sensor suites, and kinetic countermeasures for short-range air defense. Our force protection systems, including solutions for C-UAS, short-range air defense systems and active protection systems used to defend ground combat vehicles help protect personnel and defense assets from these growing threats. Other The Company separately presents the unallocable costs associated with corporate functions and certain non-operating subsidiaries of the Company as Corporate & Eliminations. See Note 16 : Segment Information for further information regarding our business segments. B. Basis of presentation The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of DRS, its wholly owned subsidiaries and its controlling interests and contain all adjustments, which are of a normal and recurring nature, considered necessary by management to present fairly the financial position, results of operations and cash flows for the periods presented. Interests in ventures that are controlled by the Company, or for which the Company is otherwise deemed to be the primary beneficiary, are consolidated. For joint ventures in which the Company does not have a controlling interest, but exerts significant influence, the Company applies the equity method of accounting. All intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation. Interim Financial Statements . The unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These rules and regulations permit some of the information and footnote disclosures included in financial statements prepared in accordance with U.S. GAAP to be condensed or omitted. These unaudited Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements as of and for the year ended December 31, 2022 included in our Annual Report on Form 10-K for the year end December 31, 2022, filed with the SEC on March 28, 2023. C. New Accounting Pronouncements Disclosure of Supplier Finance Program Obligations In September 2022, the Financial Accounting Standards Board issued Accounting Standards Update 2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations , which is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of this standard did not have a material impact on our financial statements. |
Business Acquisitions and Dispo
Business Acquisitions and Dispositions | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Acquisitions and Dispositions | Business Acquisitions and Dispositions Acquisitions On June 21, 2022, the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with RADA Electronic Industries, Ltd (“RADA”), a leading Israel-based provider of small-form tactical radar, for an all-stock merger, with RADA surviving as a wholly owned subsidiary of the Company. The Company acquired RADA as part of the Company’s goal to become a market leader in advanced sensing and force protection. The acquisition of RADA has been accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations, with the Company as the accounting acquirer, which requires the assets acquired and liabilities assumed be recognized at their acquisition date fair value. The acquisition was completed on November 28, 2022, when each issued and outstanding ordinary share of RADA was converted and exchanged for one share of common stock of the Company. The total purchase consideration for RADA was $511 million and is comprised of the Company’s shares of common stock issued in exchange for all issued and outstanding ordinary shares of RADA, as well as $20 million of replacement stock compensation awards’ fair value attributable to pre-combination services. The preliminary fair value estimates of the net assets acquired and liabilities assumed are based upon preliminary calculations and valuations, and those estimates and assumptions are subject to change as the Company obtains additional information during the measurement period (up to one year from the acquisition date). The Company has not yet finalized the determination of fair values allocated to the acquired assets and liabilities, including but not limited to the valuation of contract related assets and liabilities and related tax impacts of the opening balance sheet adjustments. The excess of the total consideration over the tangible assets, identifiable intangible assets, and assumed liabilities is recorded as goodwill. Identifiable intangibles assets of $131 million consist of $90 million of technology related assets while the remaining $41 million consists of customer and contractual relationships. The goodwill of $284 million arising from the acquisition is primarily attributable to the growth opportunities related to the RADA business. None of the goodwill resulting from the acquisition is deductible for tax purposes. All of the goodwill recognized related to the RADA acquisition was assigned to the ASC segment. Dispositions On March 21, 2022, the Company entered into a definitive agreement to sell its Global Enterprise Solutions (“GES”) business to SES Government Solutions, Inc., a wholly-owned subsidiary of SES S.A., for $450 million subject to certain working capital adjustments. The transaction was completed on August 1, 2022 and resulted in cash proceeds of $427 million after net working capital adjustments. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with CustomersThe Company recognizes revenue for each separately identifiable performance obligation in a contract representing an obligation to transfer a distinct good or service to a customer. In most cases, goods and services provided under the Company’s contracts are accounted for as single performance obligations due to the complex and integrated nature of our products and services. These contracts generally require significant integration of a group of goods and/or services to deliver a combined output. In some contracts, the Company provides multiple distinct goods or services to a customer. In those cases, the Company accounts for the distinct contract deliverables as separate performance obligations and allocates the transaction price to each performance obligation based on its relative standalone selling price, which is generally estimated using cost plus a reasonable margin. We classify revenues as products or services on our Consolidated Statements of Earnings based on the predominant attributes of the performance obligations. While the Company provides warranties on certain contracts, we typically do not provide for services beyond standard assurances and therefore do not consider warranties to be separate performance obligations. Typically we enter into three types of contracts: fixed-price contracts, cost-plus contracts and time and material (“T&M”) contracts (cost-plus contracts and T&M contracts are aggregated below as flexibly priced contracts). The majority of our total revenues are derived from fixed-price contracts; refer to the revenue disaggregation disclosures that follow. For fixed-price contracts, customers agree to pay a fixed amount, negotiated in advanced for a specified scope of work. For cost-plus contracts, typically we are reimbursed for allowable or otherwise defined total costs (defined as cost of revenues plus allowable general and administrative expenses) incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. T&M contracts provide for reimbursement of labor hours expended at a contractual fixed labor rate per hour, plus the actual costs of material and other direct non-labor costs. The fixed labor rates on T&M contracts include amounts for the cost of direct labor, indirect contract costs and profit. Revenue from contracts with customers is recognized when the performance obligations are satisfied through the transfer of control over the good or service to the customer, which may occur either over time or at a point in time. Revenues for the majority of our contracts are measured using the over time, percentage of completion cost-to-cost method of accounting to calculate percentage of completion. We believe this is an appropriate measure of progress toward satisfaction of performance obligations as this measure most accurately depicts the progress of our work and transfer of control to our customers. Due to the long-term nature of many of our contracts, developing the estimated total cost at completion and total transaction price often requires judgment. Factors that must be considered in estimating the cost of the work to be completed include the nature and complexity of the work to be performed, subcontractor performance and the risk and impact of delayed performance. After establishing the estimated total cost at completion, we follow a standard Estimate at Completion (“EAC”) process in which we review the progress and performance on our ongoing contracts on a routine basis. Adjustments to original estimates for a contract's revenue, estimated costs at completion and estimated profit or loss often are required as work progresses under a contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change and are also required if contract modifications occur. When adjustments in estimated total costs at completion or in estimated total transaction price are determined, the related impact on revenue and operating income are recognized using the cumulative catch-up method, which recognizes in the current period the cumulative effect of such adjustments for all prior periods. Any anticipated losses on these contracts are fully recognized in the period in which the losses become evident. EAC adjustments had the following impacts to revenue for the periods presented: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2023 2022 2023 2022 Revenue $ (11) $ (10) $ (20) $ (11) Total % of Revenue 1.7 % 1.6 % 1.7 % 0.9 % The impacts noted above are attributed primarily to changes in our firm-fixed-price development type programs. As changes happen in the design required to achieve contractual specifications, those changes often result in the programs’ estimate and related profitability. Conversely, if the requirements for the recognition of contracts over time are not met, revenue is recognized at a point in time when control transfers to the customer, which is generally upon transfer of title. In such cases, the production that is in progress and costs that will be recognized at a future point in time are reported within “inventories”. Costs to obtain a contract are incremental direct costs incurred to obtain a contract with a customer, including sales commissions and dealer fees, and are capitalized if material. Costs to fulfill a contract include costs directly related to a contract or specific anticipated contract (e.g., certain design costs) that generate or enhance our ability to satisfy our performance obligations under these contracts. These costs are capitalized to the extent they are expected to be recovered from the associated contract. Contract Assets and Liabilities The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities. (Dollars in millions) June 30, 2023 December 31, 2022 Contract assets $ 1,018 $ 872 Contract liabilities 292 233 Net contract assets $ 726 $ 639 Revenue recognized in the periods ending June 30, 2023 and June 30, 2022, that was included in the contract liability balance at the beginning of each period was $129 million and $107 million, respectively. Contract assets related to amounts withheld by customers until contract completion are not considered a significant financing component of our contracts because the intent is to protect the customers from our failure to satisfactorily complete our performance obligations. Payments received from customers in advance of revenue recognition (contract liabilities) are not considered a significant financing component of our contracts because they are utilized to pay for contract costs within a one-year period or are requested by us to ensure the customers meet their payment obligations. Value of Remaining Performance Obligations The value of remaining performance obligations, which we also refer to as total backlog, includes the following components: • Funded - Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts. • Unfunded - Unfunded backlog represents the revenue value of firm orders for products and services under existing contracts for which funding has not yet been appropriated less funding previously recognized on these contracts. The following table summarizes the value of our total backlog as of June 30, 2023, incorporating both funded and unfunded components: Backlog: (Dollars in millions) June 30, 2023 Funded $ 3,002 Unfunded $ 1,355 Total Backlog $ 4,357 We expect to recognize approximately 31% of our June 30, 2023 backlog as revenue over the next six months, with the remainder to be recognized thereafter. Disaggregation of Revenue ASC : ASC revenue is primarily derived from U.S. government development and production contracts and is generally recognized using the over time, percentage of completion cost-to-cost method of accounting. We disaggregate ASC revenue by geographical region, customer relationship and contract type. We believe these categories best depict how the nature, amount, timing and uncertainty of ASC revenue and cash flows are affected by economic factors: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2023 2022 2023 2022 Revenue by Geographical Region United States $ 340 $ 367 $ 670 $ 739 International 62 74 $ 112 $ 96 Intersegment Sales 2 3 $ 13 $ 5 Total $ 404 $ 444 $ 795 $ 840 Revenue by Customer Relationship Prime contractor $ 181 $ 216 $ 343 $ 448 Subcontractor 221 225 $ 439 $ 387 Intersegment Sales 2 3 $ 13 $ 5 Total $ 404 $ 444 $ 795 $ 840 Revenue by Contract Type Firm Fixed Price $ 335 $ 394 $ 659 $ 736 Flexibly Priced (1) 67 47 $ 123 $ 99 Intersegment Sales 2 3 $ 13 $ 5 Total $ 404 $ 444 $ 795 $ 840 ________________ (1) Includes revenue derived from time-and-materials contracts. IMS : IMS revenue is primarily derived from U.S. government development and production contracts and is generally recognized over time using the over time, percentage of completion cost-to-cost method of accounting We disaggregate IMS revenue by geographical region, customer relationship and contract type. We believe these categories best depict how the nature, amount, timing and uncertainty of IMS revenue and cash flows are affected by economic factors: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2023 2022 2023 2022 Revenue by Geographical Region United States $ 222 $ 178 $ 408 $ 390 International 4 8 $ 7 $ 14 Intersegment Sales — 1 $ — $ 1 Total $ 226 $ 187 $ 415 $ 405 Revenue by Customer Relationship Prime contractor $ 48 $ 36 $ 94 $ 69 Subcontractor 178 150 $ 321 $ 335 Intersegment Sales — 1 $ — $ 1 Total $ 226 $ 187 $ 415 $ 405 Revenue by Contract Type Firm Fixed Price $ 183 $ 154 $ 338 $ 347 Flexibly Priced (1) 43 32 $ 77 $ 57 Intersegment Sales — 1 $ — $ 1 Total $ 226 $ 187 $ 415 $ 405 ________________ (1) Includes revenue derived from time-and-materials contracts. |
Accounts Receivable
Accounts Receivable | 6 Months Ended |
Jun. 30, 2023 | |
Receivables [Abstract] | |
Accounts Receivable | Accounts Receivable Accounts receivable represent amounts billed and currently due from customers. Payment is typically received from our customers either at periodic intervals (e.g., biweekly, or monthly) or upon achievement of contractual milestones. Accounts receivable consist of the following: (Dollars in millions) June 30, 2023 December 31, 2022 Accounts receivable $ 199 $ 168 Less allowance for credit losses (1) (2) Accounts receivable, net $ 198 $ 166 The Company maintains certain agreements with financial institutions to sell certain trade receivables. See Note 5: Sale of Receivables for more information |
Sale of Receivables
Sale of Receivables | 6 Months Ended |
Jun. 30, 2023 | |
Transfers and Servicing [Abstract] | |
Sale of Receivables | Sale of Receivables The Company is party to factoring facilities with various financial institutions with an aggregate capacity of $325 million. Pursuant to the servicing agreements collections on sold receivables that had not yet been remitted to the financial institutions are included within short-term borrowings and current portion of long-term debt in the Consolidated Balance Sheets. See Note 11. Debt for further information. The receivables sold under the factoring facilities are without recourse for any customer credit risk and result in a true sale. Receivables are derecognized in their entirety when sold, and the Company’s continuing involvement is limited to their servicing, for which the Company receives a fee commensurate with the service provided and therefore no servicing asset or liability related to these receivables was recognized for any period presented. The fair value of the sold receivables approximated their book value due to their short-term nature. Proceeds from the sold receivables are reflected in operating cash flows on the statement of cash flows. During the periods ended June 30, 2023 and June 30, 2022, the Company incurred immaterial purchase discount fees which are presented in other general and administrative expenditures, net on the consolidated statements of earnings. Six Months Ended June 30, (Dollars in millions) 2023 2022 Beginning balance $ 243 $ 215 Sales of receivables 90 94 Cash returned to purchaser 271 259 Outstanding balance sold to purchasers (1) 62 50 Cash collected, not remitted to purchaser (2) 6 1 Remaining sold receivables $ (56) $ (49) ________________ (1) For the period ended June 30, 2023, the Company recorded a net decrease to cash flows from operating activities of $181 million and for the period ended June 30, 2022 a decrease to cash flow from operating activities of $165 million. (2) Represents cash collected on behalf of purchasers and not yet remitted. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consists of the following: (Dollars in millions) June 30, 2023 December 31, 2022 Raw materials $ 86 $ 83 Work in progress 281 224 Finished goods 11 12 Total $ 378 $ 319 |
Property, Plant and Equipment
Property, Plant and Equipment | 6 Months Ended |
Jun. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment by major asset class consists of the following: (Dollars in millions) June 30, 2023 December 31, 2022 Land, buildings and improvements $ 339 $ 321 Plant and machinery 196 190 Equipment and other 335 335 Total property, plant and equipment, at cost 870 846 Less accumulated depreciation (468) (442) Total property, plant and equipment, net $ 402 $ 404 Depreciation expense related to property, plant and equipment was $31 million and $27 million for the periods ended June 30, 2023 and June 30, 2022, respectively. |
Other Liabilities
Other Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | Other Liabilities A summary of significant other liabilities by balance sheet caption follows: (Dollars in millions) June 30, 2023 December 31, 2022 Salaries, wages and accrued bonuses $ 53 $ 63 Fringe benefits 65 76 Litigation — 10 Restructuring costs 8 4 Provision for contract losses 46 54 Operating lease liabilities 24 25 Taxes Payable 2 31 Other (1) 27 60 Total other current liabilities $ 225 $ 323 Operating lease liabilities $ 74 $ 68 Taxes Payable 28 21 Other (1) 22 9 Total other noncurrent liabilities $ 124 $ 98 ________________ (1) Consists primarily of environmental remediation reserves and warranty reserves. See Note 14: Commitments and Contingencies for more information regarding the warranty provision. |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets Other intangible assets mainly refer to the fair value of existing customer contractual relationships attributable to the acquired business and patents which are being amortized over their respective lives. The fair value of intangible assets typically is determined, as of the date of acquisition, based on estimates and judgments regarding expectations for the estimated future after-tax earnings and cash flows (including cash flows for working capital) arising from backlog and follow-on sales to the customer over their estimated lives, including the probability of expected future contract renewals and sales, less a contributory assets charge, all of which is discounted to present value. The following disclosure presents certain information regarding the Company's intangible assets as of June 30, 2023 and December 31, 2022. All intangible assets are being amortized over their estimated useful lives, as indicated below, with no estimated residual values. June 30, 2023 December 31, 2022 (Dollars in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Acquired Intangible Assets $ 1,087 $ (929) $ 158 $ 1,087 $ (918) $ 169 Patents and licenses 9 (6) 3 9 (6) 3 Total intangible assets $ 1,096 $ (935) $ 161 $ 1,096 $ (924) $ 172 Amortization expense related to intangible assets was $5 million and $11 million for the three and six months ended June 30, 2023 and $2 million and $4 million for the three and six months ended June 30, 2022. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at June 30, 2023 and December 31, 2022 is as follows: (Dollars in millions) June 30, 2023 December 31, 2022 Deferred tax assets $ 202 $ 208 Less valuation allowance 19 17 Deferred tax assets 183 191 Deferred tax liabilities 123 125 Net deferred tax asset $ 60 $ 66 Our deferred tax balance associated with our retirement benefit plans includes a deferred tax asset of $8 million and $8 million as June 30, 2023 and December 31, 2022 respectively, that are recorded in accumulated other comprehensive earnings to recognize the funded status of our retirement plans. See Note 12: Pension and Other Postretirement Benefits |
Debt
Debt | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt The Company’s debt consists of the following: (Dollars in millions) June 30, 2023 December 31, 2022 Term loan A $ 219 $ 225 Outstanding revolver 110 — Finance lease and other 160 161 Short-term borrowings 6 10 Total debt principal 495 396 Less unamortized debt issuance costs and discounts (2) (2) Total debt, net 493 394 Less short-term borrowings and current portion of long-term debt (136) (29) Total long-term debt $ 357 $ 365 Term Loans In November 2022, the Company entered into a senior unsecured credit agreement with Bank of America in the amount of $500 million (the “2022 Credit Agreement”) with a maturity of November 29, 2027. The 2022 Credit Agreement provides for a term loan of $225 million bearing interest at a variable rate generally based on the Secured Overnight Financing Rate, (“SOFR”), plus a spread ranging from 1.48% to 2.10% depending on the leverage ratio, as defined in the 2022 Credit Agreement, or an alternative variable rate based on the higher of the Bank of America prime rate, the federal funds rate, or a rate generally based on SOFR, in each case subject to additional basis point spread as defined in the 2022 Credit Agreement, (“2022 Term Loan A”). Interest is payable quarterly in arrears. The outstanding balance of the 2022 Term Loan A at June 30, 2023 was $219 million. The fair value of Term Loan A at June 30, 2023 was approximately $219 million, however the Company has the ability to prepay the outstanding principal balance without penalty. Credit Facilities The 2022 Credit Agreement provides for a revolving credit facility available for working capital needs of the Company, (“the 2022 Revolving Credit Facility”). As of June 30, 2023 and December 31, 2022, the 2022 Revolving Credit Facility had a limit of $275 million. Loans under the 2022 Revolving Credit Facility bear interest at a variable rate generally based on the SOFR, plus a spread ranging from 1.48% to 2.10% depending on the leverage ratio, as defined in the 2022 Credit Agreement, or an alternative variable rate based on the higher of the Bank of America prime rate, the federal funds rate, or a rate generally based on SOFR, in each case subject to additional basis point spread as defined in the 2022 Credit Agreement. The Company also pays a commitment fee ranging between 0.20% and 0.35% depending on the Company’s leverage ratio applied to the unused balance of the 2022 Revolving Credit Facility. The outstanding balance as of June 30, 2023 was $110 million and there was no outstanding balance on the 2022 Revolving Credit Facility as of December 31, 2022. The weighted average interest rate on the 2022 Revolving Credit Facility as of June 30, 2023 was 5.68%. The Company also maintains uncommitted working capital credit facilities with certain financial institutions in an aggregate of $65 million at June 30, 2023 and December 31, 2022, respectively (the “Financial Institution Credit Facilities”). One of the Financial Institution Credit Facilities in the amount of $6 million is guaranteed by Leonardo S.p.A. The primary purpose of the Financial Institution Credit Facilities is to support standby letter of credit issuances on contracts with customers.The Financial Institution Credit Facilities also included a revolving facility with a maximum borrowing limit of $15 million, which bore interest at LIBOR plus 0.5%. The revolving facility was eliminated from the Financial Institution Credit Facilities as of March 31, 2023. As of December 31, 2022, there was no balance outstanding on the revolving facility of the Financial Institution Credit Facilities. The Company had letters of credit outstanding of approximately $41 million and $36 million as of June 30, 2023 and December 31, 2022, which reduces the available capacity of the Financial Institution Credit Facilities by an equal amount. Short-term Borrowings As of June 30, 2023 and December 31, 2022, the Company recognized $6 million and $10 million, respectively, collected on behalf of the buyers of our trade receivables pursuant to our factoring arrangements as short-term borrowings and current portion of long-term debt in the Consolidated Balance Sheet, which approximates its fair value. Refer to Note 4: Accounts Receivable and Note 5: Sale of Receivables for more information. |
Pension and Other Postretiremen
Pension and Other Postretirement Benefits | 6 Months Ended |
Jun. 30, 2023 | |
Retirement Benefits [Abstract] | |
Pension and Other Postretirement Benefits | Pension and Other Postretirement Benefits Retirement Plan Summary Information The Company maintains multiple pension plans, both contributory and non-contributory, covering employees at certain locations. Eligibility requirements for participation in the plans vary, and benefits generally are based on the participant's compensation and years of service, as defined in the respective plan. The Company's funding policy generally is to contribute in accordance with cost accounting standards that affect government contractors, subject to the Tax Code and regulations thereunder. For all periods presented, the Company made no discretionary pension contributions. Plan assets are invested primarily in equities, bonds (both corporate and U.S. government), U.S. government-sponsored entity instruments, cash and cash equivalents and real estate. The Company also provides postretirement medical benefits for certain retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for the Company's postretirement benefit plans. The Company's contractual arrangements with the U.S. government provide for the recovery of contributions to a Voluntary Employees' Beneficiary Association trust and, for non-funded plans, recovery of claims on a pay-as-you-go basis, subject to the Tax Code and regulations thereunder, with the retiree generally paying a portion of the costs through contributions, deductibles and coinsurance provisions. The Company also maintains certain non-contributory and unfunded supplemental retirement plans. Eligibility for participation in the supplemental retirement plans is limited, and benefits generally are based on the participant's compensation and/or years of service. The following tables provide certain information regarding the Company's pension, postretirement and supplemental retirement plans as of for the three and six months ended June 30,: Defined Benefit Pension Plans Postretirement Benefit Plan Supplemental Retirement Plans (Dollars in millions) Three Months Ended June 30, 2023 Three Months Ended June 30, 2022 Three Months Ended June 30, 2023 Three Months Ended June 30, 2022 Three Months Ended June 30, 2023 Three Months Ended June 30, 2022 Service cost $ — $ — $ — $ — $ — $ — Interest cost 2 1 — — — — Less Expected return on plan assets (2) (2) — — — — Amortization of net actuarial loss (gain) 1 1 — — — — Amortization of prior service cost — — — — — — Settlement expense (income) — — — — — — Net periodic benefit cost $ 1 $ — $ — $ — $ — $ — Defined Benefit Pension Plans Postretirement Benefit Plan Supplemental Retirement Plans (Dollars in millions) Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 Service cost $ — $ — $ — $ — $ — $ — Interest cost $ 4 $ 3 $ — $ — $ — $ — Less Expected return on plan assets $ (3) $ (4) $ — $ — $ — $ — Amortization of net actuarial loss (gain) $ 1 $ 1 $ — $ — $ — $ — Amortization of prior service cost $ — $ — $ — $ — $ — $ — Settlement expense (income) $ — $ 1 $ — $ — $ — $ — Net periodic benefit cost $ 2 $ 1 $ — $ — $ — $ — The expected long-term return on plan assets assumption represents the average rate that the Company expects to earn over the long-term on the assets of the Company's benefit plans, including those from dividends, interest income and capital appreciation. The assumption has been determined based on expectations regarding future rates of return for the plans' investment portfolio, with consideration given to the allocation of investments by asset class and historical rates of return for each individual asset class. Pension related expenses are reflected in the Total costs of revenues and General and administrative expenses on the Consolidated Statement of Earnings (unaudited). A one percentage increase or decrease in healthcare trend rates in the table above would have an insignificant impact to our service and interest cost and the postretirement medical obligations. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions, except per share amounts; shares in millions 2023 2022 2023 2022 Net earnings attributable to common shareholders $ 35 $ 25 $ 47 $ 61 Basic weighted average number of shares outstanding 261 210 261 $ 210 Impact of dilutive share-based awards 3 — 2 $ — Diluted weighted average number of shares outstanding 264 210 263 210 Earnings per share attributable to common shareholders - basic $ 0.14 $ 0.12 $ 0.18 $ 0.29 Earnings per share attributable to common shareholders - diluted $ 0.13 $ 0.12 $ 0.18 $ 0.29 For the three months and six months ended June 30, 2023, potential dilutive common shares primarily consisted of employee stock options, restricted stock units (“RSUs”) and performance restricted stock units (“PRSUs”), however, the amount of dilutive securities included in the diluted weighted average number of shares outstanding was immaterial. For the period ended June 30, 2022, the basic and diluted weighted average number of shares outstanding were equal as there were no dilutive securities. The computation of diluted earnings per share (“EPS”) excludes the effect of the potential exercise of stock awards when the average market price of the common stock is lower than the exercise price of the stock awards during the period because the effect would be anti-dilutive. In addition, the computation of diluted EPS excludes stock awards whose issuance is contingent upon the satisfaction of certain performance vesting conditions. At June 30, 2023, there were $1.1 million stock awards excluded from the computation. At June 30, 2022 there were no anti-dilutive securities. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments The Company’s commitments are primarily related to our lease agreements, purchase obligations, and credit agreements. Contingencies From time to time we are subject to certain legal proceedings and claims in the ordinary course of business. These matters are subject to many uncertainties and it is possible that some of these matters ultimately could be decided, resolved or settled in a manner adverse to us. Although the precise amount of liability that may result from these matters is not ascertainable, the Company believes that any amounts exceeding the Company's recorded accruals should not materially adversely affect the Company's financial condition or liquidity. It is possible, however, that the ultimate resolution of those matters could result in a material adverse effect on the Company's results of operations and/or cash flows from operating activities for a particular reporting period. We establish reserves for specific legal matters when we determine that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. The Company reviews the developments in contingencies that could affect the amount of the reserves that have been previously recorded. The Company adjusts provisions and changes to disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability and the estimated amount of any potential losses. Some environmental laws, such as the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (also known as “CERCLA” or the “Superfund law”) and similar state statutes, can impose liability upon former owners or operators for the entire cost of investigating and remediating contaminated sites regardless of the lawfulness of the original activities that led to the contamination. In July 2000, an entity which later became a subsidiary of the Company received a Section 104(e) Request for Information (“RFI”) from the National Park Service (“NPS”), pursuant to CERCLA, regarding the presence of radioactive material at a site within a national park (“Orphan Mine”), which site was operated by an alleged predecessor to our subsidiary over 50 years ago. Following the subsidiary’s response to the RFI, the NPS directed it and another alleged former operator to perform an Engineering Evaluation and Cost Analysis (“EE/CA”) of a portion of the site. The Company’s subsidiary made a good faith offer to conduct an alternative EE/CA work plan, but the NPS rejected this offer and opted to perform the EE/CA itself. The NPS previously posted its intention to open a formal public comment period regarding the EE/CA at the end of 2019. To the Company’s knowledge, the EE/CA has not been released and a public comment period has yet to be opened. The Environmental Protection Agency (“EPA”) episodically updates its electronic databases concerning pending Superfund sites. As of June 2023, the entry in EPA’s Superfund database for this site states that this “[s]ite does not qualify for the NPL [National Priorities List] based on existing information. The EPA has determined that no further federal action (NFFA) will be taken at this site.” As a result, DRS has eliminated the Orphan Mine reserve as a liability is no longer probable or estimable. However, it remains possible that the NPS may seek to recover damages, including for remediation and/or loss of use of certain natural resources. The Company believes that it has legitimate defenses to its subsidiary’s potential liability and that there are other potentially responsible parties for the environmental conditions at the site, including the U.S. government as owner, operator and arranger at the site. The potential liability associated with this matter could change substantially due to such factors as additional information on the nature or extent of contamination, methods of remediation that might be recommended or required, changes in the apportionment of costs among the responsible parties, whether the NPS seeks to recover additional damages, whether the NPS’s plans to investigate additional areas to identify a need for further remedial action for which the Company may be identified as a potentially responsible party and other actions by governmental agencies or private parties. In the performance of our contracts we routinely request contract modifications that require additional funding from the customer. Most often, these requests are due to customer-directed changes in the scope of work. While we are entitled to recovery of these costs under our contracts, the administrative process with our customer may be protracted. Based on the circumstances, we periodically file requests for equitable adjustment (“REAs”) that are sometimes converted into claims. In some cases, these requests are disputed by our customer. We believe our outstanding modifications, REAs and other claims will be resolved without material impact to our results of operations, financial condition or cash flows. As a government contractor, with customers including the U.S. government as well as various state and local government entities, the Company may be subject to audits, investigations and claims with respect to its contract performance, pricing, costs, cost allocations and procurement practices. Additionally, amounts billed under such contracts, including direct and indirect costs, are subject to potential adjustments before final settlement. Management believes that adequate provisions for such potential audits, investigations, claims and contract adjustments, if any, have been made in the financial statements. Product Warranties Product warranty costs generally are accrued in proportion to product revenue realized in conjunction with our over-time revenue recognition policy. Product warranty expense is recognized based on the term of the product warranty, generally one year to three years, and the related estimated costs, considering historical claims expense. Accrued warranty costs are reduced as these costs are incurred and as the warranty period expires, and otherwise may be modified as specific product performance issues are identified and resolved. The following is a summary of changes in the product warranty balances during the period ended June 30, 2023: (Dollars in millions) Balance at December 31, 2022 $ 18 Additional provision 11 Reversal and utilization (6) Balance at June 30, 2023 23 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party TransactionsThe Company has related-party sales with the ultimate majority stockholder and its other affiliates that occur in the regular course of business. Related-party sales for these transactions included in revenues were $13 million and $54 million for the six months ended June 30, 2023 and June 30, 2022, respectively, and were $7 million and $51 million for the three months ended June 30, 2023 and June 30, 2022, respectively. The Company has related-party purchases with the ultimate majority stockholder and its other affiliates that occur in the regular course of business. Related-party purchases for these transactions are included in cost of revenues and were $1 million and $18 million for the six months ended June 30, 2023 and June 30, 2022, respectively, and were $1 million and $7 million for the three months ended June 30, 2023 and June 30, 2022, respectively. The receivables related to these transactions with the ultimate majority stockholder and its other affiliates of $14 million and $14 million, respectively, and payables of $2 million and $1 million, respectively, are included in accounts receivable and accounts payable in our Consolidated Balance Sheet as of June 30, 2023 and December 31, 2022. In addition, there was a related-party balance in contract assets of $1 million and $5 million at June 30, 2023 and December 31, 2022, respectively. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Operating segments represent components of an enterprise for which separate financial information is available that is regularly reviewed by the CODM in determining how to allocate resources and assess performance. Our Chief Executive Officer is our CODM and he uses a variety of measures to assess the performance of the Company as a whole, depending on the nature of the activity. Beginning in the first quarter of 2022, the Company’s operating and reportable segments were revised into two reportable segments, ASC and IMS, to align our market strategy and capital allocation decision making with our operating structure. Prior year information was revised to reflect the new segment structure. All other operations, which consists primarily of DRS corporate headquarters and certain non-operating subsidiaries of the Company, are grouped in Corporate & Eliminations. We primarily use Adjusted EBITDA, a non-GAAP financial measure, to manage the Company and allocate resources. Adjusted EBITDA of our business segments includes our net earnings before income taxes, amortization of acquired intangible assets, depreciation, restructuring costs, interest, transaction costs related to an anticipated offering of securities, acquisition and divestiture related expenses, foreign exchange, the coronavirus pandemic (“COVID-19”) response costs, non-service pension expenditures, legal liability accrual reversals, and other one-time non-operational events. Adjusted EBITDA is used to facilitate a comparison of the ordinary, ongoing and customary course of our operations on a consistent basis from period to period and provide an additional understanding of factors and trends affecting our business segments. This measure assists the CODM in assessing segment operating performance consistently over time without the impact of our capital structure, asset base and items outside the control of the management team and expenses that do not relate to our core operations. Certain information related to our segments for the periods ended June 30, 2023 and June 30, 2022 is presented in the following tables. Consistent accounting policies have been applied by all segments within the Company, within all reporting periods. A description of our reportable segments as of June 30, 2023 and June 30, 2022 has been included in Note 1: Summary of Significant Accounting Policies . Intersegment sales are generally transferred at cost to the buying segment, and the sourcing segment does not recognize a profit. Such intercompany operating income is eliminated in consolidation, so that the Company’s total revenues and operating earnings reflect only those transactions with external customers. Total revenues and intersegment revenues by segment for the periods ended June 30, 2023 and, June 30, 2022 consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2023 2022 2023 2022 ASC $ 404 $ 444 $ 795 $ 840 IMS 226 187 $ 415 $ 405 Corporate & Eliminations (2) (4) $ (13) $ (6) Total revenue $ 628 $ 627 $ 1,197 $ 1,239 (Dollars in millions) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 ASC $ 2 $ 3 $ 13 $ 5 IMS — 1 $ — $ 1 Total intersegment revenue $ 2 $ 4 $ 13 $ 6 Reconciliation of reportable segment Adjusted EBITDA to Net Earnings (loss) consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2023 2022 2023 2022 Adjusted EBITDA ASC $ 36 $ 57 $ 73 $ 89 IMS 26 10 $ 38 $ 51 Corporate & Eliminations — — $ — $ — Total Adjusted EBITDA 62 67 111 140 Amortization of intangibles (5) (2) (11) (4) Depreciation (15) (14) (31) (27) Restructuring costs (8) — (8) — Interest expense (9) (10) (17) (18) Deal related transaction costs (1) (8) (3) (10) Other one-time non-operational events 9 (1) 8 (1) Income tax (provision) benefit 2 (7) (2) (19) Net earnings $ 35 $ 25 $ 47 $ 61 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net earnings | $ 35 | $ 25 | $ 47 | $ 61 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Segment Reporting | Advanced Sensing and Computing (“ASC”) The Advanced Sensing and Computing (“ASC”) segment designs, develops and manufactures sensing and network computing technology that enables real-time situational awareness required for enhanced operational decision making and execution by our customers. Our leading sensing capabilities span applications including missions requiring advanced detection, precision targeting and surveillance sensing, long range electro-optic/infrared (“EO/IR”), signals intelligence (“SIGINT”) and other intelligence systems, electronic warfare (“EW”), ground vehicle sensing, next generation active electronically scanned array (“AESA”) tactical radars, dismounted soldier sensing and space sensing. Across our offering, we are focused on advancing sensor distance, precision, clarity, definition, spectral depth and effectiveness. Furthermore, we seek to leverage our multi-decade experience to optimize size, weight, power and cost tailored to our customers’ specific mission requirements, including in space-based applications for earth surveillance and missile tracking. Our sensing capabilities are complemented by our rugged, trusted and cyber resilient network computing products. Our network computing offering is utilized across a broad range of mission applications including platform computing on ground and shipboard (both surface ship and submarine) for advanced battle management, combat systems, radar, command and control (“C2”), tactical networks, tactical computing and communications. Our network computing products support the DoD’s need for greater situational understanding at the tactical edge and permits data to be rapidly transmitted securely from command centers to forward-positioned defense assets. Integrated Mission Systems (“IMS”) Our Integrated Mission Systems (“IMS”) segment designs, develops, manufactures and integrates power conversion, control and distribution systems, ship propulsion systems, motors and variable frequency drives, force protection systems, transportation and logistics systems for the U.S. and allied defense customers. Our naval power and propulsion systems are providing next-generation power capabilities for the future fleet. DRS is currently a leading provider of next-generation electrical propulsion systems for the U.S. Navy. We provide power conversion, control, distribution and propulsion systems for the Navy’s top priority shipbuilding programs, including the Columbia Class ballistic missile submarine, the first modern U.S. electric drive submarine. We believe DRS is well positioned to meet the needs of an increasingly electrified fleet with our high-efficiency, power dense permanent magnet motors, energy storage systems and associated efficient, rugged and compact power conversion, electrical actuation systems, and advanced cooling technologies. DRS has a long history of providing a number of other critical products to the U.S. Navy with a significant installed base on submarines, aircraft carriers and other surface ships including motor controllers, instrumentation and control equipment, electrical actuation systems, and thermal management systems for electronics and ship stores refrigeration. Our technologies and systems help protect U.S. forces and assets against increasingly sophisticated and proliferating threats. DRS is an integrator of systems in ground vehicles for short-range air defense, counter-Unmanned Aerial Systems (“C-UAS”), and vehicle survivability and protection. This integrator role includes utilizing radars, EW equipment, reconnaissance and surveillance systems, modular combat vehicle turrets, and stabilized sensor suites, and kinetic countermeasures for short-range air defense. Our force protection systems, including solutions for C-UAS, short-range air defense systems and active protection systems used to defend ground combat vehicles help protect personnel and defense assets from these growing threats. Other The Company separately presents the unallocable costs associated with corporate functions and certain non-operating subsidiaries of the Company as Corporate & Eliminations. |
Basis of Presentation | Basis of presentation The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of DRS, its wholly owned subsidiaries and its controlling interests and contain all adjustments, which are of a normal and recurring nature, considered necessary by management to present fairly the financial position, results of operations and cash flows for the periods presented. Interests in ventures that are controlled by the Company, or for which the Company is otherwise deemed to be the primary beneficiary, are consolidated. For joint ventures in which the Company does not have a controlling interest, but exerts significant influence, the Company applies the equity method of accounting. All intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation. Interim Financial Statements . The unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These rules and regulations permit some of the information and footnote disclosures included in financial statements prepared in accordance with U.S. GAAP to be condensed or omitted. |
New Accounting Pronouncements | New Accounting Pronouncements Disclosure of Supplier Finance Program Obligations In September 2022, the Financial Accounting Standards Board issued Accounting Standards Update 2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations , which is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of this standard did not have a material impact on our financial statements. |
Revenue from Contracts with Customers | The Company recognizes revenue for each separately identifiable performance obligation in a contract representing an obligation to transfer a distinct good or service to a customer. In most cases, goods and services provided under the Company’s contracts are accounted for as single performance obligations due to the complex and integrated nature of our products and services. These contracts generally require significant integration of a group of goods and/or services to deliver a combined output. In some contracts, the Company provides multiple distinct goods or services to a customer. In those cases, the Company accounts for the distinct contract deliverables as separate performance obligations and allocates the transaction price to each performance obligation based on its relative standalone selling price, which is generally estimated using cost plus a reasonable margin. We classify revenues as products or services on our Consolidated Statements of Earnings based on the predominant attributes of the performance obligations. While the Company provides warranties on certain contracts, we typically do not provide for services beyond standard assurances and therefore do not consider warranties to be separate performance obligations. Typically we enter into three types of contracts: fixed-price contracts, cost-plus contracts and time and material (“T&M”) contracts (cost-plus contracts and T&M contracts are aggregated below as flexibly priced contracts). The majority of our total revenues are derived from fixed-price contracts; refer to the revenue disaggregation disclosures that follow. For fixed-price contracts, customers agree to pay a fixed amount, negotiated in advanced for a specified scope of work. For cost-plus contracts, typically we are reimbursed for allowable or otherwise defined total costs (defined as cost of revenues plus allowable general and administrative expenses) incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. T&M contracts provide for reimbursement of labor hours expended at a contractual fixed labor rate per hour, plus the actual costs of material and other direct non-labor costs. The fixed labor rates on T&M contracts include amounts for the cost of direct labor, indirect contract costs and profit. Revenue from contracts with customers is recognized when the performance obligations are satisfied through the transfer of control over the good or service to the customer, which may occur either over time or at a point in time. Revenues for the majority of our contracts are measured using the over time, percentage of completion cost-to-cost method of accounting to calculate percentage of completion. We believe this is an appropriate measure of progress toward satisfaction of performance obligations as this measure most accurately depicts the progress of our work and transfer of control to our customers. Due to the long-term nature of many of our contracts, developing the estimated total cost at completion and total transaction price often requires judgment. Factors that must be considered in estimating the cost of the work to be completed include the nature and complexity of the work to be performed, subcontractor performance and the risk and impact of delayed performance. After establishing the estimated total cost at completion, we follow a standard Estimate at Completion (“EAC”) process in which we review the progress and performance on our ongoing contracts on a routine basis. Adjustments to original estimates for a contract's revenue, estimated costs at completion and estimated profit or loss often are required as work progresses under a contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change and are also required if contract modifications occur. When adjustments in estimated total costs at completion or in estimated total transaction price are determined, the related impact on revenue and operating income are recognized using the cumulative catch-up method, which recognizes in the current period the cumulative effect of such adjustments for all prior periods. Any anticipated losses on these contracts are fully recognized in the period in which the losses become evident. production that is in progress and costs that will be recognized at a future point in time are reported within “inventories”. Costs to obtain a contract are incremental direct costs incurred to obtain a contract with a customer, including sales commissions and dealer fees, and are capitalized if material. Costs to fulfill a contract include costs directly related to a contract or specific anticipated contract (e.g., certain design costs) that generate or enhance our ability to satisfy our performance obligations under these contracts. These costs are capitalized to the extent they are expected to be recovered from the associated contract. Contract Assets and Liabilities The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities. Contract assets related to amounts withheld by customers until contract completion are not considered a significant financing component of our contracts because the intent is to protect the customers from our failure to satisfactorily complete our performance obligations. Payments received from customers in advance of revenue recognition (contract liabilities) are not considered a significant financing component of our contracts because they are utilized to pay for contract costs within a one-year period or are requested by us to ensure the customers meet their payment obligations. Value of Remaining Performance Obligations The value of remaining performance obligations, which we also refer to as total backlog, includes the following components: • Funded - Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts. • Unfunded - Unfunded backlog represents the revenue value of firm orders for products and services under existing contracts for which funding has not yet been appropriated less funding previously recognized on these contracts. |
Intangible Assets | Other intangible assets mainly refer to the fair value of existing customer contractual relationships attributable to the acquired business and patents which are being amortized over their respective lives. The fair value of intangible assets typically is determined, as of the date of acquisition, based on estimates and judgments regarding expectations for the estimated future after-tax earnings and cash flows (including cash flows for working capital) arising from backlog and follow-on sales to the customer over their estimated lives, including the probability of expected future contract renewals and sales, less a contributory assets charge, all of which is discounted to present value. |
Pension and Other Postretirement Benefits | The Company maintains multiple pension plans, both contributory and non-contributory, covering employees at certain locations. Eligibility requirements for participation in the plans vary, and benefits generally are based on the participant's compensation and years of service, as defined in the respective plan. The Company's funding policy generally is to contribute in accordance with cost accounting standards that affect government contractors, subject to the Tax Code and regulations thereunder. For all periods presented, the Company made no discretionary pension contributions. Plan assets are invested primarily in equities, bonds (both corporate and U.S. government), U.S. government-sponsored entity instruments, cash and cash equivalents and real estate. The Company also provides postretirement medical benefits for certain retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for the Company's postretirement benefit plans. The Company's contractual arrangements with the U.S. government provide for the recovery of contributions to a Voluntary Employees' Beneficiary Association trust and, for non-funded plans, recovery of claims on a pay-as-you-go basis, subject to the Tax Code and regulations thereunder, with the retiree generally paying a portion of the costs through contributions, deductibles and coinsurance provisions. The Company also maintains certain non-contributory and unfunded supplemental retirement plans. Eligibility for participation in the supplemental retirement plans is limited, and benefits generally are based on the participant's compensation and/or years of service. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Change in Estimate at Completion Adjustments | EAC adjustments had the following impacts to revenue for the periods presented: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2023 2022 2023 2022 Revenue $ (11) $ (10) $ (20) $ (11) Total % of Revenue 1.7 % 1.6 % 1.7 % 0.9 % |
Schedule of Contract Assets and Contract Liabilities | (Dollars in millions) June 30, 2023 December 31, 2022 Contract assets $ 1,018 $ 872 Contract liabilities 292 233 Net contract assets $ 726 $ 639 |
Schedule of Remaining Performance Obligations, Expected Timing of Satisfaction | The following table summarizes the value of our total backlog as of June 30, 2023, incorporating both funded and unfunded components: Backlog: (Dollars in millions) June 30, 2023 Funded $ 3,002 Unfunded $ 1,355 Total Backlog $ 4,357 |
Schedule of Disaggregation of Revenue | We believe these categories best depict how the nature, amount, timing and uncertainty of ASC revenue and cash flows are affected by economic factors: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2023 2022 2023 2022 Revenue by Geographical Region United States $ 340 $ 367 $ 670 $ 739 International 62 74 $ 112 $ 96 Intersegment Sales 2 3 $ 13 $ 5 Total $ 404 $ 444 $ 795 $ 840 Revenue by Customer Relationship Prime contractor $ 181 $ 216 $ 343 $ 448 Subcontractor 221 225 $ 439 $ 387 Intersegment Sales 2 3 $ 13 $ 5 Total $ 404 $ 444 $ 795 $ 840 Revenue by Contract Type Firm Fixed Price $ 335 $ 394 $ 659 $ 736 Flexibly Priced (1) 67 47 $ 123 $ 99 Intersegment Sales 2 3 $ 13 $ 5 Total $ 404 $ 444 $ 795 $ 840 ________________ (1) Includes revenue derived from time-and-materials contracts. categories best depict how the nature, amount, timing and uncertainty of IMS revenue and cash flows are affected by economic factors: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2023 2022 2023 2022 Revenue by Geographical Region United States $ 222 $ 178 $ 408 $ 390 International 4 8 $ 7 $ 14 Intersegment Sales — 1 $ — $ 1 Total $ 226 $ 187 $ 415 $ 405 Revenue by Customer Relationship Prime contractor $ 48 $ 36 $ 94 $ 69 Subcontractor 178 150 $ 321 $ 335 Intersegment Sales — 1 $ — $ 1 Total $ 226 $ 187 $ 415 $ 405 Revenue by Contract Type Firm Fixed Price $ 183 $ 154 $ 338 $ 347 Flexibly Priced (1) 43 32 $ 77 $ 57 Intersegment Sales — 1 $ — $ 1 Total $ 226 $ 187 $ 415 $ 405 ________________ (1) Includes revenue derived from time-and-materials contracts. |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable consist of the following: (Dollars in millions) June 30, 2023 December 31, 2022 Accounts receivable $ 199 $ 168 Less allowance for credit losses (1) (2) Accounts receivable, net $ 198 $ 166 |
Sale of Receivables (Tables)
Sale of Receivables (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Transfers and Servicing [Abstract] | |
Schedule of Sale of Receivables | Six Months Ended June 30, (Dollars in millions) 2023 2022 Beginning balance $ 243 $ 215 Sales of receivables 90 94 Cash returned to purchaser 271 259 Outstanding balance sold to purchasers (1) 62 50 Cash collected, not remitted to purchaser (2) 6 1 Remaining sold receivables $ (56) $ (49) ________________ (1) For the period ended June 30, 2023, the Company recorded a net decrease to cash flows from operating activities of $181 million and for the period ended June 30, 2022 a decrease to cash flow from operating activities of $165 million. (2) Represents cash collected on behalf of purchasers and not yet remitted. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventories consists of the following: (Dollars in millions) June 30, 2023 December 31, 2022 Raw materials $ 86 $ 83 Work in progress 281 224 Finished goods 11 12 Total $ 378 $ 319 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant and equipment by major asset class consists of the following: (Dollars in millions) June 30, 2023 December 31, 2022 Land, buildings and improvements $ 339 $ 321 Plant and machinery 196 190 Equipment and other 335 335 Total property, plant and equipment, at cost 870 846 Less accumulated depreciation (468) (442) Total property, plant and equipment, net $ 402 $ 404 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | A summary of significant other liabilities by balance sheet caption follows: (Dollars in millions) June 30, 2023 December 31, 2022 Salaries, wages and accrued bonuses $ 53 $ 63 Fringe benefits 65 76 Litigation — 10 Restructuring costs 8 4 Provision for contract losses 46 54 Operating lease liabilities 24 25 Taxes Payable 2 31 Other (1) 27 60 Total other current liabilities $ 225 $ 323 Operating lease liabilities $ 74 $ 68 Taxes Payable 28 21 Other (1) 22 9 Total other noncurrent liabilities $ 124 $ 98 ________________ (1) Consists primarily of environmental remediation reserves and warranty reserves. See Note 14: Commitments and Contingencies for more information regarding the warranty provision. |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The following disclosure presents certain information regarding the Company's intangible assets as of June 30, 2023 and December 31, 2022. All intangible assets are being amortized over their estimated useful lives, as indicated below, with no estimated residual values. June 30, 2023 December 31, 2022 (Dollars in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Acquired Intangible Assets $ 1,087 $ (929) $ 158 $ 1,087 $ (918) $ 169 Patents and licenses 9 (6) 3 9 (6) 3 Total intangible assets $ 1,096 $ (935) $ 161 $ 1,096 $ (924) $ 172 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at June 30, 2023 and December 31, 2022 is as follows: (Dollars in millions) June 30, 2023 December 31, 2022 Deferred tax assets $ 202 $ 208 Less valuation allowance 19 17 Deferred tax assets 183 191 Deferred tax liabilities 123 125 Net deferred tax asset $ 60 $ 66 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The Company’s debt consists of the following: (Dollars in millions) June 30, 2023 December 31, 2022 Term loan A $ 219 $ 225 Outstanding revolver 110 — Finance lease and other 160 161 Short-term borrowings 6 10 Total debt principal 495 396 Less unamortized debt issuance costs and discounts (2) (2) Total debt, net 493 394 Less short-term borrowings and current portion of long-term debt (136) (29) Total long-term debt $ 357 $ 365 |
Pension and Other Postretirem_2
Pension and Other Postretirement Benefits (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Retirement Benefits [Abstract] | |
Schedule of Net Benefit Costs | The following tables provide certain information regarding the Company's pension, postretirement and supplemental retirement plans as of for the three and six months ended June 30,: Defined Benefit Pension Plans Postretirement Benefit Plan Supplemental Retirement Plans (Dollars in millions) Three Months Ended June 30, 2023 Three Months Ended June 30, 2022 Three Months Ended June 30, 2023 Three Months Ended June 30, 2022 Three Months Ended June 30, 2023 Three Months Ended June 30, 2022 Service cost $ — $ — $ — $ — $ — $ — Interest cost 2 1 — — — — Less Expected return on plan assets (2) (2) — — — — Amortization of net actuarial loss (gain) 1 1 — — — — Amortization of prior service cost — — — — — — Settlement expense (income) — — — — — — Net periodic benefit cost $ 1 $ — $ — $ — $ — $ — Defined Benefit Pension Plans Postretirement Benefit Plan Supplemental Retirement Plans (Dollars in millions) Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 Service cost $ — $ — $ — $ — $ — $ — Interest cost $ 4 $ 3 $ — $ — $ — $ — Less Expected return on plan assets $ (3) $ (4) $ — $ — $ — $ — Amortization of net actuarial loss (gain) $ 1 $ 1 $ — $ — $ — $ — Amortization of prior service cost $ — $ — $ — $ — $ — $ — Settlement expense (income) $ — $ 1 $ — $ — $ — $ — Net periodic benefit cost $ 2 $ 1 $ — $ — $ — $ — |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions, except per share amounts; shares in millions 2023 2022 2023 2022 Net earnings attributable to common shareholders $ 35 $ 25 $ 47 $ 61 Basic weighted average number of shares outstanding 261 210 261 $ 210 Impact of dilutive share-based awards 3 — 2 $ — Diluted weighted average number of shares outstanding 264 210 263 210 Earnings per share attributable to common shareholders - basic $ 0.14 $ 0.12 $ 0.18 $ 0.29 Earnings per share attributable to common shareholders - diluted $ 0.13 $ 0.12 $ 0.18 $ 0.29 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Product Warranty Liability | The following is a summary of changes in the product warranty balances during the period ended June 30, 2023: (Dollars in millions) Balance at December 31, 2022 $ 18 Additional provision 11 Reversal and utilization (6) Balance at June 30, 2023 23 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Total Revenues and Intersegment Revenues by Segment | Total revenues and intersegment revenues by segment for the periods ended June 30, 2023 and, June 30, 2022 consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2023 2022 2023 2022 ASC $ 404 $ 444 $ 795 $ 840 IMS 226 187 $ 415 $ 405 Corporate & Eliminations (2) (4) $ (13) $ (6) Total revenue $ 628 $ 627 $ 1,197 $ 1,239 (Dollars in millions) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 ASC $ 2 $ 3 $ 13 $ 5 IMS — 1 $ — $ 1 Total intersegment revenue $ 2 $ 4 $ 13 $ 6 |
Schedule of Depreciation, Assets by Segment and EBITDA Reconciliation to Net Earnings | Reconciliation of reportable segment Adjusted EBITDA to Net Earnings (loss) consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2023 2022 2023 2022 Adjusted EBITDA ASC $ 36 $ 57 $ 73 $ 89 IMS 26 10 $ 38 $ 51 Corporate & Eliminations — — $ — $ — Total Adjusted EBITDA 62 67 111 140 Amortization of intangibles (5) (2) (11) (4) Depreciation (15) (14) (31) (27) Restructuring costs (8) — (8) — Interest expense (9) (10) (17) (18) Deal related transaction costs (1) (8) (3) (10) Other one-time non-operational events 9 (1) 8 (1) Income tax (provision) benefit 2 (7) (2) (19) Net earnings $ 35 $ 25 $ 47 $ 61 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Concentration Risk (Details) | 6 Months Ended | |||
Jun. 30, 2023 reporting_unit | Jun. 30, 2023 | Jun. 30, 2023 segment | Jun. 30, 2022 | |
Concentration Risk [Line Items] | ||||
Number of reportable segments | 2 | 2 | ||
U.S. Department Of Defense | Revenue from Contract with Customer Benchmark | Government Contracts Concentration Risk | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 73% | 82% | ||
International And Commercial Customers | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 27% | 18% |
Business Acquisitions and Dis_2
Business Acquisitions and Dispositions - Narrative (Details) $ in Millions | Nov. 28, 2022 USD ($) | Aug. 01, 2022 USD ($) | Jul. 08, 2022 USD ($) | Mar. 21, 2022 USD ($) |
Advanced Acoustic Concepts | ||||
Business Acquisition [Line Items] | ||||
Proceeds from sale of equity method investments | $ 56 | |||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Global Enterprise Solutions | ||||
Business Acquisition [Line Items] | ||||
Sale of business, consideration to be received | $ 450 | |||
Proceeds from divestiture of businesses | $ 427 | |||
RADA | ||||
Business Acquisition [Line Items] | ||||
Share exchange ratio | 1 | |||
Preliminary aggregate purchase consideration | $ 511 | |||
Replacement share-based payment awards pre-combination vesting expense | 20 | |||
Intangible Assets | 131 | |||
Goodwill, acquired in business combination | 284 | |||
RADA | Technology Related Assets | ||||
Business Acquisition [Line Items] | ||||
Intangible Assets | 90 | |||
RADA | Acquired Intangible Assets | ||||
Business Acquisition [Line Items] | ||||
Intangible Assets | $ 41 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Estimate at Completion Adjustments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Change in Accounting Estimate [Line Items] | ||||
Total revenues | $ 628 | $ 627 | $ 1,197 | $ 1,239 |
Contracts Accounted for under Percentage of Completion | ||||
Change in Accounting Estimate [Line Items] | ||||
Total revenues | $ (11) | $ (10) | $ (20) | $ (11) |
Total % of Revenue | 1.70% | 1.60% | 1.70% | 0.90% |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Contract Assets and Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 1,018 | $ 872 |
Contract liabilities | 292 | 233 |
Net contract assets | $ 726 | $ 639 |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | ||
Contract with customer, liability, revenue recognized | $ 129 | $ 107 |
Revenue from Contracts with C_6
Revenue from Contracts with Customers - Remaining Performance Obligations, Backlog Schedule (Details) $ in Millions | Jun. 30, 2023 USD ($) |
Revenue from Contract with Customer [Abstract] | |
Funded | $ 3,002 |
Unfunded | 1,355 |
Total Backlog | $ 4,357 |
Revenue from Contracts with C_7
Revenue from Contracts with Customers - Remaining Performance Obligations, Narrative (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | Jun. 30, 2023 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 31% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 6 months |
Revenue from Contracts with C_8
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 628 | $ 627 | $ 1,197 | $ 1,239 |
Intersegment Sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | (2) | (4) | (13) | (6) |
ASC | Prime contractor | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 181 | 216 | 343 | 448 |
ASC | Subcontractor | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 221 | 225 | 439 | 387 |
ASC | Firm Fixed Price | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 335 | 394 | 659 | 736 |
ASC | Flexibly Priced | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 67 | 47 | 123 | 99 |
ASC | Intersegment Sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | (2) | (3) | (13) | (5) |
ASC | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 404 | 444 | 795 | 840 |
IMS | Prime contractor | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 48 | 36 | 94 | 69 |
IMS | Subcontractor | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 178 | 150 | 321 | 335 |
IMS | Firm Fixed Price | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 183 | 154 | 338 | 347 |
IMS | Flexibly Priced | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 43 | 32 | 77 | 57 |
IMS | Intersegment Sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 0 | (1) | 0 | (1) |
IMS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 226 | 187 | 415 | 405 |
United States | ASC | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 340 | 367 | 670 | 739 |
United States | IMS | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 222 | 178 | 408 | 390 |
International | ASC | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 62 | 74 | 112 | 96 |
International | IMS | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 4 | $ 8 | $ 7 | $ 14 |
Accounts Receivable - Summary (
Accounts Receivable - Summary (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Receivables [Abstract] | ||
Accounts receivable | $ 199 | $ 168 |
Less allowance for credit losses | (1) | (2) |
Accounts receivable, net | $ 198 | $ 166 |
Sale of Receivables - Narrative
Sale of Receivables - Narrative (Details) $ in Millions | Jun. 30, 2023 USD ($) |
Transfers and Servicing [Abstract] | |
Sale of receivable, aggregate capacity | $ 325 |
Sale of Receivables - Schedule
Sale of Receivables - Schedule of Sale of Receivables (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Transfer Of Financial Assets Accounted For As Sales [Roll Forward] | ||
Beginning balance | $ 243 | $ 215 |
Sales of receivables | 90 | 94 |
Cash returned to purchaser | 271 | 259 |
Outstanding balance sold to purchasers | 62 | 50 |
Cash collected, not remitted to purchaser | 6 | 1 |
Remaining sold receivables | (56) | (49) |
Increase (decrease) to cash flows from operating activities, attributable to transfer of financial assets accounted for as sales | $ (181) | $ (165) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 86 | $ 83 |
Work in progress | 281 | 224 |
Finished goods | 11 | 12 |
Total | $ 378 | $ 319 |
Property, Plant and Equipment -
Property, Plant and Equipment - Components of Property, Plant and Equipment (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, at cost | $ 870 | $ 846 |
Less accumulated depreciation | (468) | (442) |
Total property, plant and equipment, net | 402 | 404 |
Land, buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, at cost | 339 | 321 |
Plant and machinery | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, at cost | 196 | 190 |
Equipment and other | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, at cost | $ 335 | $ 335 |
Property, Plant and Equipment_2
Property, Plant and Equipment - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 15 | $ 14 | $ 31 | $ 27 |
Other Liabilities (Details)
Other Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Other Liabilities Disclosure [Abstract] | ||
Salaries, wages and accrued bonuses | $ 53 | $ 63 |
Fringe benefits | 65 | 76 |
Litigation | 0 | 10 |
Restructuring costs | 8 | 4 |
Provision for contract losses | 46 | 54 |
Operating lease liabilities | 24 | 25 |
Taxes Payable | 2 | 31 |
Other | $ 27 | $ 60 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Total other current liabilities | Total other current liabilities |
Total other current liabilities | $ 225 | $ 323 |
Operating lease liabilities | 74 | 68 |
Taxes Payable | 28 | 21 |
Other | $ 22 | $ 9 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Total other noncurrent liabilities | Total other noncurrent liabilities |
Total other noncurrent liabilities | $ 124 | $ 98 |
Intangible Assets - Summary (De
Intangible Assets - Summary (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 1,096 | $ 1,096 |
Accumulated Amortization | (935) | (924) |
Net Carrying Amount | 161 | 172 |
Acquired Intangible Assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,087 | 1,087 |
Accumulated Amortization | (929) | (918) |
Net Carrying Amount | 158 | 169 |
Patents and licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 9 | 9 |
Accumulated Amortization | (6) | (6) |
Net Carrying Amount | $ 3 | $ 3 |
Intangible Assets - Narrative (
Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 5 | $ 2 | $ 11 | $ 4 |
Minimum | Acquired Intangible Assets | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 10 years | 10 years | ||
Minimum | Patents and licenses | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 5 years | 5 years | ||
Maximum | Acquired Intangible Assets | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 15 years | 15 years | ||
Maximum | Patents and licenses | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible asset, useful life | 10 years | 10 years |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Income Tax Disclosure [Abstract] | ||
Deferred tax assets | $ 202 | $ 208 |
Less valuation allowance | 19 | 17 |
Deferred tax assets | 183 | 191 |
Deferred tax liabilities | 123 | 125 |
Net deferred tax asset | $ 60 | $ 66 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Income Tax Disclosure [Abstract] | ||
Tax deferred asset | $ 8 | $ 8 |
Debt - Schedule of Long-Term De
Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Finance lease and other | $ 160 | $ 161 |
Short-term borrowings | 6 | 10 |
Total debt principal | 495 | 396 |
Less unamortized debt issuance costs and discounts | (2) | (2) |
Total debt, net | 493 | 394 |
Less short-term borrowings and current portion of long-term debt | (136) | (29) |
Total long-term debt | 357 | 365 |
Term loan A | Notes Payable, Other Payables | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 219 | 225 |
Outstanding revolver | Notes Payable, Other Payables | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 110 | $ 0 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 1 Months Ended | 6 Months Ended | |
Nov. 30, 2022 | Jun. 30, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | |||
Collection of sold receivables | $ 6,000,000 | $ 10,000,000 | |
Leonardo S.p.A. | Financial Guarantee | |||
Debt Instrument [Line Items] | |||
Guaranteed line of credit facility | 6,000,000 | ||
2022 Credit Agreement | Notes Payable, Other Payables | |||
Debt Instrument [Line Items] | |||
Credit limit | $ 500,000,000 | ||
Term loan A | Notes Payable, Other Payables | |||
Debt Instrument [Line Items] | |||
Principal amount | $ 225,000,000 | ||
Long-Term Debt | 219,000,000 | ||
Fair value of long-term debt | 219,000,000 | ||
Long-term debt, gross | 219,000,000 | 225,000,000 | |
Term loan A | Notes Payable, Other Payables | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Minimum | |||
Debt Instrument [Line Items] | |||
Variable rate percentage | 1.48% | ||
Term loan A | Notes Payable, Other Payables | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Maximum | |||
Debt Instrument [Line Items] | |||
Variable rate percentage | 2.10% | ||
Outstanding revolver | Notes Payable, Other Payables | |||
Debt Instrument [Line Items] | |||
Credit limit | 275,000,000 | 275,000,000 | |
Long-term debt, gross | $ 110,000,000 | 0 | |
Debt, weighted average interest rate | 5.68% | ||
Outstanding revolver | Notes Payable, Other Payables | Minimum | |||
Debt Instrument [Line Items] | |||
Commitment fee percentage | 0.20% | ||
Outstanding revolver | Notes Payable, Other Payables | Maximum | |||
Debt Instrument [Line Items] | |||
Commitment fee percentage | 0.35% | ||
Outstanding revolver | Notes Payable, Other Payables | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Minimum | |||
Debt Instrument [Line Items] | |||
Variable rate percentage | 1.48% | ||
Outstanding revolver | Notes Payable, Other Payables | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Maximum | |||
Debt Instrument [Line Items] | |||
Variable rate percentage | 2.10% | ||
Financial Institution Credit Facilities | Line of Credit | |||
Debt Instrument [Line Items] | |||
Credit limit | $ 65,000,000 | 65,000,000 | |
Letters of credit outstanding | 41,000,000 | 36,000,000 | |
Financial Institution Credit Facilities | Line of Credit | Outstanding revolver | |||
Debt Instrument [Line Items] | |||
Credit limit | $ 15,000,000 | ||
Line of credit outstanding | $ 0 | ||
Financial Institution Credit Facilities | Line of Credit | Outstanding revolver | LIBOR | |||
Debt Instrument [Line Items] | |||
Variable rate percentage | 0.50% |
Pension and Other Postretirem_3
Pension and Other Postretirement Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Defined Benefit Pension Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 0 | $ 0 | $ 0 | $ 0 |
Interest cost | 2 | 1 | 4 | 3 |
Less Expected return on plan assets | (2) | (2) | (3) | (4) |
Amortization of net actuarial loss (gain) | 1 | 1 | 1 | 1 |
Amortization of prior service cost | 0 | 0 | 0 | 0 |
Settlement expense (income) | 0 | 0 | 0 | 1 |
Net periodic benefit cost | 1 | 0 | 2 | 1 |
Postretirement Benefit Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 0 | 0 | 0 | 0 |
Interest cost | 0 | 0 | 0 | 0 |
Less Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of net actuarial loss (gain) | 0 | 0 | 0 | 0 |
Amortization of prior service cost | 0 | 0 | 0 | 0 |
Settlement expense (income) | 0 | 0 | 0 | 0 |
Net periodic benefit cost | 0 | 0 | 0 | 0 |
Supplemental Retirement Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 0 | 0 | 0 | 0 |
Interest cost | 0 | 0 | 0 | 0 |
Less Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of net actuarial loss (gain) | 0 | 0 | 0 | 0 |
Amortization of prior service cost | 0 | 0 | 0 | 0 |
Settlement expense (income) | 0 | 0 | 0 | 0 |
Net periodic benefit cost | $ 0 | $ 0 | $ 0 | $ 0 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares shares in Millions | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1.1 | 0 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Earnings Per Share [Abstract] | ||||
Net earnings attributable to common shareholders, basic | $ 35 | $ 25 | $ 47 | $ 61 |
Net earnings attributable to common shareholders, diluted | $ 35 | $ 25 | $ 47 | $ 61 |
Basic weighted average number of shares outstanding (in shares) | 261 | 210 | 261 | 210 |
Impact of dilutive share-based awards (in shares) | 3 | 0 | 2 | 0 |
Diluted weighted average number of shares outstanding (in shares) | 264 | 210 | 263 | 210 |
Earnings per share attributable to common shareholders - basic (in dollars per share) | $ 0.14 | $ 0.12 | $ 0.18 | $ 0.29 |
Earnings per share attributable to common shareholders - diluted (in dollars per share) | $ 0.13 | $ 0.12 | $ 0.18 | $ 0.29 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |
Beginning balance | $ 18 |
Additional provision | 11 |
Reversal and utilization | (6) |
Ending balance | $ 23 |
Minimum | |
Product Warranty Liability [Line Items] | |
Product warranty term | 1 year |
Maximum | |
Product Warranty Liability [Line Items] | |
Product warranty term | 3 years |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | |||||
Revenue from related party | $ 628 | $ 627 | $ 1,197 | $ 1,239 | |
Accounts receivable, net | 198 | 198 | $ 166 | ||
Accounts payable | 290 | 290 | 457 | ||
Contract assets | 1,018 | 1,018 | 872 | ||
Affiliated Entity | Leonardo S.p.A. | |||||
Related Party Transaction [Line Items] | |||||
Revenue from related party | 7 | 51 | 13 | 54 | |
Related parties amount in cost of sales | 1 | $ 7 | 1 | $ 18 | |
Accounts receivable, net | 14 | 14 | 14 | ||
Accounts payable | 2 | 2 | 1 | ||
Contract assets | $ 1 | $ 1 | $ 5 |
Segment Information - Narrative
Segment Information - Narrative (Details) - 6 months ended Jun. 30, 2023 | reporting_unit | segment |
Segment Reporting [Abstract] | ||
Number of reportable segments | 2 | 2 |
Segment Information - Revenues
Segment Information - Revenues and Intersegment Revenues (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Total revenues | $ 628 | $ 627 | $ 1,197 | $ 1,239 |
Operating Segments | ASC | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 404 | 444 | 795 | 840 |
Operating Segments | IMS | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 226 | 187 | 415 | 405 |
Corporate & Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | (2) | (4) | (13) | (6) |
Corporate & Eliminations | ASC | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | (2) | (3) | (13) | (5) |
Corporate & Eliminations | IMS | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | $ 0 | $ (1) | $ 0 | $ (1) |
Segment Information - EBITDA Re
Segment Information - EBITDA Reconciliation to Net Earnings (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Adjusted EBITDA | ||||
Adjusted EBITDA | $ 62 | $ 67 | $ 111 | $ 140 |
Amortization of intangibles | (5) | (2) | (11) | (4) |
Depreciation | (15) | (14) | (31) | (27) |
Restructuring costs | (8) | 0 | (8) | 0 |
Interest expense | (9) | (10) | (17) | (18) |
Deal related transaction costs | (1) | (8) | (3) | (10) |
Other one-time non-operational events | 9 | (1) | 8 | (1) |
Income tax (provision) benefit | 2 | (7) | (2) | (19) |
Net earnings | 35 | 25 | 47 | 61 |
Operating Segments | ASC | ||||
Adjusted EBITDA | ||||
Adjusted EBITDA | 36 | 57 | 73 | 89 |
Operating Segments | IMS | ||||
Adjusted EBITDA | ||||
Adjusted EBITDA | 26 | 10 | 38 | 51 |
Corporate & Eliminations | ||||
Adjusted EBITDA | ||||
Adjusted EBITDA | $ 0 | $ 0 | $ 0 | $ 0 |