DRS - Earnings call transcript Q2 2024

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Operator

Thank you for standing by. Welcome to Leonardo DRS Second Quarter 2024 Earnings Call. [Operator Instructions] I would now like to hand the call over to Steve Vather. Sir, you may begin.

Stephen Vather

Good morning, and welcome, everyone. today's conference on participating for quarterly call. earnings Thanks Lynn, and CEO; me today Mike Chairman Bill are CFO. With and our Dippold, our discuss highlights, operational our and will outlook. financial forward They results strategy, Investor the is regarding anticipated Relations you webcast the future also earnings also events, presentation. Management the anticipated future of and find call company. during make Today's on forward-looking will portion the statements future website, being performance of where supplemental may and release trends the the call statements such involve that you not that guarantees difficult and caution We performance future are risks are of uncertainties and to predict. may from differ Actual in results factors. to materially the due forward-looking statements of projected variety a those

undertake discussion Form update any no to of full made factors, risk of our the a forward-looking XX-K please this other latest our statements call. refer We obligation For and on to these filings. SEC

or non-GAAP During measures, evaluated investors. non-GAAP this measures financial should information GAAP which we isolation a also management be for will provide useful performance measures. These as call, not substitute for discuss believe in

You the in can the discussed over time, this to measures of will call I non-GAAP reconciliation earnings release. At call Bill. our this Bill? on the find turn

William Lynn

and for to well quarterly continues evidenced all us. DRS perform impressive releasing thank results by Steve, the this are you as we morning. joining Thanks,

steady are We experiencing differentiated portfolio of technologies. our diverse customer demand across

and strength we computing As network particular in In our to book-to-bill. integration. electric propulsion, was a systems posted there capabilities power result, infrared another consecutive X.X quarter and QX, of advanced ground sensing,

to revenue robust constraints, quarter new XX% continue experience, and easing XX% over unlocked billion, up $X.X ascended we year-over-year with chain Additionally, year-over-year stands of supply the our sequentially. The which up total company organic another records coupled to now growth. and of backlog also is demand

in XX% points take results. want adjusted our for by to Adjusted the The team's a quarter. diluted XX% prompting guidance thank half walk you on full FY basis the year, is steadfast and thanks operational the earnings little detail in such also delivered to To team increased macro execution. I compared to broader the preliminary We solid XXX our bit to year. marvelous on our our made exceptional EPS performance last EBITDA and by increased call. [ adjusted and for on focus later ] DRS some appropriations. adjust to progress the the of expansion Mike net a will through and outlook of margin first Congress the 'XX XX% grew us environment. thoughts has moment give driving

expect under enter However, a year resolution. prior to consistent the we fiscal years, continuing with

this that investment deterring the the environment the the and beyond national near are term, changing factor Looking we believe elevated by necessary, driving important on consistently remains and, strategy security as most focused of allies. its defense if Technology our advancements growth. front near and threat Both is will the I to modernize. contesting nature continue U.S. to the their global to incremental warfare capabilities responsible enhance single remain are address complexities. Shifting peer adversaries. of mention supporting made DRS imperative that supply improvements customers brief well these they our reinforce on mission a chain. unlocking to as new factors revenue for partially positioned

XXXX. but steady a of most supply seen gradual recovery not and chain across all and our have year-to-date We

to availability with delivery new year. That be for these higher the We pacing our improved consistency Overall, with quality. the our component are growth in resulting Additionally, steadfast management lead significantly year, better which, we a material broader with believe than in and of pre-XXXX. with close increased input both chain, more supply line to times ] expected are contained is future revenue developments and range. are in are that respect as improvement, time the proactive lines, be course, to step-up [ to of as from said, the recovery projections this a well revenue the previous and accelerating chain pricing, supply to of coupled growth positive predictability steady the and mid-single-digit state

lessening within for While quarter. has input of still operations, are pricing. Shifting a XXXX, us this a where highlight in higher been business are stubborn some our to absorbing me there let factor inflation items still our we pockets couple

recognized the we customers' sensing our across As strong clear portfolio. business, outstanding are for technologies. to our our our be I demand [ mentioned push modernization bolstered see ] technologies set opportunity evident in gold standard. long-term In quarterly and our by as well This differentiated well earlier, as continuing as broad the continue is to bookings next-generation

also that meet We jointly capabilities market by with cutting-edge partnering leading our to emerging positions develop are players advancing requirements. customer commercial

and example, to sensors. At X edge actively makes award an the and of to their into integrate agility to we are recognized technology for delivery. many performance AI Win and exceptional customer, choice As delivering customers embodies time, BAE the Partner same commitment at our We among over culture with were and our best-in-class working on-time our our us the to recently received ecosystem. missions. partner quality award, years from Systems, across execute the ensuring the This others processing excellence capability, a best defense commitment very

to close interest, strategy continues matched of the customer which future R&D validates mission to needs. alignment innovation be Our our healthy with

lasers this capability this light. information pleased quantum our earlier am family recall several to that cover applications. science unveiled orders were already secured and that we designed may spectrum lasers that demand These year, of for report to in new domain. for I wider we state-of-the-art continue a specifically have a of gather You

solutions. international in we critical force and survivability considerable multi-domain and to for our appetite Counter-UAS, today's force operating protection and seeing protection effectively domestic remain capabilities customer Additionally, battlefield. are

control and as submarines. to and [indiscernible] systems electronic be quarter, Our across Navy technologies also million to tactical we $XXX to provide secured that systems protection mention key sonar radars, briefly U.S. in continued active sensing advanced and as well enablers. I expertise integration contract a critical want our this allied

visibility support it that we to recompete come. year to with into also the this our continuing pleased for the largest for clears network years We important Navy provides on be as increased will contract XXXX. win computing many us This are

Moving on expansion to quick update facility South Charleston, Carolina. our efforts a in

to the steady progress continue by ramp-up in as demonstrated quarter. CapEx the We of make

up continue CapEx in second half. will planned, to As pick the

I results. cleared one which want now of Cogswell Lastly, XX,XXX in out year, of am most the our to industrial is very fighters. our technology to focus best team's marks continued and on commend proud the said, there was security. Overall, be commitment XX delivering superb team of, am to our This outstanding and to That Connecticut security. to DRS continued XXnd I of year-to-date recipients company-wide lot than Award, unwavering demonstrates honor for I a proud more eligible facilities. their our award Danbury, This war pleased commitment of the our with

shareholders. leading sustainable our are customers consistency Our generating critical of for components which value formula. and investment, creation on talented positions driving sound outcomes people, and remain growth, long-term execution to are market spectacular both We focused strategy and prudent all

our turn will and over XXXX now ] me Let quarter greater through the in who guidance revised call second detail. to walk [ results Mike, you

Michael Dippold

team our want for to with pleased also strong the my I momentum. to thanks extend I'm quarter. continued executing Bill. another great Thanks,

organic. revenue and well quarter stemmed supply and is in and in earlier, A recovery above sensing, As the a growth Bill chain our infrared tactical customer our growth from demand of XX% driving propulsion impressive continued sizable radar entirely was the advanced well electric expectations. our as growth mentioned power portion increases Revenue as prior programs.

programs growth the revenue radars. up in view. related to to XX% due was ASC Moving sensing and tactical segment segment advanced infrared to

performance evident Our IMS segment solid revenue across with year-over-year, the was segment. up XX%

improved Now extrapolated margin profitability. and volume the integration efficient favorable of is was representing quarter. and expansion related EBITDA lumpy. IMS margin to to segment, due is Adjusted up level, XXX adjusted increased a to is XXX program. It for surveillance due higher an up EBITDA ground Increased a basis Columbia-class primary points trend basis view. EBITDA. $XX performance basis margin to segment points trending to in was said, with ASC our continues to execution. margin year. mix, EBITDA that from That less program the adjusted evident the of contracted when for in important positively basis with fairly the with to year. adjusted the execution EBITDA core quarter last by mix it's XX% year-over-year Since EBITDA to ], program annual points segment by The program and up XXX program catalyst adjusted XXX [ XX% improved X%, XX% points the note compare adjusted unfavorable be and was At over continues where clearer half volume last segment expansion first million, margin quarterly growth

bottom line metrics. to the Moving

was $X.XX EPS million quarter X% net earnings X%, share, were Second and respectively. and diluted $XX a up

operational of and from $X.XX net adjusted rate $XX outweighed up and earnings of a respectively. compare. adjusted a were EPS share and year-over-year Strong the in increased execution XX% tax higher taxes relative Our the headwind million diluted XX%,

cash cash by better increased which the driven free and year great higher offset efficiency, generation free than in a more to were small year-over-year CapEx profitability collections flow. better Moving a slightly investment. the than with Cash working outcome last quarter, net capital

shift metrics. to increasing first are remarkable our a guidance key the me performance, on across Based half Let all on discussion we guidance. our updated

still XX% $X.XXX billion, all organic. year-over-year range billion X% now higher is and a are a We revenue expecting between which $X.XXX to represents growth, of which

solid for year recompetes sizable the visibility continue to our backlog and have We from position. secured recently execute we as

and largely timing of input as level the progress output orders. of pacing on well revenue depend will as of customer our labor the receipts, However, material

is and million. has the and also For now adjusted million range EBITDA, between increased $XXX $XXX

improvement our as and business. Overall, output, expecting less as lower increased of improvement count are discrete, Embedded prior as some million higher the production IMS operational to than impact in pockets $X.XX consistent the our The from prior a EPS as favorable fully share. some annual guide $X.XX our lower inflation growth program but ASC revenue We was adjusted diluted to diluted expect shares. with range less and little in XX.X% range at volume. program segments margin efficient due are our transition tax from of improvement. The and the remains XXX a between implied execution rate Columbia-class leveraging expected primarily lingering margin still year-over-year contribute composition the guide revenue share increased both is this we of well to to from margin well to healthy our

adjusted the coming are year. When with that it cash likely consistent contribute the balance the quarter, we in to of strongly of is fourth flow increase for targeting a the the year. still primarily portion prior second quarter. is half, the of quarter earnings expectation about XX% cadence think the conversion free Lastly, our of we net years, Obviously, increase from the the the guidance the will manifest second in of financial significant the performance fourth outperformance will

a range. low to with we anticipating step-up result, in QX small are QX, to from in adjusted $XXX EBITDA mid-XX% a million, As around the translating revenue margin

Our XXXX XXXX. from targets. not towards our revenue adjusted X-year remain financial approximately We a while does by EBITDA committed margin guidance albeit to base higher XX% revenue annually, change driving growth driving revised mid-single-digit

Let thoughts. me few wrap up with closing a quick

We focus meet on driving performance said, these the and take we date our to That With shareholders. are in maintaining to ready to with your we execution applaud are team questions. to commitments achieving steadfast results. pleased are our customers our and that, broader a

Operator

comes Research. with from Stallard Vertical question of the first Our Instructions] Robert line [Operator

Robert Stallard

you. And I've for got a couple

whether division First in think forward. you them efficiency elaborate I what expecting the could of you if continue and IMS in on issues wondering call them quarter, to going these, the you're all,

William Lynn

Mike, go ahead? why don't you

Michael Dippold

Yes. Sure.

is kind out than it's years program and of anticipated handful we've within program, [ of integration really out here. anticipated. a the is. we'll it us completion extended we as the longer the of a that a that's It's programs some more at segment. we headwind that had we to can ] cost previously program And and the the taking at that's light see the in delays believe that have -- We have had this testing this program what So land a just had old, of tunnel It's line, year. had Rob, We've a and -- closing a complete is this IMS we the that XX-yard little end bit. the

I 'XX. long don't impact So the headwind dealing in with year. anything a but we're for is it the current it's to I will contained it think term, believe

Robert Stallard

of contrast supply Okay. getting a wondering you but still got overall better, and better I where like chain the it sounds if there some situation sort it's Then is work most perhaps as was to is could do. follow-up, where than

William Lynn

Yes.

] terms seeing I down. the As [ up. both Rob, said the have supply better come Availabilities in and environment, chain comments, we market are itself, in of times opening are the a lead

things the anywhere to like pre-XXXX, though, particularly time electronic We frame. to in are pre-COVID close components back really not, or

other everyone the did the from that we managing supply moved is chain. delivery past. we The the more else, year I saw the chain management. heavily factor are And of in at away we've looking and than are this in proactive supply we much just-in-time this resilience improvement Obviously, like was think part in

Robert Stallard

a one then Bill final probably. just And me, for Okay. one for

have the demand? of Looking of could obviously, the what of offset wondering what we outlook the were this Ukrainian have the zeroed? risk funding perhaps sort for if be supplemental later year, DoD and from DRS was political on sort on might uncertainty sort European to be I And there

William Lynn

think do saw difference or highlight than modest led, The the for I'd because is little Harris mean, Rob, I Democratic in you ending be a the in if rather threat Yes. still is Ukraine Republican think still abrupt threat impact pacing and Ukraine. backfill of The talked at dealing immediate I budget wouldn't an Ukraine. would threat with defense to of you be to transfers is either they've on I the spending. White they're Most and change think a I how the overall, Ukraine. this -- going is same. between China have about House I the direct Putin the Pacific. Trump a surprised point equipment U.S. it's biggest administration,

that Democrat see But you House a Republican I under gradual change. it probably you act. White than think a think I under be of would would So less a

Operator

of Our Seth line with next the comes Seifman question from JPMorgan.

Alexander Ladd

and Ladd Seth actually Alex is Mike Bill, today. this Steve, on for

that adjusted EBITDA saw kind dig outlook First, into we of more to change the wanted margins. for the in

seems that if margins it you XX.X% adjusted of guidance, implies a driving think remarks a to I imply drop-through but earlier mix the a And prepared the midpoint outlook, year. kind the get and stronger it program of there's and headwinds the I like step your take favorable less release sales there's down execution EBITDA a of less in of for that some kind and are this. sales bit certainly

if could assume, related kind that? highlight be color you're could you Columbia maybe provide specifically So from kind on given this. I'd that more second of programs if the it's I was to not expecting wondering of what in more of you driving but half, improvement should the margin that, types we

William Lynn

Yes.

Mike me open some for to Let then detail. and more turn

happen. closing get is You're from the ]. projecting each better continues improvement is contract than right. we that contract XX program identified better We're The about that we are a more headwinds the an the a year margins, transition now and point this still Columbia with the improvement. basis That's we're year-over-year 'XX by program driven that It profit year, [ mix 'XX program, to out substantial and expected. had surveillance strongly -- that we slowly to

revenue the end our is of the portfolio. margin increase, of towards In revenue mix addition, increase lower the the

some still of about assumptions. we inflation. over still a are there's issue. are inflation then mix under pockets contracts our seeing X/X And It's of priced So

And so carrying we're some still that. of

that last -- We year of why be add... to that. Mike, this don't the you expect

Michael Dippold

I think I'll the was your just covered part it you answer latter of question, pretty the HX kind which outlook. well. of on

we and to with us tick the program as we and they do year. to going even second as driven see a will by a execute shift little profitability to an as that's half put Columbia the in going on expect to in you're just second in-year higher the execute be Bill the that the we drive sets, ship half So mentioned, that range up the of start [ ] in see the to guide and margin later we come to out,

Alexander Ladd

also the helpful. as bit being think That's towards follow-up. XX%. QX pointed year-over-year. growth little you guide I in up Great. first a I And was sales about the And appreciate half then double to the Obviously, maybe sales digits. pretty up at strong a being more

So a in decline decent the kind of implies fourth that pretty quarter.

backlog seeing company environment, in be guys we're there could the the the some the like having above seeing in you general it upside. growth the X, about thinking are for seems and Just demand book-to-bill a opportunity strength

can So maybe how set we bit think kind more, about should you a too. in on that and of curious if us this level little QX progression

William Lynn

Yes.

one you I improved think this Alex, the factor missed is there, the we've year. been linearity experiencing This we're has that drive had. a

year still 'XX. end strong easier the increased front and are the X% tougher the So ones is when at linearity It the math year-over-year are versus the that year-over-year think increase, of ones do because year. looking driving which is XX% to we back the in of you're of 'XX comps, end the of to in a

Operator

comes the question line Andre next from of Madrid with BTIG. Our

Andre Madrid

I bit thinking to when I guys labor by. naval broadly you talking start the about South supply -- really more just mean Carolina been mean has you hard come started wanted chain, a skilled the off at have facility. already to look more I

see across as what well. started out? look it's rolled cap You consider actually for have I will to of recruiting some like guys eventual this this facility your peers Smid you mean once

William Lynn

Yes.

we yards, [ in and And ]. the in employees of have. we the have out a the catchment of Carolina Electric of think there. in it's And X South was pool strong the yards, potential importantly, intentional fact, nuclear Boat X We big Newport placement area that News

things of In is supportive the to is the base. is industrial industrial The this of of geography that wanted submarine submarine Navy broadening that we base, of the terms one do. broaden to

the I about, ramp think and of get as have we in broken start build Charleston. And we -- cycle we'll closer, employees, starting of strong pool even ground, we efforts through the are bring to think, stronger obviously So talented we about recruiting and we'll -- we're a a way up, for we X/X and we've workforce.

Andre Madrid

moving follow see Understood. that the you any down and supplier I at Columbia-class, underway. power I propulsion but I selection think I there DDG(X) ramp to up that available know if when And pushed there front. are color other still there? look mean Is this the forward? naval you other think was supposed out. for mean Understood. got opportunities pretty well do what could on earlier year, I is

William Lynn

power. And energy on amounts you're power as requirements substantial. the the XX-year to directed think power Andre, equation power term, area. of lives I SSN(X) DDG(X) broadly, are lower mean mentioned, of it opportunities the power of that is system, the I think cost fuel in to XX- importantly, there's classes you mid going difficult. driven to on ] We of buckets propulsion propulsion be kind case [ sensor you're a for war [indiscernible] electric will directed the not choice it of the increase ships, the think ships, of -- even important the propulsion. strong ships suites, I ships, X quieter, here One being part is in of looking and do cheaper those both the at demands operating is forward DDG(X) think X energy very towards Yes. most most for but the because the sense, the are over very at And for technology prominent. DRS but of increasing other of long and of ultimately, just you All put looking new a several the classes going drives by by it's And multiples, electric taking when fighting costs. because these operationally, by terms to probably that's is are in which which more power and

in for that the we to a mid- So there's term those. long case think strong

more electric we like decision leading the do third U.S. of the one. on international just yards talked Navy, basket We've that we allow of content programs the dedicated the then work base, which increase submarine international a get expanding looking But navies, that's to is yet. Korean between that basket faster at opportunities. and existing be base second is to the content opportunities. power. who supplier that And think about opportunities of realigning throughput. The submarines increased us looking will is be each on industrial we don't the as have No, strongly just will and on edge submarine to for towards International producing to more do look the the

from think coming in So potential area X there's baskets. we market this strong those

Andre Madrid

helpful are in more. That's I break little squeeze one to look that If very Or you just some of color. What able content that a granular? down? increased is mean could that would I too like?

William Lynn

facility through negotiation is the little we've we've this set is we're that I talked Navy. about really and we're you discussing expansion. specifics XXXXs, the on to submarine that the in a execute there's go justified the we initial the point that terms the granular just with for with But capacity base. types at industrial the content phase of greater of a case second Navy have visibility give number in the But and business it's probably from work better case, gave based because too now a shipyards facility in case that the that now expand this both the up into what invest the is under business a phase way in It's contracts that exact us investment could that efficiency we the That's to in work bring of to much that that can't Charleston Columbia all way way.

Operator

with Bank America. of from the Mora Next Mariana Perez line question of comes

Mariana Perez Mora

for investments opportunities mentioned the prepared the and Navy you air or It's And are your your versus of How have developments a you're you space? way and traditional Quantum edge. of those get specific call or R&D implement it, unmanned a you actually much like lot to Army, arenas the into R&D? So Could actually describe customer there? to please like the in AI, remarks, to are cybersecurity this? own which seeing how

William Lynn

There's there, a lot Mariana. Yes.

sensors. the the basically mean, investment sensors by here, improve to And and and will a space-based think as the our do AI use with edge of companies. us, is ground-based edge well both sensors, processing of bring better and there we you and it's is vehicle as sensors focus push the some teaming I our capability investment of processing front, AI the to the how that our On the We it mix then improve commercial you performance.

a expertise the the of entry AI into the commercial base, is Quantum, we side quantum our partners of lies lot really know, on lasers. industrial found and point some you As through there. With

a need the Daylight And You to do be quantum engine the to some at and of photonics have sensing. we computing able in best laser world capability Solutions.

-- doing And getting IRAD starting that finance. so we're to we've well, capability. photonics in co-investment some orders from stage still of been we're and quantum, also that and in getting to in quantum initial now the We're engine has develop And enormous in our the of early some potential. we customers, we're help but participation the but stages early that stages think contracts early some are we're

Mariana Perez Mora

the I'm In Columbia. to Or production? key their that call, General one that if what we see at as are seeing to progress then that work? something you're shipyards. towards about of -- and mentioned Dynamics progress progress should spill be milestones looking in your over they other is curious earnings some the And the are outsiders the seeing

Michael Dippold

Yes.

continuous of production. did that the all important for get thing realize for led with entirety the think year I is contract we maintain last to the us to XX DRS ships as the to us

executing disconnected stand-alone makes contract. we existing comments the little any on there from that GD because a we're So are

you think I think because financial going well the of execute maybe And progress to continuing as the to there. those continue milestones and seat, indicator see be expansion We that continued margin is we're my to effectively. hit I

Operator

Sam the question Securities. from with line of next comes Struhsaker Our Truist

Samuel Struhsaker

hear me guys you Can right? all

William Lynn

Yes, Sam.

Samuel Struhsaker

wondering about Mike was Could kind for of you of could segments, the for bit Ciarmoli. the looking break And a maybe IMS we between where how kind drivers the in potentially if and give to if the are pressure should that I ACS. revision detail little you -- the guys year, the mild trajectory then upper more revenue. for on think of the margin X second I'm maybe at on that, addition half? the in drivers margins

William Lynn

you Mike, that? take why don't

Michael Dippold

Yes.

on with the me top on let and line So side start revenue the first side. the half

We push are pretty holistic seeing both a across segments. demand

So our will end growth trend our up to see good to revenue revenue growth you're we're segments. DRS -- fairly that contribute I equally we And ability deliver think the backlog position segments about year. ] and a out similar to therefore, [ for both of as for feeling all going the

On margin which contribute are expansion say margin expectation executing both similar higher into output. fashion of it's the both the would of revenue that's I we kind that And even what year kind and side, to year-over-year. also the we're will segments in our they still in a walked the with holding with,

Samuel Struhsaker

anywhere else you're issues? great. kind program then on. it's there so of seeing that That's guys are of Okay. seeing any that isolated to just some that pressure And -- guess I Is really Or program? just kind about one is really that one you

Michael Dippold

We're price. firm XX% fixed Yes.

So be risk. some there's opportunities, always some may there

make as maybe done equally identifying risks a we've I important think opportunities. to well those what and the identifying risk understanding early, sure is management of that we're mitigation as team

effectively we an some have incredible we to forward, but between XXXX. as balance have commitments and that execute price deliver through margin be fixed So look and yes, we to confidence way we're that's development our also our EBITDA all on underpins efforts, able really then our the opportunities. our what risks going And

Samuel Struhsaker

I And one if Okay. follow-up, could. final just Great. then

that a that we Carolina trajectory pretty down could about? increase the of ramp or for on expect back steady is ramp there we CapEx facility, the should On think that? a kind Or South with peak then and

Michael Dippold

kind the see with a looking QX. would year, For and I we up of CapEx expect to pretty slight the QX latter remainder QX similar commitments into the ramp get to as of into the

terms that's expectation step-up, facility in have So I of of execution and of South remainder that see the cadence the the think year. of the gradual a the you'd we Carolina for the

Operator

line question comes CJS from of Jon next Tanwanteng Securities. Our with the

Jonathan Tanwanteng

at for international expectations seems bit a if I outlook. expectations spending the there's split what broadly, and in at between seeing quarter been before? and spending. to does Day past, long-term a long-term it's than Investors domestic little that wondering supplementals, ex DoD defense as talk into well. percentage the grow your a defense you factor different of if presented kind at you've Great the like could any that the from How Ukraine more it and was Maybe been the a you're Allied higher Nations about push it's growth among

William Lynn

our the this Investor than Thanks, different are And what defense Jon. budget. than Day. that seeing that broadly talk think it's faster point, growing about at I we U.S. the presented the we is about international But speaking, years, at did we X environment, don't and there, mix. think We our the and doubled we'll last of an in increase. revenue revenue over XX%, on see this our trajectory we're increase in do X that We've year still projecting international to international or forward.

going think And the you're So base. about that, that that opportunity environment international of similarly, revenue strong about I and is in And for Asia, that X.X% we ] and increase of you where [ increases in GDP. our think, talking further Japan. talked [ and us, that, increasing to U.K. Europe content seeing is ], Australia too now gives

Jonathan Tanwanteng

time and M&A. more We've Okay. multiples allocation or that getting if really Great. if at I'm Any you're look you're opportunities? specifically -- some assets a seen [ updates seeing and reasonable go deals attractive for on those if ], capital wondering

William Lynn

opportunities active don't our and have [ over in opportunities. to do more past want diligent continue ] we're we been any markets that X but kind seeing where announce, to M&A. the core X been anything framework We've to see strategic we We the months. of have quite would and We

criteria, prudent, evaluate them think do financial an be M&A We're to as we the strict against have execute we over on this. I near we said, are but continue to opportunities. seeing able we the and midterm. will But strategy to We

Jonathan Tanwanteng

They've parent, Okay. as one just is more And squeeze what M&A doing. update well. in. if active on could I been Any markets Leonardo, in your

William Lynn

there agreement on -- we we're -- We XX% them, where our closely we can M&A, with in aligned and a that consult are shareholders. shareholder have

share their So to value any increase [ directly drops ] into price.

with participate we we're looking what on them. and aligned we're So for,

Operator

Our line Jan-Frans comes the next from with Engelbrecht of question Baird.

Jan-Frans Engelbrecht

significant Middle question you highlight there's would clearly out we was And for protection, outlook that just if programs end XXXX heading in XXXX in late wondering tailwinds, into force specifically? especially any milestones I I had just specific that on -- in for if growth protection imagine demand I seeing should or a look the East. could market? XXXX the force

William Lynn

exacerbated -- No, the decision of of earlier underlying military invest advent our all in protection, short-range been Army threats is think we even all and in force Counter-UAS, they've highlighted air to ] the which I technology, shrunk right? end structure. in it that's dynamics, but the Army by we [ put that organic made in they this extends that of They're the year. X as market world for return think of you've ], has to have lower the protection the air short-range call, you're Ukraine Yes. active That -- force the Battalion there drone and threats drone have an the [ those threats from X I we're able doubled on They toward year that defense. capabilities. structure to even growth that they -- those the defense, went where to air mentioned air seeing the got dedicated to still conflict are got Israel a importance -- The

demand by make developing more the in point, solution it a markets. it more I and are for enable able, but think, vehicle see short-range to competitive have a efficient fewer higher which the they voting demand. price So the to international We to of proportion -- starting international mission assets, that also air lowers defense. And were Counter-UAS, the operationally they're help single makes we

mean, this overall, area, I I very the are positive. trends in think So

Jan-Frans Engelbrecht

just And U.S. like I sort or but targeting? quick platforms. days, the of helpful. opportunity there really also early from the the maybe or you are maybe level, trend I you growing That's [ between top guys it's mind Nations know a on follow-up, can longer we've guess, seen comment think but that, need for would there? would weapon sensors this be industry Is of term the ], if interoperability for anything any that terms guess, Allied in I I call high of

William Lynn

XXth always I NATO mean anniversary. mean, just frankly, celebrated I there. that's is -- -- Yes. Alliance we been

and -- Asia we the then alliances So close in have as well.

So always been there. that's

we of face it's we see on conflicts sell see the one some it to that. -- opportunities military the Europe. we vehicles the where it would computing we international do we of with sensing Eastern U.K. We the the I with Where area of the compute been some already to is military, reemphasized say is for and foreign of for see and think threat it will battlefield your China. of I right, people. part do And yes, communications. sales and see more, even you U.S.

that if an there vehicles, -- One suggested. give does network because that it's certainly U.S.-sourced to vehicle, that the integral incentive computing. a there's there's you're that two, to particularly So the same you if dynamic interoperability put you're you buying basically, but

Jan-Frans Engelbrecht

Congrats quarter. on good the

Operator

next Stanley. of line Morgan comes Liwag Our from the question Kristine with

Unknown Analyst

Kristine. is This on for Justin

lot one ASC. think a maybe a I have been already, quick just but covered on

the shifting quarter, much was work the for last fair towards manifested in in from the development shift back ] of still segment? production type guess, mentioned you half think year. XQ to expectations how that [ course production over I of tilt results? for further And mix I here the

Michael Dippold

your Yes, assessment. I you're with think spot on

growth We well those move in to the programs has the as helped some both which development see efficiencies programs, the revenue on production are those production, starting into margin. and is improving as of certainly

into So see expect year. that half trend continue the to I the second would of

Operator

back showing for remarks. I'm further in closing no questions gentlemen, queue. I to now Steve over to the turn and Ladies the call would like

Stephen Vather

time for in your all you company. morning interest and the your this Thank

me. or questions, don't day. to Of the again your you follow-up rest all course, e-mail if have speaking to We soon. hesitate with of forward of look call Enjoy you please

Operator

Ladies and gentlemen, this concludes today's participation. conference call. for Thank you your

You now disconnect. may

Leonardo DRS (DRS) 30 Jul 242024 Q2 Earnings call transcript