Leonardo DRS [DRS] on Wednesday evening reported lower earnings and sales in its first quarter largely due to headwinds from a boost the company received a year ago in the Columbia-class submarine program and the divestiture of a business.
Net income tumbled 67 percent to $12 million, 5 cents earnings per share (EPS), from $36 million (17 cents EPS) a year ago.
The
Columbia profit step up in the first quarter of 2022 was a $25 million headwind to the top and bottom-lines in the first quarter of 2023. Earnings were also lower due to increased internal research and development spending on electric power and propulsion technologies.
Excluding taxes, interest expense, transaction and restructuring costs, and other expenses, adjusted earnings of $19 million (7 cents EPS), topped consensus estimates by a penny per share.
Sales fell 7 percent to $569 million from $612 million a year ago. In addition to the headwind from the submarine adjustment a year ago, the divestiture of the Global Enterprise Solutions more than offset revenues from the acquisition of RADA Electronic Industries.
The company’s guidance for 2023 is unchanged. Orders were strong at $749 million and backlog stood at $4.3 billion, up 43 percent from $3 billion a year ago. Free cash was a $346 million outflow.
Leonardo DRS continues to see stability in its supply chain but lead times won’t improve until 2024, Bill Lynn, the company’s chairman and CEO, said Wednesday evening on the earnings call.
“But the stability is what we need to meet our revenue commitments and through the first quarter that’s what we’re seeing,” he said.
Electronics and castings are two “pockets” where the company continues to see bottlenecks and lead time challenges in the supply chain, Michael Dippold, Leonardo DRS’s chief financial officer, said.