Oct 29, 2026 earnings call — Strong bookings and radar-driven backlog growth
Bookings exceeded $1.6 billion and record funded backlog reached $5.6 billion.
Revenue $1.1B (est $1.0B) · EPS $0.46 (est $0.35) · Next-quarter revenue outlook $4.0B–$4.0B
Key quotes
"Our differentiation is recognized this quarter with a $500 million contract supporting the Department of War's counter drone office called JIATF 401."
"This quarter, we were selected to provide the permanent magnet electric propulsion system for the Republic of Korea's Navy's KDDX destroyer program."
"Bookings exceeded $1.6 billion representing a book to bill ratio of 1.5x."
Analyst Q&A 9
Korean destroyer contract and comparison
Q (Morgan Stanley): Analyst asked about the KDDX win: the opportunity size, how DRS content compares to Columbia work, and other near-term international surface ship opportunities.
A: Management said the KDDX win proves their technology works outside the U.S. They said the ship power architecture is the same as Columbia and allows moving power around the ship for sensors and weapons. They expect similar architectures for future U.S. and international surface ships.
"First and foremost, it gives us the ability, to show that our technology is applicable to nations outside of the United States." — John A. Baylouny (CEO)
ASC margins and supply chain
Q (Guggenheim): Analyst asked why ASC margins were flat sequentially despite year-over-year expansion and about supply chain risks for upcoming wins.
A: Management said ASC margins are expanding over the year and mix is the main driver, with tactical radar mix helping last quarter. They expect further margin expansion in Q4 and will see benefits more clearly year-to-date. On supply chain, they said they learned from past issues, now use tools including AI, and buy material early to avoid shortages.
"I would say that on the ASC side, we are continuing to predict and project margin expansion throughout the year." — Michael Dippold (CFO)
How new wins affect 2027 growth
Q (Baird): Analyst asked how the 50,000-unit drone camera, radar IDIQ, and Korean destroyer contracts could ramp into 2027 and beyond.
A: Management said the wins reflect prior investments in IRAD and CapEx and they are optimistic about growth above their existing framework. They will provide more 2027/multiyear guidance in early February and at Investor Day. They expect RAFT and other wins could drive 2027 toward low double digit growth.
"We are very well positioned for sustained growth in our investments, in the cutting edge technology, some of which you mentioned, and alignment to the customer's priorities." — John A. Baylouny (CEO)
Doosan role and unmanned teaming in Korea
Q (Andrew · BofA): Analyst asked what Doosan's contribution is on KDDX and whether DRS will pursue Korea's manned-unmanned teaming initiative.
A: Management said Doosan is their in-country partner for content and integration on KDDX. They said they are not aware yet of Korea formally moving to unmanned teaming, though they expect the market to head that way and DRS is investing in sensing and edge AI for unmanned operations.
"Doosan is our partner here, and for in country content as well as integration." — John A. Baylouny (CEO)
ASC backlog mix and CR risk
Q (Jamie · JPMorgan): Analyst asked whether ASC backlog mix will support margins into 2027 and whether an extended continuing resolution (CR) poses risks.
A: Management expects a positive mix tailwind for Q4 and into 2027 driven by distributed radars and counter-UAS demand, so ASC should drive most future margin expansion. They said IMS is already high-performing and ASC will add profitability. They do not view an extended CR as a material risk because the department priorities are bipartisan and should continue.
"I think that there is going to be a positive mix tailwind as we look out for Q4 and into the into the future, including 27." — Michael Dippold (CFO)
Exporting counter-UAS radars and JIATF task order timing
Q (Austin Moeller · Canaccord Genuity): Analyst asked about demand for counter-UAS radars in NATO and Middle East, and when JIATF 401 task order revenues will show in the P&L and how the $14.4 billion might flow.
A: Management said they see global demand and are already selling radars into many nations, winning meaningful share despite competition. On JIATF 401, some revenue is already flowing through the P&L because delivery orders can be satisfied quickly, and they expect a significant portion of broader funding to flow through that task force though they won't comment on appropriation amounts.
"Some of that revenue is already flowing through the P and L." — John A. Baylouny (CEO)
Space wins and nuclear opportunity
Q (Andre Madrid · U. S. Bancorp BTIG): Analyst asked for an update on Tranche 3 space work, OTA wins, growth of the space portfolio, and opportunities in commercial nuclear control systems.
A: Management said space is growing fast and the SDA Tranche 3 missile warning/tracking payload is executing well, plus they have payloads for software-defined radio/crypto coming. They also noted their nuclear legacy is in instrumentation and safety controls, with orders for reactor upgrades and interest in small modular reactors as a future opportunity.
"First and foremost, just going back to the budget request, the space request for 2027 is a 100% increase from 2026." — John A. Baylouny (CEO)
Sensing growth sources and RAFT impact
Q (Noah Poponak · Goldman Sachs): Analyst asked how sensing demand splits between existing growth, step-change growth, and new markets, and asked how much RAFT contributes to 2027 growth and margins.
A: Management said they expect mid to high single digit growth in core portfolio and have higher-growth 'option' areas like missiles and space that could accelerate growth if they hit. On RAFT, management did not give explicit numbers but said RAFT should be immediately accretive and likely add a couple points ("2, 3 points") to top-line growth; they expect 2027 margin expansion to continue but at a slower pace than 2026.
"So we have not been explicit in that, but we did give some color surrounding RAFT." — Michael Dippold (CFO)
Radar revenue size and growth outlook
Q (Jonathan Tanwanteng · CJS): Analyst asked what percent of revenue comes from radar today and how that may change over 2–3 years given the $500 million contract, international demand, and capacity expansion.
A: Management said they have not disclosed radar revenue percent but radars are embedded across force protection and advanced sensing and are becoming a sizable portfolio piece. They said capacity investments and geographic expansion (like the UK) should make radar a strong tailwind and that the budget request shows a large increase in radar-related capability, so radar growth should outpace their baseline framework.
"We have not disclosed what the actual revenue contribution from the radars is." — Michael Dippold (CFO)