DRSMEDIUM SIGNALOPPORTUNITY10-K

DRS demonstrated strong operational performance with 12.8% revenue growth to $3.6B and significantly increased R&D spending (+40.2%) and capital expenditures (+63.5%), signaling aggressive investment in growth capabilities.

The company is in a clear growth and investment phase, with management deploying substantial capital toward R&D and infrastructure while maintaining strong profitability and cash generation. The removal of pandemic-related risk language and addition of "integration" to their core capabilities description suggests operational confidence and expanded service offerings.

Comparing 2026-02-27 vs 2025-03-03View on EDGAR →
FINANCIAL ANALYSIS

DRS delivered robust financial performance with revenue growing 12.8% to $3.6B while net income increased 30.5% to $278M, demonstrating strong operational leverage. The company significantly ramped investment with R&D expenses up 40.2% and capital expenditures surging 63.5%, funded by strong operating cash flow growth of 35.1% to $366M. The 32% increase in accounts receivable aligns with revenue growth, while the overall financial picture signals a defense contractor in aggressive growth mode with healthy margins and cash generation supporting increased investment in future capabilities.

FINANCIAL STATEMENT CHANGES
Capital Expenditure
Cash Flow
+63.5%
$85.0M→$139.0M

Capital expenditure jumped 63.5% — major investment cycle underway; assess returns on deployment.

R&D Expense
P&L
+40.2%
$92.0M→$129.0M

R&D investment increased 40.2% — signals commitment to future product development, though near-term margin impact.

Operating Cash Flow
Cash Flow
+35.1%
$271.0M→$366.0M

Operating cash flow surged 35.1% — exceptional cash generation, highest quality earnings signal.

Accounts Receivable
Balance Sheet
+32%
$253.0M→$334.0M

Receivables surged 32% — revenue recognized but not yet collected; watch for collection issues or channel stuffing.

Net Income
P&L
+30.5%
$213.0M→$278.0M

Net income grew 30.5% — bottom-line growth signals improving overall business health.

Operating Income
P&L
+18.8%
$293.0M→$348.0M

Operating income improving — cost discipline or growing revenue base absorbing fixed costs.

Gross Profit
P&L
+18.1%
$736.0M→$869.0M

Gross profit expanding — improving pricing power or product mix shift toward higher-margin offerings.

Revenue
P&L
+12.8%
$3.2B→$3.6B

Revenue growing 12.8% — solid top-line momentum, watch margins for quality of growth.

Current Liabilities
Balance Sheet
+10.3%
$1.1B→$1.2B

Current liabilities rose 10.3% — increased short-term obligations, watch current ratio.

LANGUAGE CHANGES
NEW — 2026-02-27
PRIOR — 2025-03-03
ADDED
See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.
As of February 24, 2026, there were 265,846,193 shares of the registrant s common stock, par value of $0.01 per share, outstanding.
The Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year ended December 31, 2025.
Department of Defense (the DoW ); The effect of inflation and other cost pressures on our supply chain and/or our labor costs; Our mix of fixed-price, cost-plus and time-and-materials type contracts and any resulting impact on our cash flows due to cost overruns; Failure to properly comply with various covenants of the agreements governing our debt could negatively impact our business; Our dependence on U.S.
national security customers and allied defense forces worldwide.
We specialize in the design, development, manufacture, and integration of advanced sensing, network computing, force protection, and electric power and propulsion technologies and solutions.
As a mid-sized defense technology company, our combination of operational speed and agility, deep domain expertise, and established positions on priority defense platforms has resulted in a durable and diversified portfolio of programs across the DoW.
We believe DRS is well positioned to support current operational requirements, while facilitating the DoW s rapid transition toward more autonomous, software-enabled, interconnected, and multi-domain capabilities required to address increasingly complex and proliferating threats.
Enhancements in sensing, artificial intelligence ( AI )-enabled computing, self-protection, and power generation and management are central to these priorities.
Demand for our technologies is concentrated in areas of sustained priority for the DoW, including counter unmanned aircraft systems ( C-UAS ), advanced infrared sensing, network computing, and electric power and propulsion for next generation navy vessels.
REMOVED
See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
As of February 28, 2025, there were 265,157,699 shares of the registrant s common stock, par value of $0.01 per share, outstanding.
Department of Defense (the DoD ); Failure to properly contain a global pandemic in a timely manner could materially affect how we and our business partners operate; The effect of inflation on our supply chain and/or our labor costs; Our mix of fixed-price, cost-plus and time-and-materials type contracts and any resulting impact on our cash flows due to cost overruns; Failure to properly comply with various covenants of the agreements governing our debt could negatively impact our business; Our dependence on U.S.
We specialize in the design, development and manufacture of advanced sensing, network computing, force protection and electric power and propulsion technologies and solutions.
Our innovative spirit and agility inherent in a mid-sized defense company, together with our established market position in these areas have created a foundational and diverse base of programs across the DoD.
We believe DRS is well positioned to not only support our customers in today s mission but to also provide more autonomous, dynamic, interconnected, and multi-domain capabilities to defend against and counter evolving and emerging threats.
We view enhancement of capabilities in sensing, computing, self-protection and power as necessary to enable the strategic priorities of the DoD and our other customers.
Our Company consists of eight business units which are organized as two operating segments: Advanced Sensing and Computing and Integrated Mission Systems.
Advanced Sensing and Computing Our 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.
Across our offerings, we are focused on advancing sensor distance and enhancing the precision, clarity, definition, spectral depth and effectiveness of our sensors.
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