Leonardo DRS Inc (DRS) 2024 Q3 法說會逐字稿

Ladies and gentlemen, good day, and welcome to the Leonardo DRS third quarter fiscal year 2024 earnings conference call. (Operator Instructions) As a reminder, this event is being recorded.

女士們、先生們，美好的一天，歡迎參加 Leonardo DRS 2024 財年第三季財報電話會議。（操作員說明）謹此提醒，正在記錄此事件。

I would now like to turn the conference over to Steve Vather, Senior Vice President of Investor Relations and Corporate Finance. Please go ahead.

我現在想將會議交給投資者關係和公司財務高級副總裁 Steve Vather。請繼續。

Good morning, and thanks for participating on today's quarterly earnings conference call. Joining me today are Bill Lynn, our Chairman and CEO, and Mike Dippold, our CFO. They will discuss our strategy, operational highlights, financial results and forward outlook. Today's call is being webcast on the Investor Relations portion of the website, where you will also find the earnings release and supplemental presentation.

早安，感謝您參加今天的季度財報電話會議。今天與我一起出席的有我們的董事長兼執行長 Bill Lynn 和我們的財務長 Mike Dippold。他們將討論我們的策略、營運亮點、財務表現和未來展望。今天的電話會議將在網站的投資者關係部分進行網路直播，您也可以在其中找到收益發布和補充簡報。

Management may also make forward-looking statements during the call regarding future events, anticipated future trends, and the anticipated future performance of the company. We caution you that such statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Actual results may differ materially from those projected in the forward-looking statements due to a variety of factors. For a full discussion of these risk factors, please refer to our latest Form 10-K and our other SEC filings. We undertake no obligation to update any of the forward-looking statements made on this call.

管理層還可能在電話會議期間就未來事件、預期未來趨勢以及公司預期未來業績做出前瞻性陳述。我們提醒您，此類聲明並不是對未來業績的保證，並且涉及難以預測的風險和不確定性。由於多種因素，實際結果可能與前瞻性聲明中的預測有重大差異。有關這些風險因素的完整討論，請參閱我們最新的 10-K 表格和其他 SEC 備案文件。我們不承擔更新本次電話會議中所做的任何前瞻性陳述的義務。

During this call, management will also discuss non-GAAP financial measures, which we believe provide useful information for investors. These non-GAAP measures should not be evaluated in isolation or as a substitute for GAAP performance measures. You can find a reconciliation of the non-GAAP measures discussed on this call in our earnings release.

在本次電話會議中，管理層還將討論非公認會計準則財務指標，我們認為這為投資者提供了有用的信息。這些非 GAAP 衡量標準不應單獨評估，也不應作為 GAAP 績效衡量標準的替代品。您可以在我們的收益報告中找到本次電話會議中討論的非公認會計原則措施的調節表。

At this time, I will turn the call over to Bill. Bill?

這時候，我會把電話轉給比爾。帳單？

Thanks, Steve. Good morning, and welcome, everyone, to the DRS Q3 earnings call. We are pleased with our strong third quarter performance and the continued momentum in the year-to-date. Our performance exemplifies the entire team's tenacity and dedication. Their steadfast focus in delivering critical technology for our customer is also translating into excellent outcomes for DRS shareholders. I want to express my thanks to the team for their incredible efforts and commend them on their impressive accomplishments to date.

謝謝，史蒂夫。早上好，歡迎大家參加 DRS 第三季財報電話會議。我們對第三季的強勁表現和今年迄今的持續成長動能感到滿意。我們的表現體現了整個團隊的堅韌和奉獻精神。他們堅定不移地致力於為我們的客戶提供關鍵技術，這也為 DRS 股東帶來了卓越的成果。我想對團隊所做的令人難以置信的努力表示感謝，並讚揚他們迄今為止所取得的令人印象深刻的成就。

Our quarterly results reflect steady customer orders, solid revenue growth, profit expansion, exceeding our top line, and improved free cash flow generation. Healthy customer appetite across our differentiated portfolio drove a book-to-bill ratio of 1.3 in the quarter. Demand for our naval network computing, electric power and propulsion, force protection, and advanced infrared sensing technologies were key contributors to our $1.1 billion of bookings for Q3. As a result, backlog marched higher both on a year-over-year and a sequential basis.

我們的季度業績反映了穩定的客戶訂單、穩健的收入成長、利潤擴張、超出了我們的收入，以及自由現金流產生的改善。我們差異化產品組合的健康客戶需求推動本季的訂單出貨比達到 1.3。對海軍網路運算、電力和推進、部隊保護以及先進紅外線感測技術的需求是我們第三季 11 億美元訂單的主要貢獻者。因此，積壓訂單年比和季比均呈上升趨勢。

Quarterly revenue growth was 16% over last year. We also grew our adjusted EBITDA by 22% and delivered margin expansion of 60 basis points in Q3. Lastly, adjusted diluted EPS was similarly propelled by strong operational execution and up 20% year-over-year.

季度營收較去年增長 16%。第三季度，我們的調整後 EBITDA 成長了 22%，利潤率成長了 60 個基點。最後，調整後攤薄每股收益同樣受到強勁營運執行力的推動，較去年同期成長 20%。

Shifting to the macro environment. As we expected, our customers began FY25 under a short-term continuing resolution, which currently lasts through December 20. We do not foresee much of an impact in 2024 from this CR. That said, we are hopeful that Congress passes appropriations in a timely manner to provide our customers with the necessary funding clarity, which is especially important in light of the increasingly complex and elevated global threat environment.

轉向宏觀環境。正如我們預期的那樣，我們的客戶在 2025 財年開始時制定了一項短期持續決議，目前該決議持續至 12 月 20 日。我們預計該 CR 不會對 2024 年產生太大影響。也就是說，我們希望國會及時通過撥款，為我們的客戶提供必要的資金透明度，鑑於全球威脅環境日益複雜和加劇，這一點尤其重要。

Irrespective of the outcome of the election next week, we believe that the robust threat environment will require a higher and prolonged US and allied defense investment. Our diverse and platform agnostic portfolio remains well-positioned to meet our customers' most challenging mission needs.

無論下週的選舉結果如何，我們認為，強大的威脅環境將需要美國及其盟國進行更高、更長期的國防投資。我們多樣化且與平台無關的產品組合仍能滿足客戶最具挑戰​​性的任務需求。

Shifting to operations. Our business continues to enjoy broad-based success as evidenced by the healthy customer demand, and innovation milestones achieved this quarter. Let me review a couple of noteworthy items.

轉向營運。我們的業務繼續取得廣泛的成功，健康的客戶需求和本季實現的創新里程碑證明了這一點。讓我回顧一下幾個值得注意的項目。

First, our strategic rationale for acquiring RADA nearly two years ago, continues to be validated and the business has performed well. The urgency and imperative to protect people and platforms from proliferated airborne threats has only increased. Today, effective air defense is being achieved through a greater quantity of capable and distributed tactical radars versus the traditional more centralized model. This is similar to what is happening in space with the shift to Low Earth Orbit satellites for missile tracking and detection mission. Our tactical radars are being deployed for a diversity of close-in and short-range air defense applications against drones, missiles, and other airborne threats.

首先，我們近兩年前收購 RADA 的策略理由繼續得到驗證，業務表現良好。保護人員和平台免受空中威脅擴散的緊迫性和必要性只增不減。如今，與傳統的集中式模式相比，有效的防空是透過更多的強大的分散式戰術雷達來實現的。這類似於太空中發生的情況，即轉向近地軌道衛星來執行飛彈追蹤和探測任務。我們的戰術雷達正在部署用於針對無人機、飛彈和其他空中威脅的各種近距離和短程防空應用。

The global threat environment has reinforced domestic and international interest for our multi-mission tactical radars, which is reflected in our bookings and growth. We are also experiencing robust customer demand which is reflected across our portfolio. In the quarter, we continued to build on our multi-domain positions in the advanced infrared sensing and network computing markets with several sole-source contract awards for follow-on work. One of these contracts includes a $235 million production contract award for naval radars deployed on US surface combatants.

全球威脅環境增強了國內外對我們的多任務戰術雷達的興趣，這反映在我們的預訂和成長中。我們也遇到了強勁的客戶需求，這反映在我們的產品組合中。本季度，我們繼續鞏固我們在先進紅外線感測和網路運算市場的多領域地位，並為後續工作授予了幾項獨家合約。其中一份合約包括價值 2.35 億美元的生產合同，用於部署在美國水面作戰艦上的海軍雷達。

In addition to fortifying our leading market positions, we are successfully penetrating logical market adjacencies. I am pleased to report that we secured new contract awards to provide customers with our cutting-edge over-the-horizon radar technology. This marks an expansion of our radar portfolio into new sensing modalities for more long-range and sophisticated threats. Additionally, we are seeing our infrared sensing capability expand into small tactical drone applications. We look forward to further building on these initial footholds and others in the years to come.

除了鞏固我們的領先市場地位外，我們還成功滲透到鄰近的市場。我很高興地報告，我們獲得了新合同，為客戶提供尖端的超視距雷達技術。這標誌著我們的雷達產品組合擴展到新的感測模式，以應對更遠距離和更複雜的威脅。此外，我們還看到我們的紅外線感測能力擴展到小型戰術無人機應用。我們期待在未來幾年在這些最初的立足點和其他立足點上進一步發展。

Across our business, we are working with strategic partners that share our spirit of innovation and agility. Just a few weeks ago at AUSA, we unveiled a directed energy counter drone capability. This Stryker-based solution adds to our suite of force protection solutions and integrates a new threat defeat mechanism to our proven portfolio.

在我們的整個業務中，我們與擁有相同創新和敏捷精神的策略合作夥伴合作。就在幾週前，我們在 AUSA 上推出了定向能反無人機能力。這種基於 Stryker 的解決方案增加了我們的部隊保護解決方案套件，並將新的威脅擊敗機制整合到我們經過驗證的產品組合中。

I am incredibly proud to note that in as few as eight months, DRS and its team designed, developed, and tested this capability to successfully down Class 1, 2, and 3 drone threats at a distance. Our ability to address challenging customer mission requirements and go from concept to operational and production-ready capabilities in a rapid manner sets us apart from the competition.

我非常自豪地註意到，DRS 及其團隊在短短八個月內設計、開發和測試了這項功能，成功遠距離擊落 1 級、2 級和 3 級無人機威脅。我們能夠滿足具有挑戰性的客戶任務要求，並快速從概念轉變為營運和生產就緒能力，這使我們在競爭中脫穎而出。

Sticking with innovation, we are advancing the integration of AI into our sensing solutions. In close collaboration with our partners and customers, we recently developed and tested an AI-aided target recognition capability on multiple platforms.

堅持創新，我們正在推動人工智慧與感測解決方案的整合。透過與合作夥伴和客戶的密切合作，我們最近在多個平台上開發並測試了人工智慧輔助目標識別功能。

Lastly, in our electric power and propulsion business, we remain on track and are making steady progress on the new facility down in Charleston, South Carolina. I also want to highlight that we are performing well on our portion of the Columbia-class program. We are delivering to our customers with quality and on schedule. From a financial perspective, we are also seeing the incremental benefit of shifting further into production and executing out of the more attractively priced chipsets.

最後，在我們的電力和推進業務方面，我們仍保持正軌，並在南卡羅來納州查爾斯頓的新工廠建設中取得穩步進展。我還想強調，我們在哥倫比亞級專案中的部分錶現良好。我們按時按質向客戶交付產品。從財務角度來看，我們也看到了進一步轉向生產並使用價格更具吸引力的晶片組所帶來的增量收益。

Overall, we are pleased with the strong momentum evident in our year-to-date results, which lays a strong foundation to close out the year. Disciplined adherence to our strategy and rigorous operational execution are fundamental to our long-term success. As I look forward, I'm excited that our agility, innovation, and talented people are sharpening our market-leading positions.

總體而言，我們對今年迄今的業績表現出的強勁勢頭感到高興，這為結束今年奠定了堅實的基礎。嚴格遵守我們的策略和嚴格的營運執行是我們長期成功的基礎。展望未來，我很高興我們的敏捷性、創新性和人才正在鞏固我們的市場領先地位。

With that, let me turn the call over to Mike, who will walk you through our financials in greater detail.

接下來，讓我把電話轉給麥克，他將帶您更詳細地了解我們的財務狀況。

Thanks, Bill. Let me also offer my congratulations to the broader team in delivering another solid quarter. Revenue growth in the quarter was 16% and completely organic. Impressive customer demand and favorable timing and material receipts push revenue above our expectations.

謝謝，比爾。我還要向更廣泛的團隊表示祝賀，祝賀他們又取得了一個穩定的季度業績。該季度的收入增長率為 16%，並且完全是有機增長。令人印象深刻的客戶需求以及有利的時間和材料收貨推動收入超出我們的預期。

Our programs related to advanced infrared sensing, force protection and tactical radars were key tailwinds to growth in the quarter. From a segment perspective, ASC revenue was up 24% year-over-year, bolstered by growth from programs in advanced infrared sensing and tactical radars. IMS revenue was up modestly at 3%, aided by increases to our force protection programs.

我們與先進紅外線感測、部隊防護和戰術雷達相關的項目是本季成長的關鍵推動力。從細分市場來看，由於先進紅外線感測和戰術雷達專案的成長，ASC 收入年增 24%。由於我們部隊保護計畫的增加，IMS 收入小幅增加了 3%。

Now, to adjusted EBITDA. Adjusted EBITDA in the quarter was $100 million, representing 22% growth from last year. Increased volume was the primary driver for the 60 basis points of margin expansion generated in the quarter.

現在，調整後的 EBITDA。該季度調整後 EBITDA 為 1 億美元，較去年增長 22%。銷量增加是本季利潤率成長 60 個基點的主要驅動力。

Shifting to the segment view. ASC adjusted EBITDA increased 33% with margin up 90 basis points due to favorable program mix, more efficient program execution, and higher volume. IMS adjusted EBITDA was up 6% and margin expanded by 30 basis points on higher volume and slightly improved net program execution across the segment.

切換到分段視圖。由於有利的計劃組合、更高效的計劃執行和更高的產量，ASC 調整後 EBITDA 增長了 33%，利潤率增長了 90 個基點。IMS 調整後的 EBITDA 成長了 6%，由於該部門銷售增加和淨計畫執行略有改善，利潤率擴大了 30 個基點。

On to the bottom-line metrics. Third quarter net earnings were $57 million and diluted EPS was $0.21 a share, up 21% and 17%, respectively. Our adjusted net earnings of $64 million and adjusted diluted EPS of $0.24 a share were up 21% and 20%, respectively. Crisp operational execution eclipsed the higher tax rate and expense in the year-over-year compare.

關於底線指標。第三季淨利為 5,700 萬美元，稀釋後每股收益為 0.21 美元，分別成長 21% 和 17%。調整後淨利為 6,400 萬美元，調整後攤薄每股收益為 0.24 美元，分別成長 21% 和 20%。與去年同期相比，乾脆的營運執行掩蓋了較高的稅率和費用。

Moving to free cash flow. Cash collections were significantly higher than last year, fueled by increased net profitability and more efficient working capital.

轉向自由現金流。在淨利潤增加和營運資金效率提高的推動下，現金回收量顯著高於去年。

Next let me review our increased 2024 guidance. Our remarkable year-to-date performance has unlocked a path for higher annual growth across all of our key metrics. Starting with revenue. We are now anticipating 11% to 13% year-over-year growth, which is reflected in the revised $3.15 billion to $3.20 billion range. With one quarter remaining in the year, we have fairly clear visibility on the drivers and sources of revenue.

接下來讓我回顧一下我們增加的 2024 年指引。我們今年迄今為止的卓越表現為我們所有關鍵指標的更高年度成長開闢了道路。從收入開始。我們目前預計將年增 11% 至 13%，這反映在修訂後的 31.5 億美元至 32 億美元範圍內。距離今年還剩最後一個季度，我們對驅動因素和收入來源有了相當清晰的了解。

The variability in the range will largely rest on the timing of material receipts and to some extent, the progress of labor inputs. The implied fourth quarter revenue is a tough compare due to the fact that we anniversary the benefits from discrete improvements from our supply chain that began in Q4 2023.

此範圍的變化很大程度上取決於材料接收的時間，並在某種程度上取決於勞動力投入的進度。隱含的第四季營收是一個艱難的比較，因為我們已經慶祝了從 2023 年第四季開始的供應鏈離散改善所帶來的好處。

Our increased adjusted EBITDA range is now $387 million to $397 million. The revised range maintained healthy year-over-year margin expansion driven by the Columbia-class transition to production as well as operational leverage from higher volume. Additionally, we still anticipate both ASC and IMS segments to contribute to annual revenue growth and margin improvement.

我們調整後的 EBITDA 範圍目前為 3.87 億美元至 3.97 億美元。由於哥倫比亞級向生產的過渡以及產量增加帶來的營運槓桿的推動，修訂後的航程保持了健康的同比利潤增長。此外，我們仍預期 ASC 和 IMS 部門將為年度營收成長和利潤率改善做出貢獻。

Next, our adjusted diluted EPS is now anticipated to be meaningfully higher with the revised range between $0.88 and $0.91 a share. The new range reflects a lower forecasted tax rate of 19%. However, our fully diluted share count is static from our prior guide at 268 million. Lastly, we are still targeting approximately 80% free cash flow conversion of our adjusted net earnings for the year.

接下來，我們調整後的稀釋每股盈餘預計將大幅提高，修正後的範圍為每股 0.88 美元至 0.91 美元。新範圍反映了 19% 的較低預測稅率。然而，我們完全攤薄後的股票數量與先前的指導值相比保持不變，為 2.68 億股。最後，我們的目標仍然是今年調整後淨利潤約 80% 的自由現金流轉換。

Moving briefly to 2025. I want to offer a preliminary guidance framework to calibrate your thoughts with what we are seeing materialize in our internal forecast. Currently, we are projecting 5% to 8% revenue growth off of our revised 2024 midpoint with adjusted EBITDA margin at approximately 13%. Consistent with past practice, we plan to establish more formal guidance in conjunction with our fourth quarter and fiscal year 2024 call in February.

短暫地移動到 2025 年。我想提供一個初步的指導框架，以根據我們在內部預測中看到的具體情況來校準您的想法。目前，我們預計營收將較修訂後的 2024 年中點成長 5% 至 8%，調整後的 EBITDA 利潤率約為 13%。與過去的做法一致，我們計劃結合 2 月的第四季和 2024 財年電話會議來制定更正式的指導。

Let me wrap up with some closing thoughts. As we quickly approach two years of being back in the public markets, we are pleased with the way the business has performed and our positioning for the future. The well-earned success we have enjoyed over the past few years is a direct result of the team's unwavering commitment in delivering excellence for customers and shareholders. We look forward to continue executing on our strategy to unlock incremental value.

讓我以一些結束語作為結束語。隨著我們重返公開市場的時間很快就過了兩年，我們對業務的表現以及我們對未來的定位感到滿意。我們在過去幾年中所取得的成功是團隊堅定不移地致力於為客戶和股東提供卓越服務的直接結果。我們期待繼續執行我們的策略以釋放增量價值。

With that, we are ready to take your questions.

這樣，我們就準備好回答您的問題了。

(Operator Instructions) Peter Arment, Baird.

（操作員說明）Peter Arment，Baird。

Yes. Good morning, Bill and Mike, Steve. Nice results. Hey, Bill, maybe if you could just start, we'd start with kind of the force protection demand. How has that changed? It seems like it's materially ramping up and whether that's going to require more CapEx in the future? Or whether you can handle within your existing facilities?

是的。早安，比爾和麥克，史蒂夫。不錯的結果。嘿，比爾，也許如果你可以開始的話，我們會從某種強制保護需求開始。這有何變化？看起來它正在大幅成長，未來是否需要更多的資本支出？或是您可以在現有設施內處理？

Yes. Thanks, Peter. I think force protection is something that was driven as the US changed its strategy in the latter part of the last decade to focus more on peer competitors. So we're now going against threats, Russia and China, that have obviously significant air forces. At the same time, the drone threat across the threat spectrum has grown. I think all of that started a move up in force protection. And frankly, we got ahead of that with SHORAD and Counter-UAS.

是的。謝謝，彼得。我認為，武力保護是美國在過去十年後半段改變戰略、更專注於同行競爭對手而推動的。因此，我們現在正在對抗俄羅斯和中國等威脅，它們顯然擁有強大的空軍。同時，整個威脅範圍內的無人機威脅都在增加。我認為所有這些都開始了部隊保護的提升。坦白說，我們在 SHORAD 和反無人機系統方面領先於此。

And then you had Ukraine, which highlighted on some dramatic YouTube videos, just exactly what that need for organic force protection was that you couldn't go with the old system of defending at the perimeter. Each unit, even sometimes each vehicle needs force protection. So I think those overall trends have driven now the Army to expand its force protection expanded SHORAD and short-range air defense and counter drone, the numbers of units, the number of troops devoted, even as they've shrunk the force structure overall.

然後是烏克蘭，在一些戲劇性的 YouTube 影片中強調，對建制部隊保護的需求正是不能採用舊的外圍防禦系統。每個單位，甚至有時每輛車都需要武力保護。因此，我認為這些總體趨勢現在促使陸軍擴大其部隊保護、擴大的短程防空系統、短程防空和反無人機、部隊數量、投入的部隊數量，儘管它們總體上縮小了部隊結構。

In terms of facilitization, we built a new facility in St. Louis a couple of years ago as part of the force protection expansion. So we're not seeing right now a need for more CapEx in that area.

在便利化方面，我們幾年前在聖路易斯建造了一個新設施，作為部隊保護擴張的一部分。因此，我們目前認為該領域不需要更多資本支出。

Got it. I appreciate that. And then just on the naval shipyards, what are you seeing in terms of the supply chain there? I know you're obviously going to benefit from setting up a facility in Charleston, but what's the latest on kind of the outsourcing or the efforts that are going on there?

知道了。我很欣賞這一點。那麼就海軍造船廠而言，您對那裡的供應鏈有何看法？我知道您顯然會從在查爾斯頓設立工廠中受益，但是最近的外包類型或在那裡正在進行的努力是什麼？

Well, our efforts on Columbia really have more to do with in-sourcing than outsourcing. Part of the reason to build Columbia is to pull -- since we now have a contract that goes out more than a decade, it lets us develop a more efficient delivery mechanism of that revenue, which involves pulling some of the work inside, and that was the whole reason to build that South Carolina facility. And that's going to drive a more efficient production line and higher margins.

嗯，我們在哥倫比亞的努力確實與內包有關，而不是外包。建立哥倫比亞的部分原因是拉動——因為我們現在有一份為期十多年的合同，它讓我們能夠開發一種更有效的收入交付機制，其中涉及將一些工作拉動到內部，並且這就是建造南卡羅來納州工廠的全部原因。這將推動更有效率的生產線和更高的利潤。

Yes. And just lastly, just your commentary about 5% to 8% kind of top line growth for -- in 2025, just that assumes a CR gets resolved. And any other kind of key points that you want to highlight that underwrites the growth there?

是的。最後，您的評論是，到 2025 年，營收將成長 5% 到 8%，前提是 CR 得到解決。您想強調的任何其他類型的關鍵點都支持那裡的成長嗎？

Go ahead, Mike.

繼續吧，麥克。

Yes, I'll take that, Peter. I think as we've discussed in the past, a CR has become kind of commonplace here for the industry. That is pretty much baked into our guide. We have a lot of the revenue coming through in 2025 that's coming out of backlog. And the majority of the remainder that's not coming out of backlog is on program continuation. So not too much in terms of a headwind from an extended CR, but that's how we're viewing the 2025 guide, Peter.

是的，我會接受的，彼得。我認為正如我們過去所討論的那樣，CR 在行業中已經變得司空見慣。這幾乎已經融入我們的指南了。2025 年我們將有大量收入來自積壓訂單。未完成積壓工作的其餘大部分都用於計劃的延續。因此，延長 CR 帶來的阻力並不算太大，但這就是我們看待 2025 年指南的方式，Peter。

I appreciate all the details. Thanks guys. I'll jump back in the queue.

我很欣賞所有的細節。謝謝你們。我會跳回到隊列中。

Robert Stallard, Vertical Research.

羅伯特·斯塔拉德，垂直研究。

Thanks so much. Good morning.

非常感謝。早安.

Good morning.

早安.

Good morning, Rob.

早安，羅布。

Bill, I'll start with you. First of all, on the Columbia-class program. General Dynamics had some pretty conservative comments about submarines as a whole the other day. And I was wondering if you see any sort of indirect risk to your schedule and financials on the program due to problems elsewhere?

比爾，我就從你開始吧。首先，關於哥倫比亞級計劃。通用動力公司前幾天對潛艇整體發表了一些相當保守的評論。我想知道您是否認為由於其他地方的問題而對該計劃的日程安排和財務狀況產生了任何間接風險？

Not at this point, Rob. I mean we -- they've segregated out the contract we have for the propulsion system. And frankly, we now have a contract that goes out a decade. We're actually ahead of the yard, the shipyard in terms of the contracts they're getting for the Navy. And the intent there was to insulate that critical component from schedule variability based on other components. And I think that is proving out at this point.

現在還不行，羅布。我的意思是我們——他們已經將我們的推進系統合約分開了。坦白說，我們現在有一份為期十年的合約。就他們為海軍獲得的合約而言，我們實際上領先於造船廠、造船廠。其目的是使此關鍵組件免受基於其他組件的進度變化的影響。我認為這一點現在已經得到證明。

Good. And then to follow up on Peter's question about your 2025 framework. The 5% to 8% range is fairly big. What might put you at the low end or the high end of that revenue growth range next year?

好的。然後跟進 Peter 關於 2025 年框架的問題。5%到8%的範圍相當大。什麼可能會讓您明年的收入成長範圍處於低端或高端？

Yes. Our range is always going to be moderated by the supply chain and the availability of material and when the material becomes kind of in our pocket in order to execute the program. So that's always the biggest driver of variability. The other will be some pacing of the timing of the awards that we receive on the portion that is a book-to-bill. But those are the two things that typically will swing us within the range, Rob.

是的。我們的範圍始終會受到供應鏈和材料可用性的調節，以及當材料進入我們的口袋以執行該計劃時。所以這始終是變化的最大驅動因素。另一個是我們在圖書到帳單部分獲得獎項的時間節奏。但這兩件事通常會讓我們在這個範圍內搖擺，羅布。

Okay. And then just a final one for me, again for Bill. On capital deployment, nothing to report since three months ago, I suppose. But I was wondering if you are seeing anything of interest on the M&A front out there?

好的。然後是我的最後一篇，也是比爾的最後一篇。我想，在資本部署方面，自三個月前以來，沒有什麼好報告的。但我想知道您是否在併購方面看到了任何有趣的事情？

We are, Rob. M&A remains our priority, and we have seen an uptick in volume. We are seeing actionable opportunities in those four core markets that we've talked about, advanced sensing, naval power, force protection and network computing. So we're very active in terms of diligence, as you said. Nothing yet to announce, but we are seeing that uptick in volume and actionability.

我們是，羅布。併購仍然是我們的首要任務，而且數量有所增加。我們在我們談到的先進感測、海軍力量、部隊保護和網路計算這四個核心市場中看到了可操作的機會。因此，正如您所說，我們在勤勉方面非常積極。尚未宣布任何消息，但我們看到數量和可操作性的上升。

That's great. Thank you very much.

那太棒了。非常感謝。

Michael Ciarmoli, Truist Securities.

邁克爾·恰莫利 (Michael Ciarmoli)，Truist 證券公司。

Hey. Good morning, guys. Thanks for taking the question. Real nice results here. Maybe just to stay on Rob's line of questioning. I guess, Bill or Mike, on the '25, 5% to 8% growth. You've obviously got this '26 framework, calling for 4% to 7%. You're going to outgrow that two years in a row. I mean it seems like there's definitely some upward pressure to that '26 implied target you put out there. But I guess, is there any reason we should think about any material deceleration?

嘿。早安，夥計們。感謝您提出問題。這裡的結果真的很好。也許只是為了繼續羅布的提問。我猜，比爾或麥克，在 25 年，成長率將達到 5% 到 8%。顯然，你已經有了這個 26 年框架，要求 4% 到 7%。你將連續兩年擺脫這個困境。我的意思是，你提出的 26 年隱含目標似乎肯定存在一些上行壓力。但我想，我們是否有理由考慮任何實質的減速？

Can you -- we're obviously seeing a lot of force protection demand. Can you frame up if any of this is a little bit shorter term in nature, maybe OPTEMPO driven from the Middle East or from Ukraine? I know you went through the puts and takes on '25. But if these wars come to a close, does that have any implications on sort of this longer-term view?

你能——我們顯然看到了大量的部隊保護需求。您能否說明一下，這些項目是否屬於短期性質的項目，可能是來自中東或烏克蘭的 OPTEMPO？我知道你經歷過 25 年的看跌和看跌。但如果這些戰爭結束，這會對這種長期觀點產生任何影響嗎？

Ukraine has not been -- in terms of direct sales to Ukraine, it hasn't been an overwhelming impact to us. So you're sitting there in '24, think about 2% to 3% of our sales is being delivered to Ukraine. So I would say that that has a limited impact.

就對烏克蘭的直接銷售而言，烏克蘭還沒有對我們產生壓倒性的影響。所以你在 24 年坐在那裡，想想我們 2% 到 3% 的銷售額是銷往烏克蘭的。所以我想說這影響有限。

I think more importantly, as you look out is, one, we are increasing the growth from '25 from that 4% to 7% to 5% to 8% that we came out with. It is going to be on a higher base from the '24 result. We ticked up '24 as well. And we feel good about that growth. I think the mid-single is still where we're going to be prospectively. But we feel good about that growth given the budget backdrop and where we are.

我認為更重要的是，正如你所看到的，第一，我們正在將 25 年的成長率從 4% 提高到 7%，再提高到 5% 到 8%。與 24 年的結果相比，它將建立在更高的基礎上。我們也勾選了「24」。我們對這種成長感到滿意。我認為中單曲仍然是我們未來的目標。但考慮到預算背景和我們的現狀，我們對這種成長感到滿意。

Got it. Okay. And then just on the Counter-UAS systems, it sounds like, I think you called out the Stryker option. Is there a potential opportunity for you guys to participate in the Replicator 2 initiative? Any -- and is that sort of a target program for what you guys are working on?

知道了。好的。然後，就反無人機系統而言，聽起來，我認為您提出了史賽克選項。你們有參與 Replicator 2 計畫的潛在機會嗎？任何——這就是你們正在做的事情的目標計劃嗎？

Replicator 2 hasn't quite gotten to our Counter-UAS efforts. I guess it's a big DoD initiative. It could move in different directions. But right now, it was the drive -- the need driven by Ukraine and the force structure increases that the Army has been making plus the technology development.

Replicator 2 還沒有完全達到我們的反無人機目標。我想這是國防部的重大舉措。它可以朝不同的方向移動。但現在，這是驅動力——烏克蘭的需求和陸軍一直在增加的部隊結構以及技術發展。

We did just show a directed energy version that we developed, I think, as I said, in about eight months for the Army. I think it's those technological developments as well as the force structure increases and the threat that's driving it less than a specific department initiative through Replicator.

我們確實剛剛展示了我們為陸軍開發的定向能版本，我認為，正如我所說，大約八個月的時間。我認為正是這些技術的發展以及部隊結構的增加和威脅推動了它的發展，而不是透過複製器的特定部門計劃。

Got it. And last one, just on Columbia-class. I think the plan was to start Shipset 3. Are you guys on to Shipset 3 now?

知道了。最後一艘，就在哥倫比亞級。我認為計劃是啟動 Shipset 3。你們現在開始玩Shipset 3了嗎？

Yes, we are. And we're proceeding pretty much along that schedule that we laid out. So everything's going on time and on schedule.

是的，我們是。我們基本上是按照我們所製定的時間表進行的。所以一切都按時、按計劃進行。

Perfect. Thanks guys. I'll jump back in the queue here.

完美的。謝謝你們。我會回到這裡的隊列。

Seth Seifman, JPMorgan.

賽斯‧塞夫曼，摩根大通。

Yes. Thanks very much, and good morning.

是的。非常感謝，早安。

Good morning.

早安.

So I just wanted to ask the EBITDA margin rate step-up that's embedded in Q4. I guess, we'll see some of that, I assume, on leverage on sales in Advanced Sensing and Computing just given the kind of seasonal strength in the fourth quarter. And then first -- so I guess that's the first part of the question. And then the second part, for IMS, it seems like -- is there anything about Columbia, a step-up or a milestone that's anticipated in the fourth quarter that kind of drives up the profitability?

所以我只是想問一下第四季的 EBITDA 利潤率提升情況。我想，考慮到第四季度的季節性強勁，我們將看到其中的一些影響，即高階感測和計算領域的銷售槓桿。然後首先——所以我想這是問題的第一部分。然後第二部分，對於 IMS 來說，哥倫比亞是否有任何預期的進步或里程碑，可以在第四季度提高盈利能力？

Yes. So I'll take those. If you're talking from a profitability perspective sequentially, if you look from Q3 to Q4, based on the kind of math from the revised guidance, you're right. We period expense G&A, the volume is going to drive the drop-through, and that's what gives us confidence in the margin.

是的。所以我會接受這些。如果您從盈利能力的角度依次進行討論，如果您從第三季度到第四季度，根據修訂後的指導中的數學計算，您是對的。我們期間費用一般和行政費用，銷售將推動下降，這讓我們對利潤率充滿信心。

If you're comparing to the prior year where we had a similar revenue output, you're seeing about 100 basis points of tick up from a marginality perspective. That's really driven from two aspects. The first is mix. And when I say mix here on the ASC side, you're talking predominantly the tactical radars. And then maybe more importantly, on the IMS side, it is the Columbia where we're seeing, not necessarily a milestone, but you're seeing the revenue moving towards the later shipsets, and having a higher proportionality of the revenue coming from those newer priced shipsets, and that's what's driving the profit expansion.

如果與前一年我們的收入產出類似，從邊際角度來看，您會看到大約 100 個基點的上升。這實際上是由兩個方面驅動的。第一個是混合。當我在這裡說 ASC 方面的混合時，您主要談論的是戰術雷達。然後也許更重要的是，在 IMS 方面，我們看到的是哥倫比亞號，不一定是一個里程碑，但你會看到收入轉向後來的船舶組，並且來自這些船舶組的收入比例更高更新價格的船舶組，這就是推動利潤擴張的原因。

Right. And so that's -- to the extent that, that's not like a milestone, but just a mix change that becomes -- does that become something that's kind of ongoing? I guess we won't see that fourth quarter level of volume as we go into the first quarter of 2025?

正確的。因此，從某種程度上來說，這不像是一個里程碑，而只是一種混合變化，這會成為一種持續的事情嗎？我想進入 2025 年第一季時我們不會看到第四季的交易量水準？

That's correct. That's exactly correct. So you won't get the volume benefit, but the margin should be there, and that's what's going to bridge us to a multiyear target of driving to that 14% marginality.

這是正確的。這是完全正確的。因此，你不會獲得銷售收益，但利潤率應該存在，這將幫助我們實現 14% 利潤率的多年目標。

Right. Okay. And then maybe to follow up a little earlier about the M&A question and just a lot of cash coming in, in the fourth quarter. Obviously, to the extent that there are opportunities out there, does it become time at some point to think about other options for the balance sheet?

正確的。好的。然後也許會更早跟進併購問題，並在第四季度收到大量現金。顯然，只要存在機會，是否就到了某個時候考慮資產負債表的其他選擇的時候了？

Yes. I mean, Seth, our priority remains M&A, but it's -- that's our highest priority, but it's not our only one. So we will look at other ways of returning cash to shareholders as well as M&A.

是的。我的意思是，塞斯，我們的首要任務仍然是併購，但這是我們的最高優先事項，但它不是我們唯一的優先事項。因此，我們將考慮向股東返還現金以及併購的其他方式。

Okay. Very good. Thanks very much.

好的。非常好。非常感謝。

Jon Tanwanteng, CJS Securities.

Jon Tanwanteng，CJS 證券。

Hi, this is Justin on for Jon. Good morning.

大家好，我是喬恩的賈斯汀。早安.

Good morning.

早安.

Good morning.

早安.

Are you seeing more relative strength in international or domestic end markets right now?

現在您看到國際或國內終端市場的相對實力更強？

I mean right now, internationally, overall, the international markets are growing faster than the US defense budget. And that's true in Europe. It's true in the Middle East and Asia as well. It's, I think, driven by the near term and geographically near threats with Putin crossing borders in Europe, Iran in the Middle East and then the threats that China is posing by its increasingly aggressive behavior, all that's driving our allies to higher defense budgets.

我的意思是，目前在國際上，整體而言，國際市場的成長速度快於美國國防預算。在歐洲也是如此。在中東和亞洲也是如此。我認為，這是由普丁在歐洲跨越邊境、中東的伊朗所構成的近期和地理上接近的威脅以及中國日益咄咄逼人的行為所構成的威脅所驅動的，所有這些都促使我們的盟友提高國防預算。

And we've seen that long-term trend in our revenue base. We've doubled our international revenue from about 5% to 10% over the last three or four years. And we expect to see that outpacing of international revenue to continue over the next couple of years at least.

我們已經看到了我們收入基礎的長期趨勢。在過去的三、四年裡，我們的國際收入翻了一番，從 5% 左右增加到 10%。我們預計至少在未來幾年內，國際收入的成長將持續下去。

That's helpful. Thanks. And then one more, if I could. Can you talk about the duration and time to revenue for new orders? So has that remained the same, gotten longer, contracted? Just any more color on that, that would be helpful.

這很有幫助。謝謝。如果可以的話，然後再來一張。您能談談新訂單的持續時間和創收時間嗎？那麼它是否保持不變、變長、變短了？只要再多一點顏色，就會很有幫助。

Yes. So the way we look at that is if you were rewinding the clock to a pre-COVID environment, our conversion of that booking and that backlog to revenue is much quicker than it is today. I think when Bill made the comments on some of the supply chain in the past quarters, it has stabilized, but the lead times are still elongated. So from our historical norms, the conversion is a little longer than we had seen. But from a comparison to kind of recent, it should be pretty stable if you're comparing to kind of the '23, '24 time frame.

是的。因此，我們看待這個問題的方式是，如果你把時間倒回新冠疫情之前的環境，那麼我們將預訂和積壓訂單轉化為收入的速度比現在要快得多。我認為當比爾在過去幾個季度對一些供應鏈發表評論時，它已經穩定下來，但交貨時間仍然被拉長。因此，從我們的歷史標準來看，轉換的時間比我們所看到的要長一些。但從與最近的比較來看，如果你與 '23、'24 的時間框架進行比較，它應該相當穩定。

All right. Thanks so much for taking the questions.

好的。非常感謝您提出問題。

Ron Epstein, Bank of America.

羅恩愛潑斯坦，美國銀行。

Yes. Hey. Good morning, guys. Bill, can you kind of walk through what's your M&A sourcing strategy? How are you finding deals? Or are you guys doing it? Is it you're just looking at bankers to bring in? Just kind of broadly, how are you finding M&A?

是的。嘿。早安，夥計們。比爾，您能介紹一下您的併購採購策略嗎？您如何尋找優惠？或者你們正在做嗎？您只是在尋找銀行家來引進嗎？籠統地說，您如何尋找併購？

Yes. Ron, we have a dedicated team that reviews -- it does what you just said. We get teasers from all of the investment banks as they bring properties out. And we review those, particularly focused on those four core mission areas. We also reach out to both financial and strategics where we think there might be -- as strategics consolidated, there's been some moves to think about shaping that portfolio. I mean financial buyers -- or financial owners are ultimately always going to be sellers over the long term. So sometimes we investigate what the timing is. And we pull all that together.

是的。羅恩，我們有一個專門的團隊進行審查——它會按照你剛才所說的那樣進行。當所有投資銀行推出房產時，我們都會收到他們的預告。我們回顧這些，特別關注這四個核心任務領域。我們也會接觸到我們認為可能存在的財務和策略方面的問題——隨著策略的鞏固，我們已經採取了一些措施來考慮塑造該投資組合。我的意思是，從長遠來看，金融買家或金融所有者最終總是會成為賣家。所以有時我們會調查一下時機。我們將所有這些整合在一起。

And as I said, what we're looking for is actionable properties in our four core areas that meet our financial criteria in terms of accretive and supporting our growth in margin and the ROIC targets we have.

正如我所說，我們正在尋找的是我們四個核心領域的可操作資產，這些資產在增值和支持我們的利潤增長以及我們擁有的投資回報率目標方面符合我們的財務標準。

And Ron, I'll just add one thing to Bill's comments is also, if you think about, particularly in our IMS segment, we are bringing a coalition of the best-in-breed capabilities for different solutions. That gives us a nice insight to up-and-coming technologies. And we've had a lot of success in the past of cultivating that relationship and ultimately partnering or using that for an acquisition incubator, if you will.

Ron，我只想在 Bill 的評論中補充一件事，如果你想一想，特別是在我們的 IMS 領域，我們正在為不同的解決方案帶來最佳的能力聯盟。這讓我們對新興科技有了很好的了解。過去，我們在培養這種關係並最終合作或將其用於收購孵化器（如果你願意的話）方面取得了許多成功。

Got it. And then I mean, I know you probably can't answer this, but I'll ask it anyway. Is there anything in the Boeing defense portfolio that could be core to you guys that isn't necessarily core to them?

知道了。然後我的意思是，我知道你可能無法回答這個問題，但我還是會問。波音國防產品組合中是否有任何東西可能是你們的核心，但不一定是他們的核心？

Yes. It's always possible. I mean, I read the news, too, but we don't have anything actionable at this point with Boeing.

是的。這總是有可能的。我的意思是，我也讀了新聞，但目前我們與波音沒有任何可採取的行動。

Yes. Got it. And then maybe just one more, if I may. With Replicator 2, I mean just kind of going back on maybe some of the earlier questions, how are you thinking about demand for Counter-UAS and directed energy? I mean, ultimately, how big could that market be?

是的。知道了。如果可以的話，也許還可以再寫一篇。對於 Replicator 2，我的意思是回顧之前的一些問題，您如何考慮對反無人機和定向能的需求？我的意思是，最終這個市場有多大？

Well, I mean, I think we're still at the early stage of filling out the Army portfolio of, I think it's 9 battalions of short-range air defense and a similar number in the counter drone. I think that beyond -- that will take several years. I think beyond that, international sales, I think, are just at the launch point. It's once you've developed the system, which is where we are at this point and then you're moving into production, that's where international sales become possible.

嗯，我的意思是，我認為我們仍處於充實陸軍組合的早期階段，我認為這是 9 個近程防空營和類似數量的反無人機營。我認為這還需要幾年的時間。我認為除此之外，國際銷售才剛開始。一旦您開發了系統，這就是我們目前所處的位置，然後您就可以投入生產，這就是國際銷售成為可能的地方。

And our initiative to take the counter drone system from a two vehicle system down to a one vehicle, we did that really on our own R&D dime, and then the Army was favorably not exposed to it to cut that in early in terms of the deployed units. But that two -- moving from two to a single vehicle solution makes it more affordable, and easier to operate and that both those things make it more attractive to international buyers. So I think that's kind of the next opening.

我們主動將反無人機系統從兩輛車系統減少到一輛車，我們確實是用自己的研發資金做到了這一點，然後陸軍有利地不接觸它，以便在部署方面儘早削減這一點單位。但這兩個——從兩輛車解決方案轉向單一車輛解決方案使其更便宜、更易於操作，這兩點都使其對國際買家更具吸引力。所以我認為這就是下一個機會。

Got it. Thank you very much.

知道了。非常感謝。

Kristine Liwag, Morgan Stanley.

克莉絲汀‧利瓦格，摩根士丹利。

Hey, this is [Justin] on for Kristine. Just going back on the '25 outlook. I know we'll get more detail on the 4Q call with the 5% to 8% growth guide. I was curious at this point if the growth profile looks similar across ASC and IMS next year? Or are there factors we could consider that might drive some variation in '25? Thanks.

嘿，這是克里斯汀的[賈斯汀]。回顧一下 25 年的前景。我知道我們將在第四季度電話會議上獲得更多有關 5% 至 8% 增長指南的詳細資訊。此時我很好奇明年 ASC 和 IMS 的成長情況是否相似？或者我們可以考慮哪些因素可能會導致 25 年出現一些變化？謝謝。

Yes. I would say you can almost see in the book-to-bill in the year-to-date period, we're getting pretty consistent demand across both segments. So I think from a trend perspective of where we're at, we would expect both of these segments to contribute to the growth rates that we're projecting out through 2025. I'll put the little asterisks where you get a little bit of an extra tailwind on the IMS side from the Columbia pricing that we talked about, which is also assisting in the margin expansion.

是的。我想說，你幾乎可以從今年迄今的訂單到帳單中看到，我們在這兩個領域的需求相當一致。因此，我認為從我們所處的趨勢角度來看，我們預計這兩個領域都將為我們預計到 2025 年的成長率做出貢獻。我將在 IMS 方面從我們討論的哥倫比亞定價中獲得一點額外的順風的地方加上小星號，這也有助於利潤率的擴張。

Okay. Great. That's helpful. And then maybe just one quick one on CapEx. Can you just provide a little more color on the pace of the South Carolina facility build out from here and how we should think about the investment profile over the next few quarters? Thanks.

好的。偉大的。這很有幫助。然後也許只是關於資本支出的快速介紹。您能否提供更多關於南卡羅來納州工廠建設進度的信息，以及我們應該如何考慮未來幾個季度的投資狀況？謝謝。

Yes. I would say that you'll likely see a little tick up in the CapEx into Q4. We do expect to land somewhere in the mid- to high 3s from a CapEx as a percentage of revenue. I think we initially had said that would be close to 4%. Obviously, the revenue guide has changed since then, pushing that percentage down. But the project remains -- it was a little slower in the first half. We've started to catch up here. That's what I think you'll see the ramp in Q4, and nothing has really changed on the pacing for 2025.

是的。我想說，您可能會看到第四季度的資本支出略有上升。我們確實預期資本支出佔收入的百分比將達到 3 左右。我想我們最初曾說過接近 4%。顯然，自那時以來，收入指南發生了變化，導致該百分比下降。但該項目仍然存在——上半年進展有點慢。我們已經開始追趕這裡了。我認為這就是您將在第四季度看到的增長，並且 2025 年的節奏沒有任何真正的變化。

Got it. Thanks.

知道了。謝謝。

(Operator Instructions) Ned Morgan, BTIG.

（操作員指令）Ned Morgan，BTIG。

At this time, I will turn the floor back to Steve Vather for closing remarks.

此時，我將請史蒂夫‧瓦瑟 (Steve Vather) 發表閉幕詞。

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

感謝大家今天早上抽出寶貴的時間以及對 DRS 的興趣。當然，如果您有後續問題，請隨時致電或發送電子郵件給我。我們期待很快能再次與大家交談。享受你一天剩下的時間。

Thank you. This concludes today's conference. You may disconnect now and thank you for your participation.

謝謝。今天的會議到此結束。現在您可以斷開連接，感謝您的參與。