Leonardo DRS Awarded Contracts Valued at Over $3 Billion for U.S. Navy’s Columbia-Class Submarine Program

Rhea-AI Summary

Leonardo DRS, Inc. (NASDAQ: DRS) has been awarded contracts valued at over $3 billion to provide integrated electric propulsion system products for the U.S. Navy’s Columbia-class submarines. This contract solidifies DRS’s position through shipset 12 for the Columbia-class program. The company was chosen by General Dynamics Electric Boat and the U.S. Navy to design and manufacture key components of the primary propulsion system of the next-generation ballistic missile submarine fleet. The Columbia-class submarines are designed to replace the fleet of Ohio-class submarines and will be the largest ever built by the United States. Leonardo DRS is a leading provider of next-generation electrical power conversion and propulsion technology for the U.S. Navy.

Insights

Defense Industry Analyst

The substantial contract awarded to Leonardo DRS, Inc. for the Columbia-class submarine program represents a significant investment in the U.S. naval capabilities and underscores the strategic importance of modernizing the country's ballistic missile submarine fleet. The contract spans multiple shipsets, indicating a long-term commitment and suggesting a stable revenue stream for Leonardo DRS over the coming years. This can be seen as a strong indicator of the company's expertise and reliability in delivering advanced military technology, which could potentially lead to further contracts and collaborations with the U.S. Navy and General Dynamics Electric Boat.

From an industry perspective, the focus on integrated electric propulsion systems is indicative of the broader trend towards more sustainable and efficient technologies in military applications. Electric propulsion is known for its operational silence, which is crucial for stealth in submarine warfare and its lower maintenance requirements compared to traditional propulsion systems. The successful testing of the prototype components also suggests that the technology is mature and ready for deployment, which could set a precedent for future naval vessels.

The impact on the stock market could be multifaceted. On one hand, investors may view the contract as a positive signal of Leonardo DRS's financial health and future prospects. On the other hand, the defense sector is often influenced by geopolitical tensions and government spending priorities, which can introduce volatility into the stock performance of companies like Leonardo DRS. Nonetheless, the contract's size and scope are likely to be considered favorable by market analysts monitoring the defense sector.

Military Technology Expert

The technical components that Leonardo DRS is contracted to supply for the Columbia-class submarines, such as the permanent magnet main propulsion electric motor and propulsion motor drives, are critical for the submarines' operational performance. The adoption of permanent magnet motors offers several advantages, including higher efficiency, reduced noise levels and lower lifecycle costs, all of which are crucial for the stealth and endurance of ballistic missile submarines. The successful full power endurance and other tests at the Navy's land-based test facility not only validate the technology but also demonstrate Leonardo DRS's capability to meet the rigorous standards required for such sensitive military equipment.

Furthermore, the emphasis on the integration of the propulsion system, from the power source to the propeller shaft, highlights the complexity and sophistication of modern naval engineering. The manufacturing of these components across multiple DRS facilities also reflects the company's extensive infrastructure and coordination capabilities required for large-scale defense projects. The expertise in power conversion and propulsion technology positions Leonardo DRS as a leader in this niche market, which could lead to increased interest from international customers seeking to upgrade their own naval fleets with similar technology.

Naval Defense Market Analyst

The award of a contract exceeding $3 billion to Leonardo DRS for the production of integrated electric propulsion systems for the U.S. Navy's Columbia-class submarines is a significant event in the naval defense market. It not only solidifies the company's position as a key player in the defense industry but also reflects the strategic shift towards next-generation propulsion technology in naval warfare. The investment in such technology is part of a larger trend where governments are prioritizing modernization and technological advancements in their defense capabilities.

Given the scale and duration of the contract, it is likely to have a substantial effect on the company's financial performance, providing a predictable and significant source of income over the next several years. This could potentially lead to increased investor confidence and a positive impact on the company's stock price. Additionally, the successful deployment of the Columbia-class submarines equipped with these systems could serve as a showcase for Leonardo DRS's technology, potentially opening doors for international sales and further strengthening its market position.

It is also worth noting that the Columbia-class submarine program is a top priority for the U.S. Navy, aimed at replacing the aging Ohio-class submarines. This transition to a more advanced class of submarines is expected to enhance the U.S. Navy's strategic deterrence capabilities and could have ripple effects on global naval power dynamics. The involvement of Leonardo DRS in such a high-profile project may enhance its reputation and credibility in the defense market, possibly influencing its stock market valuation positively.

ARLINGTON, Va.--(BUSINESS WIRE)-- Leonardo DRS, Inc. (NASDAQ: DRS) has been awarded contracts valued at over $3 billion, when fully funded, to provide integrated electric propulsion system products for the U.S. Navy’s Columbia-class submarines. This contract solidifies DRS’s position through shipset 12 for the Columbia-class program. This award was previously announced on the DRS 2023 Q3 earnings call.

Leonardo DRS was chosen by General Dynamics Electric Boat and the U.S. Navy to design and manufacture the permanent magnet main propulsion electric motor, the propulsion motor drives, switchgear, and the propulsion controls – the heart of the Columbia Electric Drive Propulsion System. These are key components of the primary propulsion system of the next-generation ballistic missile submarine fleet. All prototype components of this system successfully completed full power endurance and other testing at the Navy’s land-based test facility.

“This award highlights Leonardo DRS as an agile and trusted partner for the U.S. Navy and General Dynamics Electric Boat, having now been awarded contracts to supply our state-of-the-art electric propulsion components through shipset 12 for the Columbia-class program,” said Leonardo DRS CEO Bill Lynn. “We are proud to be a part of this team and be the provider of these critical components for the most advanced ballistic missile submarine in our Navy’s history.”

The Columbia-class submarine is a new class of ballistic missile submarines and is a top priority for the U.S. Navy. They are designed to replace the fleet of Ohio-class submarines. At 560 feet long with displacement of nearly 21,000 tons, the Columbia-class submarines will be the largest ever built by the United States.

“DRS is committed to our partnership with Electric Boat and the U.S. Navy,” said Jon Miller, senior vice president and general manager of Leonardo DRS Naval Power Systems. “Their strategic mission is our purpose. Together, we develop innovative systems for critical next-generation national security platforms like the Columbia-class ballistic missile submarine.”

The integrated electric propulsion components will be manufactured in the DRS facilities in Fitchburg, Massachusetts, Menomonee Falls, Wisconsin, Danbury, Connecticut, and High Ridge, Missouri. “This award is a reflection of our talented workforce and world-class propulsion technology that can provide capability from the power source to the propeller shaft,” said Miller.

Leonardo DRS is a leading provider of next-generation electrical power conversion and propulsion technology for the U.S. Navy, with major systems for next-generation submarines and surface ships. Investments in the company’s market-leading propulsion and power generation technology have created opportunities to use proven electric drive capabilities for future naval platforms. DRS solutions are leading the way in providing power flexibility to support the increased power requirements of current and future naval platforms.

About Leonardo DRS

Headquartered in Arlington, VA, Leonardo DRS, Inc. is an innovative and agile provider of advanced defense technology to U.S. national security customers and allies around the world. We specialize in the design, development and manufacture of advanced sensing, network computing, force protection, and electric power and propulsion, and other leading mission-critical technologies. Our innovative people are leading the way in developing disruptive technologies for autonomous, dynamic, interconnected, and multi-domain capabilities to defend against new and emerging threats. For more information and to learn more about our full range of capabilities, visit www.LeonardoDRS.com.

Forward-Looking Statements

This communication contains statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements reflect current expectations, assumptions and estimates of future performance and economic conditions. The company cautions investors that any forward-looking statements are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those matters expressed in or implied by such forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240110394417/en/

Leonardo DRS Investor Relations

Steve Vather

Vice President, Investor Relations and Corporate Finance

+1 703 409 2906

stephen.vather@drs.com

Leonardo DRS Media

Michael Mount

Vice President, Communications and Public Affairs

+1 571 447 4624

mmount@drs.com

Source: Leonardo DRS, Inc.

FAQ

What contracts has Leonardo DRS been awarded?

Leonardo DRS has been awarded contracts valued at over $3 billion to provide integrated electric propulsion system products for the U.S. Navy’s Columbia-class submarines.

Who chose Leonardo DRS to design and manufacture key components for the next-generation ballistic missile submarine fleet?

General Dynamics Electric Boat and the U.S. Navy chose Leonardo DRS to design and manufacture key components for the next-generation ballistic missile submarine fleet.

What are the key components that Leonardo DRS will design and manufacture for the Columbia-class submarines?

Leonardo DRS will design and manufacture the permanent magnet main propulsion electric motor, the propulsion motor drives, switchgear, and the propulsion controls – the heart of the Columbia Electric Drive Propulsion System.

Where will the integrated electric propulsion components be manufactured?

The integrated electric propulsion components will be manufactured in the DRS facilities in Fitchburg, Massachusetts, Menomonee Falls, Wisconsin, Danbury, Connecticut, and High Ridge, Missouri.

What is the strategic mission of Leonardo DRS according to Jon Miller?

According to Jon Miller, the strategic mission of Leonardo DRS is to develop innovative systems for critical next-generation national security platforms like the Columbia-class ballistic missile submarine.

What type of technology does Leonardo DRS provide for the U.S. Navy?

Leonardo DRS is a leading provider of next-generation electrical power conversion and propulsion technology for the U.S. Navy.