U.S. Navy Awards Leonardo DRS Radar Design Agent and Engineering Services for AN/SPQ-9B

Rhea-AI Summary

Leonardo DRS (NASDAQ: DRS) has secured a contract from NAVSEA for over $26 million, providing AN/SPQ-9B radar design and engineering services. The contract encompasses system engineering, software development, hardware design, and more.

The AN/SPQ-9B radar is designed for littoral environments, offering high clutter improvement and low false track rates. It supports detection and tracking of various threats including anti-ship cruise missiles, UAVs, and helicopters.

Leonardo DRS's expertise in complex design and manufacturing underpins support across naval, ground, air, space, and cyber missions.

Positive

• Contract valued at over $26 million with NAVSEA, enhancing revenue potential.
• AN/SPQ-9B radar's high performance in cluttered environments increases DRS's credibility.
• Expands Leonardo DRS's existing RF and EW systems capabilities.
• Continued support for the AN/SPQ-9B radar for the past six years underscores reliability.
• Demonstrates Leonardo DRS's extensive experience in complex design and manufacturing.

Negative

• Heavy dependency on contract options being exercised to realize the full $26 million value.
• Potential technical challenges in delivering comprehensive system engineering and upgrades.

Insights

Defense Industry Analyst

Leonardo DRS's newly awarded contract from NAVSEA for the AN/SPQ-9B radar system is a notable event for several reasons. First, the contract value of $26 million is a significant addition to DRS's revenue stream, particularly in a sector where governmental contracts are highly competitive and often serve as a stable financial backbone. Second, this contract underscores DRS's established expertise in radar and electronic warfare systems. The AN/SPQ-9B radar is a complex technology designed for high-clutter and littoral environments, which require advanced detection and tracking capabilities. The recognition from NAVSEA bolsters DRS's reputation as a leader in defense technology, an aspect that can positively sway investor sentiment.

Moreover, the technical specifications of the AN/SPQ-9B radar, like its X-band pulse Doppler and frequency agility, are critical since they cater to modern naval warfare needs, particularly with the rise of UAVs and sophisticated missile threats. Investors should note that this contract not only promises immediate revenue but also positions DRS as a key player in future naval projects, potentially leading to further lucrative contracts.

Financial Analyst

The financial implications of the NAVSEA contract for Leonardo DRS are multifaceted. While $26 million might seem modest compared to the financial size of Leonardo DRS, it should be considered a strategic win. Government contracts like this often come with long-term relationships and potential follow-on work, offering more stable revenue streams compared to the volatile commercial market. The predictability of government contracts helps in financial planning and risk management, making it an attractive element for long-term investors.

It's also essential to consider the impact on stock performance. News of contract awards typically leads to positive market reactions due to their direct link to future revenue and profitability. While this particular contract might not cause a dramatic spike, it reinforces investor confidence in DRS's business model and operational capabilities. Additionally, given that defense spending is generally resilient even during economic downturns, such contracts can act as a hedge against market volatility.

Market Research Analyst

From a market research standpoint, the NAVSEA contract highlights DRS's competitive positioning within the defense industry. The ability to secure contracts for complex systems like the AN/SPQ-9B radar suggests that DRS possesses strong technical capabilities and a robust R&D framework, essential for maintaining a competitive edge. Additionally, the focus on littoral environments and modern threats like UAVs and low-flying missiles positions DRS within high-demand market segments, aligning with trends in modern military requirements.

This contract may also have positive implications for Leonardo DRS's broader market strategy. As nations continue to invest in upgrading their naval capabilities, the demand for advanced radar systems is likely to grow. DRS's successful bid suggests they are well-positioned to capitalize on these trends, potentially leading to further contracts and market share gains. For retail investors, this translates into a more promising outlook for the company's future growth and revenue streams.

ARLINGTON, Va.--(BUSINESS WIRE)-- Leonardo DRS, Inc. (NASDAQ: DRS) announced today that it was awarded a contract from NAVSEA to provide AN/SPQ-9B radar design agent and engineering services. The contract includes options, if exercised, would bring the cumulative value to more than $26 million.

AN/SPQ-9B radar mounted on U.S. Navy ship. Leonardo DRS announced that it was awarded a contract from NAVSEA to provide AN/SPQ-9B radar design agent and engineering services. (Photo: Business Wire)

Under the contract, DRS will provide system engineering, software development, hardware design, installation, safety, test, product updates, system upgrade and configuration management support.

“We are very proud to be selected as the design agent on SPQ-9B and are honored to support this critical air and surface threat detection program for the Navy,” Cari Ossenfort, senior vice president and general manager of the Leonardo DRS Naval Electronics business unit. “Our agility, proven engineering processes as well as our experienced team are the key reasons we are a trusted partner to NAVSEA and PEO Integrated Warfare Systems.”

The AN/SPQ-9B is an X-band, pulse Doppler, frequency-agile radar which was designed specifically for the littoral environment. It has a very high clutter improvement factor supporting a very low false track rate in the littorals and in high clutter environments. It scans out to the horizon and performs simultaneous and automatic air and surface target detection and tracking of low flying anti-ship cruise missiles surface threats, and low/slow flying aircraft, UAVs, periscopes, and helicopters.

This award builds upon our existing RF and EW systems capabilities and is an expansion of the support that DRS has provided for AN/SPQ-9B over the past six years. This work is an example of DRS’s deep experience as a leader in complex design and manufacturing supporting a wide range of missions. The company’s capabilities extend across all domains to support naval, ground, air, space, and cyber missions in areas of sensing, force protection, computer networking, as well as naval power and propulsion systems.

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/20240528916986/en/

Leonardo DRS Investor Relations Contacts

Steve Vather

Senior Vice President, Investor Relations and Corporate Finance

+1 703 409 2906

stephen.vather@drs.com

Leonardo DRS Media Contact

Michael Mount

Vice President, Communications and Public Affairs

+1 571 447 4624

mmount@drs.com

Source: Leonardo DRS, Inc.

FAQ

What is the value of the new contract awarded to Leonardo DRS by NAVSEA?

The contract is valued at over $26 million if all options are exercised.

What services will Leonardo DRS provide under the new NAVSEA contract?

Leonardo DRS will provide system engineering, software development, hardware design, installation, safety, test, product updates, system upgrades, and configuration management support.

What is the significance of the AN/SPQ-9B radar?

The AN/SPQ-9B radar is designed specifically for littoral environments and offers high clutter improvement and low false track rates, critical for detecting and tracking air and surface threats.

How long has Leonardo DRS been supporting the AN/SPQ-9B radar?

Leonardo DRS has been supporting the AN/SPQ-9B radar for the past six years.

What are some capabilities of Leonardo DRS mentioned in the PR?

Leonardo DRS’s capabilities include sensing, force protection, computer networking, and naval power and propulsion systems across naval, ground, air, space, and cyber missions.