activities                                           ($42)      $93 
-------------------------------------------------  --------   ------- 
 Effect of exchange rate changes on cash and 
 cash equivalents                                        --        -- 
------------------------------------------------   --------   ------- 
 Net decrease in cash and cash equivalents            ($269)    ($259) 
 Cash and cash equivalents at beginning of year         467       306 
-------------------------------------------------  --------   ------- 
 Cash and cash equivalents at end of period            $198       $47 
=================================================  ========   ======= 
 

Non-GAAP Financial Measures (Unaudited)

In addition to the results reported in accordance with U.S. GAAP included throughout this document, the company has provided information regarding "Adjusted EBITDA," "Adjusted EBITDA Margin," "Adjusted Net Earnings," "Adjusted Diluted Earnings Per Share" and "Free Cash Flow" (each, a non-GAAP financial measure).

We believe the non-GAAP financial measures presented in this document will help investors understand our financial condition and operating results and assess our future prospects. We believe these non-GAAP financial measures, each of which is discussed in greater detail below, are important supplemental measures because they exclude unusual or non-recurring items as well as non-cash items that are unrelated to or may not be indicative of our ongoing operating results. Further, when read in conjunction with our GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as a tool to help make financial, operational and planning decisions. Finally, these measures are often used by analysts and other interested parties to evaluate companies in our industry by providing more comparable measures that are less affected by factors such as capital structure.

We recognize that these non-GAAP financial measures have limitations, including that they may be calculated differently by other companies or may be used under different circumstances or for different purposes, thereby affecting their comparability from company to company. In order to compensate for these and the other limitations discussed below, management does not consider these measures in isolation from or as alternatives to the comparable financial measures determined in accordance with U.S. GAAP. Readers should review the reconciliations below and should not rely on any single financial measure to evaluate our business.

We define these non-GAAP financial measures as:

Adjusted EBITDA and Adjusted EBITDA Margin are defined as net earnings before income taxes, interest expense, amortization of acquired intangible assets, depreciation, deal-related transaction costs, restructuring costs and other one-time non-operational events (which include non-service pension expense, legal liability accrual reversals and foreign exchange impacts), then in the case of adjusted EBITDA margin dividing adjusted EBITDA by revenues.

 
 (Dollars in millions)    Three Months Ended    Nine Months Ended 
                            September 30,         September 30, 
                         --------------------  -------------------- 
                          2024       2023       2024       2023 
                          ----       ----       ----       ---- 
 Net earnings            $  57      $  47      $ 124      $  94 
 Income tax provision       12          1         29          3 
 Interest expense            5         10         17         27 
 Amortization of 
  intangibles                6          5         17         16 
 Depreciation               17         16         51         47 
 Deal-related 
  transaction costs          1          1          5          4 
 Restructuring costs        --          2          5         10 
 Other one-time 
  non-operational 
  events                     2         --          4         (8) 
-----------------------   ----       ----       ----       ---- 
 Adjusted EBITDA         $ 100      $  82      $ 252      $ 193 
 Adjusted EBITDA Margin   12.3%      11.7%      11.2%      10.2% 
 

Adjusted Net Earnings and Adjusted Diluted EPS are defined as net earnings excluding amortization of acquired intangible assets, deal-related transaction costs, restructuring costs and other one-time non-operational events (which include non-service pension expense, legal liability accrual reversals and foreign exchange impacts), and the related tax impacts, then in the case of adjusted diluted EPS dividing adjusted net earnings by the diluted weighted average number of shares outstanding (WASO).

 
 (In millions, 
 except per share 
 amounts)           Three Months Ended     Nine Months Ended 
                      September 30,          September 30, 
                   --------------------  ---------------------- 
                     2024       2023       2024       2023 
                    -------    -------    -------    ------- 
 Net earnings      $     57   $     47   $    124   $     94 
 Amortization of 
  intangibles             6          5         17         16 
 Deal-related 
  transaction 
  costs                   1          1          5          4 
 Restructuring 
  costs                  --          2          5         10 
 Other one-time 
  non-operational 
  events                  2         --          4         (8) 
 Tax effect of 
  adjustments 
  (1)                    (2)        (2)        (6)        (5) 
-----------------   -------    -------    -------    ------- 
 Adjusted Net 
  Earnings         $     64   $     53   $    149   $    111 
=================   =======    =======    =======    ======= 
 
 Per share 
 information 
----------------- 
 Diluted WASO       268.299    265.000    267.357    263.675 
 
 Diluted EPS       $   0.21   $   0.18   $   0.46   $   0.36 
 Adjusted Diluted 
  EPS              $   0.24   $   0.20   $   0.56   $   0.42 
 

(1) Calculation uses an estimated statutory tax rate on non-GAAP adjustments.

Free Cash Flow is defined as the sum of the cash flows provided by (used in) operating activities, transaction-related expenditures (net of tax), capital expenditures and proceeds from sale of assets.

 
 (Dollars in millions)      Three Months Ended      Nine Months Ended 
                              September 30,           September 30, 
                         ------------------------  ------------------- 
                             2024         2023      2024       2023 
                         ------------  ----------  -------  ---------- 
 Net cash provided by 
  (used in) operating 
  activities                 $59          $36       ($172)    ($310) 
 Transaction-related 
  expenditures, net of 
  tax                         --            1           1        17 
 Capital expenditures        (12)         (15)        (56)      (42) 
 Proceeds from sales of 
  assets                       1           (1)          1        -- 
-----------------------  -------  ---  ------      ------   ------- 
 Free Cash Flow              $48          $21       ($226)    ($335) 
=======================  =======  ===  ======      ======   ======= 
 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241030657738/en/

 
    CONTACT:    Investors 

Steve Vather

SVP, Investor Relations & Corporate Finance

+1 703 409 2906

stephen.vather@drs.com

Media

Michael Mount

VP, Communications & Public Affairs

+1 571 447 4624

mmount@drs.com

(END) Dow Jones Newswires

October 30, 2024 07:30 ET (11:30 GMT)