What Leonardo DRS, Inc. told the SEC could break it.

DRS's international defense business is subject to ITAR, EAR, the Export Control Act, FCPA and U.S. tariffs/retaliatory actions, and depends on obtaining export licenses.

“Various geopolitical and economic factors, laws and regulations including the Foreign Corrupt Practices Act (“FCPA”), the Export Control Act, the International Traffic in Arms Regulations (“ITAR”), the Export Administration Regulations (“EAR”), recent U.S. tariffs imposed or threatened to be imposed on other countries and any related retaliatory actions taken by such countries and those that we are exposed to as a result of our international business;”

Leonardo S.p.A. (Italian, ~30.2% owned by the Italian state) controls ~71% of DRS voting power, so DRS operates under Foreign Ownership, Control or Influence (FOCI) rules under the NISPOM, which condition its facility clearances and classified contracts.

“Leonardo S.p.A., an Italian company listed on the Milan Stock Exchange, owns the entire share capital of US Holding which, in turn, owns approximately 71% of the voting power of our outstanding common stock. As a result, we are deemed to be under FOCI.”

Leonardo DRS derives 80% of total revenues directly or indirectly from U.S. government contracts (concentrated with the Department of War), making it highly exposed to defense budget and appropriations cycles.

“Revenues derived directly, as a prime contractor, or indirectly, as a subcontractor, from contracts with the U.S. government represented 80%, 79% and 80% of our total revenues for 2025, 2024, and 2023, respectively.”

Several of Leonardo DRS's suppliers are the sole source of certain components, and it sometimes uses components with only one supplier; supplier failure could force costly, delayed transitions.

“Although materials and purchased components generally are available from a number of different suppliers, several suppliers serve as the sole source of certain components.”

DRS has faced inflationary supply-chain cost pressure on micro-electronics and commodity metals, which have impacted profitability and may not be mitigated on firm-fixed-price contracts.

“We have experienced inflationary pressures to our supply chain costs, including those associated with micro-electronics, commodities (e.g., metals), and others. These costs have impacted our profitability.”