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Segment Information
 9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
Segment Information Segment Information
Operating segments represent components of an enterprise for which separate financial information is available that is regularly reviewed by the CODM in determining how to allocate resources and assess performance. Our Chief Executive Officer is our CODM and he uses a variety of measures to assess the performance of the Company as a whole, depending on the nature of the activity. The Company’s operating and reportable segments consist of ASC and IMS. All other operations, which consists primarily of DRS corporate headquarters and certain non-operating subsidiaries of the Company, are grouped in Corporate & Eliminations.
We primarily use adjusted EBITDA, a non-GAAP financial measure, to manage the Company and allocate resources. Adjusted EBITDA of our business segments includes our net earnings before income taxes, amortization of acquired intangible assets, depreciation, restructuring costs, interest, deal-related transaction costs, other non-operating expenses such as foreign exchange, non-service pension expenditures, legal liability accrual reversals, and other one-time non-operational events as well as gains (losses) on business disposals. Adjusted EBITDA is used to facilitate a comparison of the ordinary, ongoing and customary course of our operations on a consistent basis from period to period and provide an additional understanding of factors and trends affecting our business segments. This measure assists the CODM in assessing segment operating performance consistently over time without the impact of our
capital structure, asset base and items outside the control of the management team and expenses that do not relate to our core operations.
Certain information related to our segments for the periods ended September 30, 2024 and 2023 is presented in the following tables. Consistent accounting policies have been applied by all segments within the Company, within all reporting periods. A description of our reportable segments as of September 30, 2024 and 2023 has been included in Note 1: Summary of Significant Accounting Policies. Intersegment sales are generally transferred at cost to the buying segment, and the sourcing segment does not recognize a profit. Such intercompany operating income is eliminated in consolidation, so that the Company’s total revenues and operating earnings reflect only those transactions with external customers.
Total revenues and intersegment revenues by segment for the periods ended September 30, 2024 and 2023 consists of the following:
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)2024202320242023
ASC$533 $431 $1,458 $1,226 
IMS285 277 812 692 
Corporate & Eliminations(6)(5)(17)(18)
Total revenues $812 $703 $2,253 $1,900 
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)2024202320242023
ASC$6 $5 $17 $18 
IMS— — — — 
Total intersegment revenues $6 $5 $17 $18 

Reconciliation of reportable segment adjusted EBITDA to net earnings consists of the following:
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)2024202320242023
Adjusted EBITDA
ASC$64 $48 $160 $121 
IMS36 34 92 72 
Corporate & Eliminations— — — — 
Total adjusted EBITDA $100 $82 $252 $193 
Amortization of intangibles(6)(5)(17)(16)
Depreciation(17)(16)(51)(47)
Restructuring costs— (2)(5)(10)
Interest expense(5)(10)(17)(27)
Deal-related transaction costs(1)(1)(5)(4)
Other one-time non-operational events(2)— (4)8 
Income tax provision(12)(1)(29)(3)
Net earnings $57 $47 $124 $94