Shares of Leonardo DRS, Inc. (DRS) plummeted 5.08% in pre-market trading on Wednesday, despite the defense technology provider reporting better-than-expected third-quarter results. The stock's decline appears to be influenced by a slight dip in profit margins and the announcement of a significant leadership change.

Leonardo DRS reported Q3 adjusted earnings of $0.29 per share, surpassing analysts' expectations of $0.28. Revenue for the quarter jumped 18% year-over-year to $960 million, also beating the consensus estimate of $924.8 million. However, the company's adjusted EBITDA margin slightly decreased to 12.2% from 12.3% in the same quarter last year, which may have concerned some investors about potential pressure on profitability.

Adding to the market reaction, Leonardo DRS announced that William J. Lynn will retire as Chairman and CEO, effective January 1, 2026. John Baylouny, the current Chief Operating Officer, will succeed Lynn as President and CEO. While leadership transitions are not uncommon, they can create uncertainty, potentially contributing to the stock's decline as investors assess the impact of this change on the company's future direction and performance.