First Quarter 2024 Revenues of $277.2 Million Increased 19.6 Percent over First Quarter 2023 Revenues of $231.8 Million, including 19.5 Percent Organic Growth

First Quarter 2024 Unmanned Systems Revenues of $59.4 Million Increased 23.8 Percent over First Quarter 2023 Revenues of $48.0 Million, including 21.8 Percent Organic Growth

First Quarter 2024 KGS Revenues of $217.8 Million Reflect 18.5 Percent Organic Growth over First Quarter 2023 Revenues of $183.8 Million

First Quarter 2024 and Last Twelve Months Ended March 31, 2024 Consolidated Book to Bill Ratio of 1.1 to 1
First Quarter 2024 Bookings of $317.8 Million

Affirms Full Year 2024 Financial Forecast

SAN DIEGO, May 07, 2024 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq:KTOS), a Technology Company in the Defense, National Security and Global Markets, today reported its first quarter 2024 financial results, including Revenues of $277.2 million, Operating Income of $7.0 million, Net Income of $1.3 million, Adjusted EBITDA of $26.0 million and a consolidated book to bill ratio of 1.1 to 1.0.

Included in first quarter 2024 Net Income and Operating Income is non-cash stock compensation expense of $9.2 million and Company-funded Research and Development (R&D) expense of $9.6 million, primarily reflecting ongoing development efforts, including in our Space and Satellite business to develop and expand our virtual, software-based OpenSpace command & control (C2), telemetry tracking & control (TT&C), Kratos owned and operated Global Space Domain Awareness (SDA) System and other solutions.

Kratos reported first quarter 2024 GAAP Net Income attributable to Kratos of $1.3 million and Earnings Per Share of $0.01 compared to a GAAP Net Loss attributable to Kratos of $7.0 million and a GAAP Net Loss per share of $0.05 for the first quarter of 2023. Adjusted EPS was $0.11 for the first quarter of 2024, compared to $0.06 for the first quarter of 2023.

First quarter 2024 Revenues of $277.2 million increased $45.4 million, or 19.6 percent, from first quarter 2023 Revenues of $231.8 million. Including the impact of the Sierra Technical Services, Inc. (STS) acquisition on a pro forma basis as if acquired at the beginning of 2023, first quarter 2024 consolidated Revenues reflect organic growth of 19.5 percent, including 21.8 percent organic growth in Unmanned Systems, 18.5 percent revenue growth in KGS, and positive organic growth across all business units.

First quarter 2024 Cash Flow Generated From Operations was $0.7 million, reflecting working capital requirements related to our 19.5 percent organic revenue growth, including continued increases in inventory balances. Free Cash Flow Used in Operations was $15.9 million after funding of $16.6 million of capital expenditures, including the continued manufacture of two production lots of Kratos Valkyrie unmanned tactical jet drone aircraft prior to contract award.

For the first quarter of 2024, Kratos’ Unmanned Systems Segment (KUS) generated Revenues of $59.4 million, as compared to $48.0 million in the first quarter of 2023, with organic revenue growth of 21.8 percent after reflecting the pro forma impact of the STS acquisition as if acquired at the beginning of 2023. KUS’s Operating Loss was $0.4 million in the first quarter of 2024 compared to an Operating Loss of $0.6 million in the first quarter of 2023, reflecting the impact of the increased revenue volume.

KUS’s Adjusted EBITDA for the first quarter of 2024 was $2.9 million, compared to first quarter 2023 KUS Adjusted EBITDA of $1.8 million, reflecting the increased revenue volume and favorable revenue mix.       

KUS’s book-to-bill ratio for the first quarter of 2024 was 1.4 to 1.0 and 1.0 to 1.0 for the last twelve months ended March 31, 2024, with bookings of $81.1 million for the three months ended March 31, 2024, and bookings of $232.5 million for the last twelve months ended March 31, 2024. Total backlog for KUS at the end of the first quarter of 2024 was $265.8 million compared to $244.2 million at the end of the fourth quarter of 2023.

For the first quarter of 2024, Kratos’ Government Solutions Segment (KGS) Revenues of $217.8 million increased 18.5 percent from Revenues of $183.8 million in the first quarter of 2023. The increased Revenues reflects organic revenue growth across all business units within KGS, which includes our Turbine Technologies, Space, Training and Cyber, Microwave Products, C5ISR and Defense Rocket Systems businesses.

KGS reported operating income of $16.6 million in the first quarter of 2024 compared to $7.7 million in the first quarter of 2023, primarily reflecting a more favorable revenue mix and leverage on the fixed overhead and SG&A costs.

Kratos’ Space, Training and Cyber business generated Revenues of $99.8 million in the first quarter of 2024 compared to $93.8 million in the first quarter of 2023, reflecting a 6.4 percent organic growth rate. First quarter 2024 KGS Adjusted EBITDA was $23.1 million, compared to first quarter 2023 KGS Adjusted EBITDA of $15.2 million, reflecting a more favorable mix in revenues, including software and data sales and increased revenue volume.

For the first quarter of 2024 and the last twelve months ended March 31, 2024, KGS reported a book-to-bill ratio of 1.1 to 1.0 and bookings of $236.7 million and $977.6 million for the three and last twelve months ended March 31, 2024, respectively. KGS’s total backlog at the end of the first quarter of 2024 was $1.007 billion, as compared to $988.0 million at the end of the fourth quarter of 2023.

For the first quarter of 2024, Kratos reported consolidated bookings of $317.8 million and a book-to-bill ratio of 1.1 to 1.0, with consolidated bookings of $1.210 billion and a book-to-bill ratio of 1.1 to 1.0 for the last twelve months ended March 31, 2024. Consolidated backlog was $1.273 billion on March 31, 2024 and $1.232 billion on December 31, 2023. Kratos’ bid and proposal pipeline was $11 billion at March 31, 2024 and December 31, 2023. Backlog at March 31, 2024 was comprised of funded backlog of $1.044 billion and unfunded backlog of $228.9 million.

Eric DeMarco, Kratos’ President and CEO, said, “Kratos’ position as a leading defense technology company is reflected in our first quarter results, which came in above our forecast. Q1 strength included our unmanned systems, air defense, propulsion system, turbine technologies and Israel-based microwave electronics businesses, and also production and delivery on certain programs that were executed earlier in the year than initially expected.   With the 2024 U.S. defense budget now complete, we have increased confidence in our full year 2024 financial forecast.”

The appearance of U.S. Department of Defense (DoD) visual information does not imply or constitute DoD endorsement
Valkyrie Flying with F-35

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/509c0b84-85f5-4c6e-88a7-1aa49da1e084

Mr. DeMarco continued, “Kratos’ first quarter bookings of $318 million, including a book to bill ratio in our Unmanned Systems business of 1.4 to 1.0, or bookings of $81.1 million, are both particularly noteworthy. Kratos’ opportunity pipeline is approximately $11 billion, including opportunities in the air defense, CUAS, microwave electronics, jet engine, propulsion system, missile, radar, hypersonic, supersonic, unmanned systems and SDA areas, each of which we are in the process of, or expect to make facilities, machinery, equipment, system and other investments to position us for future organic growth. Kratos’ air defense pipeline is particularly robust, including Iron Dome, Arrow, SHORAD, HIMAD, Barak, Patriot, IBCS and other systems. Recent achievements include the successful static fire test of Kratos’ Zeus 2 Solid Rocket Motor (SRM), Kratos placing the order for the first nine Zeus 1 and Zeus 2 SRM’s in preparation for initial customer funded flights including Kratos Erinyes hypersonic system, and Kratos demonstrating XQ-58A electronic warfare capabilities for the United States Marine Corps.”

 

Zeus 1 Static Test & Zeus 2 Static Test

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/0347e1de-7107-4c39-8c4d-7d04f417b7ba

Mr. DeMarco concluded “There is a generational recapitalization of strategic weapon systems occurring globally, and we believe that Kratos is uniquely positioned with our internal investment, rapid development, affordability and disruptive first to market approach. At Kratos, affordability is a technology, better is the enemy of good enough and ready to field today, with Kratos systems and products designed up front for large scale, low cost, rapid production, all of which are value differentiating for our government customers and traditional large system integrator partners. Operational challenges continue to include the obtaining and retention of qualified personnel, including those willing and able to hold National Security clearances.”