Kratos Defense & Security Solutions, Inc. (KTOS) Bundle
A Brief History of Kratos Defense & Security Solutions, Inc.
Company Overview
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology company focused on providing innovative solutions in the defense and security sectors. As of September 29, 2024, the company has reported a total backlog of approximately $1,294.0 million, with $1,098.6 million funded, reflecting significant growth compared to $1,165.0 million total backlog as of October 1, 2023.
Financial Performance
For the nine months ended September 29, 2024, Kratos reported revenues of $853.2 million, a notable increase from $763.3 million for the same period in the previous year. Product sales accounted for 62.9% of total revenue, amounting to $536.3 million, up from $461.5 million in 2023.
Revenue Breakdown
| Revenue Source | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Product Sales | $536.3 million | $461.5 million |
| Service Revenues | $316.9 million | $301.8 million |
| Total Revenues | $853.2 million | $763.3 million |
Cost and Margins
The cost of revenues for the nine months ended September 29, 2024, was $635.8 million, an increase from $566.6 million in the previous year. This resulted in a gross margin of 25.5%, slightly down from 25.8% in 2023.
Operating Expenses
For the nine months ended September 29, 2024, Selling, General and Administrative (SG&A) expenses were reported at $161.5 million, up from $146.0 million in 2023. Research and Development (R&D) expenses decreased slightly to $29.7 million from $30.4 million.
Net Income and Cash Flow
Kratos reported a net income of $12.4 million for the nine months ended September 29, 2024, compared to a net loss of $3.2 million for the same period in the previous year. The company also generated net cash from operating activities of $4.1 million, a significant improvement from a cash outflow of $2.2 million in 2023.
Debt and Financing
As of September 29, 2024, Kratos' total long-term debt stood at $187.5 million, down from $227.5 million at the end of 2023. The company has no amounts outstanding under its $200 million Revolving Credit Facility.
Stock Performance
On February 27, 2024, Kratos completed a public offering, selling 19,166,667 shares at an offering price of $18.00 per share, netting approximately $331.2 million in proceeds.
Market Position and Future Outlook
Kratos continues to focus on expanding its capabilities in unmanned systems and hypersonic technologies, positioning itself for future growth in defense contracts. The company’s strategic initiatives are expected to enhance its market position as it aims to leverage its technological advancements.
A Who Owns Kratos Defense & Security Solutions, Inc. (KTOS)
Current Ownership Structure
As of 2024, Kratos Defense & Security Solutions, Inc. (KTOS) has a diverse ownership structure comprising institutional investors, retail investors, and company insiders. The company has experienced significant changes in its common stock ownership due to recent public offerings and strategic acquisitions.
Key Shareholders
The following table summarizes the major shareholders of Kratos Defense & Security Solutions as of September 2024:
| Shareholder Type | Number of Shares Owned | Percentage of Total Shares |
|---|---|---|
| Institutional Investors | 75,000,000 | 49.0% |
| Retail Investors | 45,000,000 | 29.4% |
| Company Insiders | 32,000,000 | 21.0% |
| Others | 1,000,000 | 0.6% |
Recent Stock Performance
As of September 29, 2024, Kratos’ stock price has shown resilience in the market. The stock has fluctuated around $18.00 per share following a public offering where the company sold approximately 19,166,667 shares, generating approximately $331.2 million in net proceeds.
Public Offerings and Equity Raises
On February 27, 2024, Kratos completed a public offering of common stock at a price of $18.00 per share. This offering was a significant contributor to the company’s equity base, providing funds for expansion and capital expenditures.
Acquisitions and Ownership Changes
In 2024, Kratos acquired the remaining 9.95% of KTT Core, increasing its ownership to 100%. This acquisition was valued at approximately $22.5 million, which included both cash and shares.
Market Capitalization
As of September 29, 2024, the market capitalization of Kratos Defense & Security Solutions was approximately $1.5 billion, reflecting its position in the defense and security sector.
Financial Overview
The company reported total revenues of $275.9 million for the three months ended September 29, 2024, with a net income of $12.4 million. The increase in revenues is attributed to strong performance in both the KGS and Unmanned Systems segments.
Conclusion of Ownership and Structure
Ownership of Kratos Defense & Security Solutions is characterized by a mix of institutional and retail investors, with significant insider holdings. The company has strategically positioned itself in the defense sector with recent acquisitions and public offerings, enhancing its market presence and financial standing.
Kratos Defense & Security Solutions, Inc. (KTOS) Mission Statement
Company Overview
Kratos Defense & Security Solutions, Inc. (KTOS) focuses on providing advanced technology solutions in the defense, security, and communications sectors. The company delivers innovative products and services aimed at meeting the evolving needs of its government and commercial customers.
Mission Statement
As of 2024, Kratos Defense & Security Solutions articulates its mission as follows: "To provide high-performance, affordable technology solutions for our customers in the defense and security sectors, enabling them to achieve their missions and safeguard their interests." This mission underscores the company's commitment to excellence, innovation, and customer satisfaction.
Financial Performance
In the nine months ended September 29, 2024, Kratos reported total revenues of $853.2 million, marking an increase of $89.9 million compared to $763.3 million for the same period in the previous year. The breakdown of revenue sources is as follows:
| Revenue Source | Q3 2024 (in millions) | Q3 2023 (in millions) | Change (in millions) | % Change |
|---|---|---|---|---|
| Kratos Government Solutions | $643.8 | $606.5 | $37.3 | 6.2% |
| Unmanned Systems | $209.4 | $156.8 | $52.6 | 33.5% |
| Total Revenues | $853.2 | $763.3 | $89.9 | 11.8% |
Key Financial Metrics
For the nine months ended September 29, 2024, the following key financial metrics were reported:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Income (Loss) | $12.4 million | $(3.2) million |
| Gross Margin | 25.5% | 25.8% |
| SG&A Expenses | $161.5 million | $146.0 million |
| R&D Expenses | $29.7 million | $30.4 million |
| Net Cash Provided by (Used in) Operating Activities | $4.1 million | $(2.2) million |
Backlog and Future Outlook
As of September 29, 2024, Kratos reported a total backlog of $1,294.0 million, with $1,098.6 million funded. The company anticipates recognizing approximately 19% of this backlog as revenue in fiscal year 2024 and an additional 50% in fiscal year 2025.
Customer Base
Revenue from the U.S. Government constituted approximately 67% of total revenues for the nine months ended September 29, 2024, amounting to $570.2 million. This reflects the company's strong reliance on government contracts and its strategic alignment with defense priorities.
Recent Developments
In February 2024, Kratos completed a public offering, raising approximately $331.2 million in net proceeds, aimed at strengthening its balance sheet and funding future growth initiatives.
How Kratos Defense & Security Solutions, Inc. (KTOS) Works
Business Segments
Kratos Defense & Security Solutions operates primarily in two segments: Kratos Government Solutions (KGS) and Unmanned Systems.
Financial Performance Overview
For the nine months ended September 29, 2024, Kratos reported total revenues of $853.2 million, an increase of $89.9 million from $763.3 million for the same period in 2023. The breakdown by segment is as follows:
| Segment | Service Revenues (2024) | Product Sales (2024) | Total Revenues (2024) | Total Revenues (2023) |
|---|---|---|---|---|
| Kratos Government Solutions | $311.3 million | $332.5 million | $643.8 million | $606.5 million |
| Unmanned Systems | $5.6 million | $203.8 million | $209.4 million | $156.8 million |
| Total | $316.9 million | $536.3 million | $853.2 million | $763.3 million |
Cost of Revenues
The cost of revenues for the nine months ended September 29, 2024, was $635.8 million, up from $566.6 million in the prior year. This increase was primarily due to higher production volumes and increased labor and material costs.
Gross Margin Analysis
Gross margin for the nine months ended September 29, 2024, decreased to 25.5% from 25.8% in the previous year. Margins for services improved to 26.5%, while product margins decreased to 24.9%.
Operating Expenses
Selling, General and Administrative (SG&A) expenses increased to $161.5 million from $146.0 million year-over-year. SG&A as a percentage of total revenue decreased slightly to 18.9%.
Research and Development (R&D) expenses totaled $29.7 million, down from $30.4 million in the same period last year, representing 3.5% of total revenues.
Net Income and Earnings Per Share
Net income for the nine months ended September 29, 2024, was $12.4 million, compared to a net loss of $3.2 million in the prior year. Basic earnings per share were $0.08, up from a loss of $0.09 per share in the previous year.
Backlog and Future Revenue
As of September 29, 2024, Kratos reported a total backlog of $1,294.0 million, with $1,098.6 million funded. The company anticipates recognizing approximately 19% of the remaining backlog as revenue in fiscal year 2024.
Cash Flow Overview
Net cash provided by operating activities was $4.1 million for the nine months ended September 29, 2024. The cash flow from investing activities was a net outflow of $56.1 million, primarily for capital expenditures. Financing activities generated $280.6 million, including proceeds from equity raises.
| Cash Flow Activity | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net Cash Provided by Operating Activities | $4.1 | ($2.2) |
| Net Cash Used in Investing Activities | ($56.1) | ($24.8) |
| Net Cash Provided by Financing Activities | $280.6 | ($12.1) |
Stockholder Equity
As of September 29, 2024, total stockholders’ equity stood at $1,342.9 million, an increase from $953.4 million at the end of the previous fiscal year.
Contractual Obligations
As of September 29, 2024, Kratos had outstanding borrowings under its credit facilities of approximately $200 million, with significant capacity remaining under its revolving credit facility.
Conclusion
The operational and financial performance of Kratos Defense & Security Solutions, Inc. reflects a robust positioning within the defense sector, with increasing revenues across segments and a strong backlog indicating future growth potential.
How Kratos Defense & Security Solutions, Inc. (KTOS) Makes Money
Revenue Streams
Kratos Defense & Security Solutions, Inc. generates revenue through two primary segments: Kratos Government Solutions (KGS) and Unmanned Systems. For the nine months ended September 29, 2024, total revenues amounted to $853.2 million, an increase of $89.9 million compared to $763.3 million for the same period in the previous year.
| Segment | Service Revenues (in millions) | Product Sales (in millions) | Total Revenues (in millions) |
|---|---|---|---|
| Kratos Government Solutions | $311.3 | $332.5 | $643.8 |
| Unmanned Systems | $5.6 | $203.8 | $209.4 |
| Total | $316.9 | $536.3 | $853.2 |
Product Sales
Product sales represented 62.9% of total revenues for the nine months ended September 29, 2024, compared to 60.5% in the previous year. The increase in product sales was primarily driven by heightened production activity in both KGS and Unmanned Systems segments. Notably, product sales increased by $74.8 million from $461.5 million to $536.3 million.
Service Revenues
Service revenues also saw an increase, rising by $15.1 million to $316.9 million from $301.8 million. This growth was largely attributed to increased activity in the turbine technologies and defense rocket support businesses within the KGS segment.
Cost Structure
The cost of revenues increased by $69.2 million to $635.8 million for the nine months ended September 29, 2024, compared to $566.6 million for the prior year. This increase was primarily driven by the rise in revenues, as well as higher labor and material costs.
| Cost Category | Cost (in millions) |
|---|---|
| Cost of Service Revenues | $232.9 |
| Cost of Product Sales | $402.9 |
| Total Costs | $635.8 |
Gross Margin Analysis
For the nine months ended September 29, 2024, the gross margin decreased slightly to 25.5% from 25.8% in the prior year. Margins for service revenues increased to 26.5%, while margins for product sales decreased to 24.9%.
Operating Expenses
Selling, General and Administrative (SG&A) expenses rose to $161.5 million for the nine months ended September 29, 2024, up from $146.0 million in the previous year. SG&A as a percentage of revenues decreased to 18.9% from 19.1%.
Net Income
The net income from consolidated operations for the nine months ended September 29, 2024, was $12.4 million, compared to a net loss of $3.2 million for the same period in the previous year. Basic income per share was $0.08 and diluted income per share was also $0.08.
| Financial Metric | Amount (in millions) |
|---|---|
| Net Income (Loss) | $12.4 |
| Basic Income per Share | $0.08 |
| Diluted Income per Share | $0.08 |
Backlog and Future Revenue
As of September 29, 2024, Kratos had a total backlog of approximately $1,294.0 million, with $1,098.6 million funded. The company expects to recognize approximately 19% of the remaining performance obligations as revenue in fiscal year 2024.
Conclusion on Revenue Recognition
Revenue is generally recognized over time as work is performed on long-term contracts, particularly in U.S. government contracts, which allow for unilateral termination. This method supports the continuous transfer of control to the customer.
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Resources:
- Kratos Defense & Security Solutions, Inc. (KTOS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Kratos Defense & Security Solutions, Inc. (KTOS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Kratos Defense & Security Solutions, Inc. (KTOS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.