Kratos Defense & Security Solutions, Inc. Announces Proposed Public Offering Of Common Stock

Rhea-AI Summary

Kratos Defense & Security Solutions (NASDAQ: KTOS) has announced a proposed public offering of $500 million worth of common stock, with underwriters having a 30-day option to purchase an additional $75 million in shares. The offering will be conducted through an underwritten offering pursuant to an effective shelf registration statement.

The net proceeds will be used to fund investments and capital expenditures for National Security programs, finance strategic acquisitions, and for general corporate purposes including debt reduction. Baird, RBC Capital Markets, Truist Securities, and Raymond James are serving as joint book-running managers for the offering.

Positive

• Significant capital raise of $500 million with potential for additional $75 million
• Funds will support execution of large National Security programs and recent awards
• Strategic acquisitions planned to enhance company capabilities
• Debt reduction included in use of proceeds

Negative

• Potential dilution for existing shareholders through new stock issuance
• Increased shares outstanding may pressure stock price
• Additional debt paydown suggests existing leverage concerns

Insights

Capital Markets Specialist

Kratos' $500M stock offering will fund growth initiatives but dilute shareholders; strategic capital raise signals expansion plans.

Kratos Defense is planning a significant $500 million common stock offering with an additional $75 million option for underwriters - a substantial capital raise for a defense technology contractor. This offering comes through an effective shelf registration that became active in February 2024, suggesting this capital raise has been in the planning stages for some time.

The company has outlined three specific uses for the proceeds: funding investments and capital expenditures for existing and recently awarded national security programs, financing strategic acquisitions, and general corporate purposes including debt reduction. The prioritization of these uses indicates this is primarily a growth-oriented capital raise rather than a balance sheet repair effort.

This offering will result in ownership dilution for existing shareholders, but provides Kratos with significant financial flexibility to execute on its growth strategy. The reference to "significant high-probability pipeline opportunities" signals management's confidence in near-term contract wins that require additional capital to properly execute.

The underwriting is being managed by established financial institutions including Baird, RBC Capital Markets, Truist Securities, and Raymond James, which typically indicates strong institutional support. The company has not yet disclosed pricing terms or the exact number of shares to be offered, which will ultimately determine the precise dilution impact on existing shareholders.

This capital raise represents a strategic decision to strengthen Kratos' financial position as it pursues expansion opportunities in the defense and national security sectors, though at the cost of equity dilution.

SAN DIEGO, June 25, 2025 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (“Kratos”) (NASDAQ: KTOS), a Technology Company in the Defense, National Security and Commercial Markets, today announced that it intends to offer for sale $500,000,000 of shares of its common stock in an underwritten offering pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission (the “SEC”). The underwriters will have a 30-day option to purchase up to an additional $75,000,000 of shares of common stock from Kratos. All of the shares in the offering are to be sold by Kratos. The proposed offering is subject to market and other conditions.

Kratos expects to use the net proceeds of the offering to (i) fund investments and capital expenditures to scale and successfully execute on large, mission critical National Security priorities related to existing programs, recent program awards and significant high-probability pipeline opportunities; (ii) to finance important customer and program targeted acquisitions; (iii) and for general corporate purposes, including pay-down of debt and to pay fees and expenses in connection with the offering.

Baird, RBC Capital Markets, Truist Securities, and Raymond James are acting as joint book-running managers for the offering.

The securities described above are being offered pursuant to an automatic shelf registration statement on Form S-3ASR (File No. 333-277222) that was previously filed by Kratos with the SEC and automatically became effective upon filing on February 21, 2024. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, these securities, nor will there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale is not permitted.

The offering will be made only by means of a prospectus supplement and the accompanying prospectus. The preliminary prospectus supplement and accompanying prospectus describing the terms of the proposed offering will be filed with the SEC. Copies of the preliminary prospectus supplement and accompanying prospectus relating to the offering may be obtained, when available, from Robert W. Baird & Co. Incorporated, 777 E. Wisconsin Avenue, Milwaukee, Wisconsin 53202, by telephone at (800) 792-2473, or by email at syndicate@rwbaird.com, RBC Capital Markets, LLC, 200 Vesey Street, New York, New York 10281, by telephone at (877) 822-4089, or by email at equityprospectus@rbccm.com, Truist Securities, Inc., 3333 Peachtree Road NE, 9^th Floor, Atlanta, Georgia 30326, by telephone at (800) 685-4786, or by email at TruistSecurities.prospectus@Truist.com, and Raymond James & Associates, Inc., 880 Carillon Parkway, St. Petersburg, FL 33716, by telephone at (800) 248-8863, or by email at prospectus@raymondjames.com. Electronic copies of the preliminary prospectus supplement and accompanying prospectus will also be available on the SEC’s website at www.sec.gov. 

About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low cost future manufacturing which is a value add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter UAS, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter.

Notice Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements relate to a variety of matters, including, without limitation, Kratos’ expectations regarding the sale of shares of its common stock in the proposed public offering, use of the expected proceeds from the proposed public offering and other statements that are not purely statements of historical fact. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements including, but not limited to: risks and uncertainties related to market conditions, the satisfaction of customary closing conditions related to the proposed public offering, as well as general economic factors. There can be no assurance that Kratos will be able to complete the proposed public offering on the anticipated terms, or at all. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 29, 2024 and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.

Press Contact:
Claire Burghoff
claire.burghoff@kratosdefense.com 

Investor Information:
877-934-4687
investor@kratosdefense.com 

FAQ

How much is Kratos Defense (KTOS) planning to raise in their new stock offering?

Kratos is planning to raise $500 million through the common stock offering, with an additional $75 million option available to underwriters within 30 days.

What will Kratos Defense (KTOS) use the proceeds from the stock offering for?

The proceeds will be used to fund investments in National Security programs, finance strategic acquisitions, reduce debt, and for general corporate purposes.

Who are the underwriters for the Kratos Defense (KTOS) stock offering?

The joint book-running managers are Baird, RBC Capital Markets, Truist Securities, and Raymond James.

Will the Kratos Defense (KTOS) stock offering dilute existing shareholders?

Yes, the $500 million common stock offering will dilute existing shareholders as it will increase the total number of outstanding shares.

When will the Kratos Defense (KTOS) stock offering take place?

The offering was announced on June 25, 2025, and will proceed subject to market and other conditions. The exact timing will be detailed in the final prospectus.