Kratos Defense & Security Solutions, Inc. Prices Public Offering of Common Stock

Rhea-AI Summary

Kratos Defense & Security Solutions (NASDAQ: KTOS) has announced the pricing of a public offering of 12,987,013 shares of common stock at $38.50 per share. The company expects to raise net proceeds of approximately $483.75 million after underwriting discounts and commissions.

The offering includes a 30-day option for underwriters to purchase up to an additional 1,948,052 shares. The proceeds will fund investments in National Security programs, finance strategic acquisitions, and support general corporate purposes including debt reduction. The offering, managed by Baird, RBC Capital Markets, Truist Securities, and Raymond James as joint book-runners, is expected to close on June 27, 2025.

Positive

• Expected to raise significant net proceeds of $483.75 million
• Funds will support execution of large National Security program opportunities
• Proceeds will enable strategic acquisitions to expand business
• Part of proceeds allocated to debt reduction, improving financial position

Negative

• Significant shareholder dilution from issuance of 12.99 million new shares
• Additional potential dilution from 1.95 million share underwriter option
• Increased shares outstanding will impact earnings per share

Insights

Financial Analyst

Kratos is raising $483.75M through stock offering to fund defense programs, acquisitions, and debt reduction, strategically positioning for growth despite shareholder dilution.

Kratos Defense has priced a public offering of 12,987,013 shares at $38.50 per share, generating net proceeds of approximately $483.75 million after underwriting discounts and commissions. The company has also granted underwriters a 30-day option to purchase up to an additional 1,948,052 shares, which could further increase proceeds.

The capital allocation strategy reveals Kratos's growth priorities in three key areas:

• Scaling execution capabilities for existing programs, recent awards, and high-probability pipeline opportunities in National Security
• Financing strategic acquisitions targeted at specific customers and programs
• General corporate purposes including debt reduction

This offering represents a significant financial reinforcement that will enable Kratos to pursue larger defense contracts and programs. In the defense sector, having substantial capital reserves is critical for program execution, as many government contracts require significant upfront investment before generating returns.

The deal structure involves multiple tiers of financial institutions, with Baird, RBC Capital Markets, Truist Securities, and Raymond James as joint book-running managers, plus five co-managers. This broad underwriter participation suggests strong institutional confidence in Kratos's business strategy.

While the offering will cause immediate shareholder dilution, the capital infusion strengthens Kratos's competitive positioning in the defense market, particularly for capital-intensive programs. The company's explicit mention of "significant high-probability pipeline opportunities" indicates visibility on potential near-term contract awards that likely necessitated this capital raise.

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 the pricing of an underwritten offering of 12,987,013 shares of its common stock at a public offering price of $38.50 per share pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission (the “SEC”). The net proceeds to Kratos from the offering, after deducting underwriting discounts and commissions, are expected to be approximately $483,750,000. Kratos has also granted the underwriters a 30-day option to purchase up to an additional 1,948,052 shares of common stock. All of the shares in the offering are to be sold by Kratos. The offering is expected to close on June 27, 2025, subject to customary closing 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. B. Riley Securities, The Benchmark Company, Noble Capital Markets, Citizens Capital Markets, and Academy Securities are acting as co-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 offering have been filed with the SEC and a final prospectus supplement will be filed with the SEC. Copies of the final 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 final 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, and 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 many shares is KTOS offering in its June 2025 public offering?

Kratos is offering 12,987,013 shares of common stock, with an additional 30-day option for underwriters to purchase up to 1,948,052 shares.

What is the price per share for Kratos Defense's 2025 stock offering?

The public offering price is set at $38.50 per share.

How much money will KTOS raise from its 2025 public offering?

Kratos expects to raise net proceeds of approximately $483.75 million after deducting underwriting discounts and commissions.

How will Kratos Defense use the proceeds from its 2025 stock offering?

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

When will the KTOS stock offering close?

The offering is expected to close on June 27, 2025, subject to customary closing conditions.