Kratos Reports Second Quarter 2025 Financial Results
Kratos Defense & Security Solutions (NASDAQ:KTOS) reported strong Q2 2025 financial results with revenues of $351.5 million, representing a 17.1% growth and 15.2% organic growth compared to Q2 2024. The company posted net income of $2.9 million and adjusted EBITDA of $28.3 million.
Key highlights include a consolidated book-to-bill ratio of 0.7 to 1.0 for Q2 2025 and 1.2 to 1.0 for the last twelve months, with total bookings of $1.401 billion. The company's bid pipeline reached $13.0 billion, up from $12.6 billion in Q1. Kratos increased its 2025 full-year revenue guidance to $1,290-$1,310 million and adjusted EBITDA guidance to $114-$120 million.
Management announced a potential new $750 million prime contract (Project Poseidon) expected by year-end, and highlighted significant growth opportunities in hypersonic systems, small jet engines, and military hardware sectors.
Kratos Defense & Security Solutions (NASDAQ:KTOS) ha riportato solidi risultati finanziari nel secondo trimestre 2025, con ricavi pari a 351,5 milioni di dollari, segnando una crescita del 17,1% e una crescita organica del 15,2% rispetto al secondo trimestre 2024. L'azienda ha registrato un utile netto di 2,9 milioni di dollari e un EBITDA rettificato di 28,3 milioni di dollari.
I principali dati evidenziano un rapporto consolidato book-to-bill di 0,7 a 1,0 per il secondo trimestre 2025 e di 1,2 a 1,0 negli ultimi dodici mesi, con ordini totali per 1,401 miliardi di dollari. Il portafoglio offerte dell'azienda ha raggiunto 13,0 miliardi di dollari, in aumento rispetto ai 12,6 miliardi del primo trimestre. Kratos ha rivisto al rialzo le previsioni di ricavi per l'intero 2025, portandole a 1.290-1.310 milioni di dollari, e l'EBITDA rettificato a 114-120 milioni di dollari.
La direzione ha annunciato un potenziale nuovo contratto principale da 750 milioni di dollari (Progetto Poseidon) previsto entro fine anno, sottolineando inoltre importanti opportunità di crescita nei sistemi ipersonici, nei motori a getto di piccole dimensioni e nel settore dell'hardware militare.
Kratos Defense & Security Solutions (NASDAQ:KTOS) reportó sólidos resultados financieros en el segundo trimestre de 2025, con ingresos de 351,5 millones de dólares, lo que representa un crecimiento del 17,1% y un crecimiento orgánico del 15,2% en comparación con el segundo trimestre de 2024. La compañía registró un ingreso neto de 2,9 millones de dólares y un EBITDA ajustado de 28,3 millones de dólares.
Los aspectos destacados incluyen una relación consolidada book-to-bill de 0,7 a 1,0 para el segundo trimestre de 2025 y de 1,2 a 1,0 para los últimos doce meses, con reservas totales de 1.401 millones de dólares. La cartera de ofertas de la empresa alcanzó 13.000 millones de dólares, un aumento respecto a los 12.600 millones del primer trimestre. Kratos elevó su pronóstico de ingresos para todo el año 2025 a 1.290-1.310 millones de dólares y su guía de EBITDA ajustado a 114-120 millones de dólares.
La dirección anunció un posible nuevo contrato principal de 750 millones de dólares (Proyecto Poseidón) esperado para fin de año, y destacó importantes oportunidades de crecimiento en sistemas hipersónicos, motores a reacción pequeños y sectores de hardware militar.
Kratos Defense & Security Solutions (NASDAQ:KTOS)는 2025년 2분기에 매출 3억 5,150만 달러를 기록하며 전년 동기 대비 17.1%, 유기적 성장률 15.2%의 강력한 실적을 발표했습니다. 회사는 순이익 290만 달러와 조정 EBITDA 2,830만 달러를 기록했습니다.
주요 내용으로는 2025년 2분기 기준 통합 book-to-bill 비율이 0.7대 1.0, 최근 12개월 기준 1.2대 1.0이며, 총 수주액은 14억 1천만 달러에 달했습니다. 회사의 입찰 파이프라인은 1분기 126억 달러에서 증가한 130억 달러를 기록했습니다. Kratos는 2025년 연간 매출 전망을 12억 9천만~13억 1천만 달러로, 조정 EBITDA 전망을 1억 1,400만~1억 2,000만 달러로 상향 조정했습니다.
경영진은 연말까지 예상되는 7억 5천만 달러 규모의 주요 계약(프로젝트 포세이돈)을 발표했으며, 극초음속 시스템, 소형 제트 엔진, 군사 하드웨어 분야에서의 상당한 성장 기회를 강조했습니다.
Kratos Defense & Security Solutions (NASDAQ:KTOS) a annoncé de solides résultats financiers pour le deuxième trimestre 2025, avec un chiffre d'affaires de 351,5 millions de dollars, soit une croissance de 17,1 % et une croissance organique de 15,2 % par rapport au deuxième trimestre 2024. La société a enregistré un bénéfice net de 2,9 millions de dollars et un EBITDA ajusté de 28,3 millions de dollars.
Les points clés incluent un ratio book-to-bill consolidé de 0,7 pour 1,0 au deuxième trimestre 2025 et de 1,2 pour 1,0 sur les douze derniers mois, avec des commandes totales de 1,401 milliard de dollars. Le pipeline d'offres de l'entreprise a atteint 13,0 milliards de dollars, en hausse par rapport à 12,6 milliards au premier trimestre. Kratos a relevé ses prévisions de chiffre d'affaires pour l'année 2025 à 1,290-1,310 milliard de dollars et ses prévisions d'EBITDA ajusté à 114-120 millions de dollars.
La direction a annoncé un nouveau contrat principal potentiel de 750 millions de dollars (Projet Poséidon) attendu d'ici la fin de l'année, mettant en avant d'importantes opportunités de croissance dans les systèmes hypersoniques, les petits moteurs à réaction et les secteurs du matériel militaire.
Kratos Defense & Security Solutions (NASDAQ:KTOS) meldete starke Finanzergebnisse für das zweite Quartal 2025 mit Umsätzen von 351,5 Millionen US-Dollar, was einem Wachstum von 17,1 % und einem organischen Wachstum von 15,2 % gegenüber dem zweiten Quartal 2024 entspricht. Das Unternehmen erzielte einen Nettoertrag von 2,9 Millionen US-Dollar und ein bereinigtes EBITDA von 28,3 Millionen US-Dollar.
Wichtige Highlights sind ein konsolidiertes Book-to-Bill-Verhältnis von 0,7 zu 1,0 für das zweite Quartal 2025 und 1,2 zu 1,0 für die letzten zwölf Monate, mit Gesamtaufträgen von 1,401 Milliarden US-Dollar. Die Angebots-Pipeline des Unternehmens erreichte 13,0 Milliarden US-Dollar, ein Anstieg gegenüber 12,6 Milliarden im ersten Quartal. Kratos erhöhte seine Umsatzprognose für das Gesamtjahr 2025 auf 1.290 bis 1.310 Millionen US-Dollar und die bereinigte EBITDA-Prognose auf 114 bis 120 Millionen US-Dollar.
Das Management kündigte einen potenziellen neuen Hauptauftrag über 750 Millionen US-Dollar (Projekt Poseidon) an, der bis Jahresende erwartet wird, und hob bedeutende Wachstumschancen in den Bereichen Hyperschallsysteme, kleine Jettriebwerke und militärische Hardware hervor.
- Revenue growth of 17.1% year-over-year to $351.5 million
- Record $13 billion opportunity pipeline and LTM book-to-bill ratio of 1.2 to 1.0
- New potential $750 million prime contract (Project Poseidon) expected by year-end
- KGS segment reported 27.1% organic growth with Defense Rocket Systems growing 116.6%
- Increased full-year 2025 revenue and adjusted EBITDA guidance
- Significant future organic growth expected across virtually all business units
- Q2 2025 Net Income decreased to $2.9 million from $7.9 million in Q2 2024
- Operating Income declined to $3.7 million from previous year
- Negative Operating Cash Flow of $10.6 million in Q2 2025
- Free Cash Flow Usage of $31.1 million after capital expenditures
- KUS segment revenues declined to $73.2 million from $85.8 million in Q2 2024
- Increased material, subcontractor and labor costs impacting margins on fixed-price contracts
Insights
Kratos delivered strong 17.1% revenue growth, raised guidance, but faces margin pressure from legacy contracts and higher investments.
Kratos reported $351.5 million in Q2 2025 revenue, representing substantial
The company's profitability metrics showed mixed performance. Net income declined to
The Government Solutions (KGS) segment was the growth engine, delivering
The company's cash flow reflects significant reinvestment for future growth, with
Management raised full-year 2025 guidance, now projecting revenue of
The broader context appears favorable, with management citing a "generational recapitalization of strategic weapon systems" and noting the U.S. 2026 National Security budget exceeding
Second Quarter 2025 Revenues of
Second Quarter 2025 Consolidated Book to Bill Ratio of 0.7 to 1 and Bookings of
Last Twelve Months Ended June 29, 2025 Consolidated Book to Bill Ratio of 1.2 to 1 and Bookings of
Increases 2025 Full Year Revenue and Adjusted EBITDA Guidance
SAN DIEGO, Aug. 07, 2025 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a Technology Company in the Defense, National Security and Commercial Markets, today reported its second quarter 2025 financial results, including Revenues of
Second quarter 2025 Net Income and Operating Income includes non-cash stock compensation expense of
Kratos reported second quarter 2025 GAAP Net Income of
Second quarter 2025 Revenues of
Second quarter 2025 Cash Flow Used in Operations was
For the second quarter of 2025, KUS generated Revenues of
KUS’s book-to-bill ratio for the second quarter of 2025 was 0.9 to 1.0 and 1.3 to 1.0 for the twelve months ended June 29, 2025, with bookings of
For the second quarter of 2025, Kratos’ Government Solutions (KGS) segment Revenues of
KGS reported Operating Income of
KGS reported a book-to-bill ratio of 0.7 to 1.0 for the second quarter of 2025, a book to bill ratio of 1.2 to 1.0 for the last twelve months ended June 29, 2025 and bookings of
Kratos reported consolidated bookings of
Eric DeMarco, Kratos’ President and CEO, said, “A generational recapitalization of strategic weapon systems is underway, with significant global funding being committed by the U.S. and its allies, including as represented by a planned U.S. 2026 National Security spend exceeding
Mr. DeMarco continued, “In addition to significant increased funding expected for our industry, Secretary of Defense Pete Hegseth recently announced sweeping changes to the way the Pentagon will buy and field unmanned aerial systems, which is related to a June 6, 2025 Presidential Executive order on “Unleashing American Drone Dominance”, both expected to accelerate the acquisition and fielding of drones. Also, further emphasizing the new focus on streamlining defense acquisition, promoting innovation and commercial “ready to go” solutions to deliver capabilities to the warfighter faster and more efficiently, Senator Roger Wicker recently introduced the FORGED Act and House Armed Services Committee Chair Mike Rogers and Ranking Member Adam Smith introduced the related SPEED Act, all of which, if enacted, we expect to benefit Kratos and our “First to Market” strategy.”
Mr. DeMarco added, “We believe that we are seeing direct positive impact from these actions, including Kratos’ Q225 17 percent revenue growth rate, our near record backlog, our record
Mr. DeMarco went on, “Virtually every Kratos business unit is forecasting significant future organic growth, including our hypersonic system franchise, small jet engines for drones, missiles and loitering munitions, our Israeli based microwave electronics business, and our military grade hardware business supporting missile, radar, hypersonic, counter UAS and strategic weapon systems. We are also expecting increased EBITDA margins beginning in 2026 and continuing thereafter, as new higher margin programs begin, certain lower margin contracts are renegotiated at renewal, and as we reduce costs in certain areas. We expect to continue to make important investments in property, plant, facilities, equipment etc., over the next two years, in conjunction with our funded customers, partners, initiatives and programs, to capture new opportunities, rebuild the industrial base, further grow our business and generate additional value for all Kratos stakeholders.”
Mr. DeMarco concluded, “In 2015, Kratos Mako tactical jet drones flew manned-unmanned teaming with Marine Corps Harrier jet aircraft, establishing Kratos as a first-to-market innovation leader, delivering actual relevant products, not PowerPoints, to the customer. As Kratos invests its own money in research and product development, we are incentivized to move fast, do it right, at a low cost, and always with an eye on being able to produce our military grade products, hardware and software affordably, at scale, and generate an adequate return for our shareholders. We believe that Kratos is in the right places, at the right time, with the right products, and importantly at the right affordable price points, to address our customer and partners requirements, to deliver significant value to Kratos stakeholders today.”
Financial Guidance
We are providing our initial 2025 third quarter guidance and increasing our full year 2025 Revenue and Adjusted EBITDA guidance range, which includes our assumptions, including as related to: current forecasted business mix, employee sourcing, hiring and retention; manufacturing, production and supply chain disruptions; parts shortages and related continued significant cost and price increases in each of these areas, that are impacting the industry and Kratos.
Kratos’ 2025 financial forecast and guidance includes elevated investments for capital expenditures for property, plant and equipment, including the expansion of our manufacturing and production facilities and related inventory builds in our Rocket Systems and Hypersonic businesses, primarily related to the recent MACH-TB 2.0 contract award, the continued manufacture of two production lots of Valkyries prior to contract award, to meet anticipated customer orders and requirements, the expansion and build-out of the Company’s Microwave Products production facilities, the expansion and build-out of our small jet engine production and test cell facilities, and the build-out of additional secure facilities for our federal secured space communications business, in accordance with contract and customer requirements. Kratos’ operating cash flow guidance also assumes consummation of certain investments in our rocket systems and unmanned systems businesses.
Our third quarter and full year 2025 guidance ranges are as follows:
| Current Guidance Range | ||
| $M | Q325 | FY25 |
| Revenues | ||
| R&D | ||
| Operating Income | ||
| Depreciation | ||
| Amortization | ||
| Stock Based Compensation | ||
| Adjusted EBITDA | ||
| Operating Cash Flow | ||
| Capital Expenditures | ||
| Free Cash Flow Use | ( | |
Management will discuss the Company’s financial results on a conference call beginning at 2:00 p.m. Pacific (5:00 p.m. Eastern) today. The call will be available at www.kratosdefense.com. Participants may register for the call using this Online Form. Upon registration, all telephone participants will receive the dial-in number along with a unique PIN that can be used to access the call. For those who cannot access the live broadcast, a replay will be available on Kratos’ website.
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. For more information, visit www.KratosDefense.com.
Notice Regarding Forward-Looking Statements
This news release contains certain forward-looking statements that involve risks and uncertainties, including, without limitation, express or implied statements concerning the Company’s expectations regarding its future financial performance, including the Company’s expectations for its third quarter and full year 2025 revenues, R&D, operating income, depreciation, amortization, stock based compensation expense, and Adjusted EBITDA, and full year 2025 operating cash flow, capital expenditures, and free cash flow, forecasted business unit organic revenue growth, EBITDA margins in 2026 and thereafter, future initiation of higher margin programs and negotiation of lower margin contracts which are expected to be renewed in the future, expected future investments in property, plant, facilities, and equipment, the Company’s bid and proposal pipeline and backlog, including the Company’s ability to timely execute on its backlog, demand for its products and services, including the Company’s alignment with today’s National Security requirements and the positioning of its C5ISR and other businesses, ability to successfully compete and expected new customer awards, the impact of the Company’s restructuring efforts and cost reduction measures, the availability and timing of government funding for the Company’s offerings, availability of an experienced skilled workforce, inflation and increased costs, risks related to potential cybersecurity events or disruptions of our information technology systems, and delays in our financial projections, industry, business and operations, including projected growth. Such statements are only predictions, and the Company’s actual results may differ materially from the results expressed or implied by these statements. 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 the Company undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Factors that may cause the Company’s results to differ include, but are not limited to: risks to our business and financial results related to the reductions and other spending constraints imposed on the U.S. Government and our other customers, including as a result of sequestration and extended continuing resolutions, the Federal budget deficit and Federal government shut-downs; risks of adverse regulatory action or litigation; risks associated with debt leverage; risks that our cost-cutting initiatives will not provide the anticipated benefits; risks that changes, cutbacks or delays in spending by the DoD may occur, which could cause delays or cancellations of key government contracts; risks of delays to or the cancellation of our projects as a result of protest actions submitted by our competitors; risks that changes may occur in Federal government (or other applicable) procurement laws, regulations, policies and budgets; risks of the availability of government funding for the Company's products and services due to performance, cost growth, or other factors, changes in government and customer priorities and requirements (including cost-cutting initiatives, the potential deferral of awards, terminations or reduction of expenditures to respond to the priorities of Congress and the Administration, or budgetary cuts resulting from Congressional committee recommendations or automatic sequestration under the Budget Control Act of 2011, as amended); risks that the unmanned aerial systems and unmanned ground sensor markets do not experience significant growth; risks that products we have developed or will develop will not become programs of record; risks that we cannot expand our customer base or that our products do not achieve broad acceptance which could impact our ability to achieve our anticipated level of growth; risks of increases in the Federal government initiatives related to in-sourcing; risks related to security breaches, including cyber security attacks and threats or other significant disruptions of our information systems, facilities and infrastructures; risks related to our compliance with applicable contracting and procurement laws, regulations and standards; risks related to the new DoD Cybersecurity Maturity Model Certification; risks relating to the ongoing conflict in Ukraine and the Israeli-Palestinian military conflict; risks to our business in Israel; risks related to contract performance; risks related to failure of our products or services; risks associated with our subcontractors’ or suppliers’ failure to perform their contractual obligations, including the appearance of counterfeit or corrupt parts in our products; changes in the competitive environment (including as a result of bid protests); failure to successfully integrate acquired operations and compete in the marketplace, which could reduce revenues and profit margins; risks that potential future goodwill impairments will adversely affect our operating results; risks that anticipated tax benefits will not be realized in accordance with our expectations; risks that a change in ownership of our stock could cause further limitation to the future utilization of our net operating losses; risks that we may be required to record valuation allowances on our net operating losses which could adversely impact our profitability and financial condition; risks that the current economic environment will adversely impact our business, including with respect to our ability to recruit and retain sufficient numbers of qualified personnel to execute on our programs and contracts, as well as expected contract awards and risks related to increasing interest rates and risks related to the interest rate swap contract to hedge Term SOFR associated with the Company’s Term Loan A; currently unforeseen risks associated with any public health crisis, and risks related to natural disasters or severe weather. These and other risk factors are more fully discussed in the Company’s Annual Report on Form 10-K for the period ended December 29, 2024, and in our other filings made with the Securities and Exchange Commission.
Note Regarding Use of Non-GAAP Financial Measures and Other Performance Metrics
This news release contains non-GAAP financial measures, including organic revenue growth rates, Adjusted EPS (computed using income before income taxes, excluding depreciation, amortization of intangible assets, amortization of capitalized contract and development costs, stock-based compensation expense, acquisition and restructuring related items and other, which includes, but is not limited to, legal related items, non-recoverable rates and costs, and foreign transaction gains and losses, less the estimated impact to income taxes) and Adjusted EBITDA (which excludes, among other things, acquisition and restructuring related items, stock compensation expense, foreign transaction gains and losses, and the associated margin rates). Additional non-GAAP financial measures include Free Cash Flow from Operations computed as Cash Flow from Operations less Capital Expenditures plus proceeds from sale of assets and Adjusted EBITDA related to our KUS and KGS businesses. Kratos believes this information is useful to investors because it provides a basis for measuring the Company’s available capital resources, the actual and forecasted operating performance of the Company’s business and the Company’s cash flow, excluding non-recurring items and non-cash items that would normally be included in the most directly comparable measures calculated and presented in accordance with GAAP. The Company’s management uses these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating the Company’s actual and forecasted operating performance, capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and investors should carefully evaluate the Company’s financial results calculated in accordance with GAAP and reconciliations to those financial results. In addition, non-GAAP financial measures as reported by the Company may not be comparable to similarly titled amounts reported by other companies. As appropriate, the most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the Company’s financial results prepared in accordance with GAAP are included in this news release.
Another Performance Metric the Company believes is a key performance indicator in our industry is our Book to Bill Ratio as it provides investors with a measure of the amount of bookings or contract awards as compared to the amount of revenues that have been recorded during the period and provides an indicator of how much of the Company’s backlog is being burned or utilized in a certain period. The Book to Bill Ratio is computed as the number of bookings or contract awards in the period divided by the revenues recorded for the same period. The Company believes that the rolling or last twelve months’ Book to Bill Ratio is meaningful since the timing of quarter-to-quarter bookings can vary.
| Press Contact: Claire Burghoff claire.burghoff@kratosdefense.com Investor Information: 877-934-4687 investor@kratosdefense.com |
| Kratos Defense & Security Solutions, Inc. | |||||||||||||||
| Unaudited Condensed Consolidated Statements of Operations | |||||||||||||||
| (in millions, except per share data) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 29, | June 30, | June 29, | June 30, | ||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Service revenues | $ | 134.9 | $ | 106.5 | $ | 237.3 | $ | 213.0 | |||||||
| Product sales | 216.6 | 193.6 | 416.8 | 364.3 | |||||||||||
| Total revenues | 351.5 | 300.1 | 654.1 | 577.3 | |||||||||||
| Cost of service revenues | 107.2 | 77.0 | 182.9 | 156.2 | |||||||||||
| Cost of product sales | 170.5 | 145.9 | 323.8 | 272.9 | |||||||||||
| Total costs | 277.7 | 222.9 | 506.7 | 429.1 | |||||||||||
| Gross profit - service revenues | 27.7 | 29.5 | 54.4 | 56.8 | |||||||||||
| Gross profit - product sales | 46.1 | 47.7 | 93.0 | 91.4 | |||||||||||
| Total gross profit | 73.8 | 77.2 | 147.4 | 148.2 | |||||||||||
| Selling, general and administrative expenses | 54.1 | 49.6 | 106.4 | 100.0 | |||||||||||
| Research and development expenses | 10.2 | 10.2 | 20.2 | 19.8 | |||||||||||
| Depreciation | 3.0 | 2.7 | 5.6 | 4.6 | |||||||||||
| Amortization of intangible assets | 2.8 | 2.2 | 4.9 | 4.3 | |||||||||||
| Operating income | 3.7 | 12.5 | 10.3 | 19.5 | |||||||||||
| Interest income (expense), net | (1.2 | ) | 0.1 | (2.1 | ) | (2.7 | ) | ||||||||
| Other income (expense), net | 2.1 | 0.1 | 1.8 | (0.1 | ) | ||||||||||
| Income before income taxes | 4.6 | 12.7 | 10.0 | 16.7 | |||||||||||
| Provision for income taxes | 1.7 | 4.8 | 2.6 | 7.5 | |||||||||||
| Net Income | 2.9 | 7.9 | 7.4 | 9.2 | |||||||||||
| Basic income per common share | 0.02 | $ | 0.05 | $ | 0.05 | $ | 0.06 | ||||||||
| Diluted income per common share | $ | 0.02 | $ | 0.05 | $ | 0.05 | $ | 0.06 | |||||||
| Weighted average common shares outstanding: | |||||||||||||||
| Basic | 155.7 | 151.8 | 154.9 | 146.4 | |||||||||||
| Diluted | 157.4 | 153.5 | 156.9 | 147.5 | |||||||||||
| Adjusted EBITDA (1) | $ | 28.3 | $ | 29.9 | $ | 55.0 | $ | 55.9 | |||||||
| Unaudited Reconciliation of GAAP to Non-GAAP Measures | |||||||||||||||
| Note: (1) Adjusted EBITDA is a non-GAAP measure defined as GAAP net income adjusted for net interest income (expense), provision for income taxes, depreciation and amortization expense of intangible assets, amortization of capitalized contract and development costs, stock-based compensation, acquisition and restructuring related items and other, and foreign transaction (gain) loss. | |||||||||||||||
| Adjusted EBITDA as calculated by us may be calculated differently than Adjusted EBITDA for other companies. We have provided Adjusted EBITDA because we believe it is a commonly used measure of financial performance in comparable companies and is provided to help investors evaluate companies on a consistent basis, as well as to enhance understanding of our operating results. Adjusted EBITDA should not be construed as either an alternative to net income (loss) or as an indicator of our operating performance or an alternative to cash flows as a measure of liquidity. The adjustments to calculate this non-GAAP financial measure and the basis for such adjustments are outlined below. | |||||||||||||||
| Please refer to the following table below that reconciles GAAP net income (loss) to Adjusted EBITDA. | |||||||||||||||
| The adjustments to calculate this non-GAAP financial measure, and the basis for such adjustments, are outlined below: | |||||||||||||||
| Interest income and interest expense, net. The Company receives interest income on investments and incurs interest expense on loans, capital leases and other financing arrangements, including the amortization of issue discounts and deferred financing costs. These amounts may vary from period to period due to changes in cash and debt balances. | |||||||||||||||
| Income taxes. The Company's tax expense can fluctuate materially from period to period due to tax adjustments that may not be directly related to underlying operating performance or to the current period of operations and may not necessarily reflect the impact of utilization of our NOLs. | |||||||||||||||
| Depreciation. The Company incurs depreciation expense (recorded in cost of revenues and in operating expenses) related to capital assets purchased, leased or constructed to support the ongoing operations of the business. The assets are recorded at cost or fair value and are depreciated over the estimated useful lives of individual assets. | |||||||||||||||
| Amortization of intangible assets. The Company incurs amortization of intangible expense related to acquisitions it has made. These intangible assets are valued at the time of acquisition and are amortized over the estimated useful lives. | |||||||||||||||
| Amortization of capitalized contract and development costs. The Company incurs amortization of previously capitalized software development and non-recurring engineering costs related to certain targets in its Unmanned Systems, ballistic missile target and space and satellite businesses as related units are sold or over the estimated useful life, as applicable. | |||||||||||||||
| Stock-based compensation expense. The Company incurs expense related to stock-based compensation included in its GAAP presentation of selling, general and administrative expense. Although stock-based compensation is an expense of the Company and viewed as a form of compensation, these expenses vary in amount from period to period, and are affected by market forces that are difficult to predict and are not within the control of management, such as the market price and volatility of the Company's shares, risk-free interest rates and the expected term and forfeiture rates of the awards. Management believes that exclusion of these expenses allows comparison of operating results to those of other companies that disclose non-GAAP financial measures that exclude stock-based compensation. | |||||||||||||||
| Foreign transaction (gain) loss. The Company incurs transaction gains and losses which are not hedged related to transactions with foreign customers in currencies other than the U.S. dollar. In addition, certain intercompany transactions can give rise to realized and unrealized foreign currency gains and losses. | |||||||||||||||
| Acquisition and transaction related items. The Company incurs transaction related costs, such as legal and accounting fees and other expenses, related to acquisitions and divestiture activities. Management believes these items are outside the normal operations of the Company's business and are not indicative of ongoing operating results. | |||||||||||||||
| Restructuring costs. The Company incurs restructuring costs for cost reduction actions which include employee termination costs, facility shut-down related costs and lease commitment costs for unused, excess or exited facilities. Management believes that these costs are not indicative of ongoing operating results as they are either non-recurring and/or not expected when full capacity and volumes are achieved. | |||||||||||||||
| Legal related items. The Company incurs costs related to pending legal settlements and other legal related matters. Management believes these items are outside the normal operations of the Company's business and are not indicative of ongoing operating results. | |||||||||||||||
| Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. The Company expects to continue to incur expenses similar to the Adjusted EBITDA financial adjustments described above, and investors should not infer from the Company's presentation of this non-GAAP financial measure that these costs are unusual, infrequent, or non-recurring. | |||||||||||||||
| Reconciliation of Net Income attributable to Kratos to Adjusted EBITDA is as follows: | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 29, | June 30, | June 29, | June 30, | ||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Net income | $ | 2.9 | $ | 7.9 | $ | 7.4 | $ | 9.2 | |||||||
| Interest expense, net | 1.2 | (0.1 | ) | 2.1 | 2.7 | ||||||||||
| Provision for income taxes | 1.7 | 4.8 | 2.6 | 7.5 | |||||||||||
| Depreciation (including cost of service revenues and product sales) | 9.0 | 8.2 | 17.3 | 15.4 | |||||||||||
| Stock-based compensation | 8.6 | 6.6 | 17.3 | 15.8 | |||||||||||
| Foreign transaction loss | 0.3 | - | 0.7 | 0.3 | |||||||||||
| Amortization of intangible assets | 2.8 | 2.2 | 4.9 | 4.3 | |||||||||||
| Amortization of capitalized contract and development costs | 0.9 | 0.3 | 1.8 | 0.7 | |||||||||||
| Resolution of previously recorded contingent liability | (1.1 | ) | - | (1.1 | ) | - | |||||||||
| Litigation fees and legal related items | 2.0 | - | 2.0 | - | |||||||||||
| Adjusted EBITDA | $ | 28.3 | $ | 29.9 | $ | 55.0 | $ | 55.9 | |||||||
| Kratos Defense & Security Solutions, Inc. | |||||||||||||||
| Unaudited Segment Data | |||||||||||||||
| (in millions) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 29, | June 30, | June 29, | June 30, | ||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Revenues: | |||||||||||||||
| Unmanned Systems | $ | 73.2 | $ | 85.8 | $ | 136.3 | $ | 145.2 | |||||||
| Kratos Government Solutions | 278.3 | 214.3 | 517.8 | 432.1 | |||||||||||
| Total revenues | $ | 351.5 | $ | 300.1 | $ | 654.1 | $ | 577.3 | |||||||
| Operating income (loss) | |||||||||||||||
| Unmanned Systems | $ | (0.2 | ) | $ | 3.6 | $ | (1.9 | ) | $ | 3.2 | |||||
| Kratos Government Solutions | 12.5 | 15.5 | 29.5 | 32.1 | |||||||||||
| Unallocated corporate expense, net | (8.6 | ) | (6.6 | ) | (17.3 | ) | (15.8 | ) | |||||||
| Total operating income | $ | 3.7 | $ | 12.5 | $ | 10.3 | $ | 19.5 | |||||||
| Note: Unallocated corporate expense, net includes costs for certain stock-based compensation programs (including stock-based compensation costs for the employee stock purchase plan and restricted stock units), the effects of items not considered part of management’s evaluation of segment operating performance, and acquisition and restructuring related items, corporate costs not allocated to the segments, legal related items, and other miscellaneous corporate activities. | |||||||||||||||
| Reconciliation of Segment Operating Income (Loss) to Adjusted EBITDA is as follows: | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 29, | June 30, | June 29, | June 30, | ||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Unmanned Systems | |||||||||||||||
| Operating loss | $ | (0.2 | ) | $ | 3.6 | $ | (1.9 | ) | $ | 3.2 | |||||
| Other income | - | 0.1 | 0.1 | 0.1 | |||||||||||
| Depreciation | 2.7 | 2.5 | 5.0 | 4.7 | |||||||||||
| Amortization of intangible assets | 1.0 | 1.0 | 2.0 | 2.0 | |||||||||||
| Amortization of capitalized contract and development costs | - | - | - | 0.1 | |||||||||||
| Resolution of Previously Recorded Contingent Liability | (0.3 | ) | - | (0.3 | ) | - | |||||||||
| Litigation Fees and Legal Related Items | 0.5 | - | 0.5 | - | |||||||||||
| Adjusted EBITDA | $ | 3.7 | $ | 7.2 | $ | 5.4 | $ | 10.1 | |||||||
| % of revenue | 5.1 | % | 8.4 | % | 4.0 | % | 7.0 | % | |||||||
| Kratos Government Solutions | |||||||||||||||
| Operating income | $ | 12.5 | $ | 15.5 | $ | 29.5 | $ | 32.1 | |||||||
| Other income | 2.4 | - | 2.4 | 0.1 | |||||||||||
| Depreciation | 6.3 | 5.7 | 12.3 | 10.7 | |||||||||||
| Amortization of intangible assets | 1.8 | 1.2 | 2.9 | 2.3 | |||||||||||
| Amortization of capitalized contract and development costs | 0.9 | 0.3 | 1.8 | 0.6 | |||||||||||
| Resolution of Previously Recorded Contingent Liability | (0.8 | ) | - | (0.8 | ) | - | |||||||||
| Litigation Fees and Legal Related Items | 1.5 | - | 1.5 | - | |||||||||||
| Adjusted EBITDA | $ | 24.6 | $ | 22.7 | $ | 49.6 | $ | 45.8 | |||||||
| % of revenue | 8.8 | % | 10.6 | % | 9.6 | % | 10.6 | % | |||||||
| Total Adjusted EBITDA | $ | 28.3 | $ | 29.9 | $ | 55.0 | $ | 55.9 | |||||||
| % of revenue | 8.1 | % | 10.0 | % | 8.4 | % | 9.7 | % | |||||||
| Kratos Defense & Security Solutions, Inc. | |||||||||||||||
| Unaudited Condensed Consolidated Balance Sheets | |||||||||||||||
| (in millions) | |||||||||||||||
| June 29, | December 29, | ||||||||||||||
| 2025 | 2024 | ||||||||||||||
| Assets | |||||||||||||||
| Current assets: | |||||||||||||||
| Cash and cash equivalents | $ | 783.6 | $ | 329.3 | |||||||||||
| Accounts receivable, net | 142.2 | 117.5 | |||||||||||||
| Unbilled receivables, net | 256.6 | 206.3 | |||||||||||||
| Inventoried costs, net | 177.8 | 162.1 | |||||||||||||
| Prepaid expenses | 14.5 | 18.0 | |||||||||||||
| Other current assets | 54.2 | 38.9 | |||||||||||||
| Total current assets | 1,428.9 | 872.1 | |||||||||||||
| Property, plant and equipment, net | 311.8 | 288.2 | |||||||||||||
| Operating lease right-of-use assets | 40.6 | 37.6 | |||||||||||||
| Goodwill | 598.8 | 568.9 | |||||||||||||
| Intangible assets, net | 58.9 | 53.8 | |||||||||||||
| Other assets | 146.7 | 130.3 | |||||||||||||
| Total assets | $ | 2,585.7 | $ | 1,950.9 | |||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||
| Current liabilities: | |||||||||||||||
| Accounts payable | $ | 97.6 | $ | 82.0 | |||||||||||
| Accrued expenses | 48.4 | 38.8 | |||||||||||||
| Accrued compensation | 71.7 | 71.9 | |||||||||||||
| Billings in excess of costs and earnings on uncompleted contracts | 77.3 | 76.3 | |||||||||||||
| Current portion of operating lease liabilities | 11.9 | 11.3 | |||||||||||||
| Current portion of finance lease liabilities | 2.1 | 1.9 | |||||||||||||
| Other current liabilities | 13.4 | 14.5 | |||||||||||||
| Total current liabilities | 322.4 | 296.7 | |||||||||||||
| Long-term debt | 169.8 | 174.6 | |||||||||||||
| Operating lease liabilities, net of current portion | 32.2 | 29.8 | |||||||||||||
| Finance lease liabilities, net of current portion | 63.3 | 64.4 | |||||||||||||
| Other long-term liabilities | 38.0 | 32.2 | |||||||||||||
| Total liabilities | 625.7 | 597.7 | |||||||||||||
| Commitments and contingencies | |||||||||||||||
| Stockholders’ equity: | |||||||||||||||
| Common stock | 0.2 | 0.2 | |||||||||||||
| Additional paid-in capital | 2,613.5 | 2,017.4 | |||||||||||||
| Accumulated other comprehensive income (loss) | 2.8 | (0.5 | ) | ||||||||||||
| Accumulated deficit | (656.5 | ) | (663.9 | ) | |||||||||||
| Total Kratos stockholders’ equity | 1,960.0 | 1,353.2 | |||||||||||||
| Total liabilities and stockholders’ equity | $ | 2,585.7 | $ | 1,950.9 | |||||||||||
| Kratos Defense & Security Solutions, Inc. | |||||||||||||||
| Unaudited Condensed Consolidated Statements of Cash Flows | |||||||||||||||
| (in millions) | |||||||||||||||
| Six Months Ended | |||||||||||||||
| June 29, | June 30, | ||||||||||||||
| 2025 | 2024 | ||||||||||||||
| Operating activities: | |||||||||||||||
| Net income | $ | 7.4 | $ | 9.2 | |||||||||||
| Adjustments to reconcile net income to net cash used in operating activities: | |||||||||||||||
| Depreciation and amortization | 22.2 | 19.7 | |||||||||||||
| Amortization of lease right-of-use assets | 6.0 | 6.0 | |||||||||||||
| Deferred income taxes | - | 0.1 | |||||||||||||
| Stock-based compensation | 17.3 | 15.8 | |||||||||||||
| Amortization of deferred financing costs | 0.3 | 0.3 | |||||||||||||
| Changes in assets and liabilities, net of acquisitions: | |||||||||||||||
| Accounts receivable | (23.1 | ) | (3.0 | ) | |||||||||||
| Unbilled receivables | (49.9 | ) | (6.4 | ) | |||||||||||
| Inventoried costs | (7.3 | ) | 2.1 | ||||||||||||
| Prepaid expenses and other assets | (27.3 | ) | (18.8 | ) | |||||||||||
| Operating lease liabilities | (5.7 | ) | (6.1 | ) | |||||||||||
| Accounts payable | 17.5 | (3.6 | ) | ||||||||||||
| Accrued expenses | 9.1 | - | |||||||||||||
| Accrued compensation | - | (1.5 | ) | ||||||||||||
| Billings in excess of costs and earnings on uncompleted contracts | (5.1 | ) | (21.0 | ) | |||||||||||
| Income tax receivable and payable | (0.9 | ) | 4.4 | ||||||||||||
| Other liabilities | (1.4 | ) | 0.8 | ||||||||||||
| Net cash used in operating activities | (40.9 | ) | (2.0 | ) | |||||||||||
| Investing activities: | |||||||||||||||
| Cash paid for acquisitions, net of cash acquired | - | (11.5 | ) | ||||||||||||
| Capital expenditures | (43.1 | ) | (29.3 | ) | |||||||||||
| Net cash used in investing activities | (43.1 | ) | (40.8 | ) | |||||||||||
| Financing activities: | |||||||||||||||
| Borrowing under credit facility | - | 10.0 | |||||||||||||
| Repayment under credit facility and term loan | (5.0 | ) | (47.5 | ) | |||||||||||
| Proceeds from the issuance of common stock, net of issuance costs | 555.9 | 330.7 | |||||||||||||
| Payment under finance leases | (0.9 | ) | (0.7 | ) | |||||||||||
| Payments of employee taxes withheld from share-based awards | (18.3 | ) | (17.1 | ) | |||||||||||
| Proceeds from shares issued under equity plans | 4.6 | 3.6 | |||||||||||||
| Net cash provided by financing activities | 536.3 | 279.0 | |||||||||||||
| Net cash flows | 452.3 | 236.2 | |||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 2.0 | (0.8 | ) | ||||||||||||
| Net increase in cash and cash equivalents | 454.3 | 235.4 | |||||||||||||
| Cash and cash equivalents at beginning of period | 329.3 | 72.8 | |||||||||||||
| Cash and cash equivalents at end of period | $ | 783.6 | $ | 308.2 | |||||||||||
| Kratos Defense & Security Solutions, Inc. | |||||||||||||||
| Unaudited Non-GAAP Measures | |||||||||||||||
| Computation of Adjusted Earnings Per Share | |||||||||||||||
| (in millions, except per share data) | |||||||||||||||
| Adjusted income and adjusted income per diluted common share (Adjusted EPS) are non-GAAP measures for reporting financial performance and exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. Management believes that exclusion of these items assists in providing a more complete understanding of the Company's underlying results and trends and allows for comparability with our peer company index and industry. The Company uses these measures along with the corresponding GAAP financial measures to manage the Company's business and to evaluate its performance compared to prior periods and the marketplace. The Company defines adjusted income before amortization of intangible assets, depreciation, stock-based compensation, foreign transaction gain/loss, and acquisition and restructuring related items and other. The estimated impact to income taxes includes the impact to the effective tax rate, current tax provision and deferred tax provision, and excludes the impact of discrete items, including transaction related expenses and release of valuation allowance, or benefit related to the add-backs.* | |||||||||||||||
| Adjusted EPS reflects adjusted income on a per share basis using weighted average diluted shares outstanding. | |||||||||||||||
| The following table reconciles the most directly comparable GAAP financial measures to the non-GAAP financial measures. | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 29, | June 30, | June 29, | June 30, | ||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Net income | $ | 2.9 | $ | 7.9 | $ | 7.4 | $ | 9.2 | |||||||
| Less: GAAP provision for income taxes | 1.7 | 4.8 | 2.6 | 7.5 | |||||||||||
| Income before taxes | 4.6 | 12.7 | 10.0 | 16.7 | |||||||||||
| Add: Amortization of intangible assets | 2.8 | 2.2 | 4.9 | 4.3 | |||||||||||
| Add: Amortization of capitalized contract and development costs | 0.9 | 0.3 | 1.8 | 0.7 | |||||||||||
| Add: Depreciation | 9.0 | 8.2 | 17.3 | 15.4 | |||||||||||
| Add: Stock-based compensation | 8.6 | 6.6 | 17.3 | 15.8 | |||||||||||
| Add: Foreign transaction loss | 0.3 | - | 0.7 | 0.3 | |||||||||||
| Non-GAAP Adjusted income from consolidated operations before income taxes | 26.2 | 30.0 | 52.0 | 53.2 | |||||||||||
| Income taxes on Non-GAAP measure Adjusted income* | 9.1 | 9.2 | 16.0 | 16.3 | |||||||||||
| Non-GAAP Adjusted net income | $ | 17.1 | $ | 20.8 | $ | 36.0 | $ | 36.9 | |||||||
| Diluted earnings per common share | $ | 0.02 | $ | 0.05 | $ | 0.05 | $ | 0.06 | |||||||
| Less: GAAP provision for income taxes | 0.01 | 0.03 | 0.02 | 0.05 | |||||||||||
| Add: Amortization of intangible assets | 0.02 | 0.02 | 0.03 | 0.03 | |||||||||||
| Add: Amortization of capitalized contract and development costs | 0.01 | - | 0.01 | 0.01 | |||||||||||
| Add: Depreciation | 0.06 | 0.06 | 0.11 | 0.10 | |||||||||||
| Add: Stock-based compensation | 0.05 | 0.04 | 0.11 | 0.11 | |||||||||||
| Add: Foreign transaction loss | - | - | - | - | |||||||||||
| Income taxes on Non-GAAP measure Adjusted income* | (0.06 | ) | (0.06 | ) | (0.10 | ) | (0.11 | ) | |||||||
| Adjusted income per diluted common share | $ | 0.11 | $ | 0.14 | $ | 0.23 | $ | 0.25 | |||||||
| Weighted average diluted common shares outstanding | 157.4 | 153.5 | 156.9 | 147.5 | |||||||||||
| *The impact to income taxes is calculated by recasting income before income taxes to include the add-backs involved in determining Adjusted income before income taxes and recalculating the income tax provision, including current and deferred income taxes, using the Adjusted income before income taxes. The recalculation also adjusts for any discrete tax expense, including transaction related expenses and the release of valuation allowance, or benefit related to the add-backs. | |||||||||||||||
FAQ
What were Kratos (KTOS) key financial results for Q2 2025?
How much is the new Project Poseidon contract worth for Kratos (KTOS)?
What is Kratos (KTOS) revenue guidance for full year 2025?
How did Kratos (KTOS) Government Solutions (KGS) segment perform in Q2 2025?
What is Kratos (KTOS) current bid and proposal pipeline?
How much was Kratos (KTOS) Free Cash Flow in Q2 2025?
