Kratos Defense & Security Solutions(KTOS)2024-11-07 21:13Revenue Performance - Q3 2024 revenues of $275.9 million, a 0.5% increase from Q3 2023 revenues of $274.6 million[1][4] - Q4 2024 total revenues reached $275.9 million, with service revenues at $103.9 million and product sales at $172.0 million[28] - Full year 2024 total revenues amounted to $853.2 million, with service revenues at $316.9 million and product sales at $536.3 million[28] - Total revenues for the three months ended September 29, 2024, were $275.9 million, slightly up from $274.6 million in the same period in 2023[35] Unmanned Systems Segment - Unmanned Systems revenues of $64.2 million in Q3 2024, up from $56.7 million in Q3 2023, with 8.7% organic revenue growth[1][4][7] - Q3 2024 Unmanned Systems Segment (KUS) bookings of $32.6 million and a 12-month book-to-bill ratio of 1.1 to 1.0 with bookings of $295.1 million[9] - Unmanned Systems segment revenues for the three months ended September 29, 2024, increased to $64.2 million from $56.7 million in the same period in 2023[35] - Unmanned Systems segment Adjusted EBITDA for the three months ended September 29, 2024, was $3.6 million, representing 5.6% of revenue, down from $5.4 million (9.5% of revenue) in the same period in 2023[36] Government Solutions Segment - Q3 2024 Government Solutions Segment (KGS) bookings of $234.6 million and a 12-month book-to-bill ratio of 1.1 to 1.0 with bookings of $945.0 million[12] - Kratos Government Solutions segment revenues for the three months ended September 29, 2024, were $211.7 million, down from $217.9 million in the same period in 2023[35] - Kratos Government Solutions segment Adjusted EBITDA for the three months ended September 29, 2024, was $21.0 million, representing 9.9% of revenue, down from $22.3 million (10.2% of revenue) in the same period in 2023[36] Bookings and Backlog - Q3 2024 consolidated book-to-bill ratio of 1.0 to 1.0, with bookings of $267.2 million and a 12-month book-to-bill ratio of 1.1 to 1.0 with bookings of $1.240 billion[1][13] - Q3 2024 consolidated backlog of $1.294 billion, with funded backlog of $1.098 billion and unfunded backlog of $195.4 million[13] Financial Guidance - Q4 2024 revenue guidance of $270 million to $295 million and full-year 2024 revenue guidance of $1.125 billion to $1.150 billion[16][17] - Full-year 2024 Adjusted EBITDA guidance of $102 million to $107 million[17] - Kratos expects base case revenue growth of approximately 10% for fiscal year 2025[18] Adjusted EBITDA and Operating Income - Q4 2024 Adjusted EBITDA was $24.6 million, compared to $27.7 million in the same period last year[27] - Full year 2024 Adjusted EBITDA reached $80.5 million, up from $66.3 million in the previous year[27] - Q4 2024 operating income was $6.5 million, down from $12.2 million in Q4 2023[28] - Full year 2024 operating income stood at $26.0 million, compared to $19.4 million in 2023[28] - Adjusted EBITDA for the three months ended September 29, 2024, was $24.6 million, compared to $27.7 million for the same period in 2023[33] - Total Adjusted EBITDA for the nine months ended September 29, 2024, was $80.5 million, compared to $66.3 million for the same period in 2023[36] Net Income and Earnings Per Share - Q4 2024 net income attributable to Kratos was $3.2 million, compared to a net loss of $1.6 million in Q4 2023[28] - Full year 2024 net income attributable to Kratos was $12.4 million, compared to a net loss of $11.3 million in 2023[28] - Net income attributable to Kratos for the three months ended September 29, 2024, was $3.2 million, compared to a net loss of $1.6 million for the same period in 2023[41] - Non-GAAP Adjusted net income for the three months ended September 29, 2024, was $17.2 million, up from $15.7 million in the same period in 2023[41] - Diluted earnings per common share for the three months ended September 29, 2024, was $0.02, compared to a loss of $0.01 per share in the same period in 2023[41] - Net income attributable to Kratos for the nine months ended September 29, 2024, was $12.4 million, compared to a net loss of $11.3 million for the same period in 2023[41] - Non-GAAP Adjusted net income for the nine months ended September 29, 2024, was $54.1 million, up from $35.3 million in the same period in 2023[41] - Diluted earnings per common share for the nine months ended September 29, 2024, was $0.08, compared to a loss of $0.09 per share in the same period in 2023[41] Cash Flow and Liquidity - Cash and cash equivalents increased significantly from $72.8 million to $301.5 million, reflecting a strong liquidity position[37] - Total current assets rose from $594.2 million to $838.4 million, indicating improved short-term financial health[37] - Long-term debt decreased from $219.3 million to $177.0 million, showing a reduction in financial leverage[37] - Net cash provided by operating activities improved to $4.1 million from a negative $2.2 million, signaling better cash flow management[38] - Capital expenditures increased to $44.6 million from $33.1 million, reflecting higher investment in property, plant, and equipment[38] - Proceeds from the issuance of common stock, net of issuance costs, amounted to $330.7 million, indicating strong equity financing[38] Balance Sheet and Liabilities - Accounts receivable decreased from $329.2 million to $319.1 million, suggesting improved collection efficiency[37] - Inventoried costs increased slightly from $156.2 million to $158.9 million, indicating stable inventory levels[37] - Total liabilities decreased from $634.0 million to $569.5 million, reflecting a stronger balance sheet position[37] Non-GAAP Metrics - Adjusted income from consolidated operations excludes amortization of intangible assets, depreciation, and stock-based compensation, providing a clearer view of operational performance[40] - Non-GAAP Adjusted income from consolidated operations before income taxes for the three months ended September 29, 2024, was $24.6 million, up from $22.6 million in the same period in 2023[41] - Non-GAAP Adjusted income from consolidated operations before income taxes for the nine months ended September 29, 2024, was $77.8 million, up from $50.8 million in the same period in 2023[41] Stock-Based Compensation and Depreciation - Stock-based compensation expense for the three months ended September 29, 2024, was $7.2 million, up from $6.4 million in the same period in 2023[33] - Depreciation expense for the three months ended September 29, 2024, was $8.1 million, up from $6.7 million in the same period in 2023[33] - Amortization of intangible assets for the three months ended September 29, 2024, was $2.2 million, up from $1.5 million in the same period in 2023[33] Future Growth and Profitability - The company expects significant future organic growth, profitability, and cash flow from investments in tactical drone and satellite areas[22] - Kratos anticipates improved revenue mix and profit in certain business segments, with sustained year-over-year revenue growth[21] - Kratos is manufacturing ~165 jet drones annually, with plans to increase to ~400 annually, including Valkyrie[14] Share Count and Weighted Average Shares - Weighted average diluted common shares outstanding for the three months ended September 29, 2024, increased to 154.1 million from 129.6 million in the same period in 2023[41] - Weighted average diluted common shares outstanding for the nine months ended September 29, 2024, increased to 147.8 million from 129.3 million in the same period in 2023[41]