Kratos Defense & Security Solutions(KTOS) - 2024 Q4 - Annual Results

Revenue Growth - Full Year 2024 Revenues reached $1.136 billion, reflecting a 9.6% growth compared to $1.037 billion in 2023, with 9.1% organic growth[1] - Unmanned Systems Revenues for 2024 were $270.5 million, representing a 27.5% increase from $212.2 million in 2023, with 25.1% organic growth[1] - KGS Revenues for 2024 totaled $865.8 million, showing a 5.0% organic growth from $824.9 million in 2023[1] - Fourth Quarter 2024 Revenues were $283.1 million, a 3.4% increase from $273.8 million in Q4 2023[1] - Total revenues for the twelve months ended December 29, 2024, reached $1,136.3 million, up from $1,037.1 million in 2023, reflecting a year-over-year growth of 9.6%[35] Cash Flow and Expenditures - Fourth Quarter 2024 Cash Flow from Operations was $45.6 million, with Free Cash Flow of $32.0 million after $13.6 million in capital expenditures[1] - Total capital expenditures for FY 2025 are forecasted to be between $125 million and $135 million[26] - The company plans to invest approximately $89 million in various facilities and programs, including $28 million for the Valkyrie second production lot[26] - Operating cash flow guidance for FY 2025 is estimated to be between $50 million and $60 million[25] - The company anticipates a free cash flow use of $75 million to $85 million for FY 2025[25] Profitability and Income - Net income attributable to Kratos for the three months ended December 29, 2024, was $3.9 million, compared to $2.4 million in the same period of 2023, indicating a 62.5% increase[35] - Adjusted EBITDA for the twelve months ended December 29, 2024, was $105.7 million, an increase from $95.4 million in 2023, representing a growth of 10.8%[49] - Operating income is expected to range from $2 million to $4 million for Q1 2025 and $34 million to $39 million for FY 2025[25] - Net income from consolidated operations increased to $16.3 million for the twelve months ended December 29, 2024, up from $2.4 million in 2023[56] - Non-GAAP Adjusted net income for the twelve months ended December 29, 2024, was $73.9 million, up from $54.2 million in 2023, reflecting a 36.4% growth[60] Book to Bill Ratio - Consolidated Book to Bill Ratio for Q4 2024 was 1.5 to 1, with bookings of $434.2 million[1] - KUS segment reported a book-to-bill ratio of 1.3 to 1 for Q4 2024, with total backlog increasing to $295.2 million[1] - KGS segment achieved a book-to-bill ratio of 1.6 to 1 for Q4 2024, with total backlog at $1.150 billion[1] - The Book to Bill Ratio is highlighted as a key performance indicator, measuring the amount of bookings compared to revenues recorded[32] Future Projections - The company forecasts 10% organic revenue growth for 2025 and 13-15% growth for 2026 based on recent program awards[2] - The company forecasts Q1 2025 revenues between $285 million and $295 million, and full year 2025 revenues between $1,260 million and $1,285 million[25] Research and Development - Research and Development (R&D) expenses are projected to be $10 million to $11 million for Q1 2025 and $42 million to $45 million for FY 2025[25] - Research and development expenses for the twelve months ended December 29, 2024, totaled $40.3 million, compared to $38.4 million in 2023, an increase of 4.9%[35] Financial Health - Cash and cash equivalents significantly increased to $329.3 million as of December 29, 2024, compared to $72.8 million at the end of 2023[54] - Total current assets rose to $872.1 million as of December 29, 2024, compared to $594.2 million in 2023, indicating strong liquidity[54] - Long-term debt decreased to $174.6 million as of December 29, 2024, down from $219.3 million in 2023, reflecting improved financial health[54] - The company’s total assets increased to $1,950.9 million as of December 29, 2024, compared to $1,632.5 million in 2023, indicating growth in the asset base[54] - The company’s accumulated deficit improved to $(663.9) million as of December 29, 2024, from $(680.2) million in 2023, showing progress in profitability[54] Segment Performance - Service revenues for the three months ended December 29, 2024, increased to $106.5 million from $100.8 million in the same period of 2023, representing a growth of 6.9%[35] - Product sales rose to $176.6 million for the three months ended December 29, 2024, compared to $173.0 million in the prior year, marking an increase of 2.1%[35] - Revenues from Unmanned Systems for the three months ended December 29, 2024, were $61.1 million, up from $55.4 million in the same period of 2023, a growth of 10.3%[51] - Kratos Government Solutions generated revenues of $222.0 million for the three months ended December 29, 2024, compared to $218.4 million in the prior year, reflecting a 1.6% increase[51] - Operating income for Kratos Government Solutions for the three months ended December 29, 2024, was $11.0 million, down from $17.5 million in the same period of 2023, a decrease of 37.1%[51] Shareholder Metrics - Diluted earnings per common share increased to $0.11 for the twelve months ended December 29, 2024, compared to a loss of $0.07 in 2023[60] - Non-GAAP Adjusted income from consolidated operations per diluted common share for the twelve months ended December 29, 2024, was $0.49, compared to $0.42 in 2023, representing a 16.7% increase[60] - The weighted average diluted common shares outstanding increased to 154.7 million for the three months ended December 29, 2024, from 134.4 million in the same period of 2023[60] Depreciation and Amortization - Amortization of intangible assets for the twelve months ended December 29, 2024, was $8.6 million, compared to $6.8 million in 2023, indicating a 26.5% increase[60] - Depreciation expenses for the twelve months ended December 29, 2024, rose to $31.7 million, up from $26.4 million in 2023, a 19.9% increase[60] - Stock-based compensation for the twelve months ended December 29, 2024, was $29.8 million, compared to $25.3 million in 2023, reflecting a 17.8% increase[60] Strategic Focus - The company emphasizes its focus on affordability and rapid development to meet mission-critical needs in defense and national security markets[27] - The company aims to achieve sustained year-over-year revenue growth and improved profitability through strategic investments and partnerships[28]