Kratos Defense reports Q2 EPS 9c, consensus 6c

Reports Q2 revenue $256.9, consensus $235.93M. Eric DeMarco, Kratos’ President and CEO, said, “For Q2, Kratos generated consolidated organic revenue growth of 10.7%, Adjusted EBITDA of $21.6 M, cash flow from operations of $23.6 M and free cash flow from operations of $20.7M. Kratos’ Unmanned Systems book to bill ratio for Q2 was 1.2 to 1.0 and Kratos’ overall book to bill ratio both for the second quarter and year to date was 1.1 to 1.0. Additionally, we have a record backlog and a bid and proposal pipeline of approximately $10 billion, including hypersonic, space, propulsion system, satellite communications and drone opportunities, with several where multiple Kratos business units are collaborating in a company-wide Kratos cross-divisional pursuit.” DeMarco continued, “Since our last quarterly report, we have successfully launched a customer’s new hypersonic system, ground tested Kratos’ new Zeus 1 solid rocket motor, including as related to Kratos’ Erinyes and Dark Fury hypersonic vehicles, received new space and satellite system program awards, including Kratos’ OpenSpace virtualized software C2 and TT&C System, reached customer agreement on a significant propulsion system program award and received a $95 million target drone system award. Kratos’ Tactical drone business also continues to progress, with multiple initiatives and customers, including bringing artificial intelligence driven combat drones to the warfighter.” DeMarco concluded, “Kratos is a product, technology, system and software company. Kratos’ priorities include winning new program awards where Kratos offerings are disruptive differentiators, operational execution, organic growth and continued year over year increased revenue, profitability and cash flow. We will make certain, targeted investments, in areas where Kratos can be disruptive and first to market, with no significant acquisitions planned. A primary operational challenge remains obtaining and retaining qualified personnel to execute existing and expected program awards, including individuals willing and able to obtain National Security Clearances, and the significantly increased cost of these individuals, all of which every Kratos business is collaborating and working closely together to address.”