Kratos Defense & Security Solutions, Inc. (Nasdaq:KTOS), a
leading National Security Solutions provider, today reported its
second quarter 2021 financial results. For the second quarter of
2021, Kratos reported Revenues of $205.1 million, Operating Income
of $3.3 million, Net Income of $1.1 million and Adjusted EBITDA of
$17.6 million. Included in Kratos’ second quarter 2021
Adjusted EBITDA is approximately $0.4 million of a negative foreign
exchange impact resulting from an increased Shekel value against
the U.S. Dollar in Kratos’ Israeli-based microwave business.
Without this adverse transaction exchange impact, second quarter
2021 Adjusted EBITDA would have been $18.0 million. For the second
quarter of 2021, internally funded Research and Development expense
increased $4.2 million over the second quarter of 2020 and
increased $2.2 million sequentially over the first quarter of 2021.
Second quarter 2021 Revenues of $205.1 million
increased 20.4 percent, as compared to Revenues of $170.4 million
in the second quarter of 2020, reflecting organic growth in Kratos’
Unmanned Systems, Space, Satellite and Cyber, Rocket Support
Systems and Microwave Electronics businesses, offset partially by
certain reductions, including in our Training Solutions business,
resulting primarily from a previously disclosed reduction in scope
of certain international contracts.
Revenue grew organically 12.3 percent in the
second quarter of 2021 as compared to the second quarter of 2020,
excluding the impact of the ASC Signal, TDI and 5D acquisitions
which contributed approximately $13.8 million. Revenue grew
organically 15.9 percent in the second quarter of 2021 on a
proforma basis, excluding the impact of the acquisitions and the
reduction of the international training contracts of approximately
$4.7 million.
Operating Income of $3.3 million in the second
quarter of 2021 increased from $2.9 million in the second quarter
of 2020, with second quarter 2021 Operating Income including
increases in non-cash stock-based compensation expense of $1.8
million and R&D of $4.2 million over the second quarter of
2020. Second Quarter 2021 Adjusted EBITDA of $17.6 million
increased 15.0 percent, as compared to $15.3 million in the second
quarter of 2020, primarily reflecting the increase in
revenues.
Second quarter 2021 Cash Flow Used from
Operations was $0.7 million, and Free Cash Flow Used from
Operations was $11.6 million, after funding $10.9 million of
capital expenditures, including in our high growth Unmanned Systems
and Space and Satellite business areas. For the six months ended
June 27, 2021, Cash Flow Generated from Operations was $22.0
million, and Free Cash Flow Generated from Operations was $1.5
million, after funding $20.5 million of capital expenditures. Cash
on hand at June 27, 2021 was $369.3 million. Kratos reported second
quarter 2021 Net Income of $1.1 million, and GAAP EPS income of
$0.01, compared to Net Loss of $0.7 million and GAAP EPS loss of
$0.01 for the second quarter of 2020. Adjusted EPS was $0.06 for
the second quarter of 2021 compared to $0.05 for the second quarter
of 2020. The Company has approximately $280 million of net
operating loss carryforwards, which are expected to substantially
shield Kratos from paying future cash income taxes.
For the second quarter of 2021, Kratos’ Unmanned
Systems Segment (KUS) Revenues of $60.3 million increased 43.6
percent, as compared to $42.0 million in the second quarter of
2020, and KUS operating income increased by 310.0 percent, to $4.1
million in the second quarter of 2021 from $1.0 million in the
second quarter of 2020.
Second quarter 2021 KUS Adjusted EBITDA of $6.9
million increased 130.0 percent, as compared to second quarter 2020
Adjusted EBITDA of $3.0 million, primarily reflecting increases in
certain tactical and target drone programs and financial leverage
achieved on the KUS fixed manufacturing, overhead, general and
administrative cost structure as production increases, offset by
certain development programs, including in the tactical drone area,
which typically generate lower margins.
KUS’s book-to-bill ratio for the second quarter
of 2021 was 0.4 to 1.0 and 1.0 to 1.0 for the last twelve months
ended June 27, 2021, with bookings of $227.4 million for the twelve
months ended June 27, 2021. Total backlog for KUS at
the end of the second quarter of 2021 was $185.4 million, down from
$222.4 million at the end of the first quarter of 2021, and up from
$175.7 million at the end of the second quarter of
2020.
For the second quarter of 2021, Kratos’
Government Solutions Segment (KGS) reported Revenues of $144.8
million, an increase of 12.8 percent, as compared to revenues of
$128.4 million in the second quarter of 2020, and operating income
of $5.9 million, down from operating income of $7.7 million in the
second quarter of 2020, primarily reflecting a less favorable
revenue mix, including an increase in new development-type
programs. Revenues in the second quarter of 2021
included organic growth in our Space, Satellite and Cyber, Rocket
Support Systems and Microwave Products businesses, and $11.8
million from the ASC Signal acquisition, partially offset by
reductions of approximately $4.7 million in our Training Solutions
business, resulting primarily from the previously disclosed scope
reductions in certain international programs.
Kratos’ Space, Satellite and Cyber business
generated Revenues of $67.4 million in the second quarter of 2021,
an increase of 35.9 percent over the second quarter of 2020
Revenues of $49.6 million. Excluding ASC, our Space, Satellite and
Cyber business Revenues grew 12.1 percent organically. Second
quarter 2021 KGS Adjusted EBITDA of $10.7 million was down from
second quarter 2020 Adjusted EBITDA of $12.3 million, primarily
reflecting a less favorable mix of revenues and increased
investments in R&D expenses of approximately $4.2 million,
which were primarily incurred in the Space and Satellite
business.
For the second quarter of 2021, KGS reported a
book-to-bill ratio of 1.1 to 1.0, including a book-to-bill ratio of
1.3 to 1.0 in Kratos’ Space, Satellite, Cyber and Training
Solutions businesses. For the twelve months ended June 27, 2021,
KGS reported a book to bill ratio of 1.2 to 1.0, with bookings of
$726.0 million for the twelve months ended June 27, 2021. KGS’s
total backlog at the end of the second quarter of 2021 was $680.2
million, up from $670.5 million at the end of the first quarter of
2021, and up from $542.8 million at the end of the second quarter
of 2020.
For the second quarter of 2021, Kratos reported
consolidated bookings of $177.8 million and a book-to-bill ratio of
0.9 to 1.0, with consolidated bookings of $953.4 million and a
book-to-bill ratio of 1.2 to 1.0 for the last twelve months ended
June 27, 2021. Backlog at June 27, 2021 was $865.6 million, down
sequentially from $892.9 million at March 28, 2021 and up from
$683.4 million at June 26, 2020, and Kratos’ bid and proposal
pipeline was $9.0 billion at June 27, 2021. Backlog at
June 27, 2021 was comprised of funded backlog of $630.6 million and
unfunded backlog of $235.0 million.
Eric DeMarco, Kratos’ President and CEO, said,
“Since our last report to you, Kratos’ UTAP-22 Mako jet drone
successfully flew the Skyborg Autonomy Core System (ACS), which
included Kratos’ Mako being the closest unmanned aircraft to fly
with a manned fighter, an F-16 Falcon, in the history of aviation.
Skyborg program related systems and payloads are now being
integrated onto the first two Valkyries from our Oklahoma
manufacturing line from the initial 12 Lot currently in production,
with additional Skyborg and other program tactical drone flights,
including Gremlins and Air Wolf, scheduled for the second half of
this year. We believe that Kratos’ suite of Unmanned Systems, those
flying today and new systems that are coming from our Ghost Works,
will be transformational for our customers and our Company, as we
continue to integrate various relevant payloads and systems,
increasing our market leading position and progressing towards
fielding and initial operating capability.”
Mr. DeMarco continued, “In Kratos’ space and
satellite business, our new software-based OpenSpace and
virtualized products are experiencing significant customer
penetration and acceptance, including record bookings with
approximately 30 customers year to date. We are forecasting an
extremely strong second half of 2021 for this business, most
notably for the fourth quarter, including significant margin
expansion, with this growth trajectory expected to further
accelerate into 2022.”
Mr. DeMarco concluded, “Our strategy is to be
first to market, with the right products, at an affordable cost, at
the right time. We are focused on exceeding our customers’
expectations with new, innovative, and disruptive technology and
systems and driving significant organic growth and returns for our
stakeholders.” Financial
Guidance
We are providing our third quarter 2021 guidance
and reaffirming our previously provided full year 2021 Revenue,
Adjusted EBITDA and Cash Flow guidance as follows:
$M |
Q321 |
FY21 |
Revenues |
$195 -
$205 |
$810 -
$850 |
R&D |
$9 -
$10 |
$38 -
$40 |
Operating
Income |
$2 -
$5 |
$27 -
$33 |
Depreciation |
$5 -
$6 |
$21 -
$22 |
Amortization |
$2 -
$3 |
$6 -
$7 |
Stock Based
Compensation |
$6 -
$7 |
$25 -
$26 |
Adjusted
EBITDA |
$16 -
$20 |
$81 -
$87 |
Operating
Cash Flow |
|
$23-
$28 |
Capital
Expenditures |
|
$58 -
$63 |
Free Cash
Flow Use |
|
($30 -
$40) |
|
|
|
The third quarter and full year 2021 estimated
Revenues and operating performance reflects the expected hardware,
product and software mix based on current shipment and execution
schedules. The third quarter and full year 2021 estimated Revenues
also include the impact of the recent loss of a large international
training contract, which contributed approximately $34.5 million to
the Company’s full year 2020 Revenues. Our full year 2021 guidance
range includes our current forecasted business mix, and our most
recent assumptions of the expected impact of COVID-19, of which
Kratos experienced increased employee cases at the end of 2020,
which continued into July 2021, including in California, Florida
and Oklahoma and in certain of our drone, space and satellite,
turbine and C5ISR locations, and recent supplier delays. In
addition, estimated third quarter and full year 2021 Operating
Income and Adjusted EBITDA reflect the expected mix of
development-type contracts and expected investments, primarily in
our Space and Satellite, Unmanned, C5ISR and Engine businesses,
where we have received or are pursuing a number of large
opportunities, including Ground Based Strategic Deterrent (“GBSD”),
Over Head Persistent Infrared (OPIR) and Skyborg.
The full year 2021 estimated Operating Cash Flow
includes approximately $10 million of planned investments in our
Rocket Support Systems and Engine businesses for new products,
including in the Hypersonic area, and to increase Kratos’ market
share, as well as approximately $5 million of the required payback
of the 2020 deferred employer related payroll taxes. The 2021
capital expenditure forecast currently includes expected outlays of
$20 to $25 million associated with the continued production of
Valkyrie aircraft prior to receipt of expected customer award(s);
therefore, these aircraft are currently reflected as Company-owned
assets until receipt of the related customer award(s). Kratos will
adjust the forecasted capital expenditure outlays and the ultimate
balance sheet classification of these investments once expected
customer orders and the nature of the contract terms can be
determined. In addition, the capital expenditure forecast includes
investments in the Company’s Space and Satellite business secure
facilities and the Company-owned space domain awareness network,
capital investments related to the recent GBSD award, and
investments related to the Company’s Turbine and Rocket Support
Systems businesses.
Management will discuss the Company’s second
quarter 2021 financial results, as well as its third quarter and
full year 2021 guidance on a conference call beginning at 2:00 p.m.
Pacific (5:00 p.m. Eastern) today. Analysts and institutional
investors may participate in the conference call by dialing (866)
393-0674, and referencing the call by ID number 4751019. The
general public may access the conference call by dialing (877)
344-3935 or on the day of the event by visiting
www.kratosdefense.com for a simultaneous webcast. A replay of the
webcast will be available on the Kratos web site approximately two
hours after the conclusion of the conference call.
About Kratos Defense & Security
SolutionsKratos Defense & Security Solutions,
Inc. (NASDAQ:KTOS) develops and fields transformative,
affordable technology, platforms, and systems for United States
National Security related customers, allies, and commercial
enterprises. Kratos is changing the way breakthrough
technologies for these industries are rapidly brought to market
through proven commercial and venture capital backed approaches,
including proactive research, and streamlined development
processes. At Kratos, affordability is a technology, and
we specialize in unmanned systems, satellite communications,
cyber security/warfare, microwave electronics, missile defense,
hypersonic systems, training and combat systems and next generation
turbo jet and turbo fan engine development. For more information go
to www.kratosdefense.com.
Notice
Regarding
Forward-Looking
StatementsThis
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 2021 revenue,
R&D, operating income, depreciation, amortization, stock based
compensation expense, and Adjusted EBITDA, and full year 2021
operating cash flow, capital expenditures and other investments,
and free cash flow, the Company’s future growth trajectory and
ability to achieve improved revenue mix and profit in certain of
its business segments and the expected timing of such profit, the
Company’s expectation of ramp on projects and that investments in
its business will result in an increase in the Company’s market
share and total addressable market and position the Company for
significant future organic growth, profitability, cash flow and
shareholder value, the Company’s bid and proposal pipeline, demand
for its products and services, including the Company’s alignment
with today’s National Security requirements, ability to
successfully compete in the tactical unmanned aerial system area
and expected new customer awards, including the magnitude and
timing of funding and expected contract awards related to the
Company’s Valkyrie program and other new tactical unmanned
programs, performance of key contracts and programs, including the
timing of production and demonstration related to certain of the
Company’s contracts and product offerings, the impact of the
Company’s restructuring efforts and cost reduction measures,
including its ability to improve profitability and cash flow in
certain business units as a result of these actions, benefits to be
realized from the Company’s net operating loss carry forwards, the
availability and timing of government funding for the Company’s
offerings, including the strength of the future funding
environment, the short-term delays that may occur as a result of
Continuing Resolutions or delays in DoD budget approvals, timing of
LRIP and full rate production related to the Company’s unmanned
aerial target system offerings, as well as the level of recurring
revenues expected to be generated by these programs once they
achieve full rate production, market and industry developments, and
the current estimated impact of COVID-19 on 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 and cost savings and cash flow
improvements expected as a result of the refinancing of our Senior
Notes; risks that our cost-cutting initiatives will not provide the
anticipated benefits; risks that changes, cutbacks or delays in
spending by the U.S. 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
UAS and UGS markets do not experience significant growth; 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 (CMMC); risks relating 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
competition 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; currently
unforeseen risks associated with COVID-19 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 27, 2020, 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 Adjusted earnings per share (computed using
income from continuing operations before income taxes, excluding
income (loss) from discontinued operations, excluding income (loss)
attributable to non-controlling interest, 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 and foreign
transaction gains and losses, less the estimated impact to income
taxes) and including Adjusted EBITDA (which includes net income
(loss) attributable to noncontrolling interest and excludes, among
other things, losses and gains from discontinued operations,
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 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
statements. 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:Yolanda White858-812-7302
Direct
Investor
Information:877-934-4687investor@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 27, |
|
June 28, |
|
June 27, |
|
June 28, |
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenues |
|
$ |
58.0 |
|
|
$ |
62.9 |
|
|
$ |
115.3 |
|
|
$ |
126.5 |
|
|
Product
sales |
|
|
147.1 |
|
|
|
107.5 |
|
|
|
284.0 |
|
|
|
212.8 |
|
|
Total revenues |
|
|
205.1 |
|
|
|
170.4 |
|
|
|
399.3 |
|
|
|
339.3 |
|
|
Cost of
service revenues |
|
|
41.3 |
|
|
|
46.2 |
|
|
|
83.8 |
|
|
|
91.4 |
|
|
Cost of
product sales |
|
|
111.8 |
|
|
|
78.2 |
|
|
|
212.5 |
|
|
|
156.1 |
|
|
Total costs |
|
|
153.1 |
|
|
|
124.4 |
|
|
|
296.3 |
|
|
|
247.5 |
|
|
Gross profit
- service revenues |
|
|
16.7 |
|
|
|
16.7 |
|
|
|
31.5 |
|
|
|
35.1 |
|
|
Gross profit
- product sales |
|
|
35.3 |
|
|
|
29.3 |
|
|
|
71.5 |
|
|
|
56.7 |
|
|
|
|
|
|
|
|
|
|
|
|
Total gross profit |
|
|
52.0 |
|
|
|
46.0 |
|
|
|
103.0 |
|
|
|
91.8 |
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses |
|
|
35.6 |
|
|
|
32.7 |
|
|
|
70.9 |
|
|
|
64.2 |
|
|
Acquisition
and restructuring related items |
|
|
0.3 |
|
|
|
1.1 |
|
|
|
0.5 |
|
|
|
1.6 |
|
|
Research and
development expenses |
|
|
10.2 |
|
|
|
6.0 |
|
|
|
18.2 |
|
|
|
11.7 |
|
|
Depreciation |
|
|
1.4 |
|
|
|
1.5 |
|
|
|
2.6 |
|
|
|
3.0 |
|
|
Amortization
of intangible assets |
|
|
1.2 |
|
|
|
1.8 |
|
|
|
2.6 |
|
|
|
3.7 |
|
|
Operating income |
|
|
3.3 |
|
|
|
2.9 |
|
|
|
8.2 |
|
|
|
7.6 |
|
|
Interest
expense, net |
|
|
(5.7 |
) |
|
|
(5.6 |
) |
|
|
(11.6 |
) |
|
|
(11.0 |
) |
|
Other income
(expense), net |
|
|
- |
|
|
|
0.3 |
|
|
|
0.2 |
|
|
|
(0.2 |
) |
|
Loss from continuing operations before income taxes |
|
|
(2.4 |
) |
|
|
(2.4 |
) |
|
|
(3.2 |
) |
|
|
(3.6 |
) |
|
Benefit for
income taxes from continuing operations |
|
|
(3.6 |
) |
|
|
(1.8 |
) |
|
|
(6.3 |
) |
|
|
(3.2 |
) |
|
Income (loss) from continuing operations |
|
|
1.2 |
|
|
|
(0.6 |
) |
|
|
3.1 |
|
|
|
(0.4 |
) |
|
Loss from
discontinued operations, net of income taxes |
|
|
(0.3 |
) |
|
|
(0.2 |
) |
|
|
(0.3 |
) |
|
|
(0.6 |
) |
|
Net income (loss) |
|
|
0.9 |
|
|
|
(0.8 |
) |
|
|
2.8 |
|
|
|
(1.0 |
) |
|
Less: Net loss attributable to
noncontrolling interest |
|
|
(0.2 |
) |
|
|
(0.1 |
) |
|
|
(0.2 |
) |
|
|
(0.1 |
) |
|
Net income (loss) attributable to
Kratos |
|
$ |
1.1 |
|
|
$ |
(0.7 |
) |
|
$ |
3.0 |
|
|
$ |
(0.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
Basic income
(loss) per common share attributable to Kratos: |
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations |
|
$ |
0.01 |
|
|
$ |
(0.01 |
) |
|
$ |
0.02 |
|
|
$ |
- |
|
|
Loss from discontinued
operations |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(0.01 |
) |
|
Net income (loss) |
|
|
0.01 |
|
|
$ |
(0.01 |
) |
|
$ |
0.02 |
|
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
Diluted
income (loss) per common share attributable to Kratos: |
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations |
|
$ |
0.01 |
|
|
$ |
(0.01 |
) |
|
$ |
0.02 |
|
|
$ |
- |
|
|
Loss from discontinued
operations |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(0.01 |
) |
|
Net income (loss) |
|
$ |
0.01 |
|
|
$ |
(0.01 |
) |
|
$ |
0.02 |
|
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic weighted average common shares
outstanding |
|
|
124.7 |
|
|
|
108.3 |
|
|
|
124.4 |
|
|
|
107.8 |
|
|
Diluted weighted average common
shares outstanding |
|
|
127.7 |
|
|
|
108.3 |
|
|
|
127.8 |
|
|
|
107.8 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA (1) |
|
$ |
17.6 |
|
|
$ |
15.3 |
|
|
$ |
35.7 |
|
|
$ |
31.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Reconciliation of GAAP to Non-GAAP
Measures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: (1) Adjusted
EBITDA is a non-GAAP measure defined as GAAP net income (loss)
attributable to Kratos adjusted for net income (loss) |
|
|
|
attributable to
noncontrolling interest, income (loss) from discontinued
operations, net interest 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 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 and
ballistic missile target businesses as these units are sold. |
|
|
|
|
|
|
|
|
|
|
|
|
|
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
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 remaining lease commitment costs for 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 27, |
|
June 28, |
|
June 27, |
|
June 28, |
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) attributable to Kratos |
|
$ |
1.1 |
|
|
$ |
(0.7 |
) |
|
$ |
3.0 |
|
|
$ |
(0.9 |
) |
|
Loss from
discontinued operations, net of income taxes |
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.3 |
|
|
|
0.6 |
|
|
Interest
expense, net |
|
|
5.7 |
|
|
|
5.6 |
|
|
|
11.6 |
|
|
|
11.0 |
|
|
Benefit for
income taxes from continuing operations |
|
|
(3.6 |
) |
|
|
(1.8 |
) |
|
|
(6.3 |
) |
|
|
(3.2 |
) |
|
Depreciation
(including cost of service revenues and product sales) |
|
|
5.8 |
|
|
|
4.2 |
|
|
|
10.7 |
|
|
|
8.6 |
|
|
Stock-based
compensation |
|
|
6.6 |
|
|
|
4.8 |
|
|
|
12.8 |
|
|
|
9.5 |
|
|
Foreign
transaction (gain) loss |
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
0.2 |
|
|
|
0.3 |
|
|
Amortization
of intangible assets |
|
|
1.2 |
|
|
|
1.8 |
|
|
|
2.6 |
|
|
|
3.7 |
|
|
Amortization
of capitalized contract and development costs |
|
|
0.3 |
|
|
|
0.3 |
|
|
|
0.5 |
|
|
|
0.5 |
|
|
Acquisition
and restructuring related items and other |
|
|
0.3 |
|
|
|
1.1 |
|
|
|
0.5 |
|
|
|
1.6 |
|
|
Plus: Net
loss attributable to noncontrolling interest |
|
|
(0.2 |
) |
|
|
(0.1 |
) |
|
|
(0.2 |
) |
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
$ |
17.6 |
|
|
$ |
15.3 |
|
|
$ |
35.7 |
|
|
$ |
31.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of acquisition and restructuring related items and
other included in Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 27, |
|
June 28, |
|
June 27, |
|
June 28, |
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
Acquisition
and transaction related items |
|
$ |
0.1 |
|
|
$ |
1.0 |
|
|
$ |
0.3 |
|
|
$ |
1.4 |
|
|
Restructuring costs |
|
|
0.2 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.3 |
|
|
$ |
1.1 |
|
|
$ |
0.5 |
|
|
$ |
1.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kratos
Defense & Security Solutions, Inc. |
|
Unaudited
Segment Data |
|
(in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 27, |
|
June 28, |
|
June 27, |
|
June 28, |
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
Unmanned
Systems |
|
$ |
60.3 |
|
|
$ |
42.0 |
|
|
$ |
116.2 |
|
|
$ |
84.0 |
|
|
Kratos
Government Solutions |
|
|
144.8 |
|
|
|
128.4 |
|
|
|
283.1 |
|
|
|
255.3 |
|
|
Total
revenues |
|
$ |
205.1 |
|
|
$ |
170.4 |
|
|
$ |
399.3 |
|
|
$ |
339.3 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
|
|
|
|
|
|
|
|
Unmanned
Systems |
|
$ |
4.1 |
|
|
$ |
1.0 |
|
|
$ |
8.3 |
|
|
$ |
1.5 |
|
|
Kratos
Government Solutions |
|
|
5.9 |
|
|
|
7.7 |
|
|
|
13.0 |
|
|
|
17.0 |
|
|
Unallocated
corporate expense, net |
|
|
(6.7 |
) |
|
|
(5.8 |
) |
|
|
(13.1 |
) |
|
|
(10.9 |
) |
|
Total
operating income |
|
$ |
3.3 |
|
|
$ |
2.9 |
|
|
$ |
8.2 |
|
|
$ |
7.6 |
|
|
|
|
|
|
|
|
|
|
|
|
Note: Unallocated
corporate expense, net includes costs for certain stock-based
compensation programs (including stock-based compensation costs for
stock options, 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 to Adjusted EBITDA is as
follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 27, |
|
June 28, |
|
June 27, |
|
June 28, |
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
Unmanned
Systems |
|
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
4.1 |
|
|
$ |
1.0 |
|
|
$ |
8.3 |
|
|
$ |
1.5 |
|
|
Other
income |
|
|
- |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
Depreciation |
|
|
2.2 |
|
|
|
1.4 |
|
|
|
3.8 |
|
|
|
3.0 |
|
|
Amortization
of intangible assets |
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.6 |
|
|
|
0.2 |
|
|
Amortization
of capitalized contract and development costs |
|
|
0.3 |
|
|
|
0.3 |
|
|
|
0.5 |
|
|
|
0.5 |
|
|
Acquisition
and restructuring related items and other |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Adjusted
EBITDA |
|
$ |
6.9 |
|
|
$ |
3.0 |
|
|
$ |
13.3 |
|
|
$ |
5.3 |
|
|
% of
revenue |
|
|
11.4 |
% |
|
|
7.1 |
% |
|
|
11.4 |
% |
|
|
6.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Kratos
Government Solutions |
|
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
5.9 |
|
|
$ |
7.7 |
|
|
$ |
13.0 |
|
|
$ |
17.0 |
|
|
Other
income |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.3 |
|
|
|
- |
|
|
Depreciation |
|
|
3.6 |
|
|
|
2.8 |
|
|
|
6.9 |
|
|
|
5.6 |
|
|
Amortization
of intangible assets |
|
|
0.9 |
|
|
|
1.6 |
|
|
|
2.0 |
|
|
|
3.5 |
|
|
Amortization
of capitalized contract and development costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Acquisition
and restructuring related items and other |
|
|
0.2 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
Adjusted
EBITDA |
|
$ |
10.7 |
|
|
$ |
12.3 |
|
|
$ |
22.4 |
|
|
$ |
26.3 |
|
|
% of
revenue |
|
|
7.4 |
% |
|
|
9.6 |
% |
|
|
7.9 |
% |
|
|
10.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Total
Adjusted EBITDA |
|
$ |
17.6 |
|
|
$ |
15.3 |
|
|
$ |
35.7 |
|
|
$ |
31.6 |
|
|
% of
revenue |
|
|
8.6 |
% |
|
|
9.0 |
% |
|
|
8.9 |
% |
|
|
9.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kratos
Defense & Security Solutions, Inc. |
|
Unaudited
Condensed Consolidated Balance Sheets |
|
(in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
27, |
|
December
27, |
|
|
|
|
|
|
|
|
2021 |
|
|
|
2020 |
|
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
$ |
369.3 |
|
|
$ |
380.8 |
|
|
Restricted cash |
|
|
|
|
|
|
- |
|
|
|
0.7 |
|
|
Accounts receivable, net |
|
|
|
|
|
|
265.0 |
|
|
|
272.3 |
|
|
Inventoried costs |
|
|
|
|
|
|
90.7 |
|
|
|
81.2 |
|
|
Prepaid expenses |
|
|
|
|
|
|
13.4 |
|
|
|
12.0 |
|
|
Other current assets |
|
|
|
|
|
|
30.3 |
|
|
|
17.8 |
|
|
Total current assets |
|
|
|
|
|
|
768.7 |
|
|
|
764.8 |
|
|
Property, plant and equipment, net |
|
|
|
|
|
|
145.5 |
|
|
|
143.8 |
|
|
Operating lease right-of-use assets |
|
|
|
|
|
|
40.1 |
|
|
|
42.9 |
|
|
Goodwill |
|
|
|
|
|
|
483.7 |
|
|
|
483.9 |
|
|
Intangible assets, net |
|
|
|
|
|
|
40.4 |
|
|
|
43.0 |
|
|
Other assets |
|
|
|
|
|
|
83.9 |
|
|
|
84.4 |
|
|
Total assets |
|
|
|
|
|
$ |
1,562.3 |
|
|
$ |
1,562.8 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
|
|
|
$ |
59.9 |
|
|
$ |
55.4 |
|
|
Accrued expenses |
|
|
|
|
|
|
27.2 |
|
|
|
34.7 |
|
|
Accrued compensation |
|
|
|
|
|
|
46.2 |
|
|
|
48.1 |
|
|
Accrued interest |
|
|
|
|
|
|
1.5 |
|
|
|
1.5 |
|
|
Billings in excess of costs and earnings on uncompleted
contracts |
|
|
|
|
|
|
43.5 |
|
|
|
34.0 |
|
|
Current portion of operating lease liabilities |
|
|
|
|
|
|
9.3 |
|
|
|
8.9 |
|
|
Other current liabilities |
|
|
|
|
|
|
11.8 |
|
|
|
11.9 |
|
|
Other current liabilities of discontinued operations |
|
|
|
|
|
|
2.7 |
|
|
|
3.1 |
|
|
Total current liabilities |
|
|
|
|
|
|
202.1 |
|
|
|
197.6 |
|
|
Long-term debt |
|
|
|
|
|
|
300.3 |
|
|
|
301.0 |
|
|
Operating lease liabilities, net of current portion |
|
|
|
|
|
|
35.3 |
|
|
|
38.6 |
|
|
Other long-term liabilities |
|
|
|
|
|
|
71.6 |
|
|
|
83.0 |
|
|
Other long-term liabilities of discontinued operations |
|
|
|
|
|
|
2.5 |
|
|
|
2.5 |
|
|
Total liabilities |
|
|
|
|
|
|
611.8 |
|
|
|
622.7 |
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest |
|
|
|
|
|
|
14.6 |
|
|
|
14.8 |
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
|
|
|
|
|
1,563.1 |
|
|
|
1,556.3 |
|
|
Accumulated other comprehensive loss |
|
|
|
|
|
|
2.2 |
|
|
|
1.4 |
|
|
Accumulated deficit |
|
|
|
|
|
|
(629.4 |
) |
|
|
(632.4 |
) |
|
Total Kratos stockholders’ equity |
|
|
|
|
|
|
935.9 |
|
|
|
925.3 |
|
|
Total liabilities and stockholders’ equity |
|
|
|
|
|
$ |
1,562.3 |
|
|
$ |
1,562.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kratos
Defense & Security Solutions, Inc. |
|
Unaudited
Condensed Consolidated Statements of Cash Flows |
|
(in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
June 27, |
|
June 28, |
|
|
|
|
|
|
|
|
2021 |
|
|
|
2020 |
|
|
Operating
activities: |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
|
|
|
$ |
2.8 |
|
|
$ |
(1.0 |
) |
|
Less: loss from discontinued operations |
|
|
|
|
|
|
(0.3 |
) |
|
|
(0.6 |
) |
|
Income (loss) from continuing operations |
|
|
|
|
|
|
3.1 |
|
|
|
(0.4 |
) |
|
Adjustments to reconcile income (loss) from continuing operations
to net cash provided by operating activities from continuing
operations: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
13.3 |
|
|
|
12.3 |
|
|
Amortization of lease right-of-use assets |
|
|
|
|
|
|
4.5 |
|
|
|
5.3 |
|
|
Deferred income taxes |
|
|
|
|
|
|
(0.9 |
) |
|
|
(1.1 |
) |
|
Stock-based compensation |
|
|
|
|
|
|
12.8 |
|
|
|
9.5 |
|
|
Amortization of deferred financing costs |
|
|
|
|
|
|
0.5 |
|
|
|
0.5 |
|
|
Provision for (recovery of) doubtful accounts |
|
|
|
|
|
|
(0.2 |
) |
|
|
0.2 |
|
|
Changes in assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
|
|
|
|
15.5 |
|
|
|
24.7 |
|
|
Unbilled receivables |
|
|
|
|
|
|
(7.9 |
) |
|
|
(6.8 |
) |
|
Inventoried costs |
|
|
|
|
|
|
(6.8 |
) |
|
|
(4.5 |
) |
|
Prepaid expenses and other assets |
|
|
|
|
|
|
(2.2 |
) |
|
|
(10.8 |
) |
|
Operating lease liabilities |
|
|
|
|
|
|
(4.5 |
) |
|
|
(6.0 |
) |
|
Accounts payable |
|
|
|
|
|
|
5.8 |
|
|
|
(9.1 |
) |
|
Accrued compensation |
|
|
|
|
|
|
(1.8 |
) |
|
|
1.4 |
|
|
Accrued expenses |
|
|
|
|
|
|
(7.5 |
) |
|
|
(4.2 |
) |
|
Accrued interest |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
Billings in excess of costs and earnings on uncompleted
contracts |
|
|
|
|
|
|
9.6 |
|
|
|
(0.5 |
) |
|
Income tax receivable and payable |
|
|
|
|
|
|
(6.1 |
) |
|
|
(3.0 |
) |
|
Other liabilities |
|
|
|
|
|
|
(5.2 |
) |
|
|
3.3 |
|
|
Net cash provided by operating activities from continuing
operations |
|
|
|
|
|
|
22.0 |
|
|
|
10.8 |
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
Cash paid for acquisitions, net of cash acquired |
|
|
|
|
|
|
(6.2 |
) |
|
|
(15.5 |
) |
|
Capital expenditures |
|
|
|
|
|
|
(20.5 |
) |
|
|
(14.1 |
) |
|
Proceeds from sale of assets |
|
|
|
|
|
|
- |
|
|
|
0.1 |
|
|
Net cash used in investing activities from continuing
operations |
|
|
|
|
|
|
(26.7 |
) |
|
|
(29.5 |
) |
|
Financing activities: |
|
|
|
|
|
|
|
|
|
Payment of long-term debt |
|
|
|
|
|
|
- |
|
|
|
(0.1 |
) |
|
Proceeds from the issuance of common stock, net of issuance
costs |
|
|
|
|
|
|
- |
|
|
|
240.5 |
|
|
Payment under finance leases |
|
|
|
|
|
|
(0.4 |
) |
|
|
(0.3 |
) |
|
Payments of employee taxes withheld from share-based awards |
|
|
|
|
|
|
(8.5 |
) |
|
|
- |
|
|
Proceeds from shares issued under equity plans |
|
|
|
|
|
|
2.5 |
|
|
|
1.4 |
|
|
Net cash provided by (used in) financing activities from continuing
operations |
|
|
|
|
|
|
(6.4 |
) |
|
|
241.5 |
|
|
Net cash flows from continuing operations |
|
|
|
|
|
|
(11.1 |
) |
|
|
222.8 |
|
|
Net operating cash flows of discontinued
operations |
|
|
|
|
|
|
(0.8 |
) |
|
|
1.7 |
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
|
|
|
|
(0.3 |
) |
|
|
0.1 |
|
|
Net increase (decrease) in cash, cash equivalents and restricted
cash |
|
|
|
|
|
|
(12.2 |
) |
|
|
224.6 |
|
|
Cash, cash equivalents and restricted cash at beginning of
period |
|
|
|
|
|
|
381.5 |
|
|
|
172.6 |
|
|
Cash, cash equivalents and restricted cash at end of period |
|
|
|
|
|
$ |
369.3 |
|
|
$ |
397.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kratos
Defense & Security Solutions, Inc. |
|
Unaudited
Non-GAAP Measures |
|
Computation
of Adjusted Earnings Per Share |
|
(in
millions, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income from
continuing operations and adjusted income from continuing
operations 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 continuing operations
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 from continuing
operations 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 27, |
|
June 28, |
|
June 27, |
|
June 28, |
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
Net
income (loss) attributable to Kratos |
|
$ |
1.1 |
|
|
$ |
(0.7 |
) |
|
$ |
3.0 |
|
|
$ |
(0.9 |
) |
|
Less: GAAP
benefit for income taxes |
|
|
(3.6 |
) |
|
|
(1.8 |
) |
|
|
(6.3 |
) |
|
|
(3.2 |
) |
|
Less: Net
loss attributable to noncontrolling interest |
|
|
(0.2 |
) |
|
|
(0.1 |
) |
|
|
(0.2 |
) |
|
|
(0.1 |
) |
|
Less: Loss
from discontinued operations, net of income taxes |
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.3 |
|
|
|
0.6 |
|
|
Loss from continuing operations before taxes |
|
|
(2.4 |
) |
|
|
(2.4 |
) |
|
|
|
(3.2 |
) |
|
|
(3.6 |
) |
|
Add:
Amortization of intangible assets |
|
|
1.2 |
|
|
|
1.8 |
|
|
|
|
2.6 |
|
|
|
3.7 |
|
|
Add:
Amortization of capitalized contract and development costs |
|
|
0.3 |
|
|
|
0.3 |
|
|
|
0.5 |
|
|
|
0.5 |
|
|
Add:
Depreciation |
|
|
5.8 |
|
|
|
4.2 |
|
|
|
10.7 |
|
|
|
8.6 |
|
|
Add:
Stock-based compensation |
|
|
6.6 |
|
|
|
4.8 |
|
|
|
12.8 |
|
|
|
9.5 |
|
|
Add: Foreign
transaction (gain) loss |
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
0.2 |
|
|
|
0.3 |
|
|
Add:
Acquisition and restructuring related items and other |
|
|
0.3 |
|
|
|
1.1 |
|
|
|
0.5 |
|
|
|
1.6 |
|
|
Non-GAAP Adjusted income from continuing
operations before income taxes |
|
|
11.9 |
|
|
|
9.7 |
|
|
|
24.1 |
|
|
|
20.6 |
|
|
Income taxes
on Non-GAAP measure Adjusted income from continuing
operations* |
|
|
4.3 |
|
|
|
4.0 |
|
|
|
8.8 |
|
|
|
8.3 |
|
|
Non-GAAP Adjusted net
income |
|
$ |
7.6 |
|
|
$ |
5.7 |
|
|
$ |
15.3 |
|
|
$ |
12.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
$ |
0.01 |
|
|
$ |
(0.01 |
) |
|
$ |
0.02 |
|
|
$ |
(0.01 |
) |
|
Less: GAAP
benefit for income taxes |
|
|
(0.03 |
) |
|
|
(0.02 |
) |
|
|
(0.05 |
) |
|
|
(0.03 |
) |
|
Less: Net
loss attributable to noncontrolling interest |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Less: Loss
from discontinued operations, net of income taxes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.01 |
|
|
Add:
Amortization of intangible assets |
|
|
0.01 |
|
|
|
0.02 |
|
|
|
0.02 |
|
|
|
0.03 |
|
|
Add:
Amortization of capitalized contract and development costs |
|
|
- |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
Add:
Depreciation |
|
|
0.05 |
|
|
|
0.04 |
|
|
|
0.08 |
|
|
|
0.08 |
|
|
Add:
Stock-based compensation |
|
|
0.05 |
|
|
|
0.04 |
|
|
|
0.10 |
|
|
|
0.09 |
|
|
Add: Foreign
transaction (gain) loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Add:
Acquisition and restructuring related items and other |
|
|
- |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
Income taxes
on Non-GAAP measure Adjusted income from continuing
operations* |
|
|
(0.03 |
) |
|
|
(0.04 |
) |
|
|
(0.07 |
) |
|
|
(0.08 |
) |
|
Adjusted income from continuing operations per diluted
common share |
|
$ |
0.06 |
|
|
$ |
0.05 |
|
|
$ |
0.12 |
|
|
$ |
0.11 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted common shares
outstanding |
|
|
127.7 |
|
|
|
108.3 |
|
|
|
127.8 |
|
|
|
107.8 |
|
|
|
|
|
|
|
|
|
|
|
|
*The impact to income
taxes is calculated by recasting income before income taxes to
include the add-backs involved in determining Adjusted income from
continuing |
operations before
income taxes and recalculating the income tax provision (benefit),
including current and deferred income taxes, using the Adjusted
income from continuing |
operations 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-end- |
|
Kratos Defense and Secur... (NASDAQ:KTOS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Kratos Defense and Secur... (NASDAQ:KTOS)
Historical Stock Chart
From Jul 2023 to Jul 2024