Kratos Defense & Security Solutions, Inc. (Nasdaq:KTOS), a
leading National Security Solutions provider, today reported its
third quarter 2021 financial results. For the third quarter of
2021, Kratos reported Revenues of $200.6 million, Operating Income
of $10.5 million, Net Loss of $2.4 million and Adjusted EBITDA of
$23.8 million. Included in Net Loss is a tax provision of $5.7
million on Income before taxes of $4.6 million, primarily
reflecting the non-deductibility of certain non-cash stock
compensation expense.
Kratos reported third quarter 2021 Net Loss of
$2.4 million, and GAAP EPS loss of $0.02, compared to Net Income of
$2.4 million and GAAP EPS income of $0.02 for the third quarter of
2020. Adjusted EPS was $0.09 for the third quarter of 2021 compared
to $0.09 for the third 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.
Third quarter 2021 Revenues of $200.6 million
decreased from third quarter 2020 Revenues of $202.0 million,
reflecting a reduction of legacy government services revenues of
$6.2 million, down from $17.4 million in the third quarter of 2020
to $11.2 million in the third quarter of 2021 and a $5.5 million
year over year decrease resulting from a previously disclosed
reduction of certain international contracts in our Training
Solutions business, offset partially by increased revenues in our
Space, Satellite and Cyber business. On a pro forma basis,
excluding these reductions, Revenue grew organically 5.8 percent in
the third quarter of 2021, as compared to the third quarter of
2020. Third quarter 2021 revenues were negatively impacted by
supply chain delays, increased lead times for delivery of necessary
components, and customer delays and travel restrictions primarily
in our Space and Satellite and C5ISR businesses, resulting in
expected revenues of approximately $8.3 million being deferred into
future periods.
Operating Income of $10.5 million in the third
quarter of 2021 decreased from $12.7 million in the third quarter
of 2020, with third quarter 2021 Operating Income including
increases in non-cash stock-based compensation expense of $1.4
million and R&D of $0.3 million over the third quarter of 2020.
Third Quarter 2021 Adjusted EBITDA of $23.8 million decreased from
$24.6 million in the third quarter of 2020, primarily reflecting
increases in SG&A costs, including increased headcount in our
Unmanned Systems business, offset partially by a more favorable mix
of revenues.
Third quarter 2021 Cash Flow Generated from
Operations was $12.6 million, and Free Cash Flow Used from
Operations was $0.3 million, after funding $12.9 million of capital
expenditures, including in our high growth Unmanned Systems, Space,
Satellite and Cyber business and Turbine Engine business areas. For
the nine months ended September 26, 2021, Cash Flow Generated from
Operations was $34.6 million, and Free Cash Flow Generated from
Operations was $1.2 million, after funding $33.4 million of capital
expenditures. Cash on hand on September 26, 2021 was $369.9
million.
For the third quarter of 2021, Kratos’ Unmanned
Systems Segment (KUS) Revenues of $61.3 million increased 14.6
percent, as compared to $53.5 million in the third quarter of 2020,
and KUS operating income decreased from $3.7 million in the third
quarter of 2020 to $2.6 million in the third quarter of 2021,
primarily due to a less favorable mix of revenues including an
increase in development programs, which typically generate lower
margins, and due to an increase in SG&A costs, including costs
related to increased headcount.
Third quarter 2021 KUS Adjusted EBITDA of $4.7
million decreased from third quarter 2020 Adjusted EBITDA of $5.6
million, primarily reflecting increases in certain development
programs, including in the tactical drone area, which typically
generate lower margins, and due to an increase in SG&A costs,
including costs related to increased headcount.
KUS’s book-to-bill
ratio for the third quarter of 2021 was 1.1 to 1.0 and 1.0 to 1.0
for the last twelve months ended September 26, 2021, with bookings
of $230.5 million for the twelve months ended September 26,
2021. Total backlog for KUS at the end of the third
quarter of 2021 was $194.5 million, up from $185.4 million at the
end of the second quarter of 2021, and up from $189.5 million at
the end of the third quarter of 2020.
For the third quarter of 2021, Kratos’
Government Solutions Segment (KGS) reported Revenues of $139.3
million, down from revenues of $148.5 million in the third quarter
of 2020, reflecting a reduction of legacy services revenues of $6.2
million and a reduction of $5.5 million from an international
training contract. These reductions were partially offset by
organic growth in our Space, Satellite and Cyber and Turbine
Technologies businesses. KGS reported operating income of $14.6
million, up from operating income of $14.1 million in the third
quarter of 2020, primarily reflecting a more favorable revenue mix
in the Company’s Space, Satellite and Cyber and Turbine
Technologies businesses.
Kratos’ Space, Satellite and Cyber business
generated Revenues of $72.0 million in the third quarter of 2021,
an organic increase of 17.5 percent over the third quarter of 2020
Revenues of $61.3 million.
Third quarter 2021 KGS Adjusted EBITDA of $19.1
million increased from third quarter 2020 Adjusted EBITDA of $19.0
million, reflecting a more favorable mix of revenues, primarily in
the Space, Satellite and Cyber and Turbine Technologies
businesses.
For the third quarter of 2021, KGS reported a
book-to-bill ratio of 0.7 to 1.0, and a book to bill ratio of 0.9
to 1 for the twelve months ended September 26, 2021. Included in
KGS is Kratos’ Space, Cyber and Training business, which reported a
book to bill ratio for the twelve months ended September 26, 2021
was 1.1 to 1. KGS’s total backlog at the end of the third quarter
of 2021 was $644.6 million, down from $680.2 million at the end of
the second quarter of 2021, and down from $683.6 million at the end
of the third quarter of 2020.
For the third quarter of 2021, Kratos reported
consolidated bookings of $174.2 million and a book-to-bill ratio of
0.9 to 1.0, with consolidated bookings of $770.9 million and a
book-to-bill ratio of 1.0 to 1.0 for the last twelve months ended
September 26, 2021. Backlog on September 26, 2021 was $839.1
million, down sequentially from $865.6 million at June 27, 2021 and
down from $873.1 million at September 27, 2020, and Kratos’ bid and
proposal pipeline was $9.1 billion at September 26, 2021. Backlog
at September 26, 2021 was comprised of funded backlog of $618.0
million and unfunded backlog of $221.1 million.
Eric DeMarco, Kratos’ President and CEO, said,
“Since our last report to you, we have received approximately $374
million in sole source, single award target drone related
contracts, of which we expect to realize substantially the entire
IDIQ amount in Kratos’ revenue over the period of performance. We
have successfully competed for and received a U.S. Air Force
Off-Board Sensing Station affordable tactical jet drone program
award, which we believe has potential future opportunity similar to
Kratos’ Valkyrie, Gremlins, Air Wolf and Thanatos programs. Our
tactical drone related programs continue to progress, including a
recent successful series of customer flights for Kratos’ Air Wolf
drone and Thanatos. And on August 16, the Air Force reiterated its
commitment to be ready for a 2023 Skyborg Vanguard Program of
Record, under which Kratos’ Valkyrie and Mako jet drones are
recognized participants.”
Mr. DeMarco, concluded, “Though we expect COVID
related, supply chain and customer issues the industry and Kratos
are experiencing to continue, there is no change in Kratos’
expected up and to the right long term organic growth profile with
increasing profit margins. Kratos is the growth leader in space,
satellite communications and unmanned drone systems as reflected in
our results today and our C5ISR, Rocket System and Next Generation
Engine businesses are also positioned to be future growth leaders.
We continue to win new strategic program awards like OBSS, we
believe the pending 2022 DoD budget is favorable for Kratos, we
have a number of programs transitioning from development to
production, with others expecting increased production and our bid
pipeline now stands at approximately $9.1 billion.”
Financial GuidanceWe are adjusting our 2021
Revenue guidance range from $810 million - $850 million to $805
million - $815 million, primarily to reflect continued and
increased supply chain and customer delays, and COVID related
quarantine issues and restrictions, including where we are unable
to enter certain countries to execute on or deliver systems for
customers. This adjustment primarily reflects over $31 million of
under contract revenue that has been deferred from our 2021 third
or fourth quarters to future periods, including in our satellite,
microwave electronics and C5ISR businesses. We expect supply chain,
customer and COVID related disruptions and delays to continue
industry wide and as related to Kratos for the foreseeable future,
which we are taking into consideration in our future forecasts. The
adjustment also reflects a recent Kratos customer re-baselined
execution plan and schedule, on a greater than $150 million C5ISR
under contract Kratos program, which shifted certain tasks into
future periods, including 2023. At the midpoint of this revenue
range of $810 million, excluding the ASC acquisition and the
international training contract, Kratos revenues are forecasted to
grow organically over 8 percent year over year from 2020 to
2021. We are adjusting our Full Year 2021 EBITDA
Guidance range of $81 - $87 million to $80 - $84 million to reflect
the impact of the revenues shifted from our third and fourth
quarters to future periods. We are improving our 2021 free
cash flow use from operations guidance of $30 - $40 million to a
use of $20 - $30 million, to reflect expected reductions in our
Days Sales Outstanding (DSOs) and increased collections, and lower
than initially forecast capital and other investments, as certain
initiatives are ahead of schedule, under budget or reduced for
other reasons.
$M |
Q421 |
FY21 |
Revenues |
$205 - $215 |
$805 - $815 |
R&D |
$8 - 10 |
$35 - $37 |
Operating
Income |
$7 - $9 |
$26 - $29 |
Depreciation |
$5 - $6 |
$21 - $22 |
Amortization |
$2 |
$6 - $7 |
Stock Based
Compensation |
$6 - $7 |
$26 |
Adjusted
EBITDA |
$20 - $24 |
$80 - $84 |
|
|
|
Operating
Cash Flow |
|
$25 - $30 |
Capital
Expenditures |
|
$45 - $55 |
Free Cash
Flow Use |
|
($20 - $30) |
The full year 2021 estimated Operating Cash Flow
includes approximately $5 - $6 million of planned investments in
our Rocket Support Systems and Engine businesses for new products,
including in the Hypersonic area, and efforts 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 approximately $25 million associated with the continued
production of Valkyrie aircraft and related equipment 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, Satellite and Cyber business secure facilities
and the Company-owned space domain awareness network, capital
investments related to the recent GBSD (Ground Based Strategic
Deterrent) award, and investments related to the Company’s Turbine
and Rocket Support Systems businesses.
There is currently no Federal Fiscal Year 2022
(October 1, 2021 – September 30, 2022) defense budget in place and
the defense industry is operating under a Federal Budget Continuing
Resolution Authorization (CRA). Under a CRA, there are no new start
program awards or new programs of record, no increases in
production on existing programs, and no transition from existing
development programs to production, among other items, all which
impact Kratos. The existing CRA expires on December 3, 2021. The
ultimate approved and authorized 2022 DoD budget and its timing is
unknown at this time, though the longer the CRA continues, the
greater the impact on the industry and the Company.
On September 9, 2021 the President issued an
Executive Order mandating that by December 8, 2021, all Federal
Contractor employees must be fully vaccinated against Covid 19,
unless excluded by certain limited exemptions. The Company is
moving to comply with the President’s Executive Order. As a result
of the President’s Executive Order, the Company (and its
subcontractors, suppliers, partners, etc.) is experiencing certain
disruptions, including but not limited to employee unrest,
retirements, resignations, etc. and other situations that we had
not previously anticipated or planned for prior to the Executive
Order, all of which we are monitoring.
Management will discuss the Company’s third
quarter 2021 financial results, as well as its fourth 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 6477329. 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 fourth 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 revenue and
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 and
expectation that the 2022 DoD budget will be favorable for the
Company, ability to successfully compete in the tactical unmanned
aerial system area and expected new customer awards, including the
magnitude and timing of funding and the future opportunity
associated with such awards, and expected contract awards related
to the Company’s Skyborg Vanguard 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 and supply chain
disruptions and delays 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 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
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 |
|
Nine Months Ended |
|
|
September 26, |
|
September 27, |
|
September 26, |
|
September 27, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
Service
revenues |
|
$ |
51.6 |
|
|
$ |
67.6 |
|
|
$ |
166.9 |
|
|
$ |
194.1 |
|
Product
sales |
|
|
149.0 |
|
|
|
134.4 |
|
|
|
433.0 |
|
|
|
347.2 |
|
Total revenues |
|
|
200.6 |
|
|
|
202.0 |
|
|
|
599.9 |
|
|
|
541.3 |
|
Cost of
service revenues |
|
|
35.5 |
|
|
|
50.5 |
|
|
|
119.3 |
|
|
|
141.9 |
|
Cost of
product sales |
|
|
104.5 |
|
|
|
94.4 |
|
|
|
317.0 |
|
|
|
250.5 |
|
Total costs |
|
|
140.0 |
|
|
|
144.9 |
|
|
|
436.3 |
|
|
|
392.4 |
|
Gross profit
- service revenues |
|
|
16.1 |
|
|
|
17.1 |
|
|
|
47.6 |
|
|
|
52.2 |
|
Gross profit
- product sales |
|
|
44.5 |
|
|
|
40.0 |
|
|
|
116.0 |
|
|
|
96.7 |
|
|
|
|
|
|
|
|
|
|
Total gross profit |
|
|
60.6 |
|
|
|
57.1 |
|
|
|
163.6 |
|
|
|
148.9 |
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses |
|
|
39.6 |
|
|
|
33.1 |
|
|
|
110.5 |
|
|
|
97.3 |
|
Acquisition
and restructuring related items |
|
|
0.3 |
|
|
|
0.4 |
|
|
|
0.8 |
|
|
|
2.0 |
|
Research and
development expenses |
|
|
8.0 |
|
|
|
7.7 |
|
|
|
26.2 |
|
|
|
19.4 |
|
Depreciation |
|
|
1.1 |
|
|
|
1.5 |
|
|
|
3.7 |
|
|
|
4.5 |
|
Amortization
of intangible assets |
|
|
1.1 |
|
|
|
1.7 |
|
|
|
3.7 |
|
|
|
5.4 |
|
Operating income |
|
|
10.5 |
|
|
|
12.7 |
|
|
|
18.7 |
|
|
|
20.3 |
|
Interest
expense, net |
|
|
(5.9 |
) |
|
|
(5.9 |
) |
|
|
(17.5 |
) |
|
|
(16.9 |
) |
Other
income, net |
|
|
- |
|
|
|
0.8 |
|
|
|
0.2 |
|
|
|
0.6 |
|
Income from continuing operations before income taxes |
|
|
4.6 |
|
|
|
7.6 |
|
|
|
1.4 |
|
|
|
4.0 |
|
Provision
(benefit) for income taxes from continuing operations |
|
|
5.7 |
|
|
|
5.0 |
|
|
|
(0.6 |
) |
|
|
1.8 |
|
Income (loss) from continuing operations |
|
|
(1.1 |
) |
|
|
2.6 |
|
|
|
2.0 |
|
|
|
2.2 |
|
Loss from
discontinued operations, net of income taxes |
|
|
(0.8 |
) |
|
|
(0.2 |
) |
|
|
(1.1 |
) |
|
|
(0.8 |
) |
Net income (loss) |
|
|
(1.9 |
) |
|
|
2.4 |
|
|
|
0.9 |
|
|
|
1.4 |
|
Less: Net income (loss) attributable
to noncontrolling interest |
|
|
0.5 |
|
- |
|
- |
|
|
|
0.3 |
|
|
|
(0.1 |
) |
Net income (loss) attributable to
Kratos |
|
$ |
(2.4 |
) |
|
$ |
2.4 |
|
|
$ |
0.6 |
|
|
$ |
1.5 |
|
|
|
|
|
|
|
|
|
|
Basic income
(loss) per common share attributable to Kratos: |
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations |
|
$ |
(0.01 |
) |
|
$ |
0.02 |
|
|
$ |
0.01 |
|
|
$ |
0.02 |
|
Loss from discontinued
operations |
|
|
(0.01 |
) |
|
|
- |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
Net income (loss) |
|
|
(0.02 |
) |
|
$ |
0.02 |
|
|
$ |
- |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
Diluted
income (loss) per common share attributable to Kratos: |
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations |
|
$ |
(0.01 |
) |
|
$ |
0.02 |
|
|
$ |
0.01 |
|
|
$ |
0.02 |
|
Loss from discontinued
operations |
|
|
(0.01 |
) |
|
|
- |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
Net income (loss) |
|
$ |
(0.02 |
) |
|
$ |
0.02 |
|
|
$ |
- |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic weighted average common shares
outstanding |
|
|
124.9 |
|
|
|
123.1 |
|
|
|
124.6 |
|
|
|
112.9 |
|
Diluted weighted average common
shares outstanding |
|
|
124.9 |
|
|
|
126.4 |
|
|
|
127.9 |
|
|
|
115.9 |
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA (1) |
|
$ |
23.8 |
|
|
$ |
24.6 |
|
|
$ |
59.5 |
|
|
$ |
56.2 |
|
|
|
|
|
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 |
|
Nine Months Ended |
|
|
September 26, |
|
September 27, |
|
September 26, |
|
September 27, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
Net income
(loss) attributable to Kratos |
|
$ |
(2.4 |
) |
|
$ |
2.4 |
|
|
$ |
0.6 |
|
|
$ |
1.5 |
|
Loss from
discontinued operations, net of income taxes |
|
|
0.8 |
|
|
|
0.2 |
|
|
|
1.1 |
|
|
|
0.8 |
|
Interest
expense, net |
|
|
5.9 |
|
|
|
5.9 |
|
|
|
17.5 |
|
|
|
16.9 |
|
Provision
(benefit) for income taxes from continuing operations |
|
|
5.7 |
|
|
|
5.0 |
|
|
|
(0.6 |
) |
|
|
1.8 |
|
Depreciation
(including cost of service revenues and product sales) |
|
|
5.0 |
|
|
|
4.5 |
|
|
|
15.7 |
|
|
|
13.1 |
|
Stock-based
compensation |
|
|
6.4 |
|
|
|
5.0 |
|
|
|
19.2 |
|
|
|
14.5 |
|
Foreign
transaction (gain) loss |
|
|
0.2 |
|
|
|
(0.7 |
) |
|
|
0.4 |
|
|
|
(0.4 |
) |
Amortization
of intangible assets |
|
|
1.1 |
|
|
|
1.7 |
|
|
|
3.7 |
|
|
|
5.4 |
|
Amortization
of capitalized contract and development costs |
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.8 |
|
|
|
0.7 |
|
Acquisition
and restructuring related items and other |
|
|
0.3 |
|
|
|
0.4 |
|
|
|
0.8 |
|
|
|
2.0 |
|
Plus: Net
income (loss) attributable to noncontrolling interest |
|
|
0.5 |
|
|
|
- |
|
|
|
0.3 |
|
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
$ |
23.8 |
|
|
$ |
24.6 |
|
|
$ |
59.5 |
|
|
$ |
56.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of acquisition and restructuring related items and
other included in Adjusted EBITDA: |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 26, |
|
September 27, |
|
September 26, |
|
September 27, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Acquisition
and transaction related items |
|
$ |
0.3 |
|
|
$ |
0.1 |
|
|
$ |
0.6 |
|
|
$ |
1.5 |
|
Restructuring costs |
|
|
- |
|
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.5 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.3 |
|
|
$ |
0.4 |
|
|
$ |
0.8 |
|
|
$ |
2.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kratos
Defense & Security Solutions, Inc. |
Unaudited
Segment Data |
(in
millions) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 26, |
|
September 27, |
|
September 26, |
|
September 27, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Revenues: |
|
|
|
|
|
|
|
|
Unmanned
Systems |
|
$ |
61.3 |
|
|
$ |
53.5 |
|
|
$ |
177.5 |
|
|
$ |
137.5 |
|
Kratos
Government Solutions |
|
|
139.3 |
|
|
|
148.5 |
|
|
|
422.4 |
|
|
|
403.8 |
|
Total
revenues |
|
$ |
200.6 |
|
|
$ |
202.0 |
|
|
$ |
599.9 |
|
|
$ |
541.3 |
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
|
|
|
|
|
|
|
Unmanned
Systems |
|
$ |
2.6 |
|
|
$ |
3.7 |
|
|
$ |
10.9 |
|
|
$ |
5.2 |
|
Kratos
Government Solutions |
|
|
14.6 |
|
|
|
14.1 |
|
|
|
27.6 |
|
|
|
31.1 |
|
Unallocated
corporate expense, net |
|
|
(6.7 |
) |
|
|
(5.1 |
) |
|
|
(19.8 |
) |
|
|
(16.0 |
) |
Total
operating income |
|
$ |
10.5 |
|
|
$ |
12.7 |
|
|
$ |
18.7 |
|
|
$ |
20.3 |
|
|
|
|
|
|
|
|
|
|
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 |
|
Nine Months Ended |
|
|
September 26, |
|
September 27, |
|
September 26, |
|
September 27, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Unmanned
Systems |
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
2.6 |
|
|
$ |
3.7 |
|
|
$ |
10.9 |
|
|
$ |
5.2 |
|
Other
income |
|
|
- |
|
|
|
- |
|
|
|
0.1 |
|
|
|
0.1 |
|
Depreciation |
|
|
1.6 |
|
|
|
1.5 |
|
|
|
5.4 |
|
|
|
4.5 |
|
Amortization
of intangible assets |
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.8 |
|
|
|
0.4 |
|
Amortization
of capitalized contract and development costs |
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.8 |
|
|
|
0.7 |
|
Adjusted
EBITDA |
|
$ |
4.7 |
|
|
$ |
5.6 |
|
|
$ |
18.0 |
|
|
$ |
10.9 |
|
% of
revenue |
|
|
7.7 |
% |
|
|
10.5 |
% |
|
|
10.1 |
% |
|
|
7.9 |
% |
|
|
|
|
|
|
|
|
|
Kratos
Government Solutions |
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
14.6 |
|
|
$ |
14.1 |
|
|
$ |
27.6 |
|
|
$ |
31.1 |
|
Other
income |
|
|
0.2 |
|
|
|
0.1 |
|
|
|
0.5 |
|
|
|
0.1 |
|
Depreciation |
|
|
3.4 |
|
|
|
3.0 |
|
|
|
10.3 |
|
|
|
8.6 |
|
Amortization
of intangible assets |
|
|
0.9 |
|
|
|
1.5 |
|
|
|
2.9 |
|
|
|
5.0 |
|
Acquisition
and restructuring related items and other |
|
|
- |
|
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.5 |
|
Adjusted
EBITDA |
|
$ |
19.1 |
|
|
$ |
19.0 |
|
|
$ |
41.5 |
|
|
$ |
45.3 |
|
% of
revenue |
|
|
13.7 |
% |
|
|
12.8 |
% |
|
|
9.8 |
% |
|
|
11.2 |
% |
|
|
|
|
|
|
|
|
|
Total
Adjusted EBITDA |
|
$ |
23.8 |
|
|
$ |
24.6 |
|
|
$ |
59.5 |
|
|
$ |
56.2 |
|
% of
revenue |
|
|
11.9 |
% |
|
|
12.2 |
% |
|
|
9.9 |
% |
|
|
10.4 |
% |
Kratos
Defense & Security Solutions, Inc. |
Unaudited
Condensed Consolidated Balance Sheets |
(in
millions) |
|
|
|
|
|
|
|
September
26, |
|
December
27, |
|
|
2021 |
|
|
|
2020 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
369.9 |
|
|
$ |
380.8 |
|
Restricted cash |
|
- |
|
|
|
0.7 |
|
Accounts receivable, net |
|
274.7 |
|
|
|
272.3 |
|
Inventoried costs |
|
90.9 |
|
|
|
81.2 |
|
Prepaid expenses |
|
11.7 |
|
|
|
12.0 |
|
Other current assets |
|
25.4 |
|
|
|
17.8 |
|
Total current assets |
|
772.6 |
|
|
|
764.8 |
|
Property, plant and equipment, net |
|
158.8 |
|
|
|
143.8 |
|
Operating lease right-of-use assets |
|
38.8 |
|
|
|
42.9 |
|
Goodwill |
|
483.7 |
|
|
|
483.9 |
|
Intangible assets, net |
|
39.3 |
|
|
|
43.0 |
|
Other assets |
|
84.6 |
|
|
|
84.4 |
|
Total assets |
$ |
1,577.8 |
|
|
$ |
1,562.8 |
|
Liabilities and Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
43.6 |
|
|
$ |
55.4 |
|
Accrued expenses |
|
28.7 |
|
|
|
34.7 |
|
Accrued compensation |
|
51.3 |
|
|
|
48.1 |
|
Accrued interest |
|
6.4 |
|
|
|
1.5 |
|
Billings in excess of costs and earnings on uncompleted
contracts |
|
57.7 |
|
|
|
34.0 |
|
Current portion of operating lease liabilities |
|
9.2 |
|
|
|
8.9 |
|
Other current liabilities |
|
10.6 |
|
|
|
11.9 |
|
Other current liabilities of discontinued operations |
|
3.1 |
|
|
|
3.1 |
|
Total current liabilities |
|
210.6 |
|
|
|
197.6 |
|
Long-term debt |
|
296.5 |
|
|
|
301.0 |
|
Operating lease liabilities, net of current portion |
|
34.0 |
|
|
|
38.6 |
|
Other long-term liabilities |
|
77.3 |
|
|
|
83.0 |
|
Other long-term liabilities of discontinued operations |
|
2.5 |
|
|
|
2.5 |
|
Total liabilities |
|
620.9 |
|
|
|
622.7 |
|
Commitments and contingencies |
|
|
|
Redeemable noncontrolling interest |
|
15.1 |
|
|
|
14.8 |
|
Stockholders’ equity: |
|
|
|
Additional paid-in capital |
|
1,572.3 |
|
|
|
1,556.3 |
|
Accumulated other comprehensive loss |
|
1.3 |
|
|
|
1.4 |
|
Accumulated deficit |
|
(631.8 |
) |
|
|
(632.4 |
) |
Total Kratos stockholders’ equity |
|
941.8 |
|
|
|
925.3 |
|
Total liabilities and stockholders’ equity |
$ |
1,577.8 |
|
|
$ |
1,562.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Kratos
Defense & Security Solutions, Inc. |
Unaudited
Condensed Consolidated Statements of Cash Flows |
(in
millions) |
|
|
|
|
|
Nine Months Ended |
|
September 26, |
|
September 27, |
|
|
2021 |
|
|
|
2020 |
|
Operating
activities: |
|
|
|
Net income |
$ |
0.9 |
|
|
$ |
1.4 |
|
Less: loss from discontinued operations |
|
(1.1 |
) |
|
|
(0.8 |
) |
Income from continuing operations |
|
2.0 |
|
|
|
2.2 |
|
Adjustments to reconcile income from continuing operations to net
cash provided by operating activities from continuing
operations: |
|
|
|
Depreciation and amortization |
|
19.4 |
|
|
|
18.5 |
|
Amortization of lease right-of-use assets |
|
6.7 |
|
|
|
7.3 |
|
Deferred income taxes |
|
(0.7 |
) |
|
|
(0.3 |
) |
Stock-based compensation |
|
19.2 |
|
|
|
14.5 |
|
Amortization of deferred financing costs |
|
0.7 |
|
|
|
0.7 |
|
Provision for (recovery of) doubtful accounts |
|
(0.2 |
) |
|
|
0.2 |
|
Changes in assets and liabilities, net of acquisitions: |
|
|
|
Accounts receivable |
|
10.1 |
|
|
|
6.4 |
|
Unbilled receivables |
|
(12.2 |
) |
|
|
(12.3 |
) |
Inventoried costs |
|
(6.8 |
) |
|
|
(4.8 |
) |
Prepaid expenses and other assets |
|
(5.1 |
) |
|
|
(15.8 |
) |
Operating lease liabilities |
|
(6.7 |
) |
|
|
(8.0 |
) |
Accounts payable |
|
(10.5 |
) |
|
|
(1.7 |
) |
Accrued compensation |
|
3.3 |
|
|
|
6.5 |
|
Accrued expenses |
|
(6.0 |
) |
|
|
(4.9 |
) |
Accrued interest |
|
4.8 |
|
|
|
4.8 |
|
Billings in excess of costs and earnings on uncompleted
contracts |
|
23.8 |
|
|
|
(2.7 |
) |
Income tax receivable and payable |
|
(2.5 |
) |
|
|
(1.4 |
) |
Other liabilities |
|
(4.7 |
) |
|
|
9.9 |
|
Net cash provided by operating activities from continuing
operations |
|
34.6 |
|
|
|
19.1 |
|
Investing activities: |
|
|
|
Cash paid for acquisitions, net of cash acquired |
|
(6.2 |
) |
|
|
(43.9 |
) |
Capital expenditures |
|
(33.4 |
) |
|
|
(23.0 |
) |
Proceeds from insurance |
|
4.5 |
|
|
|
- |
|
Proceeds from sale of assets |
|
- |
|
|
|
0.1 |
|
Net cash used in investing activities from continuing
operations |
|
(35.1 |
) |
|
|
(66.8 |
) |
Financing activities: |
|
|
|
Proceeds from the issuance of long-term debt |
|
- |
|
|
|
4.8 |
|
Payment of long-term debt |
|
(5.1 |
) |
|
|
(0.7 |
) |
Proceeds from the issuance of common stock, net of issuance
costs |
|
- |
|
|
|
240.4 |
|
Payment under finance leases |
|
(0.7 |
) |
|
|
(0.5 |
) |
Payments of employee taxes withheld from share-based awards |
|
(9.1 |
) |
|
|
(1.3 |
) |
Proceeds from shares issued under equity plans |
|
5.9 |
|
|
|
5.3 |
|
Net cash provided by (used in) financing activities from continuing
operations |
|
(9.0 |
) |
|
|
248.0 |
|
Net cash flows from continuing operations |
|
(9.5 |
) |
|
|
200.3 |
|
Net operating cash flows of discontinued
operations |
|
(1.1 |
) |
|
|
2.1 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
(1.0 |
) |
|
|
0.4 |
|
Net increase (decrease) in cash, cash equivalents and restricted
cash |
|
(11.6 |
) |
|
|
202.8 |
|
Cash, cash equivalents and restricted cash at beginning of
period |
|
381.5 |
|
|
|
172.6 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
369.9 |
|
|
$ |
375.4 |
|
|
|
|
|
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 |
|
Nine Months Ended |
|
|
September 26, |
|
September 27, |
|
September 26, |
|
September 27, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Net
income (loss) attributable to Kratos |
|
$ |
(2.4 |
) |
|
$ |
2.4 |
|
|
$ |
0.6 |
|
|
$ |
1.5 |
|
Less: GAAP
provision (benefit) for income taxes |
|
|
5.7 |
|
|
|
5.0 |
|
|
|
(0.6 |
) |
|
|
1.8 |
|
Less: Net
income (loss) attributable to noncontrolling interest |
|
|
0.5 |
|
|
|
- |
|
|
|
0.3 |
|
|
|
(0.1 |
) |
Less: Loss
from discontinued operations, net of income taxes |
|
|
0.8 |
|
|
|
0.2 |
|
|
|
1.1 |
|
|
|
0.8 |
|
Income from continuing operations before
taxes |
|
|
4.6 |
|
|
|
7.6 |
|
$ |
- |
|
1.4 |
|
|
|
4.0 |
|
Add:
Amortization of intangible assets |
|
|
1.1 |
|
|
|
1.7 |
|
|
- |
|
3.7 |
|
|
|
5.4 |
|
Add:
Amortization of capitalized contract and development costs |
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.8 |
|
|
|
0.7 |
|
Add:
Depreciation |
|
|
5.0 |
|
|
|
4.5 |
|
|
|
15.7 |
|
|
|
13.1 |
|
Add:
Stock-based compensation |
|
|
6.4 |
|
|
|
5.0 |
|
|
|
19.2 |
|
|
|
14.5 |
|
Add: Foreign
transaction (gain) loss |
|
|
0.2 |
|
|
|
(0.7 |
) |
|
|
0.4 |
|
|
|
(0.4 |
) |
Add:
Acquisition and restructuring related items and other |
|
|
0.3 |
|
|
|
0.4 |
|
|
|
0.8 |
|
|
|
2.0 |
|
Non-GAAP Adjusted income from continuing
operations before income taxes |
|
|
17.9 |
|
|
|
18.7 |
|
|
|
42.0 |
|
|
|
39.3 |
|
Income taxes
on Non-GAAP measure Adjusted income from continuing
operations* |
|
|
6.5 |
|
|
|
7.2 |
|
|
|
15.3 |
|
|
|
15.4 |
|
Non-GAAP Adjusted net
income |
|
$ |
11.4 |
|
|
$ |
11.5 |
|
|
$ |
26.7 |
|
|
$ |
23.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
$ |
(0.02 |
) |
|
$ |
0.02 |
|
|
$ |
- |
|
|
$ |
0.01 |
|
Less: GAAP
provision (benefit) for income taxes |
|
|
0.05 |
|
|
|
0.04 |
|
|
|
- |
|
|
|
0.01 |
|
Less: Net
income (loss) attributable to noncontrolling interest |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Less: Loss
from discontinued operations, net of income taxes |
|
|
0.01 |
|
|
|
- |
|
|
|
0.01 |
|
|
|
0.01 |
|
Add:
Amortization of intangible assets |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.03 |
|
|
|
0.05 |
|
Add:
Amortization of capitalized contract and development costs |
|
|
- |
|
|
|
- |
|
|
|
0.01 |
|
|
|
0.01 |
|
Add:
Depreciation |
|
|
0.04 |
|
|
|
0.04 |
|
|
|
0.12 |
|
|
|
0.11 |
|
Add:
Stock-based compensation |
|
|
0.05 |
|
|
|
0.04 |
|
|
|
0.15 |
|
|
|
0.12 |
|
Add: Foreign
transaction (gain) loss |
|
|
- |
|
|
|
(0.01 |
) |
|
|
- |
|
|
|
- |
|
Add:
Acquisition and restructuring related items and other |
|
|
- |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.02 |
|
Income taxes
on Non-GAAP measure Adjusted income from continuing
operations* |
|
|
(0.05 |
) |
|
|
(0.06 |
) |
|
|
(0.12 |
) |
|
|
(0.13 |
) |
Adjusted income from continuing operations per diluted
common share |
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
$ |
0.21 |
|
|
$ |
0.21 |
|
|
|
|
|
|
|
|
|
|
Weighted average diluted common shares
outstanding |
|
|
124.9 |
|
|
|
126.4 |
|
|
|
127.9 |
|
|
|
115.9 |
|
|
|
|
|
|
|
|
|
|
*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. |
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