SAN DIEGO – Kratos Defense & Security Solutions Inc. (Nasdaq: KTOS) reported net income of $7.9 million during the second quarter of 2024, turning in earnings of a nickel per share on total revenues of $300.1 million. The business, which is raising its profile as a jet engine builder, reported its earnings on Aug. 7.
Revenues increased 16.8% over the $256.9 million that Kratos brought in during the same quarter of 2023. At the time, the business reported a net loss of 2 cents per share or $2.7 million. Nearly all the growth was organic.
Kratos Defense stock touched a 52-week high of $23.18 on Aug. 26, pulling back to close at $22.52 on Wednesday (Aug. 28).
“Kratos’ position as a leading defense technology company is reflected in our second quarter and six month year-to-date organic growth rates of 16.7% and 18.1%, respectively,” CEO Eric DeMarco said in a statement. “We are growing the business, while also increasing our profitability … .”
Product sales accounted for the lion’s share of revenue during the recently ended quarter.
They were $193.6 million while service revenues came to $106.5 million. Gross profit on product sales was $47.7 million while gross profit on service revenues was $29.5 million, for a total gross profit of $77.2 million.
Selling, general and administrative expenses came to $49.6 million, up from $44.4 million in the second quarter of 2023. Research and development costs were $10.2 million, roughly in line with the $9.9 million in the same quarter one year ago. The business said it expected total R&D costs for 2024 to end up in the range of $40 million to $43 million.
Guidance Holding Steady
Kratos Defense said it would hold to the full-year guidance it issued before. It said it expects to finish 2024 with revenue in the range of $1.125 billion to $1.15 billion and adjusted EBITDA of $102 million to $107 million. EBITDA stands for earnings before interest, taxes, depreciation and amortization.
In the current quarter, Kratos Defense anticipates revenue of $265 million to $280 million.
The business projected adjusted EBITDA of $20 million to $23 million.
Kratos Defense’s forecast is cautious in that it expects there will be no final Pentagon budget in place when fiscal 2025 arrives on Oct. 1. The business expects its federal customer will operate under a stopgap bill known as a continuing resolution. Under such a plan, the Pentagon will issue no new program or contract awards. In addition, it will not increase existing production contract funding and it will not let certain programs make the jump from development to production.
The company said its guidance also included expectations and assumptions for its supply chain execution, and for employee sourcing, hiring, retention and the related cost.
Kratos Defense & Security Solutions
FOUNDED: 1994 as Wireless Facilities Inc.
CEO: Eric DeMarco
HEADQUARTERS: Scripps Ranch
BUSINESS: Defense contractor
REVENUE: $1.04 billion in 2023
STOCK: KTOS (Nasdaq)
EMPLOYEES: Approximately 3,900 full-time, part-time and on-call employees worldwide
WEBSITE: kratosdefense.com
CONTACT: 858-812-7300
NOTABLE: Kratos Turbine Technologies of Jupiter, Florida — the company’s jet engine factory — is one of the fastest growing divisions within Kratos
