Fiscal 2022 Revenues of $898.3 Million and Fourth Quarter 2022 Revenues of $249.3 Million Increased 10.7 Percent and 17.8 Percent over Fiscal Year and Fourth Quarter 2021 Revenues, Respectively

Fourth Quarter 2022 Consolidated Book to Bill Ratio of 1.2 to 1 
Fiscal 2022 Consolidated Book to Bill Ratio of 1.1 to 1

SAN DIEGO, Feb. 23, 2023 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq:KTOS), a leading National Security Solutions provider, today reported its fourth quarter and fiscal year 2022 financial results. For the fourth quarter of 2022, Kratos reported Revenues of $249.3 million, Operating Income of $4.1 million, Net Loss of $8.3 million, Adjusted EBITDA of $19.2 million and a consolidated book to bill ratio of 1.2 to 1.0.  

Included in fourth quarter 2022 Net Loss and Operating Income is non-cash stock compensation expense of $6.4 million and Company-funded Research and Development (R&D) expense of $10.6 million, primarily reflecting significant ongoing development efforts being made, including in our Space and Satellite business to develop our virtual, software-based OpenSpace command & control (C2), telemetry tracking & control (TT&C) and other ground system solutions. Also included in fourth quarter 2022 Net Loss is a tax provision of $6.0 million primarily resulting from a non-cash valuation allowance of $5.6 million recorded related to deferred tax assets of certain state net operating loss carryforwards and R&D credits.

Kratos reported a fourth quarter 2022 GAAP Net Loss per share of $0.07, compared to a Net Loss of $2.6 million and a GAAP Net Loss per share of $0.02 for the fourth quarter of 2021. Adjusted EPS was $0.08 for the fourth quarter of 2022, compared to $0.11 for the fourth quarter of 2021.

Fourth quarter 2022 Revenues of $249.3 million increased $37.7 million, or 17.8 percent, from fourth quarter 2021 Revenues of $211.6 million. Fourth quarter 2022 Revenues include an aggregate contribution of $29.1 million from the Cosmic Advanced Engineered Solutions, Inc. (Cosmic AES), CTT, Inc. (CTT), and the Engineering Division of Southern Research Institute (SRE) acquisitions and consolidated organic Revenue growth of 4.1 percent, primarily in our Turbine Technologies and C5ISR businesses and increased volume in our Unmanned Systems business. Excluding the impact of the legacy Training business which declined $2.7 million in the fourth quarter of 2022 as compared to the fourth quarter of 2021, consolidated organic Revenue growth was 5.5 percent.

Fourth quarter 2022 Cash Flow Generated from Operations was $6.7 million and Free Cash Flow Used in Operations was $3.9 million after funding $10.6 million of capital expenditures.

For the fourth quarter of 2022, Kratos’ Unmanned Systems Segment (KUS) generated Revenues of $62.7 million, an increase of 15.3 percent as compared to $54.4 million in the fourth quarter of 2021, primarily reflecting an increase in tactical drone related activity as compared to 2021. KUS’s Operating Income was $1.8 million in the fourth quarter of 2022 compared to $2.3 million in the fourth quarter of 2021, reflecting a less favorable mix of revenues including an increase in development programs which typically generate lower margins, increased supply chain costs of approximately $0.6 million, and an increase of R&D expenses of approximately $0.2 million.

KUS’s Adjusted EBITDA for the fourth quarter of 2022 was $4.5 million, compared to fourth quarter 2021 KUS Adjusted EBITDA of $4.6 million, reflecting increases in certain development programs which typically generate lower margins and increases in SG&A, R&D, and supply chain related and employee costs.
        
KUS’s book-to-bill ratio for the fourth quarter of 2022 was 1.0 to 1.0 and 0.7 to 1.0 for the last twelve months ended December 25, 2022, with bookings of $61.9 million for the three months ended December 25, 2022, and bookings of $153.6 million for the twelve months ended December 25, 2022. Total backlog for KUS at the end of the fourth quarter of 2022 was $201.6 million compared to $202.4 million at the end of the third quarter of 2022.

For the fourth quarter of 2022, Kratos’ Government Solutions Segment (KGS) reported Revenues of $186.6 million, compared to Revenues of $157.2 million in the fourth quarter of 2021. The increased Revenues include the aggregate contribution of approximately $29.1 million from the Cosmic AES, CTT and SRE acquisitions, organic revenue growth in our Turbine Technologies and C5ISR businesses, offset primarily by a reduction of $2.7 million related to our legacy Training Solutions business.    Excluding the legacy Training Solutions business and the impact of the acquired businesses, KGS revenues grew organically 2.2 percent, or $3.3 million, from $150.3 million in the fourth quarter of 2021 to $153.6 million in the fourth quarter of 2022.

KGS reported operating income of $8.8 million in the fourth quarter of 2022 compared to $14.7 million in the fourth quarter of 2021, primarily reflecting a less favorable revenue mix and an increase in R&D from $8.0 million in the fourth quarter of 2021 to $9.4 million in the fourth quarter of 2022, resulting from ongoing development efforts in our Space and Satellite business related to our OpenSpace C2, TT&C, and other ground station solutions.

Kratos’ Space, Satellite and Cyber business generated Revenues of $93.5 million in the fourth quarter of 2022 compared to $78.4 million in the fourth quarter of 2021. Excluding Revenues of $16.6 million from the recent Cosmic AES acquisition, revenues for our Space, Satellite and Cyber business were $76.9 million in the fourth quarter of 2022, down approximately $1.5 million as compared to the fourth quarter of 2021, reflecting the wind-down of a federal services satellite contract in 2021. Fourth quarter 2022 KGS Adjusted EBITDA was $14.7 million, compared to fourth quarter 2021 KGS Adjusted EBITDA of $18.8 million, reflecting a less favorable mix in revenues.

For the fourth quarter of 2022, KGS reported a book-to-bill ratio of 1.2 to 1.0, a book to bill ratio of 1.2 to 1.0 for the twelve months ended December 25, 2022 and bookings of $230.8 million and $845.5 million for the three and twelve months ended December 25, 2022, respectively.   KGS includes Kratos’ Space, Satellite and Cyber business, which reported a book to bill ratio of 1.2 to 1.0 for the fourth quarter of 2022 and a book to bill ratio of 1.3 to 1.0 for the twelve months ended December 25, 2022. Bookings for Kratos’ Space, Satellite and Cyber business for the three months and last twelve months ended December 25, 2022 were $111.4 million and $444.3 million, respectively. KGS’s total backlog at the end of the fourth quarter of 2022 was $910.8 million, as compared to $866.6 million at the end of the third quarter of 2022.

For the fourth quarter of 2022, Kratos reported consolidated bookings of $292.7 million and a book-to-bill ratio of 1.2 to 1.0, with consolidated bookings of $999.1 million and a book-to-bill ratio of 1.1 to 1.0 for the last twelve months ended December 25, 2022. Consolidated backlog on December 25, 2022 was $1.11 billion, as compared to $1.07 billion at September 25, 2022. Kratos’ bid and proposal pipeline was $10 billion at December 25, 2022, as compared to $9.9 billion at September 25, 2022.   Backlog at December 25, 2022 was comprised of funded backlog of $721.4 million and unfunded backlog of $391.0 million.