Full Year 2023 Revenues of $1.037 Billion Reflect 15.5 Percent Growth and 12.6 Percent Organic Growth, Respectively, Over Full Year 2022 Revenues of $898.3 Million

Fourth Quarter Revenues of $273.8 Million Reflect 9.8 Percent Growth and 7.3 Percent Organic Growth, Respectively, Over Fourth Quarter 2022 Revenues of $249.3 Million

Fourth Quarter 2023 Cash Flow Generated from Operations of $67.4 Million
Full Year 2023 Cash Flow Generated from Operations of $65.2 Million

Fourth Quarter 2023 Consolidated Book to Bill Ratio of 1.2 to 1 and Bookings of $330 Million

Last Twelve Months Ended December 31, 2023 Consolidated Book to Bill Ratio of 1.1 to 1 and Bookings of $1.15 Billion

2024 Financial Forecast Includes 10 Percent Organic Revenue Growth

SAN DIEGO, Feb. 13, 2024 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a Technology Company in the Defense, National Security and Global Markets, today reported its fourth quarter 2023 financial results, including Revenues of $273.8 million, Operating Income of $11.7 million, Net Income attributable to Kratos of $2.4 million, Adjusted EBITDA of $29.1 million and a consolidated book to bill ratio of 1.2 to 1.0.

Included in fourth quarter 2023 Net Income and Operating Income is non-cash stock compensation expense of $6.3 million and Company-funded Research and Development (R&D) expense of $8.0 million, which includes significant ongoing development efforts in our Space and Satellite Communications business to develop our virtual, software-based OpenSpace command & control (C2), telemetry tracking & control (TT&C) and other ground system solutions. The fourth quarter 2023 Net Income attributable to Kratos includes $3.2 million attributable to a non-controlling interest, which includes a charge of $2.7 million adjustment recorded to reflect the estimated increase in the value of the redeemable non-controlling interest to the estimated redemption amount by Kratos.

Kratos reported fourth quarter 2023 GAAP Net Income attributable to Kratos of $2.4 million and a GAAP Net Income per share of $0.02, compared to a GAAP Net Loss attributable to Kratos of $8.3 million and a GAAP Net Loss per share of $0.07 for the fourth quarter of 2022. Adjusted earnings per share (EPS) was $0.12 for the fourth quarter of 2023, compared to $0.08 for the fourth quarter of 2022.

Fourth quarter 2023 Revenues of $273.8 million increased $24.5 million, reflecting 9.8 percent and 7.3 percent organic growth, respectively, from fourth quarter 2022 Revenues of $249.3 million.    Fourth quarter 2023 Cash Flow Generated from Operations was $67.4 million, primarily reflecting the receipt of accelerated favorable customer milestone payments, resulting in a Consolidated Days Sales Outstanding reduction from 117 days in the third quarter of 2023 to 109 days in the fourth quarter of 2023 and increases in deferred revenues or customer advanced payments to $101.8 million at the end of the fourth quarter of 2023, up from $79.4 million at the end of the third quarter of 2023. Free Cash Flow Generated from Operations for the Fourth Quarter of 2023 was $48.1 million after funding of $19.3 million of capital expenditures. Capital expenditures remain elevated due primarily to the manufacture of two production lots of Valkyries prior to contract award, to meet anticipated customer orders and requirements.

For the fourth quarter of 2023, Kratos’ Unmanned Systems (KUS) segment generated Revenues of $55.4 million, which included contribution of $6.4 million from the recent Sierra Technical Services, Inc. (STS) acquisition, as compared to $62.7 million in the fourth quarter of 2022, primarily reflecting reduced tactical drone activity. KUS’s Operating Income was $1.0 million in the fourth quarter of 2023 compared to $1.8 million in the fourth quarter of 2022. KUS’s Adjusted EBITDA for the fourth quarter of 2023 was $4.0 million, compared to fourth quarter 2022 KUS Adjusted EBITDA of $4.5 million, reflecting reduced volume.  
        
KUS’s book-to-bill ratio for the fourth quarter of 2023 was 1.1 to 1.0 and 1.2 to 1.0 for the last twelve months ended December 31, 2023, with bookings of $61.2 million for the three months ended December 31, 2023, and bookings of $244.2 million for the last twelve months ended December 31, 2023.    Total backlog for KUS at the end of the fourth quarter of 2023 was $255.8 million compared to $227.8 million at the end of the third quarter of 2023.

For the fourth quarter of 2023, Kratos’ Government Solutions (KGS) segment Revenues of $218.4 million increased from Revenues of $186.6 million in the fourth quarter of 2022, reflecting a 17.0 percent growth and organic growth rate. The increased Revenues includes organic revenue growth in our Space, Satellite, Cyber and Training Solutions, Turbine Technologies, C5ISR, and Microwave Products businesses.

KGS reported operating income of $17.5 million in the fourth quarter of 2023 compared to $8.8 million in the fourth quarter of 2022, primarily reflecting a more favorable mix and increased revenue volume. Fourth quarter 2023 KGS Adjusted EBITDA was $25.1 million, compared to fourth quarter 2022 KGS Adjusted EBITDA of $14.7 million, primarily reflecting the increased revenue and more favorable mix.

Kratos’ Space, Satellite, Cyber and Training business generated Revenues of $112.9 million in the fourth quarter of 2023 compared to $97.7 million in the fourth quarter of 2022, reflecting a 15.5 percent organic growth rate.

KGS reported a book-to-bill ratio of 1.2 to 1.0 for the fourth quarter of 2023, a book to bill ratio of 1.1 to 1.0 for the last twelve months ended December 31, 2023 and bookings of $269.2 million and $902.2 million for the three and last twelve months ended December 31, 2023, respectively. KGS includes Kratos’ Space, Satellite, Cyber and Training Solutions business, which reported a book to bill ratio of 1.2 to 1.0 for the fourth quarter and the last twelve months ended December 31, 2023. Bookings for Kratos’ Space, Satellite, Cyber and Training business for the three months and last twelve months ended December 31, 2023 were $132.2 million and $493.5 million, respectively. KGS’s total backlog at the end of the fourth quarter of 2023 was $988.0 million, as compared to $937.3 million at the end of the third quarter of 2023.

Kratos reported consolidated bookings of $330.3 million and a book-to-bill ratio of 1.2 to 1.0 for the fourth quarter of 2023, and consolidated bookings of $1.15 billion and a book-to-bill ratio of 1.1 to 1.0 for the last twelve months ended December 31, 2023. Consolidated backlog was $1.24 billion on December 31, 2023 and $1.17 billion on October 1, 2023. Kratos’ bid and proposal pipeline was $11.0 billion at December 31, 2023 and $10.3 billion at October 1, 2023. Backlog at December 31, 2023 included funded backlog of $944.6 million and unfunded backlog of $299.3 million.

Full Year 2023 Results

Kratos reported its full year 2023 financial results, including Revenues of $1.037 billion, Operating Income of $31.1 million, Net Loss attributable to Kratos of $8.9 million, Adjusted EBITDA of $95.4 million and a consolidated book to bill ratio of 1.1 to 1.0.

Included in the full year 2023 Net Loss and Operating Income is non-cash stock compensation expense of $25.3 million and Company-funded Research and Development (R&D) expense of $38.4 million, which includes significant ongoing development efforts in our Space and Satellite Communications business to develop our first to market, virtual, software-based OpenSpace command & control (C2), telemetry tracking & control (TT&C) and other ground system solutions. The full year 2023 Net Loss attributable to Kratos includes $11.3 million attributable to a non-controlling interest, which includes charges of $9.9 million of adjustments recorded to reflect the estimated increase in the value of the redeemable non-controlling interest to the estimated redemption amount by Kratos.

Kratos reported full year 2023 GAAP Net Loss attributable to Kratos of $8.9 million and a GAAP Net Loss per share of $0.07, compared to a GAAP Net Loss attributable to Kratos of $36.9 million and a GAAP Net Loss per share of $0.29 for the full year 2022. Adjusted earnings per share (EPS) was $0.42 for the full year 2023, compared to $0.31 for full year 2022.

Full year 2023 Revenues of $1.037 billion increased $138.8 million, reflecting 15.5 percent growth and 12.6 percent organic growth, respectively, from full year 2022 Revenues of $898.3 million. Full year 2023 Cash Flow Generated from Operations was $65.2 million, primarily reflecting the receipt of accelerated favorable customer milestone payments, offset partially by working capital uses including increases in inventories of approximately $29.6 million. Free Cash Flow Generated from Operations was $21.1 million after funding of $52.4 million of capital expenditures, less $8.3 million in receipt of proceeds for sale of Valkyries that were built as Kratos capital assets. Full year 2023 capital expenditures were elevated due primarily to the manufacture of the two production lots of Valkyries prior to contract award to meet anticipated customer orders and requirements.