Kratos Defense & Security Solutions, Inc. (Nasdaq:KTOS), a
leading National Security Solutions provider announced today that
its Unmanned Systems Division (KUSD) recently received a
competitive, $40.8 million single award, cost-share contract by the
Air Force Research Laboratory (AFRL) for the Low-Cost Attritable
Strike Unmanned Aerial System (UAS) Demonstration (LCASD). This
contract award is the result of a competitive acquisition with
seven competitors. Under the contract award, KUSD will design,
develop, deliver, demonstrate and test a technical baseline for a
high-speed, long-range, low-cost, limited life-strike UAS.
Additional elements of the LCASD program include the identification
of key enabling technologies for future low-cost attritable
aircraft demonstrations, and the provision of a vehicle for future
capability and technology demonstrations. Under the $40.8
million cost-share contract, Kratos will receive $7.3 million in
Government funding, and invest up to $33.5 million over the
approximate 30 month period of performance. For the Company’s
investment, Kratos will retain hard and other assets including
aircraft, related support and other equipment, and important
intellectual property, software, data, platform, and system
rights. Additionally, planning by AFRL includes a desire to
further evolve the system via subsequent technology maturation
Government funded spirals valued at approximately $100 million.
The LCASD system KUSD will provide represents a
configurable design for multiple variants anticipated to perform
various missions that could require Nap-of-The-Earth (NOE) Flight,
Cruising at High Altitudes, Defensive Counter Air (DCA) Maneuvers,
Offensive Counter Air (OCA) Maneuvers, the Suppression of Enemy Air
Defenses (SEAD) and the Destruction of Enemy Air Defenses
(DEAD). Additionally, the System will also incorporate
performance capability including extreme agility for missile
avoidance maneuvers for improved survivability. The Kratos LCASD
design will meet or in certain cases significantly exceed the
following stated Air Force goals for the program:
- UAS Acquisition Cost: $3 million or less for the first unit up
to 99 units, and $2 million or less for 100 or greater unit
quantity purchases.
- 1,500 nautical mile mission radius with a 500 lb. payload.
- Capable of Mach 0.9 Dash.
- Maximum G load limits, maneuver rates, and subsystem
environmental suitability.
- Internal weapons capability; sized to carry and deliver at
least two GBU-39 small diameter bombs.
- Runway Independent Take-off and Landing capability.
- Emphasis on the use of Commercial-Off-The-Shelf (COTS)
materials, sub-systems, manufacturing processes, and open mission
system architecture concepts.
- Tactical consideration of the vehicle shape, elimination of
gaps and mismatches, and aero-structural inlet integration.
Jerry Beaman, President of Kratos Unmanned
Systems Division, said, “The LCASD program is another important
step in establishing Kratos in the growing Tactical Unmanned Aerial
Vehicle marketplace, with survivable, high performance, mission
flexible, tactical platforms designed to counter the potential
adversaries of today, and the future.”
Eric Demarco, President and CEO of Kratos
Defense & Security Solutions, Inc., said, “The LCASD contract
award is one of the most important Unmanned Tactical Aerial System
awards for Kratos to date, and we are honored to have been selected
in a very competitive process. With this win, Kratos has now
received each of the most recent high performance unmanned tactical
or combat aerial system awards to date, including a DARPA Gremlins
Prime win, and a separate Tactical UAS win, which we believe
validates our strategy, technology, capabilities and cost
effectiveness in the Combat UAS arena. Additionally, and most
importantly, we believe that this Government–Industry partnership
will result in the demonstration of arguably the world’s most
capable and affordable long-range strike UAV.”
Mr. DeMarco went on, “Similar to other Kratos
unmanned drone systems, with LCASD, Kratos’ strategy includes an
internally funded investment over the approximate three year
initial contract period of performance, for which our Company will
own and retain aircraft, support equipment, software, other assets,
and intellectual property, all of which we believe will be
critically important and valuable over the expected long term life
of this platform, including future production. We believe
that the LCASD aircraft will be an incredibly important strategic
platform for multiple users once developed, reflected by the
production quantity purchase price targets of $3 million per
aircraft for block order quantities below 99 units, and $2 million
per aircraft for block quantity order buys of 100 units or
more. The potential multiple year revenue, profitability and
cash flow opportunity of this program and platform is significant,
and Kratos’ winning approach and technology resulted in success for
this highly competed contract award.”
Mr. DeMarco continued, “Also importantly,
investments we have been making in the manned-unmanned teaming
technologies area will all play together as we work with U.S. DoD
entities to shape future capability sets. We believe that
ever present budget pressures placed on the U.S. DoD, coupled with
Kratos’ proven and affordable technologies which we have
demonstrated we can field in very short time periods, including
Kratos’ UTAP-22 Tornado UAS, positions the Company well for
participation in this growing and new market space.”
Mr. DeMarco concluded, “Kratos’ award of LCASD
is another significant milestone in our building a leading high
performance tactical unmanned combat aerial system business.
With the success and progress we have made with AFRL LCASD, DARPA
Gremlins, UTAP-22, an additional recent tactical UAS award, other
opportunities, and the multiple new unmanned aerial target drone
system production programs that we expect to begin later this year
and in 2017, we expect increasing future revenues, Adjusted EBITDA
profitability and cash flow. Accordingly, we now have a very
clear path for the business with significant near, mid and long
term growth opportunities.”
Kratos will provide additional details on the
LCASD award, Kratos’ investment and the related aircraft, other
assets and intellectual property Kratos will retain during the
Company’s second quarter earnings conference call.
About Kratos Defense & Security
SolutionsKratos Defense & Security Solutions, Inc.
(Nasdaq:KTOS) is a mid-tier government contractor at the forefront
of the Department of Defense’s Third Offset Strategy. Kratos
is a leading technology, intellectual property and proprietary
product and solution company focused on the United States and its
allies’ national security. Kratos is the industry leader in
high performance unmanned aerial drone target systems used to test
weapon systems and to train the warfighter, and is a provider of
high performance unmanned combat aerial systems for force
multiplication and amplification. Kratos is also an industry
leader in satellite communications, microwave electronics, cyber
security/warfare, missile defense and combat systems. Kratos
has primarily an engineering and technically oriented work force of
approximately 2,700. Substantially all of Kratos' work is performed
on a military base, in a secure facility or at a critical
infrastructure location. Kratos' primary end customers are National
Security related agencies. News and information are available at
www.KratosDefense.com.
Notice Regarding Forward-Looking
StatementsCertain statements in this press release may
constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements are made on the basis of the current
beliefs, expectations and assumptions of the management of Kratos
and are subject to significant risks and uncertainty. 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 Kratos undertakes no obligation to
update or revise these statements, whether as a result of new
information, future events or otherwise. Although Kratos believes
that the expectations reflected in these forward-looking statements
are reasonable, these statements involve many risks and
uncertainties that may cause actual results to differ materially
from what may be expressed or implied in these forward-looking
statements. For a further discussion of risks and uncertainties
that could cause actual results to differ from those expressed in
these forward-looking statements, as well as risks relating to the
business of Kratos in general, see the risk disclosures in the
Annual Report on Form 10-K of Kratos for the year ended
December 27, 2015, and in subsequent reports on Forms 10-Q and
8-K and other filings made with the SEC by Kratos.
Press Contact:
Yolanda White
858-812-7302 Direct
Investor Information:
877-934-4687
investor@kratosdefense.com
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