Kratos Defense & Security Solutions, Inc. (Nasdaq:KTOS), a
leading National Security Solutions provider, today reported its
first quarter 2022 financial results. For the first quarter of
2022, Kratos reported Revenues of $196.2 million, Operating Loss of
$1.2 million, Net Loss of $15.9 million and Adjusted EBITDA of
$13.8 million. Included in Net Loss is a $13.0 million
loss for a debt extinguishment charge reflecting the premium paid
to redeem the Company’s 6.5% Senior Notes and the write-off of
related deferred financing costs.
First quarter 2022 Operating Loss includes
non-cash stock compensation expense of $7.0 million, which
increased $0.8 million from the first quarter of 2021, and
Company-funded Research and Development expense of $9.2 million,
reflecting significant ongoing development efforts being made,
including in our space and satellite business to develop our
virtual, software based OpenSpace ground station solution.
Kratos reported a first quarter 2022 GAAP loss
per share of $0.12, which included the $13.0 million loss for debt
extinguishment charge noted above, compared to Net Income of $1.9
million and GAAP EPS income of $0.01 for the first quarter of 2021.
Adjusted EPS was $0.04 for the first quarter of 2022, compared to
$0.06 for the first quarter of 2021. Kratos has approximately $235
million of net operating loss carryforwards, which are expected to
substantially shield the Company from paying future cash income
taxes.
First quarter 2022 Revenues of $196.2 million,
increased $2.0 million, or 1.0 percent, from first quarter 2021
Revenues of $194.2 million, were adversely impacted by the extended
6 month Continuing Resolution Authorization (CRA), which was not
resolved until the end of March 2022. First quarter 2022 revenues
were also adversely impacted by continuing and increased supply
chain disruptions, and COVID-related employee absenteeism, which
resulted in approximately $15.3 million of first quarter 2022
revenues being deferred into future periods. First quarter 2022
revenues include a contribution of $14.7 million from the recent
acquisitions of Cosmic Advanced Engineered Solutions, Inc. (Cosmic
AES) and CTT, Inc., (CTT) offset by the previously reported loss of
an international training services contract of approximately $8.3
million.
First quarter 2022 Cash Flow Used in Operations
was $7.9 million, including a use for the increase of inventory
balances of $15.3 million during the quarter primarily in our
satellite and microwave electronic businesses, in anticipation of
the ramps in production in the second half of the year and, in
part, to advance inventory levels, in an attempt to mitigate the
impact of supply chain disruptions. Free Cash Flow Used in
Operations was $18.7 million, after funding $10.8 million of
capital expenditures, including in our high growth Unmanned
Systems, Space, Satellite and Cyber and Turbine Technologies
business areas.
For the first quarter of 2022, Kratos’ Unmanned
Systems Segment (KUS) generated Revenues of $52.6 million, as
compared to $55.9 million in the first quarter of 2021. KUS
Operating Income was $0.5 million in the first quarter of 2022,
compared to $4.2 million in the first quarter of 2021, reflecting a
less favorable mix of revenues, including an increase in
development programs which typically generate lower margins, an
increase in SG&A costs of approximately $1.1 million, an
increase of R&D expenses of approximately $1.2 million and
increases in supply chain and employee related costs.
First quarter 2022 KUS Adjusted EBITDA was $3.0
million, compared to first quarter 2021 Adjusted EBITDA of $6.4
million, reflecting increases in certain development programs which
typically generate lower margins and increases in SG&A,
R&D, supply chain related and headcount costs.
KUS’s book-to-bill
ratio for the first quarter of 2022 was 0.3 to 1.0 and 1.0 to 1.0
for the last twelve months ended March 27, 2022, with bookings of
$236.7 million for the twelve months ended March 27,
2022. Total backlog for KUS at the end of the first
quarter of 2022 was $230.5 million compared to $269.6 million at
the end of the fourth quarter of 2021.
For the first quarter of 2022, Kratos’
Government Solutions Segment (KGS) reported Revenues of $143.6
million, compared to Revenues of $138.3 million in the first
quarter of 2021. The increased revenues include the contribution of
approximately $14.7 million from the recently acquired Cosmic AES
and CTT, offset by a reduction of $8.3 million in our Training
Solutions business, resulting primarily from the loss of an
international training contract, and continued and increased supply
chain disruptions, which resulted in first quarter 2022 KGS
revenues of approximately $14.6 million being deferred into future
periods. KGS reported operating income of $5.6 million in the first
quarter of 2022, compared to $7.1 million in the first quarter of
2021, primarily reflecting a less favorable revenue mix and
increased costs related to the supply chain and employee
base.
Kratos’ Space, Satellite and Cyber business
generated Revenues of $72.5 million in the first quarter of 2022,
compared to $58.5 million in the first quarter of 2021. Included in
the first quarter 2022 revenues is $12.7 million from the recent
Cosmic AES acquisition, offset partially by approximately $7.1
million of supply chain related and other delays, including in the
Company’s commercial and international satellite communications
business.
First quarter 2022 KGS Adjusted EBITDA was $10.8
million, compared to first quarter 2021 KGS Adjusted EBITDA of
$11.7 million, reflecting a less favorable mix of revenues, the
continued and increased impact of supply chain disruptions and
increases in supply chain and employee related costs.
For the first quarter of 2022, KGS reported a
book-to-bill ratio of 1.3 to 1.0, and a book to bill ratio of 1.1
to 1 for the twelve months ended March 27, 2022.
Included in KGS is Kratos’ Space, Satellite and Cyber business,
which reported a book to bill ratio of 1.3 to 1.0 for the first
quarter of 2022, and a book to bill ratio of 1.1 to 1.0 for the
twelve months ended March 27, 2022. Bookings for the Space,
Satellite and Cyber business for the last twelve months ended March
27, 2022 was $313.8 million. KGS’s total backlog at the end of the
first quarter of 2022 was $751.6 million, as compared to $684.3
million at the end of the fourth quarter of 2021.
For the first quarter of 2022, Kratos reported
consolidated bookings of $198.2 million and a book-to-bill ratio of
1.0 to 1.0, with consolidated bookings of $873.3 million and a
book-to-bill ratio of 1.1 to 1.0 for the last twelve months ended
March 27, 2022. Backlog on March 27, 2022 was $982.1 million, as
compared to $953.9 million at December 26, 2021, and Kratos’ bid
and proposal pipeline was $9.4 billion at March 27, 2022, as
compared to $9.4 billion at December 26, 2021. Backlog
at March 27, 2022 was comprised of funded backlog of $685.7 million
and unfunded backlog of $296.4 million.
Eric DeMarco, Kratos’ President and CEO, said,
“Since our last report, the Fiscal 2022 Budget has been approved,
including significant funding in space, satellite, cyber, unmanned
systems, hypersonics, missile defense, strategic deterrence and
microwave electronics, all core Kratos business areas.
The Fiscal 2023 budget request has also been released, also
continuing these as priority national security funding areas. We
have now received or have been informed that we will receive
several large new contracts in our unmanned systems and our
satellite business, including our new software based OpenSpace
products. The awards will provide us additional visibility into our
Q3 and Q4 forecasted revenue, with a significant increase in our
forecasted profitability as we expect to achieve operating leverage
on our cost infrastructure.”
Mr. DeMarco, continued, “Over the last few
months, the Pentagon has continued to clarify its vision for low
cost, force multiplying and loyal wingman unmanned aerial drone
systems. We continue to be confident that Kratos’ affordable, made
in America, high performance jet drones, which are flying today and
not power-points, and which are designed to enable fielding of
mass, large quantities and runway independence, providing
challenges to adversaries and survivability to our forces, are
critical differentiators. We are currently producing
approximately 150 jet drone aircraft of various types annually and
are ready and able to immediately step up when the customer
requires”.
Mr. DeMarco concluded, “We are focused
internally, including continuing to win contract awards, expanding
our market share, and on program execution and working with our
customers contracting offices so that we receive funding as quickly
as possible now that the 2022 budget is in place. We are also
focused on managing industry wide challenges, including supply
chain issues, inflation and increasing costs, COVID related impacts
to our customers and employees and obtaining and retaining
qualified personnel, all of which are expected to continue for the
foreseeable future.”
Financial GuidanceWe are providing our initial
second quarter guidance and affirming our full year 2022 guidance
as follows:
|
|
|
|
|
|
|
|
$M |
Q222 |
FY22 |
|
Revenues |
$205 -
$215 |
$880 -
$920 |
|
R&D |
$9 -
$10 |
$35 -
$38 |
|
Operating
Income (loss) |
$(3) -
$0 |
$26 -
$30 |
|
Depreciation |
$5 -
$6 |
$24 -
$25 |
|
Amortization |
$2 -
$3 |
$8 -
$9 |
|
Stock Based
Compensation |
$6 -
$7 |
$25 -
$26 |
|
Adjusted
EBITDA |
$11 -
$14 |
$85 -
$89 |
|
Operating
Cash Flow |
|
$20 -
$30 |
|
Capital
Expenditures |
|
$50 -
$60 |
|
Free Cash
Flow Use |
|
($30 -
$40) |
|
Our second quarter and Fiscal Year 2022 financial guidance we
are providing today includes our current forecasted business mix,
and our assumptions related to the expected impact of continued
employee absenteeism and retention, manufacturing, production and
supply chain disruptions, parts shortages and related price
increases in materials and components, travel restrictions and
other COVID-19 related items that have and continue to impact the
industry and Kratos.
Throughout the first quarter of 2022, we
experienced a significant increase in the intensity and effects of
COVID–19, including the new Omicron variant, on our employees,
consultants, vendors, suppliers, customers, etc. We have assumed
that these COVID–19 related impacts to our business, which
significantly impacted our fiscal first quarter 2022 and continue
to impact our second quarter, will begin to subside by the third
fiscal quarter, and continue to improve throughout the second half
of our fiscal year 2022. Our assumption of an improving COVID-19
and supply chain related environment in the second half of the
year, combined with we now have a Fiscal 2022 DoD budget and that
the FY 2023 DoD budget request has been submitted, are directly
related to our 2022 financial forecast and potential investment
decisions. Additionally, we have recently received or been informed
that we will receive certain large program awards, including in our
Unmanned Systems and Satellite business, which directly relates to
our forecasted 2022 quarter over quarter financial forecast
improvement, including Kratos’ expectation that its financial
performance in the second half of 2022 will be substantially
greater than the first half. We currently estimate that
COVID-related issues, including the availability and increased
costs of certain raw materials and related components and
materials, a lack of capacity at mills supporting Kratos’ hardware
programs, and the availability of an experienced skilled workforce
to impact our second quarter 2022 Revenues and Adjusted EBITDA by
approximately $15 to $17 million and $2 to $4 million,
respectively, similar to the impact that we experienced on our
first quarter 2022 Revenues and Adjusted EBITDA. We also currently
estimate these issues to impact our fiscal year 2022 Revenues and
Adjusted EBITDA by approximately $34 to $38 million and $7 to $10
million, respectively. We will provide future updates as
appropriate. Also included in our fiscal year 2022 estimated
Adjusted EBITDA are additional incremental merit increases of
approximately $5 million above our historical merit increase
levels. These increases were recently implemented to retain our
highly skilled workforce amidst a very tight and competitive labor
market.
The forecasted financial trajectory in the
second half of 2022 reflects the expected mix of revenues,
including the expected timing of software product deliveries in our
Space, Satellite and Cyber business, based upon the forecasted
order flow and roll out of our new OpenSpace solution, and contract
awards we have recently received or that we have been informed we
will receive.
Forecasted second quarter 2022 and fiscal year
2022 Operating Income and Adjusted EBITDA, also reflect the
expected mix of development-type contracts and expected
investments, including in our Space, Satellite and Cyber, Unmanned
Systems, C5ISR, Turbine Technologies and Rocket System businesses,
where we have received, informed that we will receive, or are
pursuing or expect to receive a number of new contract
awards. Kratos’ fiscal year 2022 forecasted revenues
also include the final impact of the 2021 loss of a large
international training contract, which contributed approximately
$13.0 million to the Company’s fiscal year 2021 first and second
quarter revenues and include the estimated contribution from the
recently closed CTT and Cosmic AES acquisitions.
Management will discuss the Company’s first
quarter 2022 financial results, as well as its second quarter and
full year 2022 guidance on a conference call beginning at 2:00 p.m.
Pacific (5:00 p.m. Eastern) today. The conference call can be
accessed by dialing (866) 374-5140, and referencing the call by ID
number 69056240. The conference call will be broadcast live in
listen-only mode on the company’s investor relations website at
https://ir.kratosdefense.com/events-presentations. 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 second quarter and full year 2022 revenues,
R&D, operating income, depreciation, amortization, stock based
compensation expense, and Adjusted EBITDA, and full year 2022
operating cash flow, capital expenditures and other investments,
and free cash flow use, 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 improved
revenue mix 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 an increase in 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, 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 and to achieve financial leverage on fixed
administrative costs, 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 employee absenteeism, supply chain disruptions,
availability of an experienced skilled workforce, inflation and
increased costs, 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 products we have developed or will develop will become
programs of record; 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 26, 2021, 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
results. 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. |
|
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|
|
Unaudited
Condensed Consolidated Statements of Operations |
|
|
|
|
|
(in
millions, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
March 27, |
|
March 28, |
|
|
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenues |
|
$ |
67.9 |
|
|
$ |
57.3 |
|
|
|
|
|
|
Product
sales |
|
|
128.3 |
|
|
|
136.9 |
|
|
|
|
|
|
Total revenues |
|
|
196.2 |
|
|
|
194.2 |
|
|
|
|
|
|
Cost of
service revenues |
|
|
49.9 |
|
|
|
42.5 |
|
|
|
|
|
|
Cost of
product sales |
|
|
94.4 |
|
|
|
100.7 |
|
|
|
|
|
|
Total costs |
|
|
144.3 |
|
|
|
143.2 |
|
|
|
|
|
|
Gross profit
- service revenues |
|
|
18.0 |
|
|
|
14.8 |
|
|
|
|
|
|
Gross profit
- product sales |
|
|
33.9 |
|
|
|
36.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross profit |
|
|
51.9 |
|
|
|
51.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses |
|
|
40.3 |
|
|
|
35.3 |
|
|
|
|
|
|
Acquisition
and restructuring related items |
|
|
0.6 |
|
|
|
0.2 |
|
|
|
|
|
|
Research and
development expenses |
|
|
9.2 |
|
|
|
8.0 |
|
|
|
|
|
|
Depreciation |
|
|
1.3 |
|
|
|
1.2 |
|
|
|
|
|
|
Amortization
of intangible assets |
|
|
1.7 |
|
|
|
1.4 |
|
|
|
|
|
|
Operating income (loss) |
|
|
(1.2 |
) |
|
|
4.9 |
|
|
|
|
|
|
Interest
expense, net |
|
|
(5.9 |
) |
|
|
(5.9 |
) |
|
|
|
|
|
Loss on
extinguishment of debt |
|
|
(13.0 |
) |
|
|
- |
|
|
|
|
|
|
Other
income, net |
|
|
0.1 |
|
|
|
0.2 |
|
|
|
|
|
|
Loss from continuing operations before income taxes |
|
|
(20.0 |
) |
|
|
(0.8 |
) |
|
|
|
|
|
Benefit for
income taxes from continuing operations |
|
|
(4.3 |
) |
|
|
(2.7 |
) |
|
|
|
|
|
Income (loss) from continuing operations |
|
|
(15.7 |
) |
|
|
1.9 |
|
|
|
|
|
|
Loss from
discontinued operations, net of income taxes |
|
|
(0.2 |
) |
|
|
- |
|
|
|
|
|
|
Net income (loss) |
|
|
(15.9 |
) |
|
|
1.9 |
|
|
|
|
|
|
Less: Net income (loss) attributable
to noncontrolling interest |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Net income (loss) attributable to
Kratos |
|
$ |
(15.9 |
) |
|
$ |
1.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income
(loss) per common share attributable to Kratos: |
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations |
|
$ |
(0.12 |
) |
|
$ |
0.02 |
|
|
|
|
|
|
Loss from discontinued
operations |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Net income (loss) |
|
$ |
(0.12 |
) |
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
income (loss) per common share attributable to Kratos: |
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations |
|
$ |
(0.12 |
) |
|
$ |
0.01 |
|
|
|
|
|
|
Loss from discontinued
operations |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Net income (loss) |
|
$ |
(0.12 |
) |
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic weighted average common shares
outstanding |
|
|
125.9 |
|
|
|
124.1 |
|
|
|
|
|
|
Diluted weighted average common
shares outstanding |
|
|
125.9 |
|
|
|
127.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA (1) |
|
$ |
13.8 |
|
|
$ |
18.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 (loss) attributable to Kratos to
Adjusted EBITDA is as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
March 27, |
|
March 28, |
|
|
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) attributable to Kratos |
|
$ |
(15.9 |
) |
|
$ |
1.9 |
|
|
|
|
|
|
Loss from
discontinued operations, net of income taxes |
|
|
0.2 |
|
|
|
- |
|
|
|
|
|
|
Interest
expense, net |
|
|
5.9 |
|
|
|
5.9 |
|
|
|
|
|
|
Loss on
extinguishment of debt |
|
|
13.0 |
|
|
|
- |
|
|
|
|
|
|
Benefit for
income taxes from continuing operations |
|
|
(4.3 |
) |
|
|
(2.7 |
) |
|
|
|
|
|
Depreciation
(including cost of service revenues and product sales) |
|
|
5.3 |
|
|
|
4.9 |
|
|
|
|
|
|
Stock-based
compensation |
|
|
7.0 |
|
|
|
6.2 |
|
|
|
|
|
|
Foreign
transaction loss |
|
|
- |
|
|
|
0.1 |
|
|
|
|
|
|
Amortization
of intangible assets |
|
|
1.7 |
|
|
|
1.4 |
|
|
|
|
|
|
Amortization
of capitalized contract and development costs |
|
|
0.3 |
|
|
|
0.2 |
|
|
|
|
|
|
Acquisition
and restructuring related items and other |
|
|
0.6 |
|
|
|
0.2 |
|
|
|
|
|
|
Plus: Net
income (loss) attributable to noncontrolling interest |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
$ |
13.8 |
|
|
$ |
18.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of acquisition and restructuring related items and
other included in Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
March 27, |
|
March 28, |
|
|
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
Acquisition
and transaction related items |
|
$ |
0.3 |
|
|
$ |
0.2 |
|
|
|
|
|
|
Restructuring costs |
|
|
0.1 |
|
|
|
- |
|
|
|
|
|
|
Legal
related items |
|
|
0.2 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.6 |
|
|
$ |
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kratos
Defense & Security Solutions, Inc. |
|
|
|
|
|
Unaudited
Segment Data |
|
|
|
|
|
(in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
March 27, |
|
March 28, |
|
|
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
Unmanned Systems |
|
$ |
52.6 |
|
|
$ |
55.9 |
|
|
|
|
|
|
Kratos Government Solutions |
|
|
143.6 |
|
|
|
138.3 |
|
|
|
|
|
|
Total revenues |
|
$ |
196.2 |
|
|
$ |
194.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss) |
|
|
|
|
|
|
|
|
|
Unmanned Systems |
|
$ |
0.5 |
|
|
$ |
4.2 |
|
|
|
|
|
|
Kratos Government Solutions |
|
|
5.6 |
|
|
|
7.1 |
|
|
|
|
|
|
Unallocated corporate expense, net |
|
|
(7.3 |
) |
|
|
(6.4 |
) |
|
|
|
|
|
Total operating income (loss) |
|
$ |
(1.2 |
) |
|
$ |
4.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
March 27, |
|
March 28, |
|
|
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
Unmanned
Systems |
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
0.5 |
|
|
$ |
4.2 |
|
|
|
|
|
|
Other income |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
Depreciation |
|
|
1.6 |
|
|
|
1.6 |
|
|
|
|
|
|
Amortization of intangible assets |
|
|
0.3 |
|
|
|
0.3 |
|
|
|
|
|
|
Amortization of capitalized contract and development costs |
|
|
0.3 |
|
|
|
0.2 |
|
|
|
|
|
|
Acquisition and restructuring related items and other |
|
|
0.2 |
|
|
|
- |
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
3.0 |
|
|
$ |
6.4 |
|
|
|
|
|
|
%
of revenue |
|
|
5.7 |
% |
|
|
11.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kratos
Government Solutions |
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
5.6 |
|
|
$ |
7.1 |
|
|
|
|
|
|
Other income |
|
|
- |
|
|
|
0.2 |
|
|
|
|
|
|
Depreciation |
|
|
3.7 |
|
|
|
3.3 |
|
|
|
|
|
|
Amortization of intangible assets |
|
|
1.4 |
|
|
|
1.1 |
|
|
|
|
|
|
Acquisition and restructuring related items and other |
|
|
0.1 |
|
|
|
- |
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
10.8 |
|
|
$ |
11.7 |
|
|
|
|
|
|
%
of revenue |
|
|
7.5 |
% |
|
|
8.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Adjusted EBITDA |
|
$ |
13.8 |
|
|
$ |
18.1 |
|
|
|
|
|
|
% of
revenue |
|
|
7.0 |
% |
|
|
9.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kratos
Defense & Security Solutions, Inc. |
|
|
|
|
|
Unaudited
Condensed Consolidated Balance Sheets |
|
|
|
|
|
(in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
27, |
|
December
26, |
|
|
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
254.4 |
|
|
$ |
349.4 |
|
|
|
|
|
|
Accounts receivable, net |
|
|
280.7 |
|
|
|
284.7 |
|
|
|
|
|
|
Inventoried costs |
|
|
107.1 |
|
|
|
91.7 |
|
|
|
|
|
|
Prepaid expenses |
|
|
11.1 |
|
|
|
9.8 |
|
|
|
|
|
|
Other current assets |
|
|
34.6 |
|
|
|
22.5 |
|
|
|
|
|
|
Total current assets |
|
|
687.9 |
|
|
|
758.1 |
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
173.5 |
|
|
|
168.3 |
|
|
|
|
|
|
Operating lease right-of-use assets |
|
|
39.6 |
|
|
|
38.5 |
|
|
|
|
|
|
Goodwill |
|
|
522.9 |
|
|
|
493.9 |
|
|
|
|
|
|
Intangible assets, net |
|
|
51.5 |
|
|
|
43.2 |
|
|
|
|
|
|
Other assets |
|
|
90.1 |
|
|
|
87.5 |
|
|
|
|
|
|
Total assets |
|
$ |
1,565.5 |
|
|
$ |
1,589.5 |
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
51.7 |
|
|
$ |
50.4 |
|
|
|
|
|
|
Accrued expenses |
|
|
34.2 |
|
|
|
27.2 |
|
|
|
|
|
|
Accrued compensation |
|
|
56.7 |
|
|
|
47.3 |
|
|
|
|
|
|
Accrued interest |
|
|
0.2 |
|
|
|
1.5 |
|
|
|
|
|
|
Billings in excess of costs and earnings on uncompleted
contracts |
|
|
49.7 |
|
|
|
58.1 |
|
|
|
|
|
|
Current portion of operating lease liabilities |
|
|
10.5 |
|
|
|
10.1 |
|
|
|
|
|
|
Other current liabilities |
|
|
9.2 |
|
|
|
25.7 |
|
|
|
|
|
|
Other current liabilities of discontinued operations |
|
|
1.1 |
|
|
|
0.8 |
|
|
|
|
|
|
Total current liabilities |
|
|
213.3 |
|
|
|
221.1 |
|
|
|
|
|
|
Long-term debt |
|
|
295.0 |
|
|
|
296.7 |
|
|
|
|
|
|
Operating lease liabilities, net of current portion |
|
|
33.3 |
|
|
|
32.7 |
|
|
|
|
|
|
Other long-term liabilities |
|
|
73.9 |
|
|
|
76.2 |
|
|
|
|
|
|
Other long-term liabilities of discontinued operations |
|
|
2.5 |
|
|
|
2.5 |
|
|
|
|
|
|
Total liabilities |
|
|
618.0 |
|
|
|
629.2 |
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest |
|
|
15.2 |
|
|
|
15.2 |
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
|
1,582.0 |
|
|
|
1,578.9 |
|
|
|
|
|
|
Accumulated other comprehensive loss |
|
|
0.6 |
|
|
|
0.6 |
|
|
|
|
|
|
Accumulated deficit |
|
|
(650.3 |
) |
|
|
(634.4 |
) |
|
|
|
|
|
Total Kratos stockholders’ equity |
|
|
932.3 |
|
|
|
945.1 |
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
1,565.5 |
|
|
$ |
1,589.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kratos
Defense & Security Solutions, Inc. |
|
|
|
|
|
Unaudited
Condensed Consolidated Statements of Cash Flows |
|
|
|
|
|
(in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
March 27, |
|
March 28, |
|
|
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
Operating
activities: |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(15.9 |
) |
|
$ |
1.9 |
|
|
|
|
|
|
Less: loss from discontinued operations |
|
|
(0.2 |
) |
|
|
- |
|
|
|
|
|
|
Income (loss) from continuing operations |
|
|
(15.7 |
) |
|
|
1.9 |
|
|
|
|
|
|
Adjustments to reconcile income (loss) from continuing operations
to net cash provided by (used in) operating activities from
continuing operations: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
7.0 |
|
|
|
6.3 |
|
|
|
|
|
|
Amortization of lease right-of-use assets |
|
|
2.6 |
|
|
|
2.2 |
|
|
|
|
|
|
Deferred income taxes |
|
|
- |
|
|
|
0.1 |
|
|
|
|
|
|
Stock-based compensation |
|
|
7.0 |
|
|
|
6.2 |
|
|
|
|
|
|
Amortization of deferred financing costs |
|
|
0.3 |
|
|
|
0.2 |
|
|
|
|
|
|
Loss on extinguishment of debt |
|
|
13.0 |
|
|
|
- |
|
|
|
|
|
|
Provision for (recovery of) doubtful accounts |
|
|
- |
|
|
|
(0.1 |
) |
|
|
|
|
|
Changes in assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
31.9 |
|
|
|
9.8 |
|
|
|
|
|
|
Unbilled receivables |
|
|
(19.8 |
) |
|
|
(1.8 |
) |
|
|
|
|
|
Inventoried costs |
|
|
(15.3 |
) |
|
|
(4.2 |
) |
|
|
|
|
|
Prepaid expenses and other assets |
|
|
(9.5 |
) |
|
|
(2.0 |
) |
|
|
|
|
|
Operating lease liabilities |
|
|
(2.7 |
) |
|
|
(2.2 |
) |
|
|
|
|
|
Accounts payable |
|
|
1.3 |
|
|
|
(2.0 |
) |
|
|
|
|
|
Accrued compensation |
|
|
5.6 |
|
|
|
6.2 |
|
|
|
|
|
|
Accrued expenses |
|
|
6.1 |
|
|
|
(2.7 |
) |
|
|
|
|
|
Accrued interest |
|
|
(1.3 |
) |
|
|
4.9 |
|
|
|
|
|
|
Billings in excess of costs and earnings on uncompleted
contracts |
|
|
(8.3 |
) |
|
|
7.1 |
|
|
|
|
|
|
Income tax receivable and payable |
|
|
(4.9 |
) |
|
|
(2.2 |
) |
|
|
|
|
|
Other liabilities |
|
|
(5.2 |
) |
|
|
(5.0 |
) |
|
|
|
|
|
Net cash provided by (used in) operating activities from continuing
operations |
|
|
(7.9 |
) |
|
|
22.7 |
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
Cash paid for acquisitions, net of cash acquired |
|
|
(58.5 |
) |
|
|
(5.1 |
) |
|
|
|
|
|
Capital expenditures |
|
|
(10.8 |
) |
|
|
(9.6 |
) |
|
|
|
|
|
Net cash used in investing activities from continuing
operations |
|
|
(69.3 |
) |
|
|
(14.7 |
) |
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
|
Proceeds from the issuance of long-term debt |
|
|
200.0 |
|
|
|
- |
|
|
|
|
|
|
Repayment of debt |
|
|
(309.8 |
) |
|
|
- |
|
|
|
|
|
|
Debt issuance costs |
|
|
(3.2 |
) |
|
|
- |
|
|
|
|
|
|
Credit agreement borrowings |
|
|
100.0 |
|
|
|
- |
|
|
|
|
|
|
Payment under finance leases |
|
|
(0.3 |
) |
|
|
(0.2 |
) |
|
|
|
|
|
Payments of employee taxes withheld from share-based awards |
|
|
(6.8 |
) |
|
|
(7.1 |
) |
|
|
|
|
|
Proceeds from shares issued under equity plans |
|
|
2.9 |
|
|
|
2.5 |
|
|
|
|
|
|
Net cash used in financing activities from continuing
operations |
|
|
(17.2 |
) |
|
|
(4.8 |
) |
|
|
|
|
|
Net cash flows from continuing operations |
|
|
(94.4 |
) |
|
|
3.2 |
|
|
|
|
|
|
Net operating cash flows of discontinued
operations |
|
|
0.1 |
|
|
|
(0.5 |
) |
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(0.7 |
) |
|
|
(0.6 |
) |
|
|
|
|
|
Net increase (decrease) in cash, cash equivalents and restricted
cash |
|
|
(95.0 |
) |
|
|
2.1 |
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at beginning of
period |
|
|
349.4 |
|
|
|
381.5 |
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
254.4 |
|
|
$ |
383.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
March 27, |
|
March 28, |
|
|
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
Net
income (loss) attributable to Kratos |
|
$ |
(15.9 |
) |
|
$ |
1.9 |
|
|
|
|
|
|
Less: GAAP
benefit for income taxes |
|
|
(4.3 |
) |
|
|
(2.7 |
) |
|
|
|
|
|
Less: Net
income (loss) attributable to noncontrolling interest |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Less: Loss
from discontinued operations, net of income taxes |
|
|
0.2 |
|
|
|
- |
|
|
|
|
|
|
Loss
from continuing operations before taxes |
|
|
(20.0 |
) |
|
|
(0.8 |
) |
|
|
|
|
|
Add:
Amortization of intangible assets |
|
|
1.7 |
|
|
|
1.4 |
|
|
|
|
|
|
Add:
Amortization of capitalized contract and development costs |
|
|
0.3 |
|
|
|
0.2 |
|
|
|
|
|
|
Add:
Depreciation |
|
|
5.3 |
|
|
|
4.9 |
|
|
|
|
|
|
Add:
Stock-based compensation |
|
|
7.0 |
|
|
|
6.2 |
|
|
|
|
|
|
Add: Loss on
extinguishment of debt |
|
|
13.0 |
|
|
|
- |
|
|
|
|
|
|
Add: Foreign
transaction loss |
|
|
- |
|
|
|
0.1 |
|
|
|
|
|
|
Add:
Acquisition and restructuring related items and other |
|
|
0.6 |
|
|
|
0.2 |
|
|
|
|
|
|
Non-GAAP Adjusted income from continuing
operations before income taxes |
|
|
7.9 |
|
|
|
12.2 |
|
|
|
|
|
|
Income taxes
on Non-GAAP measure Adjusted income from continuing
operations* |
|
|
2.8 |
|
|
|
4.5 |
|
|
|
|
|
|
Non-GAAP Adjusted net
income |
|
$ |
5.1 |
|
|
$ |
7.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
$ |
(0.12 |
) |
|
$ |
0.01 |
|
|
|
|
|
|
Less: GAAP
benefit for income taxes |
|
|
(0.03 |
) |
|
|
(0.02 |
) |
|
|
|
|
|
Less: Net
income (loss) attributable to noncontrolling interest |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Less: Loss
from discontinued operations, net of income taxes |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Add:
Amortization of intangible assets |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
|
|
|
Add:
Amortization of capitalized contract and development costs |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Add:
Depreciation |
|
|
0.04 |
|
|
|
0.04 |
|
|
|
|
|
|
Add:
Stock-based compensation |
|
|
0.06 |
|
|
|
0.05 |
|
|
|
|
|
|
Add: Loss on
extinguishment of debt |
|
|
0.10 |
|
|
|
- |
|
|
|
|
|
|
Add: Foreign
transaction loss |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Add:
Acquisition and restructuring related items and other |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Income taxes
on Non-GAAP measure Adjusted income from continuing
operations* |
|
|
(0.02 |
) |
|
|
(0.03 |
) |
|
|
|
|
|
Adjusted income from continuing operations per diluted
common share |
|
$ |
0.04 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted common shares
outstanding |
|
|
125.9 |
|
|
|
127.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kratos Defense and Secur... (NASDAQ:KTOS)
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From Aug 2024 to Sep 2024
Kratos Defense and Secur... (NASDAQ:KTOS)
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From Sep 2023 to Sep 2024