Kratos Defense & Security Solutions (KTOS) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues reached $300.1 million, up 16.8% year-over-year, with 16.7% organic growth, driven by strong performance in unmanned systems and government solutions.

• Net income was $7.9 million versus a net loss of $2.7 million in Q2 2023; EPS improved to $0.05 from $(0.02).

• Adjusted EBITDA for Q2 was $29.9 million, a 38% increase year-over-year, surpassing guidance.

• Backlog reached $1.3 billion as of June 30, 2024, with 35% expected to be recognized as revenue in 2024.

• Cash and cash equivalents rose to $308.2 million at June 30, 2024, following a $331.2 million equity raise in February 2024.

Financial highlights

• Q2 2024 revenue: $300.1 million, up from $256.9 million in Q2 2023, exceeding guidance.

• Q2 2024 net income: $7.9 million; Q2 2024 diluted EPS: $0.05.

• Adjusted EBITDA was $29.9 million, above the $20M–$23M guidance.

• Free cash flow used from operations was $15.4 million, with CapEx of $12.7 million.

• Consolidated backlog grew to $1.303 billion at June 30, 2024.

Outlook and guidance

• Affirmed 2024 guidance: unmanned systems revenue $265M–$275M (22%–27% organic growth), KGS revenue $860M–$875M.

• FY24 operating income expected at $33M–$38M; Adjusted EBITDA at $102M–$107M.

• Guidance incorporates expected 2025 federal continuing resolution, with no new program awards or production funding increases.

• CapEx for 2024 expected at $70M–$80M, with $40M–$50M as non-recurring investments.

• 35% of $1.3 billion backlog expected to be recognized as revenue in 2024, 41% in 2025.