Kratos Defense (KTOS) Misses Q4 EPS by 2c, Revenues Miss; Offers 1Q & FY21 Revenue Outlook

Kratos Defense (NASDAQ: KTOS) reported Q4 EPS of $0.08, $0.02 worse than the analyst estimate of $0.10. Revenue for the quarter came in at $206.4 million versus the consensus estimate of $217.15 million.

• Fourth Quarter and Fiscal 2020 Revenues of $206.4 and $747.7 Million, Increased 11.5 percent and 4.2 percent, respectively, over 2019
• Fourth Quarter and Fiscal 2020 Unmanned Systems Segment Revenues of $49.5 and $187.0 Million, Increased 29.2 and 15.9 percent, respectively, over 2019
• Fourth Quarter and Fiscal 2020 Cash Flow from Operations of $25.6 Million and $44.7 Million, respectively Fourth Quarter 2020 Book to Bill Ratio of 1.2 to 1 Fiscal 2020 Book to Bill Ratio of 1.4 to 1

Eric DeMarco, Kratos’ President and CEO, said, “Kratos ended 2020 with a 1.4 to 1.0 book to bill ratio for the year, including 1.4 to 1.0 in our Unmanned Systems business, a record backlog and an opportunity pipeline of $9 billion, providing us with confidence and visibility to our expected future growth trajectory and representative of the success of the investments we have made. As we begin 2021, approximately 60 percent of Kratos business is focused on innovative and disruptive Space, Satellite Communications and Unmanned Systems, which are expected to be some of our fastest growing and highest profit margin business areas.”

Mr. DeMarco continued, “Since our last report to you, we have received approximately $38 million in Skyborg, $18 million in LCAAT/LCASD and $10 million in other Valkyrie or Tactical Drone related program awards. Additionally, an attritableONE XQ-58A Valkyrie flew with a USAF F-22 Raptor, a USAF F-35A Lightening II and a Marine Corps F-35B in an ABMS gatewayONE Program demonstration and the Gremlins system successfully completed its third test flight series. We also continued to integrate and test multiple systems and payloads into each of Kratos’ family of affordable, high performance drones flying today, further expanding our first to market leading position, and we remain highly confident of the ultimate transformational success of this business.”

Mr. DeMarco concluded, “Over the past several quarters, the number of large, new program opportunities that Kratos has received or that we are now pursuing has increased substantially, and in 2021 we will be making the investments to execute on, and pursue these, including the objective of substantially increasing Kratos market share and positioning Kratos for significant future organic growth, profitability, cash flow and shareholder value.”

GUIDANCE:

Kratos Defense sees Q1 2021 revenue of $185-195 million, versus the consensus of $189.25 million.

Kratos Defense sees FY2021 revenue of $810-850 million, versus the consensus of $843.86 million.

For earnings history and earnings-related data on Kratos Defense (KTOS) click here.

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