Fiscal 2021 Revenues of $811.5 Million and Fourth Quarter 2021 Revenues of $211.6 Million Increased 8.5 percent and 2.5 Percent over Fiscal Year and Fourth Quarter 2020 Revenues, Respectively

Fiscal 2021 Unmanned Systems Segment Revenues of $231.9 Million and Fourth Quarter 2021 Revenues of $54.4 Million, Increased 24.0 Percent and 9.9 Percent over Fiscal Year and Fourth Quarter 2020 Revenues, Respectively

         Fiscal 2021 Space, Satellite and Cyber Business Revenues of $276.3 million and Fourth Quarter 2021 Revenues of $78.4 Million, Increased 18.9 percent and 9.0 Percent over Fiscal Year and Fourth Quarter 2020 Revenues, Respectively

Fourth Quarter 2021 Consolidated Book to Bill Ratio of 1.5 to 1
Fiscal 2021 Consolidated Book to Bill Ratio of 1.0 to 1

SAN DIEGO, Feb. 22, 2022 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq:KTOS), a leading National Security Solutions provider, today reported its fourth quarter and fiscal 2021 financial results. For the fourth quarter of 2021, Kratos reported Revenues of $211.6 million, Operating Income of $9.2 million, Net Loss of $2.6 million and Adjusted EBITDA of $23.4 million.   Included in Net Loss is a tax provision of $4.5 million on Income before taxes of $3.0 million.

Kratos reported fourth quarter 2021 Net Loss of $2.6 million, and GAAP loss per share of $0.02, compared to Net Income of $78.1 million and GAAP EPS income of $0.62 for the fourth quarter of 2020, which included a non-recurring non-cash tax benefit of $75.3 million. Adjusted EPS was $0.11 for the fourth quarter of 2021 compared to $0.08 for the fourth quarter of 2020. The Company has approximately $235 million of net operating loss carryforwards, which are expected to substantially shield Kratos from paying future cash income taxes.   

Fourth quarter 2021 Revenues of $211.6 million increased $5.2 million, or 2.5 percent, from fourth quarter 2020 Revenues of $206.4 million, reflecting increases in the Company’s Unmanned Systems, Space, Satellite and Cyber, Microwave Products and Turbine Technologies businesses, offset partially by reductions of approximately $9.4 million in our Training Solutions business resulting primarily from a previously disclosed reduction of an international training contract. On a pro forma basis, excluding this reduction, Revenue grew organically 7.7 percent in the fourth quarter of 2021, as compared to the fourth quarter of 2020.   Additionally, fourth quarter 2021 revenues continued to be negatively impacted by COVID-related employee absenteeism, supply chain delays, increased lead times for delivery of necessary components, customer delays and travel restrictions, primarily in our Space, Satellite and Cyber, Microwave Products and C5ISR businesses, resulting in expected revenues of approximately $11.2 million being deferred into future periods.

Operating Income of $9.2 million in the fourth quarter of 2021 increased from $9.0 million in the fourth quarter of 2020, with fourth quarter 2021 Operating Income including increases in Internally Funded Research & Development of $1.4 million over the fourth quarter of 2020. Fourth quarter 2021 Adjusted EBITDA of $23.4 million increased from $22.3 million in the fourth quarter of 2020.

Fourth quarter 2021 Cash Flow Generated from Operations was $0.7 million, and Free Cash Flow Used from Operations was $12.4 million, after funding $13.1 million of capital expenditures, including in our high growth Unmanned Systems, Space, Satellite and Cyber and Turbine Technologies business areas.

For the fourth quarter of 2021, Kratos’ Unmanned Systems Segment (KUS) Revenues of $54.4 million increased 9.9 percent, as compared to $49.5 million in the fourth quarter of 2020. KUS Operating Income decreased from $3.5 million in the fourth quarter of 2020 to $2.3 million in the fourth quarter of 2021, primarily due to a less favorable mix of revenues, including an increase in development programs, which typically generate lower margins, and due to an increase in SG&A costs of approximately $1.3 million and an increase of R&D expenses of approximately $0.3 million.

Fourth quarter 2021 KUS Adjusted EBITDA of $4.6 million decreased from fourth quarter 2020 Adjusted EBITDA of $5.5 million, primarily reflecting increases in certain development programs, including in the tactical drone area, which typically generate lower margins, and due to an increase in SG&A costs, including costs related to increased headcount.
        
KUS’s book-to-bill ratio for the fourth quarter of 2021 was 2.4 to 1.0 and 1.1 to 1.0 for the last twelve months ended December 26, 2021, with bookings of $263.6 million for the twelve months ended December 26, 2021.   Total backlog for KUS at the end of the fourth quarter of 2021 was $269.6 million, up from $194.5 million at the end of the third quarter of 2021, and up from $237.9 million at the end of the fourth quarter of 2020.      

For the fourth quarter of 2021, Kratos’ Government Solutions Segment (KGS) reported Revenues of $157.2 million, up from Revenues of $156.9 million in the fourth quarter of 2020, reflecting organic growth in our Space, Satellite and Cyber, Microwave Products and Turbine Technologies businesses, offset by a reduction of $9.4 million in our Training Solutions business resulting primarily from the loss of an international training contract. KGS reported operating income of $14.7 million, up from Operating Income of $12.5 million in the fourth quarter of 2020, primarily reflecting a more favorable revenue mix in the Company’s Space, Satellite and Cyber, Microwave Products and Turbine Technologies businesses.  

Kratos’ Space, Satellite and Cyber business generated Revenues of $78.4 million in the fourth quarter of 2021, an organic increase of 9.0 percent over the fourth quarter of 2020 Revenues of $71.9 million.

Fourth quarter 2021 KGS Adjusted EBITDA of $18.8 million increased from fourth quarter 2020 Adjusted EBITDA of $16.8 million, including a more favorable mix of revenues, primarily in the Space, Satellite and Cyber business generated from deliveries of OpenSpace software and work performed on certain confidential programs, and including a favorable mix and deliveries in our Microwave Products and a favorable mix in our Turbine Technologies businesses.

For the fourth quarter of 2021, KGS reported a book-to-bill ratio of 1.2 to 1.0, and a book to bill ratio of 1.0 to 1 for the twelve months ended December 26, 2021.   Included in KGS is Kratos’ Space, Satellite and Cyber business, which reported a book to bill ratio for the twelve months ended December 26, 2021 of 1.1 to 1. KGS’s total backlog at the end of the fourth quarter of 2021 was $684.3 million, up from $644.6 million at the end of the third quarter of 2021, and flat from $684.2 million at the end of the fourth quarter of 2020.

For the fourth quarter of 2021, Kratos reported consolidated bookings of $323.1 million and a book-to-bill ratio of 1.5 to 1.0, with consolidated bookings of $840.0 million and a book-to-bill ratio of 1.0 to 1.0 for the last twelve months ended December 26, 2021. Backlog on December 26, 2021 was $953.9 million, up sequentially from $839.1 million at September 26, 2021 and up from $922.2 million at December 27, 2020, and Kratos’ bid and proposal pipeline was $9.4 billion at December 26, 2021, up from $9.1 billion at September 26, 2021.   Backlog at December 26, 2021 was comprised of funded backlog of $653.7 million and unfunded backlog of $300.2 million.

Fiscal 2021 Revenues of $811.5 million increased 8.5 percent, as compared to Revenues of $747.7 million in fiscal 2020, reflecting organic growth in Kratos’ Unmanned Systems, Space, Satellite and Cyber, Microwave Products, and Turbine Technologies businesses, offset partially by certain reductions of approximately $26.1 million in our Training Solutions business. Fiscal 2021 Revenues include approximately $41.4 million from the recent ASC Signal acquisition, up from fiscal 2020 Revenues of $21.9 million, reflecting a full year of contribution in 2021. On a proforma basis, excluding the reduction in our Training Solutions business and excluding the ASC acquisition, Consolidated Revenues increased organically 10.7 percent.

In fiscal 2021, our Unmanned Systems business generated revenue of $231.9 million, an increase of 24 percent over 2020 revenues of $187.0 million. In fiscal 2021 our KGS business generated revenue of $579.6 million, an increase of 3.4 percent over 2020 revenue of $560.7 million. On a proforma basis, excluding the reduction in our Training Solutions business and excluding the ASC acquisition, revenues in our KGS business grew 5.4 percent from fiscal 2020 to fiscal 2021.