Kratos Defense & Security Solutions(KTOS) - 2025 Q3 - Quarterly Results

Revenue Growth - Third Quarter 2025 revenues reached $347.6 million, reflecting a 26.0% growth and 23.7% organic growth compared to $275.9 million in Q3 2024[2] - Full year 2025 revenue guidance has been increased to a range of $1,320 million to $1,330 million[20] - Total revenues for the three months ended September 28, 2025, were $347.6 million, a 26% increase from $275.9 million in the same period of 2024[33] - Product sales increased to $230.2 million for the three months ended September 28, 2025, compared to $172.0 million in the prior year, representing a 34% growth[33] - Unmanned Systems segment revenues for Q3 2025 were $87.2 million, representing a 35.8% organic growth from $64.2 million in Q3 2024[2] - Government Solutions segment revenues for Q3 2025 were $260.4 million, showing a 20.0% organic growth from $211.7 million in Q3 2024[10] - Unmanned Systems segment revenues increased to $87.2 million for the three months ended September 28, 2025, up 36% from $64.2 million in the same period of 2024[49] - Kratos Government Solutions segment revenues rose to $260.4 million for the three months ended September 28, 2025, a 23% increase from $211.7 million in the same period of 2024[49] Profitability - Q3 2025 net income was $8.7 million, with adjusted earnings per share (EPS) of $0.14, compared to $3.2 million and $0.11 EPS in Q3 2024[5][6] - Net income for the three months ended September 28, 2025, was $8.7 million, up from $3.2 million in the same period of 2024, reflecting a 171% increase[33] - Adjusted EBITDA for the three months ended September 28, 2025, was $30.8 million, compared to $24.6 million in the same period of 2024, indicating a 25% increase[33] - The Company anticipates organic revenue growth for 2026 and 2027, with expected EBITDA margins improving during these years[26] - Adjusted net income for the nine months ended September 28, 2025, was $60.3 million, compared to $54.1 million for the same period in 2024, reflecting an increase of 10.8%[58] Financial Position - Total backlog at the end of Q3 2025 was $1.480 billion, up from $1.414 billion at the end of Q2 2025[13] - Total current assets increased to $1,237.0 million as of September 28, 2025, compared to $872.1 million as of December 29, 2024, representing a 42% growth[52] - Cash and cash equivalents rose to $565.9 million as of September 28, 2025, up from $329.3 million as of December 29, 2024, indicating a 72% increase[52] - Total liabilities decreased to $441.8 million as of September 28, 2025, down from $597.7 million as of December 29, 2024[52] Investment and Expenses - The company plans to invest approximately $25 to $30 million in its Rocket Systems and Unmanned Systems businesses for procurement and development[18] - Research and development expenses for the three months ended September 28, 2025, were $10.0 million, slightly up from $9.9 million in the same period of 2024[33] - Stock-based compensation expense for the nine months ended September 28, 2025, was $26.4 million, compared to $23.0 million for the same period in 2024[47] - The company expects to continue incurring expenses similar to those adjustments made in the Adjusted EBITDA calculation, indicating ongoing operational costs[46] Cash Flow - Net cash used in operating activities was $(54.2) million for the nine months ended September 28, 2025, compared to $4.1 million for the same period in 2024[54] - Capital expenditures for the nine months ended September 28, 2025, were $(71.1) million, up from $(44.6) million in the same period in 2024, indicating a 59.5% increase[54] - Net cash provided by financing activities was $360.2 million for the nine months ended September 28, 2025, compared to $280.6 million for the same period in 2024, an increase of 28.4%[54] Future Outlook - Full year 2026 organic revenue growth rate forecast has been increased to 15% to 20% above the 2025 revenue forecast[2] - Preliminary target for 2027 organic revenue growth rate is set at 18% to 23% above the 2026 revenue forecast[3] - The Company plans to pursue higher margin programs and negotiate lower margin contracts expected to be renewed in the future[26] - The Company is focused on expanding its customer base and enhancing product acceptance to achieve anticipated growth levels[27]