Core Viewpoint - Kratos Defense & Security Solutions, Inc. (KTOS) is expected to report strong first-quarter 2025 results, driven by solid revenue growth across its business segments despite challenges from higher costs [1][7]. Group 1: Revenue Performance - The Unmanned Systems business segment is anticipated to show solid revenue growth due to increased domestic and international target drone production, with quarterly revenues estimated at $65.6 million, reflecting a 10.4% increase year-over-year [2]. - The Government Solutions business segment is expected to benefit from revenue growth in C5ISR, microwave electronics, hypersonic and ballistic missile target businesses, and turbine technologies [3]. - However, the Space and Satellite business within the Government segment is projected to experience lower revenues due to OEM delays in software-defined satellite manufacturing, negatively impacting the deployment of commercial satellite ground equipment [4]. - The overall revenue estimate for the Government segment is $227 million, indicating a 4.2% rise from the previous year [5]. - The total revenue estimate for KTOS in the first quarter is $292.2 million, representing a 5.4% increase from the year-ago quarter [7]. Group 2: Earnings Expectations - The consensus estimate for KTOS' first-quarter earnings is nine cents per share, which indicates an 18.2% decline from the prior-year figure [8]. - Despite solid revenue projections, higher bid and proposal costs, along with increased subcontractor and material costs on certain contracts, are expected to adversely affect overall earnings [7]. Group 3: Market Position and Predictions - The Zacks model indicates that KTOS does not conclusively predict an earnings beat this time, with an Earnings ESP of 0.00% and a Zacks Rank of 3 (Hold) [9][10].

Core Insights - Kratos Defense & Security Solutions, Inc. (KTOS) reported a fourth-quarter 2024 adjusted earnings of 13 cents per share, an increase of 8.3% from 12 cents in the prior-year quarter, and exceeded the Zacks Consensus Estimate by 44.4% [1][2] - The company achieved total revenues of $283.1 million in the fourth quarter, which was a 3.4% increase from $273.8 million in the previous year, although it fell short of the Zacks Consensus Estimate of $288 million by 1.8% [3] - For the full year 2024, total revenues reached $1.14 billion, up from $1.04 billion in 2023, aligning with the Zacks Consensus Estimate [4] Financial Performance - GAAP earnings for the fourth quarter were reported at three cents per share, compared to two cents in the fourth quarter of 2023 [2] - Selling, general and administrative expenses increased by 1.1% year over year, while research and development expenses surged by 32.5% [5] - Operating income for the fourth quarter was $3 million, a decline from $11.7 million in the same quarter last year [5] Segment Performance - Unmanned Systems segment net revenues improved by 10.3% year over year to $61.1 million [7] - Kratos Government Solutions segment net revenues increased by 1.6% to $222 million compared to the previous year [7] Operational Metrics - The consolidated book-to-bill ratio was reported at 1.5-1.0, with bookings totaling $434.2 million, and total backlog at the end of the fourth quarter was $1.45 billion, up from $1.29 billion at the end of the third quarter [6] Cash Flow and Debt - As of December 29, 2024, cash and cash equivalents totaled $329.3 million, a significant increase from $72.8 million as of December 31, 2023 [8] - Long-term debt decreased to $174.6 million from $219.3 million recorded at the end of 2023 [8] - Net cash flow from operating activities was $49.7 million in 2024, down from $65.2 million at the end of 2023 [8] Future Guidance - For the first quarter of 2025, KTOS projects revenues in the range of $285-$295 million, while the full-year 2025 revenue guidance is set between $1.26-$1.29 billion [9] - The Zacks Consensus Estimate for 2025 revenues is pegged at $1.28 billion, closely aligning with the company's mid-point guidance [9] - Operating cash flows for 2025 are expected to be between $50-$60 million, with free cash outflow projected at $75-$85 million [10]