Kratos' (KTOS) Q2 Earnings & Revenues Top Estimates, Down Y/Y

Kratos Defense & Security Solutions, Inc. KTOS reported second-quarter 2020 earnings of 8 cents per share, which surpassed the Zacks Consensus Estimate of 5 cents by 60%. The bottom line, however, declined 27.2% from the prior-year quarter’s earnings of 11 cents per share.

Barring one-time adjustments, the company reported a GAAP loss of a penny per share in the second quarter of 2020.

Total Revenues

Total revenues amounted to $170.4 million, surpassing the Zacks Consensus Estimate of $167 million by 2%. Revenues although declined 9.3% from $187.9 million reported in the year-ago quarter. The year-over-year downside was led by lower product sales and service revenues.

Operational Update

Kratos’ operating expenses amounted to $39.8 million in the quarter compared with the prior-year quarter’s $35.5 million. Selling, general and administrative expenses were up 8.6%, while research and development expenses rose 33.3%.

The company reported second-quarter 2020 operating income of $2.9 million compared with the operating income of $9 million reported in the second quarter of 2019.

Kratos reported second-quarter 2020 bookings of $163.7 million and a book-to-bill ratio of 1.3 to 1.0, with a backlog of $683.4 million as of Jun 28, 2020.

Segmental Performance

Unmanned Systems: Net sales during the second quarter declined 1.2% year over year to $42 million.

Government Solutions: Net sales in the second quarter fell 11.7% year over year to $128.4 million.

Kratos Defense Security Solutions, Inc. Price, Consensus and EPS Surprise

Kratos Defense Security Solutions, Inc. price-consensus-eps-surprise-chart | Kratos Defense Security Solutions, Inc. Quote

Financial Details

As of Jun 28, 2020, cash and cash equivalents were $397.2 million compared with $172.6 million as of Dec 31, 2019.

Long-term debt, including net of current portion, totaled $295.9 million as of Jun 28, 2020, up from $295.1 million as of Dec 31, 2019.

At the end of first-half 2020, cash generated from operating activities summed $10.8 million compared with $20 million in the first half of 2019.

Q3 & 2020 Guidance

For the third quarter of 2020, Kratos expects revenues of $195-$205 million. The Zacks Consensus Estimate for sales is pegged at $200.4 million, which lies above the midpoint of the company’s projected view.

For 2020, the company increased its revenue guidance from $720-$760 million to $740-$780 million, primarily reflecting the expected contribution of the ASC Signal acquisition for the second half of 2020. The Zacks Consensus Estimate for full-year sales is pegged at $750.8 million, which lies below the midpoint of the company’s projected range.

Zacks Rank

Kratos currently carries a Zacks Rank #4 (Sell).

Recent Defense Releases

Teledyne Technologies TDY, a Zacks Rank #2 (Buy) company, reported second-quarter 2020 adjusted earnings of $2.43 per share, which surpassed the Zacks Consensus Estimate of $2.01 by 20.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lockheed Martin Corp. LMT, a Zacks Rank #3 (Hold) company, reported second-quarter 2020 adjusted earnings of $6.13 per share, which surpassed the Zacks Consensus Estimate of $5.71 by 7.4%.

Curtiss-Wright Corporation CW, a Zacks Rank #3 company, reported second-quarter 2020 adjusted earnings of $1.31 per share, which surpassed the Zacks Consensus Estimate of $1.29 by 1.6%.

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