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Kratos' (KTOS) Q1 Earnings Beat Estimates, Revenues Rise Y/Y

Zacks Equity Research
·4-min read

Kratos Defense & Security Solutions, Inc. KTOS reported first-quarter 2020 adjusted earnings of 9 cents per share, which exceeded the Zacks Consensus Estimate of 6 cents by 50%. The bottom-line figure, however, declined 18.2% from 11 cents reported in the prior-year quarter.

Total Revenues

Total revenues amounted to $168.9 million, surpassing the Zacks Consensus Estimate of $165 million by 2.4% and increasing 5.3% from $160.4 million reported in the year-ago quarter. The year-over-year upside was led by higher product sales and service revenues.

Operational Update

Kratos’ operating expenses amounted to $41.1 million in the quarter compared with $36.7 million in the prior-year quarter. Selling, general and administrative expenses were up 9.8%, while research and development expenses surged 46.2%.

Kratos reported first-quarter 2020 operating income of $4.7 million, reflecting a decrease of 42.7% from first-quarter 2019.

The company reported first-quarter 2020 bookings of $213.1 million and a book-to-bill ratio of 1.3 to 1.0. Backlog as of Mar 29, 2020, was $646.8 million, up 7.6% from the backlog on Dec 29, 2019.

Segmental Performance

Unmanned Systems: Net revenues during the first quarter increased 20.3% year over year to $42 million.

Government Solutions: Net revenues in the first quarter rose 1.1% year over year to $126.9 million.

Kratos Defense Security Solutions Inc Price, Consensus and EPS Surprise

Kratos Defense Security Solutions Inc Price, Consensus and EPS Surprise
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

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Financial Details

As of Mar 29, 2020, cash and cash equivalents were $158.6 million compared with $172.6 million as of Dec 29, 2019.

Long-term debt, including net of current portion, totaled $295.3 million as of Mar 29, 2020, up slightly from $295.1 million as of Dec 29, 2019.

As of Mar 29, 2020, cash generated from operating activities was $4 million compared with $16 million in the prior year’s quarter.

2020 Guidance

For the second quarter of 2020, Kratos expects revenues of $160-170 million. The Zacks Consensus Estimate for sales is pegged at $190.9 million, which lies above the company’s projected view.

For 2020, the company lowered its revenue guidance from $740-$780 million to $720-$760 million, primarily to reflect the expected impacts of COVID-19 on the business, vendors, suppliers and customers. The Zacks Consensus Estimate for full-year sales is pegged at $756.5 million, which lies above the midpoint of the company’s projected range.

Zacks Rank

Kratos currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Lockheed Martin Corp. LMT, a Zacks Rank #3 company, reported first-quarter 2020 earnings of $6.08 per share, which surpassed the Zacks Consensus Estimate of $5.76 by 5.5%. The bottom line also improved 1.5% from the year-ago quarter’s $5.99.

General Dynamics Corporation GD, a Zacks Rank #3 company, reported first-quarter 2020 earnings from continuing operations of $2.43 per share, which missed the Zacks Consensus Estimate of $2.46 by 1.2%. Moreover, earnings declined 5.1% from $2.56 in the year-ago quarter.

Teledyne Technologies Inc. TDY, a Zacks Rank #3 company, reported first-quarter 2020 earnings of $2.28 per share, which surpassed the Zacks Consensus Estimate of $2.10 by 8.6%. The bottom line also improved 12.9% from the year-ago quarter’s $2.02.

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