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Kratos Defense (KTOS) Q1 Earnings Top Estimates, Revenues Rise

·4 min read

Shares of Kratos Defense & Security Solutions, Inc. KTOS have declined 8.1% to $12.87 since the company released its first-quarter 2022 results on May 6.

Kratos Defense reported first-quarter 2022 adjusted earnings of 4 cents per share, which beat the Zacks Consensus Estimate of a penny by a whopping 300%. However, the bottom line declined by 33.3% from the 6 cents per share reported in the prior-year quarter.

Kratos Defense reported a GAAP loss of 12 cents per share against the earnings of a penny reported in the prior-year quarter.

Total Revenues

Total revenues were $196.2 million, in line with the Zacks Consensus Estimate. Total revenues increased 1% from $194.2 million in the year-ago quarter.

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

Operational Update

Kratos Defense’s SG&A expenses were up 14.2%, while research and development expenses increased 15% year over year. Meanwhile, depreciation expenses rose 8.3%, whereas expenses regarding acquisitions and restructuring-related items increased a solid 200%.

KTOS reported a first-quarter 2022 operating loss of $1.2 million against the operating income of $4.9 million reported in the year-ago quarter.

Kratos Defense’s book-to-bill ratio for the first quarter of 2022 was 1.0 to 1.0, with bookings of $198.2 million for the same period.

The total backlog for Kratos Defense at the end of the first quarter of 2022 was $982.1 million, up from $953.9 million at the end of the fourth quarter of 2021.

Segmental Performance

Unmanned Systems:Net revenues in the first quarter decreased by 5.9% year over year to $52.6 million.

Government Solutions:Net revenues in the first quarter increased 3.8% year over year to $143.6 million, mainly due to contributions from recently acquired Cosmic AES and CTT.

Financial Details

As of Mar 27, 2022, cash and cash equivalents were $254.4 million compared with $349.4 million as of Dec 26, 2021.

The long-term debt, including net of the current portion, totaled $295 million as of Mar 27, 2022, slightly down from $296.7 million as of Dec 26, 2021.

In the first quarter, the cash outflow from operating activities was $7.9 million compared to the cash inflow of $22.7 million in the prior-year period.

Guidance

For the second quarter of 2022, KTOS expects to generate revenues in the range of $205-$215 million. The Zacks Consensus Estimate for second-quarter revenues is pegged at $210.5 million, in line with the midpoint of the company’s projected range.

For 2022, the company continues to expect revenues in the range of $880-$920 million. The Zacks Consensus Estimate for full-year revenues stands at $893.7 million, which lies near the lower end of the company’s projected range.

Zacks Rank

Kratos Defense currently has 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 LMT reported first-quarter 2022 earnings of $6.44 per share, which surpassed the Zacks Consensus Estimate of $6.22 by 3.5%. However, the bottom line declined by 1.8% year over year.

Lockheed Martin ended the first quarter of 2022 (on Mar 27, 2022) with $134.23 billion in the backlog compared with $135.36 billion at the end of the fourth quarter of 2021. LMT’s cash from operations at the end of the first quarter of 2022 amounted to $1.41 billion compared with $1.75 billion a year ago.

Raytheon Technologies’ RTX first-quarter 2022 adjusted earnings per share (EPS) of $1.15 beat the Zacks Consensus Estimate of $1.01 by 13.9%. Its sales of $15,716 million missed the Zacks Consensus Estimate of $15,799 million by 0.5%.

Raytheon Technologies had cash and cash equivalents of $6,040 million as of Mar 31, 2022 compared with $7,832 million as of Dec 31, 2021. RTX projects an adjusted EPS in the range of $4.60-$4.80.

Hexcel Corporation HXL reported first-quarter 2022 adjusted earnings of 22 cents per share, which exceeded the Zacks Consensus Estimate of 17 cents by 29.4%.

Hexcel’s net sales during the first quarter totaled $390.6 million, which beat the Zacks Consensus Estimate of $362 million by 7.9%. HXL currently expects to generate sales in the range of $1.50-$1.63 billion in 2022.


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