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Kratos Defense (KTOS) Q2 Earnings Top, '22 Revenue View Up

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Shares of Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) have inched up 0.3% to $15.10 since the company released its second-quarter 2022 results on Aug 10, reflecting investors’ optimism about the company’s quarterly results.

Kratos Defense reported second-quarter 2022 adjusted earnings of 7 cents per share, which beat the Zacks Consensus Estimate of 3 cents by a whopping 133.3%. Moreover, the bottom line improved 16.7% from 6 cents per share reported in the prior-year quarter.

Kratos Defense reported a GAAP loss of 4 cents per share against an earnings of a penny reported in the prior-year quarter.

Total Revenues

Total revenues were $224.2 million, which surpassed the Zacks Consensus Estimate of $210 million by 7%. Total revenues also increased 9.3% from $205.1 million in the year-ago quarter.

Operational Update

Kratos Defense’s SG&A expenses were up 16.9%, while research and development expenses declined 9.8% year over year. Meanwhile, depreciation expenses dropped 7.1%, whereas expenses related to the amortization of intangible assets increased a solid 27.8%.

KTOS reported a second-quarter 2022 operating loss of $1.9 million against an operating income of $3.3 million reported in the year-ago quarter.

Kratos Defense’s book-to-bill ratio for the second quarter of 2022 was 1.2 to 1.0, with bookings of $261 million for the same period.

The total backlog for Kratos Defense at the end of the second quarter of 2022 was $1.05 billion, up from $982.1 million at the end of the first quarter of 2022.

Segmental Performance

Unmanned Systems: Net revenues in the second quarter decreased 6.5% year over year to $56.4 million.

Government Solutions: Net revenues in the second quarter increased 15.9% year over year to $167.8 million, mainly due to contributions from recently acquired Cosmic AES, CTT and SRE.

Financial Details

As of Jun 26, 2022, cash and cash equivalents were $142.4 million compared with $349.4 million as of Dec 26, 2021.

The long-term debt, including net of the current portion, totaled $293.8 million as of Jun 26, 2022, slightly down from $296.7 million as of Dec 26, 2021.

In the first six months of 2022, the cash outflow from operating activities was $29.5 million against a cash inflow of $22 million in the prior-year period.

Guidance

For the third quarter of 2022, KTOS expects to generate revenues in the range of $220-$230 million. The Zacks Consensus Estimate for third-quarter revenues is pegged at $226.9 million, higher than the midpoint of the company’s projected range.

For 2022, the company currently expects revenues in the range of $890-930 million, up from the prior guidance of $880-$920 million. The Zacks Consensus Estimate for full-year revenues stands at $901.5 million, which lies lower than the mid-point of the full-year estimate range provided by the company.

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 Corporation (LMT - Free Report) reported second-quarter 2022 earnings of $6.32 per share, which surpassed the Zacks Consensus Estimate of $6.29 by 0.5%. The bottom line, however, declined 1.6% year over year.

The company’s net sales amounted to $15.45 billion, which missed the Zacks Consensus Estimate of $16.16 billion by 4.4%. The top line also declined 9.3% from $17.03 billion reported in the year-ago quarter.

Hexcel Corporation (HXL - Free Report) reported second-quarter 2022 adjusted earnings of 33 cents per share, which exceeded the Zacks Consensus Estimate of 30 cents by 10%.

The company’s net sales totaled $393 million, which beat the Zacks Consensus Estimate of $383 million by 2.6%. Moreover, the top line witnessed an improvement of 22.7% from the year-ago quarter’s $320.3 million.

Leidos Holdings, Inc.’s (LDOS - Free Report) second-quarter 2022 adjusted earnings of $1.59 per share beat the Zacks Consensus Estimate of $1.55 by 2.6%. The bottom line also improved 4.6% from $1.52 per share registered a year ago.

The company generated total revenues of $3,597 million in the quarter under consideration, exceeding the Zacks Consensus Estimate of $3,514 million by 2.4%. The top line also improved 4.3% year over year.