Virtualized and Orchestrated Products Support the Dynamic Needs of Today’s Software-Defined Payloads and Multi-Orbit Constellations
SAN DIEGO, Nov. 29, 2022 (GLOBE NEWSWIRE) — Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a leading National Security Solutions provider announced today the general availability of its virtual OpenSpace Channelizer and Combiner for satellite ground operations. The products are used to split and combine digitized RF signals for more effective downlink and uplink, especially to support the advanced capabilities of next generation software-defined satellites and LEO constellations. For example, to support increasing customer demand or to address potential cases of interference, a high bandwidth signal from a software-defined satellite can be split into smaller signals and routed across the ground dynamically for service delivery or for RF analysis.
The OpenSpace Channelizer and Combiner are completely virtualized running on general purpose compute, replacing the racks of proprietary RF analog devices such as splitters and dividers that constitute today’s ground systems. Analog hardware components are not capable of keeping up with the faster demands growing in the space layer, such as high throughput spot beams, multi-orbit constellations and programmable payloads. For example, it can take days, weeks and sometimes months to make configuration changes to hardware, often requiring technicians to fly to remote locations to re-cable and install hardware in teleports. As software, however, the OpenSpace Channelizer and Combiner enable configuration and reconfiguration in just seconds in order to adapt to changing mission conditions such as interference or to support changing customer service levels.
The OpenSpace Channelizer and Combiner go beyond simple virtualization. They are orchestrated together with any standards-based digitizer and with other OpenSpace Platform ground functions to support automation and the quick provisioning of new services across the ground segment, including needed uplink/downlink functions. Virtual elements can be spun up for new missions on the fly and when no longer needed, spun down so the resources can be used for other operations.
The OpenSpace Channelizer and Combiner support a variety of satellite use cases for applications in two-way satellite communication (SATCOM) services, Earth Observation and Remote Sensing (EO/RS), and Telemetry, Tracking & Command (TT&C). Intelsat, the world’s largest commercial satellite operator, will be among the first users of the OpenSpace Channelizer and Combiner for SATCOM. In May of this year Intelsat announced it would use Kratos’ OpenSpace Platform to support its coming software-defined satellites and supporting ground network.
“We are supporting our customers growing connectivity needs for high-speed and reliable coverage on a global scale by enabling software-defined capabilities across our network,” commented Carmel Ortiz, VP of Systems Innovation at Intelsat. “Working in concert with our dynamic satellites, the OpenSpace Channelizer and Combiner as part of the OpenSpace Platform will help us accelerate the provisioning of new connectivity services and respond to traffic spikes in a matter of seconds.”
“The OpenSpace Channelizer and Combiner are available today to support the satellite ground systems movement toward digital transformation,” explained Christopher Boyd, Vice President of Product Management at Kratos. “The OpenSpace Platform is a fully digital gateway solution with digitizers that route IF signals from antennas across the ground system using virtualized channelizers/combiners to modem service chains that process the signals. The fully digital and software-based approach enables OpenSpace to be deployed in a single teleport or scaled across multiple teleports and data centers depending on service scale requirements.”
About OpenSpace Kratos’ OpenSpace family of solutions enables the digital transformation of satellite ground systems to become a more dynamic and powerful part of the space network. The family consists of three product lines: OpenSpace SpectralNet for converting satellite RF signals to be used in digital environments; OpenSpace quantum products, which are virtual versions of traditional hardware components; and the OpenSpace Platform, the first commercially available, fully orchestrated, software-defined ground system. These three OpenSpace lines enable satellite operators and other service providers to implement digital operations at their own pace and in ways that meet their unique mission goals and business models. For more information about the OpenSpace family visit: https://www.KratosDefense.com/OpenSpace.
About Kratos Defense & Security Solutions Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) develops and fields transformative, affordable technology, platforms and systems for United States National Security related customers, allies and commercial enterprises. Kratos is changing the way breakthrough technology for these industries are rapidly brought to market through proven commercial and venture capital backed approaches, including proactive research and streamlined development processes. At Kratos, affordability is a technology and we specialize in unmanned systems, satellite communications, cyber security/warfare, microwave electronics, missile defense, hypersonic systems, training, combat systems and next generation turbo jet and turbo fan engine development. For more information go to www.KratosDefense.com.
Notice Regarding Forward-Looking Statements Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 26, 2021, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.
Billions in Artemis Program Budget Could Cause these Companies to Rocket
What companies could gain from the Artemis missions to the moon?
The multibillion-dollar Artemis program has been unfolding over the past several years. The most recent success is the 322-foot-tall Space Launch System (SLS), the most powerful rocket NASA has developed, and the Orion spacecraft. This is all designed to, in time, safely carry astronauts to the moon’s orbit and provide a platform for the U.S. to return to the moon’s surface for the first time since 1972.
The mission of Artemis One is to test a powerful NASA rocket called the Space Launch System, as well as the Orion spacecraft that the rocket will ferry into orbit. After the Florida launch, NASA plans to use the SLS rocket to direct Orion on a route around the moon, after which the vehicle’s crewless capsule will return to Earth and parachute into the Pacific Ocean. Those steps represent another trial geared toward ensuring the Orion crew module can safely bring astronauts back from orbit.
The initial mission will help set the stage for a crewed mission to the moon that NASA hopes to conduct as early as 2025. These efforts will entail higher technology and special equipment designed especially for a unique purpose. With billions being spent, investors may ask what companies may benefit. Obviously, the major contractors, then subcontractors and material suppliers.
The cost of SLS is shown above. Additionally, the cost to assemble, integrate, prepare and launch the SLS and its payloads are funded separately under Exploration Ground Systems, currently at about $600 million per year. (Source:Wikipedia)
Major Contractors
Keeping in mind that an unsuccessful launch could weigh on these companies, as much as they may be propelled by continued success, these are prime contractors. NASA’s prime contractors for the rock launch system is Aerojet Rocketdyne (AJRD), Boeing (NYSE: BA), and Northrop Grumman (NOC). As a note, AJRD showed up as one of 5 portfolio holdings of hedge fund manager Michael Burry.
Lockheed Martin (LMT) is the prime contractor on the Orion spacecraft, while NASA’s prime contractors for the rocket launch system include Redwire’s (RDW) critical sun sensor components and advanced optical imaging technologies, they will be launching on NASA’s Orion spacecraft as a part of the space agency’s Artemis One mission. Aeva Technologies (AEVA) is also involved with a LiDAR-based mobile terrain-mapping and navigation system for lunar and other planet exploration, while KULR Technology Group (KULR) has a battery safety contract with NASA to test its lithium-ion cells going into battery packs designed for the Artemis Program.
Raytheon Technologies'(RTX) was selected to advance spacewalking capabilities in low-Earth orbit and on the Moon. Goodyear Tire & Rubber (GT) has been contracted to develop tires to perform on the lunar surface.
Rocket Lab (RKLB) has been called upon to test new orbits around the moon. For communications, Lockheed Martin (LMT), Amazon (AMZN), and Cisco (CSCO) are working in conjunction to develop a new voice, AI, and tablet-based video technologies for use around the moon.
The companies being called upon is expected to grow rapidly after scientific experiments begin on the moon’s surface.
For more than 70 years, Vectrus has provided critical mission support for our customers’ toughest operational challenges. As a high-performing organization with exceptional talent, deep domain knowledge, a history of long-term customer relationships, and groundbreaking technical expertise, we deliver innovative, mission-matched solutions for our military and government customers worldwide. Whether it’s base operations support, supply chain and logistics, IT mission support, engineering and digital integration, security, or maintenance, repair and overhaul, our customers count on us for on-target solutions that increase efficiency, reduce costs, improve readiness, and strengthen national security. Vectrus is headquartered in Colorado Springs, Colo., and includes about 8,100 employees spanning 205 locations in 28 countries. In 2021, Vectrus generated sales of $1.8 billion. For more information, visit the company’s website at www.vectrus.com or connect with Vectrus on Facebook, Twitter, and LinkedIn.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
3Q22 Operating Results. In the first quarter as a combined entity, V2X reported strong results. Revenue of $958.2 million was up 10% year-over-year. Both the legacy Vectrus and Vertex businesses grew in the 10% y-o-y range. We had projected revenue of $855 million. The Company reported a GAAP net loss of $17 million, or a loss of $0.56 per share, driven by costs related to the merger. On an adjusted basis, net income totaled $40.2 million, or EPS of $1.33. We had projected adjusted EPS of $0.81. Adjusted EBITDA totaled $79 million for an 8.2% margin.
Drivers. The strong operating resultswere driven by continued expansion on existing business and the phase-in of new awards. Notably, year-over-year organic growth for the legacy Vectrus was approximately 10% in the quarter, driven by performance in INDOPACOM, growth on LOGCAP, contribution from Fort Benning as well as volume associated with rapid response and contingency support.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
On July 5, 2022 (“Closing Date”), Vectrus, Inc. (“Vectrus”) completed its merger (“the Merger”) with Vertex Aerospace Services Holding Corp. (“Vertex”), thereby forming V2X, Inc. Third quarter “reported results” reflect the contributions of Vectrus from July 1, 2022, through September 30, 2022 and Vertex from the Closing Date through September 30, 2022, unless otherwise noted. Comparisons to historical periods are relative to legacy Vectrus results, unless otherwise noted.
Third Quarter Highlights:
Solid third quarter revenue of $958.2 million; Pro forma revenue of $961.3 million, +10% y/y
Reported operating income (inclusive of Merger related costs) of $4.5 million; Adjusted operating income1 of $73.6 million
Adjusted EBITDA1 of $79.0 million with an adjusted EBITDA margin1 of 8.2%
Third quarter diluted EPS of ($0.56); Adjusted diluted EPS1 of $1.33
Strong third quarter operating cash flow of $80.1 million; Adjusted operating cash flow1 of $121.2 million
Reduced net debt by $87 million dollars or 7% since the Merger closed on July 5, 2022
Guidance: Raising guidance mid-point for revenue, adjusted EBITDA1, and adjusted operating cash flow1
MCLEAN, Va., Nov. 8, 2022 /PRNewswire/ — V2X, Inc. (NYSE:VVX) announced third quarter 2022 financial results. “I’m pleased to report a strong start for V2X with third quarter results that demonstrate our ability to grow, generate substantial cash flow, and increase value for shareholders,” said Chuck Prow, President and Chief Executive Officer of V2X. “Our adjusted operating cash flow1 of $121 million in the quarter was significant and highlights the robust cash generative nature of our business. Additionally, adjusted EBITDA margin1 was 8.2%, which was driven by our teams’ successful efforts in delivering solid performance that was also ahead of schedule. We also continue to make significant progress on integration milestones and remain on track to deliver our previously communicated cost synergies. Based on our current momentum, significant progress on integration, and third quarter performance, we are increasing the mid-point of our guidance for revenue, adjusted EBITDA1 and adjusted operating cash flow1. I’d like to thank all of our employees for their focus on delivering results and achieving significant progress on integration, while providing high quality uninterrupted service and support to our clients.”
Mr. Prow continued, “We remain excited about the potential opportunities that lie ahead for V2X to lead in the converged environment. The key metrics and leading indicators of our business remain strong. Recent wins have driven our total backlog to $13 billion, which represents over three times V2X’s annualized revenue, providing substantial visibility. Additionally, the company does not currently have any contracts that generate more than two percent of revenue up for recompete for at least the next two and half years. With limited recompetes and solid revenue visibility, V2X is focusing on capturing new opportunities and contract expansion. Our $20 billion combined pipeline of new business currently submitted and / or expected to be submitted over the next twelve months provides additional opportunity to further grow the business. Furthermore, V2X has identified revenue synergies that are incremental to our current pipeline that are currently being assessed for resource allocation and pursuit. In aggregate, we believe V2X is well positioned to create additional value for our stakeholders.”
Third Quarter Results
Third quarter 2022 revenue of $958.2 million; Pro forma revenue of $961.3 million
Operating income of $4.5 million, or 0.5% margin, including Merger and integration related costs of $44.9 million and amortization of acquired intangible assets of $24.2 million
Adjusted operating income1 of $73.6 million or 7.7% adjusted operating margin1
Adjusted EBITDA1 for the quarter of $79.0 million with an 8.2% adjusted EBITDA margin1
Diluted EPS for the third quarter of 2022 of ($0.56) and includes Merger and integration related costs
Adjusted diluted EPS1 of $1.33 in the quarter
Operating cash flow for the quarter of $80.1 million
Adjusted operating cash flow1 for the quarter of $121.2 million (excluding Merger related payments)
Net debt on September 30, 2022, of $1,220.7 million, representing an $87 million decrease from the closing on July 5, 2022
The Company was undrawn on its revolver at quarter end
Total backlog as of September 30, 2022 of $12.7 billion
“Our third quarter financial results were strong and a great start for V2X,” said Susan Lynch, Senior Vice President and Chief Financial Officer. “Pro forma revenue increased 10% year-over-year to $961.3 million. Pro forma revenue takes into consideration the four days of our third quarter where Vertex was not part of V2X. Organic revenue growth was 10% for legacy Vectrus and was driven by continued strong performance on LOGCAP V, growth associated with the Fort Benning Eagle contract award and volume associated with rapid response and contingency efforts in Europe as well as INDOPACOM. Organic revenue from INDOPACOM increased 113% year-over-year, a noteworthy achievement especially given the revenue contribution from the Pacific Defender exercise during the prior year period. Total topline expansion was driven by the Merger with Vertex on July 5, 2022, which includes the ramp of new business including the E-6B, Advanced Helicopter Training System, Navy Test Wing Atlantic, and Global Strike programs.”
Ms. Lynch continued, “Our strong performance coupled with a focus on cash collections and process improvement in the quarter yielded strong results with significant cash generated from operating activities of $80.1 million. Excluding Merger related payments of $41.1 million, adjusted operating cash flow1 in the quarter was $121.2 million. This solid performance resulted in a $87.0 million dollar or 7% reduction in the company’s net debt since the Merger Closing Date, which exemplifies V2X’s ability to generate strong cash flow with low capital requirements. Total consolidated indebtedness to EBITDA1 (total leverage ratio) was 3.7x, a 0.3x improvement from Merger close. Importantly, we have been able to reduce our leverage ahead of plan, which was previously expected to be 3.7x by the end of this year. We anticipate our net debt will show further improvement in Q4 2022.”
Guidance Ms. Lynch concluded, “Given our current momentum, significant progress on integration, and third quarter performance, we are increasing the mid-point of the second half 2022 guidance for revenue, adjusted EBITDA1 and adjusted operating cash flow1.”
Guidance for the second half (2H) 2022 is as follows:
$ millions, except for EBITDA margins and per share amounts
V2X 2H 2022 Guidance (previous)
V2X 2H 2022 Guidance (current)
Revenue
$1,900
to
$1,940
$1,920 to $1,940
Adjusted EBITDA1
$140
to
$150
$145 to $150
Adjusted Diluted Earnings Per Share1
$1.94
to
$2.19
$2.14 to $2.28
Net Cash Provided by Operating Activities Excluding M&A Costs
$130
to
$150
$140 to $150
Forward-looking statements are based upon current expectations and are subject to factors that could cause actual results to differ materially from those suggested here, including those factors set forth in the Safe Harbor Statement below.
Third Quarter 2022 Conference Call
Management will conduct a conference call with analysts and investors at 4:30 p.m. ET on Tuesday, November 8, 2022. U.S.-based participants may dial in to the conference call at 877-506-6380, while international participants may dial 412-542-4198. A live webcast of the conference call as well as an accompanying slide presentation will be available here: https://app.webinar.net/anKV0d7G8Q9.
A replay of the conference call will be posted on the V2X website shortly after completion of the call and will be available for one year. A telephonic replay will also be available through November 22, 2022, at 844-512-2921 (domestic) or 412-317-6671 (international) with passcode 10171765.
Presentation slides that will be used in conjunction with the conference call will also be made available online in advance at https://investors.vectrus.com/. V2X recognizes its website as a key channel of distribution to reach public investors and as a means of disclosing material non-public information to comply with its obligations under the U.S. Securities and Exchange Commission Regulation FD.
Footnotes: 1 See “Key Performance Indicators and Non-GAAP Financial Measures” for descriptions and reconciliations.
About V2X V2X is a leading provider of critical mission solutions and support to defense clients globally, formed by the 2022 Merger of Vectrus and Vertex to build on more than 120 combined years of successful mission support. The Company delivers a comprehensive suite of integrated solutions across the operations and logistics, aerospace, training and technology markets to national security, defense, civilian and international clients. Our global team of approximately 14,000 employees brings innovation to every point in the mission lifecycle, from preparation, to operations, to sustainment, as it tackles the most complex challenges with agility, grit, and dedication.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 (the “Act”): Certain material presented herein includes forward-looking statements intended to qualify for the safe harbor from liability established by the Act. These forward-looking statements include, but are not limited to, all the statements and items listed under “Guidance” above and other assumptions contained therein for purposes of such guidance, other statements about our 2022 performance outlook, five-year growth plan, revenue, DSO, contract opportunities, the potential impact of COVID-19, and any discussion of future operating or financial performance.
Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “could,” “potential,” “continue” or similar terminology. These statements are based on the beliefs and assumptions of the management of the Company based on information currently available to management.
These forward-looking statements are not guarantees of future performance, conditions, or results, and involve a number of known and unknown risks, uncertainties, assumptions, and other important factors, many of which are outside our management’s control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. For a discussion of some of the risks and uncertainties that could cause actual results to differ from such forward-looking statements, see the risks and other factors detailed from time to time our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the U.S. Securities and Exchange Commission.
We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
CoreCivic is a diversified, government-solutions company with the scale and experience needed to solve tough government challenges in flexible, cost-effective ways. We provide a broad range of solutions to government partners that serve the public good through high-quality corrections and detention management, a network of residential and non-residential alternatives to incarceration to help address America’s recidivism crisis, and government real estate solutions. We are the nation’s largest owner of partnership correctional, detention and residential reentry facilities, and believe we are the largest private owner of real estate used by government agencies in the United States. We have been a flexible and dependable partner for government for nearly 40 years. Our employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government better the public good. Learn more at www.corecivic.com.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Increasing Populations. Management noted ICE populations have increased nearly 26% quarter-to-date. While one month does not make a trend, that is encouraging, especially as we believe there will be further loosening of COVID restrictions and a removal of Title 42, both of which could increase the demand for CoreCivic’s services.
More to Come? In addition to the rising ICE populations, management noted increasing interest from other parties for staffing shortages, as these parties deal with a very tight labor market. With excess bed capacity available and the staff hired, CoreCivic is well positioned to pick up additional business, in our view.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
SAN DIEGO, Nov. 03, 2022 (GLOBE NEWSWIRE) — Kratos Defense & Security Solutions, Inc. (Nasdaq:KTOS), a leading National Security Solutions provider, today reported its third quarter 2022 financial results. For the third quarter of 2022, Kratos reported Revenues of $228.6 million, Operating Loss of $3.6 million, Net Loss of $8.0 million, Adjusted EBITDA of $20.0 million and a book to bill ratio of 1.1 to 1.0.
Included in Net Loss is a $6.4 million charge, $3.4 million related to certain non-recoverable costs, including rate and cost growth items resulting from an inability to hire the required planned direct labor base, both internally and by our subcontractors, to execute on our backlog, due to a continuing challenging industry environment in both hiring and retaining skilled manufacturing personnel in our C5ISR business and $3 million from non-recoverable indirect cost rate growth resulting from a smaller than planned direct labor base due to delays in customer program execution and awards in our Training Solutions business. We have recorded this charge as the Department of Defense (DoD) position remains that Requests for Equitable Adjustment (REAs) will not be accepted by contractors like Kratos for inflation related and other increased costs, and as Kratos’ contract mix in the C5ISR and Training Solutions businesses is substantially firm fixed price, we are unable to absorb and pass on to our customers such unanticipated costs in our programs, contracts and rate structures and remain competitive, including as certain program execution work has either not yet commenced or has just begun.
Third quarter 2022 Operating Loss includes non-cash stock compensation expense of $6.6 million, and Company-funded Research and Development expense of $9.6 million, primarily reflecting significant ongoing development efforts being made, including in our Space and Satellite business to develop our virtual, software-based OpenSpace ground station solution.
Kratos reported a third quarter 2022 GAAP loss per share of $0.06, which includes the $6.4 million charge noted above, compared to a Net Loss of $2.4 million and a GAAP loss per share of $0.02 for the third quarter of 2021. Adjusted EPS was $0.08 for the third quarter of 2022, compared to $0.09 for the third quarter of 2021.
Third quarter 2022 Revenues of $228.6 million, which increased $28.0 million, or 14.0 percent, from third quarter 2021 Revenues of $200.6 million, were adversely impacted by continuing and increased supply chain disruptions and increased material costs, COVID-related employee absenteeism and increased challenges and costs associated with hiring, obtaining and retaining qualified employees, which resulted in approximately $11.3 million of third quarter 2022 revenues being deferred into future periods, with approximately $5.9 million of associated operating income, including increased inflationary costs. Third quarter 2022 revenues include an aggregate contribution of $30.2 million from the recent acquisitions of Cosmic Advanced Engineered Solutions, Inc. (Cosmic AES), CTT, Inc. (CTT), and the Engineering Division of Southern Research Institute (SRE), organic revenue growth in our C5ISR, Turbine Technologies, Microwave Products, and Rocket Support businesses, primarily offset by reduced volume in our Unmanned Systems and Training Solutions businesses.
Third quarter 2022 Cash Flow Used in Operations was $2.8 million. Free Cash Flow Used in Operations was $15.7 million, after funding $12.9 million of capital expenditures, including in our Unmanned Systems, Space, Satellite and Cyber and Turbine Technologies business areas.
For the third quarter of 2022, Kratos’ Unmanned Systems Segment (KUS) generated Revenues of $50.0 million, as compared to $61.3 million in the third quarter of 2021, primarily reflecting reduced tactical drone related activity as compared to 2021. KUS Operating Loss was $0.1 million in the third quarter of 2022 compared to KUS Operating Income of $2.6 million in the third quarter of 2021, reflecting reduced volumes, a less favorable mix of revenues, including an increase in development programs which typically generate lower margins, an increase in SG&A costs of approximately $0.2 million resulting primarily from increased headcount, and an increase of R&D expenses of approximately $1.0 million.
KUS Adjusted EBITDA for the third quarter of 2022 was $2.1 million, compared to third quarter 2021 KUS Adjusted EBITDA of $4.7 million, reflecting reduced volume, increases in certain development programs which typically generate lower margins and increases in SG&A, R&D, supply chain related and employee costs.
KUS’s book-to-bill ratio for the third quarter of 2022 was 1.0 to 1.0 and 1.0 to 1.0 for the last twelve months ended September 25, 2022, with bookings of $221.3 million for the twelve months ended September 25, 2022. Total backlog for KUS at the end of the third quarter of 2022 was $202.4 million compared to $203.3 million at the end of the second quarter of 2022.
For the third quarter of 2022, Kratos’ Government Solutions Segment (KGS) reported Revenues of $178.6 million, compared to Revenues of $139.3 million in the third quarter of 2021. The increased revenues include the aggregate contribution of approximately $30.2 million from the recently acquired Cosmic AES, CTT and SRE, and organic revenue growth in our C5ISR, Turbine Technologies, Microwave Products, and Rocket Support businesses, primarily offset by a reduction of $2.8 million in our Training Solutions business. On a proforma basis, excluding the Training Solutions business, KGS revenues grew organically 8.9 percent or $11.8 million, from $133.1 million in the third quarter of 2021 to $144.9 million in the third quarter of 2022.
KGS reported operating income of $3.3 million in the third quarter of 2022, compared to $14.6 million in the third quarter of 2021. Third quarter 2022 operating income included the charge for non-recoverable costs of $6.4 million in our C5ISR and Training Solutions businesses described above, as well as a $0.6 million charge related to excess Training Solutions facilities.
Kratos’ Space, Satellite and Cyber business generated Revenues of $85.9 million in the third quarter of 2022, compared to $72.0 million in the third quarter of 2021. Excluding revenues generated of $15.6 million from the recent Cosmic AES acquisition, revenues for our Space, Satellite and Cyber business were $70.3 million in the third quarter of 2022, down approximately $1.7 million reflecting the wind-down of a federal services satellite contract in 2021.
Excluding the impact of the $6.4 million charge related to non-recoverable costs and the $0.6 million charge related to excess Training Solutions facilities, third quarter 2022 KGS Adjusted EBITDA was $17.9 million, compared to third quarter 2021 KGS Adjusted EBITDA of $19.1 million.
For the third quarter of 2022, KGS reported a book-to-bill ratio of 1.1 to 1.0, with a book to bill ratio of 1.2 to 1.0 for the twelve months ended September 25, 2022, and bookings of $807.6 million for the twelve months ended September 25, 2022. Included in KGS is Kratos’ Space, Satellite and Cyber business, which reported a book to bill ratio of 1.1 to 1.0 for the third quarter of 2022, and a book to bill ratio of 1.2 to 1.0 for the twelve months ended September 25, 2022. Bookings for the Space, Satellite and Cyber business for the last twelve months ended September 25, 2022, were $406.2 million. KGS’s total backlog at the end of the third quarter of 2022 was $866.6 million, as compared to $846.9 million at the end of the second quarter of 2022.
For the third quarter of 2022, Kratos reported consolidated bookings of $246.5 million and a book-to-bill ratio of 1.1 to 1.0, with consolidated bookings of $1.029 billion and a book-to-bill ratio of 1.2 to 1.0 for the last twelve months ended September 25, 2022. Backlog on September 25, 2022 was $1.07 billion, as compared to $1.05 billion at June 26, 2022, and Kratos’ bid and proposal pipeline was $9.9 billion at September 25, 2022, as compared to $9.9 billion at June 26, 2022. Backlog at September 25, 2022 was comprised of funded backlog of $696.1 million and unfunded backlog of $372.8 million.
Eric DeMarco, Kratos’ President and CEO, said, “In the third quarter, Kratos successfully executed on what we can control in a continued and increasingly difficult operating environment, including a 1.1 to 1.0 book to bill ratio and the recent MACH-TB Hypersonic program award with our partner Dynetics, which could be significant related to Kratos’ Zeus launch systems and Erinyes vehicles. Expected upcoming awards for Kratos include an additional new hypersonic related program award, two new Valkyrie related tactical drone system awards from two new customers for multiple aircraft and a large OpenSpace virtualized satellite system program award.”
Mr. DeMarco continued, “Since our last report to you, we were informed that certain Kratos satellite program related software deliverables expected to be acquired by an existing government customer have been delayed to a future period and we were informed by a customer that funding is no longer available for the continuation of a certain, non-Valkyrie related drone program we have been working on, both which were previously forecast as significant contributors to our fourth quarter 2022 financial forecast. We have also determined that as a result of the continuing incredibly tight labor market for qualified machinists and skilled production personnel, including those with security clearances, that we will not achieve by this fiscal year end our previous forecast net increase headcount target to execute on our backlog and maintain our indirect rates. We have reflected the impact of each of these and other items, including inflation, supply chain, etc., in today’s third quarter financial report and our updated fiscal 2022 forecast.”
Mr. DeMarco concluded, “We have taken action to address these matters, including continuing to incorporate in our new proposals and contract awards cost and rate increases to address the inflationary environment, including specifically as related to higher labor rates and we have adjusted the organization in certain areas to address customer related delays, funding and other issues. By taking these actions now, having a 1.2 to 1.0 LTM book to bill ratio with multiple large, new programs ramping and maintaining a record combined backlog and opportunity pipeline, we continue to forecast future growth for the Company, including base case full year 2023 over 2022 10 percent revenue growth and increased margins, with potential accelerated growth opportunities in the tactical drone, space, satellite, rocket and hypersonic system areas.”
Financial Guidance Our fourth quarter and Fiscal Year 2022 financial guidance we are providing today includes our current forecasted business mix, and our assumptions, including as related to: employee sourcing, hiring and retention; manufacturing, production and supply chain disruptions; and parts shortages and related continued significant cost and price increases, including for employees, materials and components that are impacting the industry and Kratos. The range of our expected fourth quarter 2022 revenues includes assumptions of forecasted execution including the number of new qualified personnel expected to be retained to execute on our programs and contracts, as well as expected contract awards. Our revised Fiscal Year 2022 cash flow guidance also includes continued advanced purchases of inventory in an attempt to mitigate supply chain disruptions, which are not currently expected to be converted to cash through the sales process until the second half of 2023.
On October 1, 2022, the U.S. Federal Government began operating under a Continuing Resolution Authorization (CRA) through at least December 16, 2022, with no Federal Fiscal 2023 Budget or DoD budget being in place. Under a CRA, federal spending and its composition is substantially held consistent with the previous year’s budget, with no new contract awards, no increased production or spending on existing programs and no transition from development to production contracts, or from low-rate initial production to full rate production being allowed, all of which may impact Kratos and our current fourth quarter and fiscal 2023 financial expectations. The longer a CRA period is extended, the greater the impact on the industry, our customers and Kratos.
Throughout the third and fourth quarter of 2022, our industry and Kratos continue to experience the effects of continuing supply chain disruptions and significant cost increases and inflation, including on our employees, consultants, subcontractors, vendors, suppliers, customers, etc., and an acute labor shortage of qualified personnel, including those requiring security clearances, to perform on programs and contracts.
We expect this difficult operating environment and its impact on the industry, our operations and our ability to forecast to continue for the foreseeable future. Following is our fourth quarter and revised full year 2022 guidance along with a reconciliation from our full year 2022 guidance provided in August 2022 to our current guidance range.
Management will discuss the Company’s third quarter 2022 financial results, as well as its fourth quarter and full year 2022 guidance on a conference call beginning at 2:00 p.m. Pacific (5:00 p.m. Eastern) today. The call will be available at www.kratosdefense.com. Participants may register for the call using this Online Form. Upon registration, all telephone participants will receive the dial-in number along with a unique PIN that can be used to access the call. For those who cannot access the live broadcast, a replay will be available on Kratos’ website.
About Kratos Defense & Security Solutions Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) develops and fields transformative, affordable technology, platforms, and systems for United States National Security related customers, allies, and commercial enterprises. Kratos is changing the way breakthrough technologies for these industries are rapidly brought to market through proven commercial and venture capital backed approaches, including proactive research, and streamlined development processes. At Kratos, affordability is a technology, and we specialize in unmanned systems, satellite communications, cyber security/warfare, microwave electronics, missile defense, hypersonic systems, training and combat systems and next generation turbo jet and turbo fan engine development. For more information go to www.kratosdefense.com.
Notice RegardingForward-LookingStatements This news release contains certain forward-looking statements that involve risks and uncertainties, including, without limitation, express or implied statements concerning the Company’s expectations regarding its future financial performance, including the Company’s expectations for its fourth quarter and full year 2022 revenues, R&D, operating income, depreciation, amortization, stock based compensation expense, and Adjusted EBITDA, and full year 2022 operating cash flow, capital expenditures and other investments, and free cash flow use, the Company’s future growth trajectory and ability to achieve improved revenue mix and profit in certain of its business segments and the expected timing of such improved revenue mix and profit, the Company’s expectation of ramp on projects and that investments in its business will result in an increase in the Company’s market share and total addressable market and position the Company for significant future organic growth, profitability, cash flow and an increase in shareholder value, the Company’s bid and proposal pipeline, demand for its products and services, including the Company’s alignment with today’s National Security requirements, ability to successfully compete and expected new customer awards, including the magnitude and timing of funding and the future opportunity associated with such awards, including in the tactical drone and satellite communication areas, performance of key contracts and programs, including the timing of production and demonstration related to certain of the Company’s contracts and product offerings, the impact of the Company’s restructuring efforts and cost reduction measures, including its ability to improve profitability and cash flow in certain business units as a result of these actions and to achieve financial leverage on fixed administrative costs, benefits to be realized from the Company’s net operating loss carry forwards, the availability and timing of government funding for the Company’s offerings, including the strength of the future funding environment, the short-term delays that may occur as a result of Continuing Resolutions or delays in DoD budget approvals, timing of LRIP and full rate production related to the Company’s unmanned aerial target system offerings, as well as the level of recurring revenues expected to be generated by these programs once they achieve full rate production, market and industry developments, and the current estimated impact of COVID-19 and employee absenteeism, supply chain disruptions, availability of an experienced skilled workforce, inflation and increased costs, and delays on our financial projections, industry, business and operations, including projected growth. Such statements are only predictions, and the Company’s actual results may differ materially from the results expressed or implied by these statements. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Factors that may cause the Company’s results to differ include, but are not limited to: risks to our business and financial results related to the reductions and other spending constraints imposed on the U.S. Government and our other customers, including as a result of sequestration and extended continuing resolutions, the Federal budget deficit and Federal government shut-downs; risks of adverse regulatory action or litigation; risks associated with debt leverage and cost savings and cash flow improvements expected as a result of the refinancing of our Senior Notes; risks that our cost-cutting initiatives will not provide the anticipated benefits; risks that changes, cutbacks or delays in spending by the U.S. DoD may occur, which could cause delays or cancellations of key government contracts; risks of delays to or the cancellation of our projects as a result of protest actions submitted by our competitors; risks that changes may occur in Federal government (or other applicable) procurement laws, regulations, policies and budgets; risks of the availability of government funding for the Company’s products and services due to performance, cost growth, or other factors, changes in government and customer priorities and requirements (including cost-cutting initiatives, the potential deferral of awards, terminations or reduction of expenditures to respond to the priorities of Congress and the Administration, or budgetary cuts resulting from Congressional committee recommendations or automatic sequestration under the Budget Control Act of 2011, as amended); risks that the UAS and UGS markets do not experience significant growth; risks that products we have developed or will develop will become programs of record; risks that we cannot expand our customer base or that our products do not achieve broad acceptance which could impact our ability to achieve our anticipated level of growth; risks of increases in the Federal government initiatives related to in-sourcing; risks related to security breaches, including cyber security attacks and threats or other significant disruptions of our information systems, facilities and infrastructures; risks related to our compliance with applicable contracting and procurement laws, regulations and standards; risks related to the new DoD Cybersecurity Maturity Model Certification (CMMC); risks relating to the ongoing conflict in Ukraine; risks related to contract performance; risks related to failure of our products or services; risks associated with our subcontractors’ or suppliers’ failure to perform their contractual obligations, including the appearance of counterfeit or corrupt parts in our products; changes in the competitive environment (including as a result of bid protests); failure to successfully integrate acquired operations and competition in the marketplace, which could reduce revenues and profit margins; risks that potential future goodwill impairments will adversely affect our operating results; risks that anticipated tax benefits will not be realized in accordance with our expectations; risks that a change in ownership of our stock could cause further limitation to the future utilization of our net operating losses; risks that we may be required to record valuation allowances on our net operating losses which could adversely impact our profitability and financial condition; risks that the current economic environment will adversely impact our business, including with respect to our ability to recruit and retain sufficient numbers of qualified personnel to execute on our programs and contracts, as well as expected contract awards and risks related to increasing interest rates; currently unforeseen risks associated with COVID-19 and risks related to natural disasters or severe weather. These and other risk factors are more fully discussed in the Company’s Annual Report on Form 10-K for the period ended December 26, 2021, and in our other filings made with the Securities and Exchange Commission.
Note Regarding Use of Non-GAAP Financial Measures and Other Performance Metrics
This news release contains non-GAAP financial measures, including Adjusted earnings per share (computed using income from continuing operations before income taxes, excluding income (loss) from discontinued operations, excluding income (loss) attributable to non-controlling interest, excluding depreciation, amortization of intangible assets, amortization of capitalized contract and development costs, stock-based compensation expense, acquisition and restructuring related items and other, which includes, but is not limited to, legal related items, non-recoverable rates and costs, and foreign transaction gains and losses, less the estimated impact to income taxes) and including Adjusted EBITDA (which includes net income (loss) attributable to noncontrolling interest and excludes, among other things, losses and gains from discontinued operations, acquisition and restructuring related items, stock compensation expense, foreign transaction gains and losses, and the associated margin rates). Additional non-GAAP financial measures include Free Cash Flow from Operations computed as Cash Flow from Operations less Capital Expenditures and Adjusted EBITDA related to our KUS and KGS businesses. Kratos believes this information is useful to investors because it provides a basis for measuring the Company’s available capital resources, the actual and forecasted operating performance of the Company’s business and the Company’s cash flow, excluding non-recurring items and non-cash items that would normally be included in the most directly comparable measures calculated and presented in accordance with GAAP. The Company’s management uses these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating the Company’s actual and forecasted operating performance, capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and investors should carefully evaluate the Company’s financial results calculated in accordance with GAAP and reconciliations to those financial results. In addition, non-GAAP financial measures as reported by the Company may not be comparable to similarly titled amounts reported by other companies. As appropriate, the most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the Company’s financial results prepared in accordance with GAAP are included in this news release.
Another Performance Metric the Company believes is a key performance indicator in our industry is our Book to Bill Ratio as it provides investors with a measure of the amount of bookings or contract awards as compared to the amount of revenues that have been recorded during the period and provides an indicator of how much of the Company’s backlog is being burned or utilized in a certain period. The Book to Bill Ratio is computed as the number of bookings or contract awards in the period divided by the revenues recorded for the same period. The Company believes that the rolling or last twelve months’ Book to Bill Ratio is meaningful since the timing of quarter-to-quarter bookings can vary.
*The impact to income taxes is calculated by recasting income before income taxes to include the add-backs involved in determining Adjusted income from continuing operations before income taxes and recalculating the income tax provision (benefit), including current and deferred income taxes, using the Adjusted income from continuing operations before income taxes. The recalculation also adjusts for any discrete tax expense, including transaction related expenses and the release of valuation allowance, or benefit related to the add-backs.
SAN DIEGO, Oct. 26, 2022 (GLOBE NEWSWIRE) — Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS), a leading National Security Solutions provider, announced today that it will publish financial results for the third quarter of 2022 after the close of market on Thursday, November 3rd. Management will discuss the Company’s operations and financial results in a conference call beginning at 2:00 p.m. Pacific (5:00 p.m. Eastern).
The call will be available at www.kratosdefense.com. Participants may register for the call using this Online Form. Upon registration, all telephone participants will receive the dial-in number along with a unique PIN that can be used to access the call. For those who cannot access the live broadcast, a replay will be available on Kratos’ website.
About Kratos Defense & Security Solutions Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) develops and fields transformative, affordable technology, platforms and systems for United States National Security related customers, allies and commercial enterprises. Kratos is changing the way breakthrough technology for these industries are rapidly brought to market through proven commercial and venture capital backed approaches, including proactive research and streamlined development processes. At Kratos, affordability is a technology, and we specialize in unmanned systems, satellite communications, cyber security/warfare, microwave electronics, missile defense, hypersonic systems, training, combat systems and next generation turbo jet and turbo fan engine development. For more information go to www.KratosDefense.com.
MCLEAN, Va., Oct. 25, 2022 /PRNewswire/ — V2X, Inc., (NYSE: VVX), a leading provider of critical mission solutions and support to defense clients globally, will report its financial results for the Third quarter ended September 30, 2022, on Tuesday, November 8, 2022, after market close. Senior management will conduct a conference call at 4:30 p.m. ET that same day.
U.S.-based participants may dial in to the conference call at 877-506-6380, while international participants may dial 412-542-4198. A live webcast of the conference call as well as an accompanying slide presentation will be available on the V2X Investor Relations website at http://investors.vectrus.com.
A replay of the conference call will be posted on the V2X website shortly after completion of the call and will be available for one year. A telephonic replay will also be available through November 22, 2022, at 844-512-2921 (domestic) or 412-317-6671 (international) with passcode 10171765.
ABOUT V2X
V2X is a leading provider of critical mission solutions and support to defense clients globally, formed by the 2022 merger of Vectrus and Vertex to build on more than 120 combined years of successful mission support. The Company delivers a comprehensive suite of integrated solutions across the operations and logistics, aerospace, training and technology markets to national security, defense, civilian and international clients. Our global team of approximately 14,000 employees brings innovation to every point in the mission lifecycle, from preparation, to operations, to sustainment, as they tackle the most complex challenges with agility, grit and dedication.
Travelers Gonna Travel!– Travel & Leisure Sector May Ignore the Recession
Economic activity in the U.S. contracted during the first half of the year. At the same time, inflation is running at 40-year highs. Investors looking to keep their money productive with reduced risk have focused on consumer staples and companies providing necessary services where demand isn’t impacted much by price. This is what experienced investors do when the economy falters. But this economy seems a bit different than previous periods of shrinking economic activity and rising prices. Jobs are still plentiful, and one industry, with a lot of pent-up demand leftover from the pandemic, is gearing up to exceed all expectations. That sector is leisure. We take a look below at the potential strength in the industry, where opportunities may be found, and how you could reduce timing risk with stocks on your shopping list.
Current State
More than half of Americans see leisure travel as a budget priority right now; in fact, 62% of Americans took at least one overnight trip between mid-May and mid-August. This is according to the latest The State of the American Traveler report compiled by Destination Analysis. Consumers continue to prioritize experiences over alternatives in their budget. As the U.S. Moves out of Fall and into the colder months, it appears the trend will continue. Chuck Artillio is co-owner of SinglesSki.com, winter-oriented travel, and leisure company. He told Channelchek, “Last year at this time, business was robust, yet bookings, as we stand now for the coming season, are already up over 100%.” Artillio added, “I’ve never seen anything like this before.”
The Destination Analysis survey also expects industrywide strength in demand for travel and leisure services in the last quarter of the year. The results show Fall and early Winter trip expectations are high. Over a quarter of Americans expect to take a trip in either October (26.6%), November (24.8%) or December (28.4%). This is up from June when 20% said they expected to take a trip in the fourth quarter of 2022.
Source: US Global Investors
The survey indicates that typical holiday travel includes visiting friends & family as the top driver for late year. However, second on the list of purposes for travel is the desire to return to a destination, followed by general atmosphere, and food & cuisine.
Source: US Global Investors
The survey produced hard data that showed Americans continue to prioritize having fun and relaxation when traveling. This, of course, can mean different things to different people. The majority said being in a quiet/peaceful location (82.5%) followed by beach time (69.7%), chilling-out poolside (67.3%), enjoying culinary experiences (65.6%), and luxury hotel experiences (60.4%).
Do Expectations Provide Opportunities?
An industry research report published this week titled, Entertainment & Leisure Industry Report: Ideas For Your Investing Shopping List, contains some ideas for interested investors. The authors of the leisure industry report include Michael Kupinski, Director of Research at Noble Capital Markets. Overall, Kupinski and Noble’s research associates find the current state of the economy as one that provides a “discount rack” of stocks that can weather a further downturn and may be the first to rise as the recovery seems imminent. He provides information and careful analysis on some stocks that he believes have favorable attributes, go here for in-depth details of these companies.
The analysts suggest investors develop a shopping list and concede that recognizing a turning point in market direction is the “hard part.” But they have suggestions for that as well. These include nibbling at the targets on your list to scale in over a period of time. This averaging in to stocks on your shopping list will lower the risk of picking one day to pile in, which may turn out to be bad timing.
Take Away
Down markets bring opportunity. They always have, and there is no reason to believe this time will be different. Finding sectors with promise, as the travel and leisure sector is now showing, then diving into research to select those in the sector with the most promise, followed by a decision to average in to the market, is one recognized way to put yourself in a position to benefit from the current “discount rack” that many stocks now seem to be on.
CoreCivic is a diversified, government-solutions company with the scale and experience needed to solve tough government challenges in flexible, cost-effective ways. We provide a broad range of solutions to government partners that serve the public good through high-quality corrections and detention management, a network of residential and non-residential alternatives to incarceration to help address America’s recidivism crisis, and government real estate solutions. We are the nation’s largest owner of partnership correctional, detention and residential reentry facilities, and believe we are the largest private owner of real estate used by government agencies in the United States. We have been a flexible and dependable partner for government for nearly 40 years. Our employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government better the public good. Learn more at www.corecivic.com.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
FFO, NFFO, and AFFO Projections. We modestly adjusted our projections for Funds From Operations, Normalized Funds From Operations, and Adjusted Funds From Operations. Our prior estimates reflected a larger estimate for depreciation and amortization and other than we are now using. We are now projecting third quarter FFO at $0.31 per share, versus a prior $0.36, NFFO of $0.31 versus $0.37, and AFFO of $0.31 versus a prior $0.32.
No Change in Business Outlook. We are not currently expecting any major change in the business environment and our projections for revenue and EPS remain unchanged. ICE ADP has risen from below 20,000 in the spring to nearly 26,000 in September, while Southwest Border encounters exceeded 200,000/mth since March and likely will be up over 32% from the full fiscal year 2021.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
The GEO Group, Inc. (NYSE: GEO) is a leading diversified government service provider, specializing in design, financing, development, and support services for secure facilities, processing centers, and community reentry centers in the United States, Australia, South Africa, and the United Kingdom. GEO’s diversified services include enhanced in-custody rehabilitation and post-release support through the award-winning GEO Continuum of Care®, secure transportation, electronic monitoring, community-based programs, and correctional health and mental health care. GEO’s worldwide operations include the ownership and/or delivery of support services for 103 facilities totaling approximately 83,000 beds, including idle facilities and projects under development, with a workforce of up to approximately 18,000 employees.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Asset Sale. The GEO Group has sold its minority equity interest in the government-owned Ravenhall Correctional Centre in Australia for approximately $84.4 million in gross proceeds, or about $75 million after-tax. GEO, as part of a consortium, originally began developing the Ravenhall facility in late 2014, with the facility opened in late 2017.
Use of Proceeds. GEO will use the proceeds, along with available cash on hand, to repay all of the remaining $146.9 million outstanding principal of its Term Loan B and its Tranche 3 Term Loan, both due March 23, 2024. Along with the repayment of the 5.125% senior notes due 2023, GEI has now reduced outstanding debt maturing prior to 2026 to approximately $23 million, a significant accomplishment, in our view.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Key Capabilities, Including Manned-Unmanned Teaming with Manned Fighters, Autonomous Relative Navigation Formation, Multi-User Handoff, Demonstrated by Kratos Platforms
SAN DIEGO, Sept. 19, 2022 (GLOBE NEWSWIRE) — In a release issued under the same headline on Monday, September 19th by Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS), please note that Eric DeMarco’s title was incorrect. The corrected release follows:
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS), a leading National Security Solutions provider and industry-leading provider of high-performance, jet-powered unmanned aerial systems, announced today another recent successful flight from its family of Collaborative Combat Aircraft (CCA)—flying and demonstrating capabilities since 2015. Kratos’ family of CCA’s include more than four different aircraft types, with each having been flying for several years, proving, validating, and demonstrating key mission capabilities, as the DoD refines the ultimate range of requirements for the various CCA classes.
All of Kratos’ CCA systems are high subsonic, high maneuverability (high-g) jet aircraft, each optimized for different mission capabilities, with each incorporating stealth and other capabilities to help ensure survivability in today’s contested environment. Kratos’ publicly announced family of CCA systems range from a 350-pound class system to a 6000-pound class system and unrefueled ranges in excess of 3,000 miles.
Kratos rail-launched and runway-independent CCAs are developed to maximize performance per cost rather than being at the exquisite end of the capability and cost level. Therefore, they are ideal for “large mass, high quantity” scenarios and for distributed capability operations, where the loss of any one aircraft has a minimal effect on mission success and a minimal effect on cost of the overall mission. Current and recent conflicts, such as the war in Ukraine, have emphasized the validity in the distributed/high mass strategy for today’s battlespace, further supported by the cost equation.
Across a portfolio of internally funded efforts and funded on-contract efforts, Kratos CCAs have flight-demonstrated the following mission capabilities in flights beginning in 2015 and continuing throughout the last seven years:
autonomous self-navigation
autonomous relative navigation, i.e., flying in formation and teaming with manned fighters
in MUM-T mode based on the manned fighter/attack aircraft path
network based encrypted communications
control handoffs between ground operators
airborne operators in the mission area
airborne operators remote from the mission area
Kratos-only autonomy flights
open system high level autonomy control from other providers/standards
collaborative operations with multiple CCAs
collaborative operations with manned systems (MUM-T)
communications relay missions
sub-UAV / loitering munition deployment operation
internal “payload” carriage
external “payload carriage”
weapon system carriage, deployment, and operation
terminal effects/mode delivery including successful target impact
Steve Fendley, President of Kratos Unmanned Systems Division, said, “There have been many reports in the recent months/years about the promise of capabilities – such as relative navigation autonomy for MUM-T operations, multiple CCA collaborative missions, control handoffs from multiple users/commanders for a single or group of UAVs/CCAs – demonstrated through UAV system simulations across the industry. Notably, each of these critical capabilities have previously been actually flight demonstrated and proven with the Kratos CCAs, beginning in 2015. Our aircraft have operated in actual flight—being controlled from, flown in formation using relative navigation based on the manned assets, and flown in coordination with F-16s, AV8-Bs, F-35s, F-22s, T-38s, CRJs, and other manned, as well as unmanned, assets.”
Mr. Fendley continued, “Kratos’ systems include inner loop and outer loop autonomy up through elements of level 4 with Kratos baseline software. The Kratos software includes open architecture interfaces to enable control from systems including the Government Reference Architecture Skyborg ACS, for example. All of these have been flight demonstrated on our CCAs with the Kratos baseline autonomy providing the foundation capability. Our continued internal and on-contract work is focused on supporting the DoD in closing on the final requirement sets for the wide range of mission applications and on having field ready systems, which have been flight proven even before the ultimate capability requirements and programs have been published.”
Mr. Fendley concluded, “The DoD has reported consistently, especially in the last several months, that runway independence and the ability to operate from multiple non-large base locations is a critical enabler for our military’s successful operations in the most critical enemy threat scenarios. The DoD has also reported consistently that large quantities or a mass of CCAs are the game-changer for success in the wargames and threat analyses. Other characteristics/capabilities which are significant enablers for mission success in these engagements/missions include a level of survivability through signature, speed, and maneuverability, plus range and endurance in substantial excess of today’s fighters, and finally, affordability based on both the mass analyses and cost trade conflict equation. Kratos’ systems have been designed specifically in response to each of these fundamentals, all which support the wargame analysis keys to success.”
Eric DeMarco, Kratos’ President & CEO, said, “At Kratos we have always been committed to ‘designed and built in the USA’, supporting the American worker, family, industrial base and our Country. As evidenced by the pandemic, supporting and strengthening the U.S. defense industrial base at all tiers is a critical key to the defense of our Nation overall. As part of this mission, Kratos develops and demonstrates complete capabilities with actual hardware, actual software, and actual systems. Proving capabilities within the challenging uncrewed aircraft arena can and will ever only be confirmed through actual flight—not simulations.”
Mr. DeMarco continued, “By progressing to actual flight and actual demonstration with high capability-per-cost, yet affordable, systems faster than traditional and conventional platform providers can achieve, Kratos is changing the status quo. We believe in being disruptive and are investing our own resources at an industry-leading, unmatched rate to ensure the warfighter has increased capabilities sooner for less cost. At Kratos, affordability is a technology, and we will remain fully committed to this approach, including American designed, sourced, and built systems, which I am confident, especially based on the current and rapidly increasing threat environment, combined with the current financial and budget realities, is the right answer for our warfighter and for the United States overall.”
About Kratos Defense & Security Solutions Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) develops and fields transformative, affordable technology, platforms and systems for United States National Security related customers, allies, and commercial enterprises. Kratos is changing the way breakthrough technology for these industries are rapidly brought to market through proven commercial and venture capital backed approaches, including proactive research, and streamlined development processes. At Kratos, affordability is a technology, and we specialize in unmanned systems, satellite communications, cyber security/warfare, microwave electronics, missile defense, hypersonic systems, small to mid-sized jet engines and technology, training, and combat systems. For more information go to www.KratosDefense.com.
Notice Regarding Forward-Looking Statements Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations, and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 26, 2021, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.
The GEO Group, Inc. (NYSE: GEO) is a leading diversified government service provider, specializing in design, financing, development, and support services for secure facilities, processing centers, and community reentry centers in the United States, Australia, South Africa, and the United Kingdom. GEO’s diversified services include enhanced in-custody rehabilitation and post-release support through the award-winning GEO Continuum of Care®, secure transportation, electronic monitoring, community-based programs, and correctional health and mental health care. GEO’s worldwide operations include the ownership and/or delivery of support services for 103 facilities totaling approximately 83,000 beds, including idle facilities and projects under development, with a workforce of up to approximately 18,000 employees.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
NDRS. We hosted GEO CFO Brian Evans and EVP Pablo Paez for a series of investor meetings in NYC. The discussion revolved around the Company’s positive operating performance in a challenged market, the debt restructuring, and the BI business.
Operating Performance. As we have highlighted previously, The GEO Group has strung together some of its best operating performance ever over the past twelve months, even in the face of challenging market conditions due to government policy changes. Conditions, especially in the immigration sector, would suggest a continued positive operating environment for the Company.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
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