Key Points: – Shares of Geo Group and CoreCivic saw significant increases (over 7% and 8%, respectively) after the appointment of Tom Homan as “border czar,” – Homan’s appointment aligns with Trump’s strong stance on deportation and border security, so there is an anticipated increase in federal contracts for private detention companies – Renewed focus on immigration enforcement marks a a significant departure from the current adminstration’s stance
Private prison stocks surged Monday after President-elect Donald Trump appointed Tom Homan as “border czar,” sparking market optimism about a renewed focus on immigration enforcement. Shares of Geo Group and CoreCivic, both major players in the private detention sector, jumped over 7% and 8%, respectively, in response to the announcement. Homan, previously the head of Immigration and Customs Enforcement (ICE) under Trump’s first term, is known for his firm stance on deportation and border security. His appointment signals a potential increase in federal contracting for companies that provide detention services, specifically for ICE operations.
Trump’s announcement on Truth Social stated that Homan will be in charge of all deportation efforts, encompassing both land and maritime borders, with an emphasis on accelerating deportations. During a conservative conference in July, Homan declared he would lead the “biggest deportation force” in U.S. history if Trump was re-elected. This strong stance aligns with Trump’s previous immigration policies, which saw heightened demand for detention facilities, and is expected to bolster the private prison industry, including companies like Geo Group and CoreCivic, which have contracts with ICE and the U.S. Marshals Service.
The renewed focus on immigration enforcement under Trump is a significant shift from the current administration’s approach, which has limited federal use of private detention centers. This shift presents a potential growth opportunity for private prison companies, which struggled as President Biden worked to reduce private prison contracts. With Homan’s appointment, investors anticipate a resurgence of federal reliance on private detention services to meet increased demand for housing immigrant detainees.
Analysts have responded positively to this development, citing that Trump’s administration will likely “embrace” companies like Geo Group and CoreCivic. Isaac Boltansky, an analyst with BTIG, noted that private prison companies are positioned for growth under an immigration-focused administration, specifically due to likely contracting needs with the U.S. Marshals Service and ICE. Analysts expect Homan’s policies to generate consistent demand for private facilities, which could lead to stronger financial performance and increased market value for these companies.
Trump’s firm stance on deportation and his choice of Homan as border czar have energized investors. The expected rise in federal contracts signals a favorable outlook for private prison stocks. With immigration reform likely to be a focal point in Trump’s administration, CoreCivic and Geo Group could see sustained growth, especially as they support the expanded need for detention services. The private prison sector, long entangled with federal enforcement policies, now faces a potential resurgence as market trends align with anticipated shifts in government policy.
Key Points: – U.S. stock indexes drop, with Nasdaq down over 1% after Iran’s missile attack on Israel. – Defense stocks rise as oil prices surge amid geopolitical tensions. – Investors grow cautious, monitoring U.S. job data and port strikes.
U.S. stock markets took a sharp turn downward on Tuesday as news broke of Iran launching a barrage of ballistic missiles at Israel, heightening tensions in the Middle East. The Nasdaq Composite led the decline, falling by over 1%, while the broader market also saw losses, reflecting growing investor caution in the face of geopolitical instability. The Dow Jones Industrial Average fell by 0.2%, and the S&P 500 dropped 0.75%.
The attack by Iran is seen as retaliation for Israel’s ongoing military campaign against Hezbollah, Iran’s ally in the region. In response to the missile strikes, President Joe Biden directed the U.S. military to support Israel’s defense and to shoot down any missiles aimed at the country, as confirmed by the White House National Security Council.
While the broader market felt the impact of the escalating conflict, shares in the defense sector surged. Companies like Northrop Grumman and Lockheed Martin saw their stock prices rise, as investors shifted focus to the increased demand for defense and military technology in light of the conflict. The S&P 500 Aerospace and Defense Index rose by more than 1%, hitting a new record high.
Energy companies also benefitted from the geopolitical unrest, with oil prices rising alongside the tensions. Exxon Mobil gained 2.2% as West Texas Intermediate crude oil climbed over 4%. The possibility of further supply disruptions in the Middle East, which produces a significant portion of the world’s oil, pushed investors into energy stocks, which historically serve as a hedge during times of geopolitical uncertainty.
On the other hand, airline stocks like Delta Air Lines experienced losses, reflecting concerns over potential disruptions in travel and higher fuel costs. Delta’s shares dropped by 1%, as investors anticipated a tightening of air travel conditions due to escalating tensions in the region.
“This situation highlights the variety of risks the market is currently facing, from slowing employment to geopolitical tensions,” noted Walter Todd, Chief Investment Officer at Greenwood Capital. “The market is vulnerable to shocks like this, and it’s reacting accordingly.”
The heightened geopolitical risk comes at a time when U.S. markets were already grappling with several economic uncertainties. On Monday, the three major indexes had posted strong gains for September and for the third quarter, but Tuesday’s developments prompted a reversal of that trend. In addition to the conflict in the Middle East, investors are also closely watching economic data related to U.S. job openings and manufacturing activity, which rebounded in August but still signaled broader concerns about the health of the economy.
Increased market volatility followed the news, with the CBOE Volatility Index, also known as the VIX or “fear gauge,” jumping by two points to 18.74. Earlier in the session, the index had reached a three-week high of 20.73, indicating a growing sense of uncertainty among investors.
Meanwhile, the looming East Coast and Gulf Coast port strikes, which began Tuesday, added another layer of complexity to the market’s reaction. The strike has halted approximately half of the nation’s ocean shipping, potentially exacerbating economic disruptions and creating further uncertainty for policymakers at the Federal Reserve as they assess the state of the economy.
Investors will be watching closely as more economic data is released later in the week, particularly the U.S. jobless claims report on Thursday and the monthly payrolls data on Friday. With market sentiment already rattled by geopolitical events, these figures could further influence the outlook for future Federal Reserve interest rate cuts.
Graham Corporation designs, manufactures and sells critical equipment for the energy, defense and chemical/petrochemical industries. The Company designs and manufactures custom-engineered ejectors, vacuum pumping systems, surface condensers and vacuum systems. It is a nuclear code accredited fabrication and specialty machining company. It supplies components used inside reactor vessels and outside containment vessels of nuclear power facilities. Its equipment is found in applications, such as metal refining, pulp and paper processing, water heating, refrigeration, desalination, food processing, pharmaceutical, heating, ventilating and air conditioning. For the defense industry, its equipment is used in nuclear propulsion power systems for the United States Navy. The Company’s products are used in a range of industrial process applications in energy markets, including petroleum refining, defense, chemical and petrochemical processing, power generation/alternative energy and other.
Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , 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.
2Q24 Results. The improved top and bottom lines reflect Graham’s successful operating strategy, in our view. The first quarter can be characterized by solid growth, consistent improvement, and strengthened profitability. We also would note the expansion of Graham’s defense business has reduced the Company’s economic sensitivity.
New Orders. Graham’s Barber-Nichols segment reported the receipt of three new awards, totaling in excess of $65 million. An extension of work for the MK48 Mod 7 Heavyweight torpedo program, received in the first quarter; a new program for the Columbia-class submarine; and a contract to provide cryogenic recirculation pumps for space vehicles. We believe these awards demonstrate the Company’s capabilities to successfully compete in its key markets.
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*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.
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, CFA, Managing Director, Equity Research Analyst, Generalist , 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.
Repricing and Extension. Yesterday, V2X announced a repricing and extension of its $907 million First Lien term loan. The actions are another step by management to enhance the capital structure, in our view, and should lead to lower interest costs and additional financial flexibility.
Details. Under the repricing, the annual interest margin was reduced by 50 basis points to 2.75%. Additionally, the 10-basis point credit spread adjustment was eliminated from the Company’s Secured Overnight Financing Rate, further improving the anticipated savings from the repricing. The company also extended the maturity of the loan by two years to December 2030.
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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.
MCLEAN, Va., May 1, 2024 /PRNewswire/ — V2X, Inc. (NYSE: VVX) has been awarded a total of $75 million in new and follow-on work to advance the next generation of threat detection and response to Chemical, Biological, Radiological, and Nuclear (CBRN) hazards. This funding is a significant step forward in enhancing global security and operational readiness against evolving threats.
The first part of this funding, amounting to $50 million, is a five-year project that will position V2X as the lead systems integrator under the CBRN Support to Command and Control (CSC2) program. CSC2 is now the program of record for the integration of CBRN and force protection sensors, which provides integrated early warning of attacks, enhancing security and operational readiness at overseas locations.
In addition to the CSC2 contract, V2X is finalizing a $25 million award to modernize and re-architect the CBRN threat warning and notification application, and predictive hazard propagation tools for enhanced operational decision support. These cutting-edge applications are designed to leverage existing systems while adding additional capabilities in a single user-friendly interface. This initiative will play a critical role in harnessing and synthesizing the growing volume of data available to commanders, ensuring rapid and informed decision-making in complex scenarios.
“These awards not only exemplify our commitment to innovation in national defense but also positions V2X at the forefront of a crucial global security initiative that requires distinct operational expertise and an ability to integrate the right technologies for the right mission” said Corinne Minton-Package, Senior Vice President of Operational Technology and Engineering at V2X. “Our technology-driven and converged security solutions are set to significantly boost the efficacy and responsiveness of CBRN threat detection and mitigation on an international scale.”
Both CBRN opportunities are pivotal in advancing the Department of Defense’s vision for Combined Joint All-Domain Command and Control (CJADC2). This vision seeks to connect sensors into a cohesive architecture that communicates across all branches of service, forming a unified network that enhances the collective operational capability of the U.S. military.
The projects underscore V2X’s role as a critical integrator and developer of sophisticated systems that improve security and defense capabilities on a global scale. The company continues to be a leader in the development and deployment of operational solutions that address high consequence mission requirements.
About V2X V2X builds smart solutions designed to integrate physical and digital infrastructure – by aligning people, actions, and outputs. Our lifecycle solutions improve security, streamline logistics, and enhance readiness.
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 16,000 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.
Media Contact Angelica Spanos Deoudes Director, Corporate Communications Angelica.Deoudes@goV2X.com 571-338-5195
Investor Contact Mike Smith, CFA Vice President, Treasury, Corporate Development and Investor Relations IR@goV2X.com 719-637-5773
SAN DIEGO, April 29, 2024 (GLOBE NEWSWIRE) — Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS), a Technology Company in the Defense, National Security and Global Markets, announced today that it will publish financial results for the first quarter 2024 after the close of market on Tuesday, May 7th. 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 OnlineForm. 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) is a technology, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low cost future manufacturing which is a value add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter UAS, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com.
MCLEAN, Va., April 23, 2024 /PRNewswire/ — V2X, Inc., (NYSE: VVX), a leading provider of global mission solutions, will report first quarter 2024 financial results on Tuesday, May 7, 2024, before market open. Senior management will conduct a conference call at 8:00 a.m. ET that same day.
U.S.-based participants may dial in to the conference call at 877-407-3982, while international participants may dial 201-493-6780. A live webcast of the conference call as well as an accompanying slide presentation will be available at https://app.webinar.net/24war3pJ8n7 and on the Investors section of the V2X website at https://gov2x.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 May 21, 2024, at 844-512-2921 (domestic) or 412-317-6671 (international) with passcode 13745566.
About V2X V2X builds smart solutions designed to integrate physical and digital infrastructure – by aligning people, actions, and outputs. Formed by the merger of Vectrus and Vertex, we bring a combined 120 years of successful mission support. Our lifecycle solutions improve security, streamline logistics, and enhance readiness.
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 16,000 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.
Investor Contact Mike Smith, CFA Vice President, Treasury, Corporate Development and Investor Relations IR@goV2X.com 719-637-5773
Media Contact Angelica Spanos Deoudes Director, Corporate Communications Angelica.Deoudes@goV2X.com 571-338-5195
MCLEAN, Va., April 17, 2024 /PRNewswire/ — V2X, Inc. (NYSE: VVX) proudly announces its selection as one of the six prime contractors for the U.S. Navy’s Global Contingency Services (GCS) Multiple Award Contract (MAC) III. The contract, valued at up to $2 billion, was awarded by the Naval Facilities Engineering Command, Pacific in Hawaii, with an expected completion date of September 2032.
This significant contract enables V2X to swiftly provide critical facility support services for a wide range of scenarios, including natural disasters, humanitarian efforts, military actions, and potential service disruptions. With operations spanning various global locations, including remote areas, V2X stands ready to deliver rapid and effective solutions whenever and wherever they are needed most.
Ken Shreves, Senior Vice President of Global Mission Solutions and Chief Service Delivery and Growth Officer at V2X, expressed pride in the company’s ongoing partnership with the Navy, “As a leading provider under GCS MAC II with nearly $300 million in awarded task orders, we are honored to continue our support for the Navy in the third iteration of the GCS MAC. This reaffirms our commitment to providing essential services during times of necessity. V2X has a proven track record of meeting our customers’ needs, even in the most challenging environments worldwide.”
During the GCS MAC II, which reached its $900 million ceiling reflecting demand for critical support services, V2X showcased its ability to deliver essential services efficiently and effectively. Under this latest contract, V2X remains committed to providing short-notice facility support services and incidental construction.
About V2X
V2X builds smart solutions designed to integrate physical and digital infrastructure – by aligning people, actions, and outputs. Formed by the merger of Vectrus and Vertex, we bring a combined 120 years of successful mission support. Our lifecycle solutions improve security, streamline logistics, and enhance readiness.
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 16,000 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.
Media Contact
Angelica Spanos Deoudes
Director, Corporate Communications
Angelica.Deoudes@goV2X.com
571-338-5195
Investor Contact
Mike Smith, CFA
Vice President, Treasury, Corporate Development and Investor Relations
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the bottom of the report for important disclosures
2024 Budget. The 2024 budget signed by President Biden significantly increases ICE funding, which could have positive implications for both CoreCivic and The GEO Group. The ICE budget increased $798 million to $9.6 billion, including $5.1 billion for ICE Enforcement and Removal Operations, a $900 million increase, according to the Homeland Security Fiscal 2024 bill summary. ATD funding increased $27.5 million to $470.2 million.
Additional Beds. Detention beds increased to 41,500 from 34,000 in fiscal 2023. We would note, the number of people detained by ICE has exceeded the 34,000 funding amount since mid-August and was 39,111 as of March 10th. At a minimum, the new budget enables ICE to increase detainees by approximately 3,000 and if the recent past is any indication, the actual number of beds in use could easily top the 41,500 level.
Encounters Still High. The most recent data for Southwest Border Encounters indicated 189,922 people were encountered in February, the second highest level for that month in history. Looking at the first five months of the fiscal year, there were some 1.15 million encounters, an annualized rate of 2.76 million, compared to 2.47 million for all of 2023.
Capacity. Even with the current 39,000 detainee level, there appears to be sufficient bed capacity at existing facilities to absorb the incremental 3,000, if it occurs. However, currently idle CoreCivic and GEO facilities may be in play, based on ICE’s geographic and other needs. We view CoreCivic’s Leavenworth and California City facilities and GEO’s North Lake and D. Ray James facilities as logical options if ICE determines a need for additional facilities.
Implications. While the budget was just signed, we view the increases as an incremental net positive for both CoreCivic and The GEO Group. The increased funding and beds are both positives and if we see another Continuing Resolution in the fall, these elevated numbers will stand until a new budget is passed.
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Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis. Named WSJ ‘Best on the Street’ Analyst and Forbes/StarMine’s “Best Brokerage Analyst.” FINRA licenses 7, 24, 63, 87
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Reported record revenue of $1.04 billion, up +6.4% y/y
Achieved y/y revenue growth of 31% in the Pacific and 18% in the Middle East
Operating income of $38.5 million; adjusted operating income1 of $76.2 million
Net income (loss) of ($0.5) million, up $10.1 million y/y
Adjusted EBITDA1 of $82.1 million with a margin1 of 7.9%
Diluted EPS of ($0.02); Adjusted diluted EPS1 of $1.22
Strong year-to-date cash flow from operations of $188.0 million; Achieved net debt reduction of $137.1 million
Awarded first substantial foreign military sales program valued at $400 million over 5 years
2024 Guidance:
Establishing full-year 2024 guidance with revenue and adjusted EBITDA1 growth of 5% at mid-point
MCLEAN, Va., March 5, 2024 /PRNewswire/ — V2X, Inc. (NYSE:VVX) announced fourth quarter and full-year 2023 financial results.
“I’m pleased to report a strong finish to 2023, with record revenue and strong operational performance which drove significant cash generation and net debt reduction,” said Chuck Prow, President and Chief Executive Officer of V2X. “I’d like to thank our teams that demonstrated agility and excellent performance, delivering 8% pro forma revenue1 growth for the full-year and 6% for the quarter. We made significant progress advancing V2X as a leader in the operational segment of the federal services market while continuing to position the company for long-term growth. The leading indicators for our business remain strong with a backlog of approximately $13 billion, $9 billion of bids submitted currently under evaluation, and a robust pipeline of opportunities valued at $15 billion expected to be submitted over the next twelve months. Our capabilities and position in an expanding market, present opportunities to drive continued growth and value for our shareholders and clients.”
“V2X achieved several milestones during the fourth quarter, which includes our first substantial foreign military sales (FMS) win valued at approximately $400 million over the next five years,” said Mr. Prow. “This program is a long-term aviation support and training contract in the Middle East and was a direct result of our multi-year FMS campaign. Importantly, our evolution as a company has been an enabler to participate in this market. With this opportunity, the total value of V2X FMS’ portfolio is approximately $700 million with accretive margins. We plan to build on this success and continue pursuing FMS opportunities that leverage our geographic footprint, strong partnerships, and core capabilities.”
Mr. Prow continued, “Our ability to provide full life cycle solutions from concept to fielding and sustainment is a significant differentiator that’s yielding results. During the quarter, we demonstrated our capabilities through the fielding of a defense platform that modernized existing systems. This program launched as an engineering development and prototyping effort with a new client and today has yielded a brand-new product that’s designed, produced, and sustained by V2X. Additionally, our engineering, integration, modernization and sustainment solutions resulted in approximately $70 million of awards to V2X in the fourth quarter.”
Mr. Prow concluded, “I’d like to thank our teams for their contributions in 2023 and progress executing our strategic framework: Expand the Base, Capture New Markets, Deliver with Excellence, and Enhance Culture. Looking ahead, V2X continues to transform to deliver enhanced capabilities in an expanding market. We have strong momentum, robust backlog, a highly aligned pipeline, limited recompetes, and high free cash generation that provides an excellent fundamental profile to support value creation.”
Fourth Quarter 2023 Results
“V2X reported revenue of $1.0 billion in the quarter, which represents 6.4% year-over-year growth,” said Shawn Mural, Senior Vice President and Chief Financial Officer. “Revenue growth in the quarter was achieved through exceptional team performance delivering milestones ahead of schedule, expansion on existing programs, and new business. This solid execution resulted in year-over-year revenue growth of 31% in the Pacific and 18% in the Middle East.”
“For the quarter, the Company reported operating income of $38.5 million and adjusted operating income1 of $76.2 million. Adjusted EBITDA1 was $82.1 million with a margin of 7.9%. Fourth quarter GAAP diluted EPS was ($0.02), due primarily to merger and integration related costs, amortization of acquired intangible assets, and interest expense. Adjusted diluted EPS1 for the quarter was $1.22.”
“V2X’s ability to generate strong cash flow with low capital expenditures is an important attribute of our business and one that we are extremely focused on as a primary avenue to enhance value for shareholders. I’m pleased to announce that during the quarter, our teams demonstrated outstanding performance in all aspects of cash conversion, driving significant collections, a record low DSO, and operating cash flow that exceeded our guidance. Net cash provided by operating activities was $188.0 million year to date. Adjusted net cash provided by operating activities1 year to date was $159.5 million, adding back $26.9 million of M&A and integration costs with $13.4 million of CARES act payments, and removing the contribution of the master accounts receivable purchase or MARPA facility of $68.8 million.”
“Solid cash generation enabled net debt reduction of $137.1 million for the year. At the end of the quarter, net debt for V2X was $1,083.6 million. Net consolidated indebtedness to EBITDA1 (net leverage ratio) was 3.3x, improved from 3.7x at the end of 2022. Additionally, we believe our strong fundamentals will allow V2X to achieve a net leverage ratio at or under 3.0x by the end of 2024.”
“Total backlog as of December 31, 2023, was $12.8 billion. Funded backlog was $2.8 billion. Bookings in the quarter were $0.6 billion, resulting in a trailing twelve-month book-to-bill of 1.1x. It’s important to note that backlog and bookings do not include the full performance period of the $400 million FMS program as the contract is being definitized and the $458 million F-5 Adversary aircraft award, discussed last quarter, as it remains in protest,” said Mr. Mural.
Full-Year 2023 Results
Full-year revenue was $3.963 billion, up 8% pro forma year-on-year. The Company reported full-year operating income of $124.4 million and adjusted operating income1 of $271.4 million. Full-year EBITDA1 was $293.9 million with a margin of 7.4%. Full-year GAAP diluted EPS was ($0.73), due primarily to merger and integration related costs, amortization of acquired intangible assets, and interest expense. Adjusted diluted EPS1 for 2023 was $3.74.
2024 Guidance
Mr. Mural concluded, “Based on the positive trends in our business we are setting the mid-point of our guidance for revenue and Adjusted EBITDA1 at $4.150 billion and $308 million, respectively, representing approximately 5% year-over-year growth. We expect revenue and adjusted EBITDA to be weighted more heavily in the second half of the year. Importantly, guidance at the mid-point assumes approximately 90% of revenue from existing contracts and less than 5% from recompetes.”
Guidance for 2024 is as follows:
$ millions, except for per share amounts
2024 Guidance
2024 Mid-Point
Revenue
$4,100
$4,200
$4,150
Adjusted EBITDA1
$300
$315
$308
Adjusted Diluted Earnings Per Share1
$3.85
$4.20
$4.03
Adjusted Net Cash Provided by Operating Activities1
$145
$165
$155
The Company is not providing a quantitative reconciliation with respect to this forward-looking non-GAAP measure in reliance on the “unreasonable efforts” exception set forth in SEC rules because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. For example, unusual, one-time, non-ordinary, or non-recurring costs, which relate to M&A, integration and related activities cannot be reasonably estimated. 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.
Fourth Quarter and Full-Year 2023 Conference Call
Management will conduct a conference call with analysts and investors at 8:00 a.m. ET on Tuesday, March 5, 2024. U.S.-based participants may dial in to the conference call at 877-407-3982, while international participants may dial 201-493-6780. A live webcast of the conference call as well as an accompanying slide presentation will be available here: https://app.webinar.net/WrwGVYwl6dA
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 March 19, 2024, at 844-512-2921 (domestic) or 412-317-6671 (international) with passcode 13743860 .
Presentation slides that will be used in conjunction with the conference call will also be made available online in advance on the “investors” section of the company’s website at https://gov2x.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 (“SEC”) Regulation FD.
Footnotes:
1 See “Key Performance Indicators and Non-GAAP Financial Measures” for descriptions and reconciliations.
About V2X
V2X builds smart solutions designed to integrate physical and digital infrastructure – by aligning people, actions, and outputs. Formed by the merger of Vectrus and Vertex, we bring a combined 120 years of successful mission support. Our lifecycle solutions improve security, streamline logistics, and enhance readiness.
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 16,000 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 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 “2024 Guidance” above and other assumptions contained therein for purposes of such guidance, other statements about our 2024 performance outlook, revenue, contract opportunities, 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, which 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 SEC.
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.
Full Year 2023 Revenues of $1.037 Billion Reflect 15.5 Percent Growth and 12.6 Percent Organic Growth, Respectively, Over Full Year 2022 Revenues of $898.3 Million
Fourth Quarter Revenues of $273.8 Million Reflect 9.8 Percent Growth and 7.3 Percent Organic Growth, Respectively, Over Fourth Quarter 2022 Revenues of $249.3 Million
Fourth Quarter 2023 Cash Flow Generated from Operations of $67.4 Million Full Year 2023 Cash Flow Generated from Operations of $65.2 Million
Fourth Quarter 2023 Consolidated Book to Bill Ratio of 1.2 to 1 and Bookings of $330 Million
Last Twelve Months Ended December 31, 2023 Consolidated Book to Bill Ratio of 1.1 to 1 and Bookings of $1.15 Billion
2024 Financial Forecast Includes 10 Percent Organic Revenue Growth
SAN DIEGO, Feb. 13, 2024 (GLOBE NEWSWIRE) — Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a Technology Company in the Defense, National Security and Global Markets, today reported its fourth quarter 2023 financial results, including Revenues of $273.8 million, Operating Income of $11.7 million, Net Income attributable to Kratos of $2.4 million, Adjusted EBITDA of $29.1 million and a consolidated book to bill ratio of 1.2 to 1.0.
Included in fourth quarter 2023 Net Income and Operating Income is non-cash stock compensation expense of $6.3 million and Company-funded Research and Development (R&D) expense of $8.0 million, which includes significant ongoing development efforts in our Space and Satellite Communications business to develop our virtual, software-based OpenSpace command & control (C2), telemetry tracking & control (TT&C) and other ground system solutions. The fourth quarter 2023 Net Income attributable to Kratos includes $3.2 million attributable to a non-controlling interest, which includes a charge of $2.7 million adjustment recorded to reflect the estimated increase in the value of the redeemable non-controlling interest to the estimated redemption amount by Kratos.
Kratos reported fourth quarter 2023 GAAP Net Income attributable to Kratos of $2.4 million and a GAAP Net Income per share of $0.02, compared to a GAAP Net Loss attributable to Kratos of $8.3 million and a GAAP Net Loss per share of $0.07 for the fourth quarter of 2022. Adjusted earnings per share (EPS) was $0.12 for the fourth quarter of 2023, compared to $0.08 for the fourth quarter of 2022.
Fourth quarter 2023 Revenues of $273.8 million increased $24.5 million, reflecting 9.8 percent and 7.3 percent organic growth, respectively, from fourth quarter 2022 Revenues of $249.3 million. Fourth quarter 2023 Cash Flow Generated from Operations was $67.4 million, primarily reflecting the receipt of accelerated favorable customer milestone payments, resulting in a Consolidated Days Sales Outstanding reduction from 117 days in the third quarter of 2023 to 109 days in the fourth quarter of 2023 and increases in deferred revenues or customer advanced payments to $101.8 million at the end of the fourth quarter of 2023, up from $79.4 million at the end of the third quarter of 2023. Free Cash Flow Generated from Operations for the Fourth Quarter of 2023 was $48.1 million after funding of $19.3 million of capital expenditures. Capital expenditures remain elevated due primarily to the manufacture of two production lots of Valkyries prior to contract award, to meet anticipated customer orders and requirements.
For the fourth quarter of 2023, Kratos’ Unmanned Systems (KUS) segment generated Revenues of $55.4 million, which included contribution of $6.4 million from the recent Sierra Technical Services, Inc. (STS) acquisition, as compared to $62.7 million in the fourth quarter of 2022, primarily reflecting reduced tactical drone activity. KUS’s Operating Income was $1.0 million in the fourth quarter of 2023 compared to $1.8 million in the fourth quarter of 2022. KUS’s Adjusted EBITDA for the fourth quarter of 2023 was $4.0 million, compared to fourth quarter 2022 KUS Adjusted EBITDA of $4.5 million, reflecting reduced volume.
KUS’s book-to-bill ratio for the fourth quarter of 2023 was 1.1 to 1.0 and 1.2 to 1.0 for the last twelve months ended December 31, 2023, with bookings of $61.2 million for the three months ended December 31, 2023, and bookings of $244.2 million for the last twelve months ended December 31, 2023. Total backlog for KUS at the end of the fourth quarter of 2023 was $255.8 million compared to $227.8 million at the end of the third quarter of 2023.
For the fourth quarter of 2023, Kratos’ Government Solutions (KGS) segment Revenues of $218.4 million increased from Revenues of $186.6 million in the fourth quarter of 2022, reflecting a 17.0 percent growth and organic growth rate. The increased Revenues includes organic revenue growth in our Space, Satellite, Cyber and Training Solutions, Turbine Technologies, C5ISR, and Microwave Products businesses.
KGS reported operating income of $17.5 million in the fourth quarter of 2023 compared to $8.8 million in the fourth quarter of 2022, primarily reflecting a more favorable mix and increased revenue volume. Fourth quarter 2023 KGS Adjusted EBITDA was $25.1 million, compared to fourth quarter 2022 KGS Adjusted EBITDA of $14.7 million, primarily reflecting the increased revenue and more favorable mix.
Kratos’ Space, Satellite, Cyber and Training business generated Revenues of $112.9 million in the fourth quarter of 2023 compared to $97.7 million in the fourth quarter of 2022, reflecting a 15.5 percent organic growth rate.
KGS reported a book-to-bill ratio of 1.2 to 1.0 for the fourth quarter of 2023, a book to bill ratio of 1.1 to 1.0 for the last twelve months ended December 31, 2023 and bookings of $269.2 million and $902.2 million for the three and last twelve months ended December 31, 2023, respectively. KGS includes Kratos’ Space, Satellite, Cyber and Training Solutions business, which reported a book to bill ratio of 1.2 to 1.0 for the fourth quarter and the last twelve months ended December 31, 2023. Bookings for Kratos’ Space, Satellite, Cyber and Training business for the three months and last twelve months ended December 31, 2023 were $132.2 million and $493.5 million, respectively. KGS’s total backlog at the end of the fourth quarter of 2023 was $988.0 million, as compared to $937.3 million at the end of the third quarter of 2023.
Kratos reported consolidated bookings of $330.3 million and a book-to-bill ratio of 1.2 to 1.0 for the fourth quarter of 2023, and consolidated bookings of $1.15 billion and a book-to-bill ratio of 1.1 to 1.0 for the last twelve months ended December 31, 2023. Consolidated backlog was $1.24 billion on December 31, 2023 and $1.17 billion on October 1, 2023. Kratos’ bid and proposal pipeline was $11.0 billion at December 31, 2023 and $10.3 billion at October 1, 2023. Backlog at December 31, 2023 included funded backlog of $944.6 million and unfunded backlog of $299.3 million.
Full Year 2023 Results
Kratos reported its full year 2023 financial results, including Revenues of $1.037 billion, Operating Income of $31.1 million, Net Loss attributable to Kratos of $8.9 million, Adjusted EBITDA of $95.4 million and a consolidated book to bill ratio of 1.1 to 1.0.
Included in the full year 2023 Net Loss and Operating Income is non-cash stock compensation expense of $25.3 million and Company-funded Research and Development (R&D) expense of $38.4 million, which includes significant ongoing development efforts in our Space and Satellite Communications business to develop our first to market, virtual, software-based OpenSpace command & control (C2), telemetry tracking & control (TT&C) and other ground system solutions. The full year 2023 Net Loss attributable to Kratos includes $11.3 million attributable to a non-controlling interest, which includes charges of $9.9 million of adjustments recorded to reflect the estimated increase in the value of the redeemable non-controlling interest to the estimated redemption amount by Kratos.
Kratos reported full year 2023 GAAP Net Loss attributable to Kratos of $8.9 million and a GAAP Net Loss per share of $0.07, compared to a GAAP Net Loss attributable to Kratos of $36.9 million and a GAAP Net Loss per share of $0.29 for the full year 2022. Adjusted earnings per share (EPS) was $0.42 for the full year 2023, compared to $0.31 for full year 2022.
Full year 2023 Revenues of $1.037 billion increased $138.8 million, reflecting 15.5 percent growth and 12.6 percent organic growth, respectively, from full year 2022 Revenues of $898.3 million. Full year 2023 Cash Flow Generated from Operations was $65.2 million, primarily reflecting the receipt of accelerated favorable customer milestone payments, offset partially by working capital uses including increases in inventories of approximately $29.6 million. Free Cash Flow Generated from Operations was $21.1 million after funding of $52.4 million of capital expenditures, less $8.3 million in receipt of proceeds for sale of Valkyries that were built as Kratos capital assets. Full year 2023 capital expenditures were elevated due primarily to the manufacture of the two production lots of Valkyries prior to contract award to meet anticipated customer orders and requirements.
For full year 2023, KUS generated Revenues of $212.2 million, which included contribution of $6.4 million from the recent STS acquisition, as compared to $221.7 million in the full year 2022, primarily reflecting reduced tactical drone activity. KUS’s Operating Income was $4.2 million in full year 2023 compared to an Operating Loss of $2.8 million in full year 2022. KUS’s Adjusted EBITDA for full year 2023 was $14.8 million, compared to full year 2022 KUS Adjusted EBITDA of $12.5 million, reflecting the reduced volume offset by a more favorable mix.
For full year 2023, KGS Revenues of $824.9 million increased $148.3 million, reflecting 21.9 percent growth and 18.9 percent organic growth, respectively, from Revenues of $676.6 million in full year 2022. The increased Revenues includes organic revenue growth in our Space, Satellite, Cyber and Training Solutions, Turbine Technologies, C5ISR, and Microwave Products businesses.
KGS reported operating income of $52.7 million in full year 2023 compared to $27.2 million in full year 2022, primarily reflecting a more favorable mix and increased revenue volume. Full year 2023 KGS Adjusted EBITDA was $80.6 million, compared to full year 2022 KGS Adjusted EBITDA of $58.2 million, primarily reflecting the more favorable mix and increased revenue.
Kratos’ Space, Satellite, Cyber and Training business generated Revenues of $423.0 million in full year 2023 compared to $359.0 million in full year 2022, reflecting a 17.8 percent growth and organic growth rate.
Eric DeMarco, Kratos’ President and CEO, said, “Kratos’ strategy as a technology company and making internally funded investments to be first to market with affordable systems, software and products, is being successfully executed. Additionally, Kratos taking the prime or lead position on program opportunities where we believe the Kratos internal investment required is acceptable and the probability of Kratos win is high, and also Kratos teaming with a traditional system integrator partner, for a combined even greater probability of win on other opportunities is clearly working. Kratos’ low cost, innovation, rapid development and engineering up front for affordable mass production, brings significant value to our customers, our prime system integrator partners in teaming situations, and to our shareholders.”
Mr. DeMarco continued, “As we begin 2024, expected Kratos’ base case growth areas include: satellite communications; jet engines for drones, missiles, loitering munitions, supersonic and space systems; hypersonic systems; C5ISR and microwave electronics for missile, radar and CUAS systems and augmented reality training systems. We are currently producing approximately 160 high performance tactical and target jet drones annually, with a validated and executing supply chain in place, and we are making the investments necessary to triple our drone production capacity. As the only Company with a family of affordable, attritable, tactical jet drones flying today with weapons range pedigree and with additional new jet drones in development, all under customer funded contracts, we are confident that we will be successful. We are forecasting Kratos’ unmanned systems business to be one of our leading growth drivers in 2024, including target drone production and tactical drone RDT&E and S&T contracts, including a new tactical drone program award.”
Mr. DeMarco concluded, “Business challenges include our ability to obtain and retain qualified personnel, including those that are willing and able to obtain National Security clearances and the related high cost of these individuals, which is currently adversely impacting our margins. Additionally, the U.S. Federal Government budgetary situation is a challenge for the industry and for Kratos, and one that we cannot control and an extended Continuing Resolution Authorization (CRA) could adversely impact our business and financial forecast if not resolved soon.”
Financial Guidance
We are providing our initial 2024 first quarter and full year financial guidance, which includes our current forecasted business mix, and our assumptions, including as related to: employee sourcing, hiring and retention; manufacturing, production and supply chain disruptions; parts shortages and related continued potential significant cost and price increases, including for employees, materials and components that are impacting the industry and Kratos. The range of our expected first quarter and full year 2024 Revenues and Adjusted EBITDA includes assumptions of forecasted execution, including the number and estimated costs of qualified personnel expected to be obtained and retained to successfully execute on our programs and contracts, as well as expected contract awards. A U.S. Government budget was not passed by October 1, 2023, the beginning of Federal Fiscal Year 2024, and as a result, Kratos and others in our industry are operating under a Continuing Resolution Authorization (CRA), which currently expires March 8, 2024, under which no new contracts and no increases in existing contracts production or funding, among other stipulations, is permitted. Kratos’ 2024 financial forecast and guidance provided today assumes that the current CRA will be resolved and that a U.S. Federal and DoD budget which includes no unexpected budget cuts impacting our business will be in place by March 8, 2024. As a result, similar to Kratos’ 2023 quarterly financial trajectory, which fiscal year also experienced a CRA, we are forecasting Kratos’ third and fourth financial quarter’s results of 2024 to be significantly greater than the fiscal first and second quarter’s results, with the fourth quarter expected to be particularly strong in both revenue and Adjusted EBITDA. If the current CRA goes beyond the existing March 8, 2024 date, we will evaluate Kratos’ 2024 financial forecast at that time, based on the existing facts, circumstances and expectations.
Kratos’ 2024 financial forecast and guidance includes elevated investments for capital expenditures, including continued manufacture of two production lots of Valkyries prior to contract award, to meet anticipated customer orders and requirements, the expansion and build-out of the Company’s Microwave Products production facilities, and the expansion of our manufacturing and production facilities in our Rocket Systems and Hypersonic businesses.
Our first quarter and full year 2024 guidance ranges are as follows:
Current Guidance Range
$M
Q124
FY24
Revenues
$240 – $260
$1,125 – $1,150
R&D
$9 – $11
$42 – $45
Operating Income
$1 – 3
$37 – $41
Depreciation
$6 – $8
$28 – $30
Amortization
$2 – $3
$8 – $10
Stock Based Compensation
$6 – $7
$26- $28
Adjusted EBITDA
$16 – $18
$102 – $107
Operating Cash Flow
$50 – $60
Capital Expenditures
$70 – $80
Free Cash Flow Use
($10 – $30)
Management will discuss the Company’s financial results, 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) is a technology, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low cost future manufacturing which is a value add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter UAS, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit 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 first quarter and full year 2024 revenues, organic revenue growth rates, R&D, operating income (loss), depreciation, amortization, stock based compensation expense, and Adjusted EBITDA, and full year 2024 operating cash flow, capital expenditures and other investments, and free cash flow, 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, including the Company’s ability to achieve sustained year over year increasing revenues, profitability and cash flow, the Company’s expectation of ramp on projects and that investments in its business, including Company funded R&D expenses and ongoing development efforts, 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 and backlog, including the Company’s ability to timely execute on its backlog, demand for its products and services, including the Company’s alignment with today’s National Security requirements and the positioning of its C5ISR and other businesses, planned 2024 investments, including in the tactical drone and satellite areas, and the related potential for additional growth in 2025 and beyond, 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 target and 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 control (TT&C) 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, the ability of the Company’s advanced purchases of inventory to mitigate supply chain disruptions and the timing of converting these investments to cash through the sales process, 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 U.S. Department of Defense (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, risks related to potential cybersecurity events or disruptions of our information technology systems, and delays in 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; risks that our cost-cutting initiatives will not provide the anticipated benefits; risks that changes, cutbacks or delays in spending by the 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 unmanned aerial systems and unmanned ground sensor 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; risks relating to the ongoing conflict in Ukraine and the Israeli-Palestinian military conflict; risks to our business in Israel; 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 compete 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 and risks related to the interest rate swap contract to hedge Term SOFR associated with the Company’s Term Loan A; 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 31, 2023, 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 organic revenue growth rates, Adjusted EPS (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 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 plus proceeds from sale of assets 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.
Note: Unallocated corporate expense, net includes costs for certain stock-based compensation programs (including stock-based compensation costs for stock options, employee stock purchase plan and restricted stock units), the effects of items not considered part of management’s evaluation of segment operating performance, and acquisition and restructuring related items, corporate costs not allocated to the segments, legal related items, and other miscellaneous corporate activities.
ATLANTA, Feb. 13, 2024 (GLOBE NEWSWIRE) — DLH Holdings Corp. (NASDAQ: DLHC) (“DLH” or the “Company”), a leading Health IT provider of digital transformation and cybersecurity, science research and development, and systems engineering and integration, today announced that it has been awarded a contract to continue providing information technology services for the National Institutes of Health’s (“NIH”) National Institute on Drug Abuse (“NIDA”). NIDA is the lead federal agency supporting scientific research on drug use and addiction.
The new award extends a partnership that began with DLH’s first contract with NIDA in 2014. The contract includes a base period of one year with four one-year options, for a total value of approximately $23 million. Through this award, DLH will provide a host of information technology services for NIDA, including managing the operations of an integrated advanced clinical/research informatics series of systems which enables researchers to share data and resources in real time. Additionally, the Company will be responsible for the research, design, development, and maintenance of clinical and scientific informatics, Intranet applications, and public web pages, as well as IT infrastructure and desktop support. This work is 100% NIH funded.
“NIDA-supported research leads to the development of effective prevention and treatment interventions that affect the more than 40 million people in the United States with substance use disorders and their families,” said Diane Yarnell, President of DLH’s Health IT Operations Center. “That NIDA continues to choose DLH for this important work is a testament to our team’s superb execution and commitment to excellence.”
About DLH
DLH (NASDAQ:DLHC) delivers improved health and national security readiness solutions for federal programs through science research and development, systems engineering and integration, and digital transformation. The Company’s experts in public health, performance evaluation, and health operations solve the complex problems faced by civilian and military customers alike, leveraging digital transformation, artificial intelligence, advanced analytics, cloud-based applications, telehealth systems, and more. With over 3,200 employees dedicated to the idea that “Your Mission is Our Passion,” DLH brings a unique combination of government sector experience, proven methodology, and unwavering commitment to innovation to improve the lives of millions. For more information, visit www.DLHcorp.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or DLH’s future financial performance. Any statements that refer to expectations, projections or other characterizations of future events or circumstances or that are not statements of historical fact (including without limitation statements to the effect that the Company or its management “believes”, “expects”, “anticipates”, “plans”, “intends” and similar expressions) should be considered forward looking statements that involve risks and uncertainties which could cause actual events or DLH’s actual results to differ materially from those indicated by the forward-looking statements. Forward-looking statements in this release include, among others, statements regarding estimates of future revenues, operating income, earnings and cash flow. These statements reflect our belief and assumptions as to future events that may not prove to be accurate. Our actual results may differ materially from such forward-looking statements made in this release due to a variety of factors, including: the risk that we will not realize the anticipated benefits of acquisitions (including anticipated future financial performance and results); the diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations; the inability to retain employees and customers; contract awards in connection with re-competes for present business and/or competition for new business; our ability to manage our debt obligations; compliance with bank financial and other covenants; changes in client budgetary priorities; government contract procurement (such as bid and award protests, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks; the impact of inflation and higher interest rates; and other risks described in our SEC filings. For a discussion of such risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in the Company’s periodic reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, as well as subsequent reports filed thereafter. The forward-looking statements contained herein are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry and business.
Such forward-looking statements are made as of the date hereof and may become outdated over time. The Company does not assume any responsibility for updating forward-looking statements, except as may be required by law.
INVESTOR RELATIONS Contact: Chris Witty Phone: 646-438-9385 Email: cwitty@darrowir.com
SAN DIEGO, Feb. 12, 2024 (GLOBE NEWSWIRE) — Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a Technology Company in Defense, National Security and Global Markets, announced today that its Kratos Space & Missile Defense Systems Inc., business unit has received a multiple-award, indefinite-delivery/indefinite-quantity, cost-plus-incentive-fee, cost-plus-fixed-fee, and firm-fixed-price contract with a combined maximum ceiling of $877 million with a nine-year ordering period for Sounding Rocket Program-4. This contract provides suborbital launch services and launch support services necessary to accomplish the Rocket Systems Launch Program’s suborbital mission. The primary locations of performance of the work will be at the contractor facilities and a variety of government launch sites, depending on mission requirements, and is expected to be completed by November 15, 2029. This contract was a competitive acquisition, and three offers were received. Space Systems Command, Kirtland Air Force Base, New Mexico, is the contracting activity.
Kratos Space & Missile Defense Systems is a leading provider of affordable rocket launch systems for ballistic missile target, ballistic missile defense, sub orbital, hypersonic and other missions.
About Kratos Defense & Security Solutions Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low cost future manufacturing which is a value add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter UAS, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit 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 25, 2022, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.
Kratos Press Contact: Yolanda White 858-812-7302 Direct
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