The recent flare-up of violence between Israel and Hamas has led to a rally in defense and aerospace stocks this week. Israel’s air strikes on Gaza, and rocket attacks into Israel, have prompted investors to bet on an escalation of military operations, boosting shares of defense contractors.
Raytheon Technologies, Northrop Grumman, Lockheed Martin, and General Dynamics all saw their share prices surge over 2% on Monday, as the conflict intensified. These major defense players have significant exposure to missile defense systems, aircraft, and other technologies used by the Israeli military.
With Israel ramping up airstrikes in response to Hamas rocket barrages, analysts expect missile stockpiles to be depleted at a faster pace. This could drive near-term orders for restocking and benefit Raytheon, a major supplier of guided missiles. Raytheon’s Patriot missile defense system is also likely seeing heightened utilization.
Meanwhile, Lockheed Martin produces F-16 fighter jets, Apache helicopters, and other aircraft central to Israeli offensive and defensive maneuvers. The company could see greater demand for maintenance, upgrades, and munitions as flight activity increases.
General Dynamics and Northrop Grumman also supply aircraft-related electronics and communications gear to the Israeli air force. Northrop’s AN/TPS-80 ground radar system provides surveillance capabilities relevant to the conflict.
Beyond immediate operations, the fighting may spur longer-term defense spending increases. With tensions high, Israel could expand investment in missile defense and strategic capabilities. Its domestic contractors, and major U.S. players, are poised to benefit.
Smaller defense firms could also get a lift. Israel frequently utilizes smaller contractors for specialized technology development catered to its unique needs. Small-cap companies like Kratos Defense and Ducommun, with niche Israeli defense exposure, may see expanded opportunities. Larger primes winning new contracts could also funnel work to smaller subcontractors.
However, analysts caution the rally may be short-lived without sustained escalation. While illustrating geopolitical risks, this week’s stock moves could reverse on a ceasefire. But major defense contractors remain well-positioned to support Israel’s defense requirements in an unpredictable region. Monitoring the situation is prudent for investors seeking defense exposure.
MCLEAN, Va., Oct. 2, 2023 /PRNewswire/ — V2X, Inc. (NYSE: VVX), today announced Shawn Mural has been appointed as its Senior Vice President and Chief Financial Officer (CFO). In this role, Mural will oversee all finance and accounting functions, including controllership, finance operations, planning, tax, treasury, investor relations, and corporate development.
Mr. Mural joins V2X from RTX Corporation and its subsidiaries (“RTX”), where he served in various capacities of increasing responsibility and most recently as Vice President of Finance and CFO of Raytheon. Over his 24 years at RTX, Shawn’s experience in various leadership roles, as well as managing large integration and operational excellence-related activities, will help support the future growth of V2X.
“As we continue to the next phase of the company’s growth, Shawn brings strong financial leadership and deep knowledge and understanding of the aerospace and defense industry,” said Chuck Prow, President and Chief Executive Officer of V2X. “I look forward to working alongside him as we continue to execute the V2X strategy.”
This appointment follows Susan Lynch’s retirement from the company. The V2X team thanks Susan for her dedicated service and wishes her every success in future endeavors.
About V2X V2X builds smart solutions designed to integrate physical and digital infrastructure – from base to battlefield – 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 15,000 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 Senior Media Strategist Communications@goV2X.com 571-338-5195
Investor Contact Michael Smith Vice President, Treasury, Corporate Development and Investor Relations IR@goV2X.com
Allient Inc. (Nasdaq: ALNT), a designer and manufacturer of specialty motion control products, has acquired Sierramotion Inc., a private company specializing in precision motion solutions. The deal expands Allient’s capabilities in highly-engineered motion components for robotic, medical, industrial and other applications.
California-based Sierramotion brings decades of experience designing customized electro-mechanical systems. Their expertise spans rotary, linear and arc motion applications. Sierramotion provides rapid prototyping, testing and low volume manufacturing for customers across industries like semiconductor, defense and robotics.
The acquisition aligns with Allient’s strategy of adding new technologies through M&A. Sierramotion’s engineering talent and nimble product development will aid Allient’s push into integrated motion systems. Combined with Allient’s larger scale manufacturing footprint, the deal creates opportunities to commercialize Sierramotion’s innovations.
Allient sees motion control as a high-growth market driven by automation and electrification trends. Their targeted sectors include factory automation, surgical robotics, last-mile delivery, drones and electric vehicles. Allient aims to leverage acquisitions to expand capabilities across this diverse customer base.
The addition of Sierramotion also boosts Allient’s new product development capacity, speeding time-to-market. Quick turn prototyping and close customer collaboration helps Sierramotion rapidly refine motion components. Integrating these strengths with Allient’s global manufacturing creates a competitive advantage.
Founded in 2019, Sierramotion has worked previously with Allient to co-develop motion solutions. The existing relationship and complementary capabilities make for a seamless integration of the two companies per management. Expect the deal to be immediately accretive.
Allient continues executing on a well-defined acquisition strategy aimed at shareholder value creation. The company looks for targets that expand its motion technology portfolio and bring specialized engineering talent. Disciplined capital deployment and operating excellence remain priorities for the Buffalo, NY-based firm.
Sierramotion also offers entry into growing West Coast technology hubs. The acquisition provides a footprint near potential customers across tech sectors. Overall, the deal enhances Allient’s competitive positioning within precision motion control, a key focus area for the company.
Keep an eye out for new motion control products as Allient leverages Sierramotion’s unique capabilities. The merger kicks Allient’s acquisition-driven expansion into higher gear as management vows to seize opportunities and lead innovation.
Pennsylvania instrumentation company AMETEK (NYSE: AME) is expanding its testing and measurement capabilities with the acquisition of United Electronic Industries.
Massachusetts-based UEI is a leader in data acquisition and control solutions for aerospace, defense, energy and semiconductor sectors. Its products enable customers to build robust systems for simulation, monitoring and automated testing.
AMETEK CEO David Zapico expressed excitement about bringing UEI’s innovative solutions into the company’s Power Systems and Instruments division. He said the $35 million deal broadens AMETEK’s presence in attractive markets that complement existing strengths.
UEI will join AMETEK’s Electronic Instruments Group, known for analytical, calibration and display instruments. The acquisition aligns with AMETEK’s growth strategy of targeting niche segments and making strategic buys.
Headquartered near Philadelphia, AMETEK has annual sales over $6 billion globally. The 90-year-old firm focuses on cash flow and capital deployment to drive double-digit earnings growth.
Take a moment to learn about Kratos Defense & Security Solutions, a company that specializes in satellite communications, missile defense, and hypersonic systems.
Revenue of $977.9 million, up 10.2% y/y on a pro forma basis
Awarded significant bookings of $2.1 billion, driving backlog +10% sequentially to $13.0 billion
Reported operating income of $34.3 million; adjusted operating income1 of $70.5 million
Adjusted EBITDA1 of $76.4 million with a margin1 of 7.8%
Diluted EPS of $0.06; adjusted diluted EPS1 of $1.01
Improved net debt to EBITDA1 leverage ratio ~0.4x to 3.48x
2023 Guidance:
Increasing mid-point of 2023 revenue, adjusted EBITDA1, and adjusted diluted EPS1 guidance
MCLEAN, Va., Aug. 8, 2023 /PRNewswire/ — V2X, Inc. (NYSE:VVX) announced second quarter 2023 financial results.
“V2X reported strong results in the second quarter with revenue increasing 10.2% year-over-year, on a pro forma basis,” said Chuck Prow, President and Chief Executive Officer of V2X. “Adjusted EBITDA1 for the quarter was $76.4 million and 7.8% margin resulting from solid revenue volume and benefits from program performance. Bookings activity in the quarter was strong at $2.1 billion in awards to V2X. This yielded total backlog of $13.0 billion, representing 10% growth sequentially. Our new business and recompete wins in addition to scope expansion on existing programs bolster our backlog position and set us up for positive momentum leading into 2024. Furthermore, with over $5 billion in bids under evaluation and a 12-month pipeline of ~$19 billion, the outlook for V2X remains robust.”
“Revenue growth in the quarter was generated by continued expansion on existing programs, contribution from new awards, as well as success in securing recompete wins late last year and in early 2023,” said Mr. Prow. “Our teams continued to further drive momentum by successfully expanding work scope on our core programs. Several notable wins late last year and in the first half of 2023 have also helped to push revenue growth. We continue to experience growth in the Pacific or INDOPACOM, and see significant long-term opportunity to further support increasing mission requirements in the region.”
Mr. Prow continued, “We were successful in capturing several key new business pursuits during the quarter. First, we were awarded a $100 million five-year task order with the Department of State to provide logistics support internationally. This represents our most substantive and strategic win with the Department of State and is the culmination of a multi-year client engagement and targeted growth campaign. Our agility and high level of readiness to support mission requirements was a key strategic differentiator for V2X in this award. Looking ahead, we see significant opportunity to leverage our comprehensive capabilities and footprint to further support the global missions of this important client. I am also pleased to announce that we are seeing results executing our sell through business model, which is leveraging our highly technical, development, integration, production, and modernization capabilities. During the quarter, V2X finalized three separate efforts with new clients that utilize our engineering, integration and manufacturing capabilities. We were also awarded an engineering development and prototyping effort with a new client that we believe will lead to new proprietary products with enduring follow-on business.”
“In addition to new awards, during the second quarter, we were awarded over $520 million in recompetes,” said Mr. Prow. “This includes an eight-year, $328 million contract with Naval Facilities Systems Command (NAVFAC) Southeast in support of the Naval Station at Guantanamo Bay. This contract includes all aspects of infrastructure sustainment, including the application of our unique converged solutions. We also secured a five-year recompete contract valued at over $122 million with NAVAIR Fleet Readiness Center Southwest for depot level maintenance support services. Transition to the new contract started in early July. These two recompete wins, along with our first quarter win of Naval Test Wing Pacific reflect the realization of our deliberate growth-oriented client campaign. These efforts are yielding growth, which further diversify our client portfolio. We are thrilled to have been selected for these important programs and remain focused on helping the Navy succeed with the missions that they serve.”
Mr. Prow concluded, “We are harnessing the combined solutions of V2X and are seeing momentum that we believe will drive growth and create value. For example, V2X’s robust modernization and sustainment capabilities are a significant differentiator and we are making excellent progress leveraging our engineering and manufacturing center of excellence. This includes opportunities such as modernizing and improving the effectiveness of the F-16 Fighting Falcon and further expanding our proprietary Gateway Mission Router 1000 across various platforms to provide cutting edge situational awareness in support of the DoD’s Joint All Domain Command and Control (JADC2) effort.”
Second Quarter 2023 Results
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. Second quarter 2022 “reported results” reflect the contributions of Vectrus from April 1, 2022, through June 30, 2022, unless otherwise noted. Comparisons to historical periods are relative to legacy Vectrus results, unless otherwise noted.
Revenue of $977.9 million, up 10.2% y/y on a pro forma basis
Operating income of $34.3 million, including merger and integration related costs of $13.6 million, and amortization of acquired intangible assets of $22.6 million
Adjusted operating income1 of $70.5 million
Adjusted EBITDA1 of $76.4 million with a 7.8% adjusted EBITDA margin1
Diluted EPS of $0.06
Adjusted diluted EPS1 of $1.01
Net debt as of June 30, 2023 of $1,176.6 million
Total backlog as of June 30, 2023 of $13.0 billion
“Our financial results for the second quarter were impressive across the board,” said Susan Lynch, Senior Vice President and Chief Financial Officer. “Pro forma revenue increased 10.2% year-over-year to $977.9 million. Revenue growth was achieved via expansion on existing programs, the contribution from new business wins awarded in late 2022 and securing key recompete programs in the first half of 2023. Advancing and protecting our core in addition to growth through new pursuit wins is fundamental to V2X delivering on its commitments. To date in 2023, we have witnessed an acceleration of deliverables that were originally contemplated to be recognized in the second half of the year. The results this quarter represent achievement of expanding in our core markets and capturing new business with approximately $900 million in new contract awards in the first half of 2023.”
For the quarter, the Company reported operating income of $34.3 million and adjusted operating income1 of $70.5 million. Adjusted EBITDA1 was $76.4 million with a margin of 7.8%. First quarter diluted EPS was $0.06, due primarily to merger and integration related costs, amortization of acquired intangible assets, and interest expense. Adjusted diluted EPS1 for the quarter was $1.01.
Ms. Lynch continued, “At the end of the quarter, net debt for V2X was $1,176.6 million, a $112 million reduction from the prior quarter. Net consolidated indebtedness to EBITDA1 (net leverage ratio) was 3.48x, representing a ~0.4x improvement over the prior quarter. We remain focused on reducing debt and expect that our leverage ratio will continue to improve in the second half of 2023.”
“Net cash provided by operating activities for the quarter was $116.6 million. Adjusted net cash provided by operating activities1 was $10.9 million, adding back $7.3 million of M&A and integration costs, and removing the contribution of the master accounts receivable purchase or “MARPA” facility of $113 million,” said Ms. Lynch.
Total backlog as of June 30, 2023, was $13.0 billion, increasing approximately $1.2 billion over last quarter reflecting successful expansion on existing programs along with significant new contract and recompete awards. Funded backlog was $3.1 billion. The trailing twelve-month book-to-bill was 1.3x.
2023 Guidance
Ms. Lynch concluded, “I am pleased with our results this quarter and for the first half of the year. Our teams continue to work together seamlessly, making notable progress on integration milestones while driving results across the board. As such, the Company is raising the mid-point of its 2023 revenue, adjusted EBITDA1, and adjusted diluted EPS1 guidance.” Guidance for 2023 is as follows:
$ millions, except for per share amounts
2023 Guidance (Updated)
2023 Mid-Point (Updated)
Revenue
$3,850
$3,950
$3,900
Adjusted EBITDA1
$295
$310
$303
Adjusted Diluted Earnings Per Share1
$3.85
$4.30
$4.08
Adjusted Net Cash Provided by Operating Activities 1
$115
$135
$125
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.
Second Quarter 2023 Conference Call
Management will conduct a conference call with analysts and investors at 4:30 p.m. ET on Tuesday, August 8, 2023. 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/lZEXpEOLx9J
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 August 22, 2023, at 844-512-2921 (domestic) or 412-317-6671 (international) with passcode 10179631.
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 – from base to battlefield – 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 15,000 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 “2023 Guidance” above and other assumptions contained therein for purposes of such guidance, other statements about our 2023 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, 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 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.
Key Performance Indicators and Non-GAAP Measures
The primary financial performance measures we use to manage our business and monitor results of operations are revenue trends and operating income trends. Management believes that these financial performance measures are the primary drivers for our earnings and net cash from operating activities. Management evaluates its contracts and business performance by focusing on revenue, operating income, and operating margin. Operating income represents revenue less both cost of revenue and selling, general and administrative (SG&A) expenses. Cost of revenue consists of labor, subcontracting costs, materials, and an allocation of indirect costs, which includes service center transaction costs. SG&A expenses consist of indirect labor costs (including wages and salaries for executives and administrative personnel), bid and proposal expenses and other general and administrative expenses not allocated to cost of revenue. We define operating margin as operating income divided by revenue.
We manage the nature and amount of costs at the program level, which forms the basis for estimating our total costs and profitability. This is consistent with our approach for managing our business, which begins with management’s assessing the bidding opportunity for each contract and then managing contract profitability throughout the performance period.
In addition to the key performance measures discussed above, we consider adjusted net income, adjusted diluted earnings per share, adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, adjusted operating cash flow, and pro forma revenue to be useful to management and investors in evaluating our operating performance, and to provide a tool for evaluating our ongoing operations. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives. We provide this information to our investors in our earnings releases, presentations, and other disclosures.
Adjusted net income, adjusted diluted earnings per share, adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, adjusted operating cash flow, and pro forma revenue, however, are not measures of financial performance under GAAP and should not be considered a substitute for financial measures determined in accordance with GAAP. Definitions and reconciliations of these items are provided below.
Pro forma revenue is defined as the combined results of our operations for the three months ended June 30, 2023 and July 1, 2022 as if the Merger had occurred on January 1, 2021.
Adjusted operating income is defined as operating income, adjusted to exclude items that may include, but are not limited to, significant charges or credits, and unusual and infrequent non-operating items that impact current results but are not related to our ongoing operations, such as M&A, integration, and related costs.
Adjusted EBITDA is defined as operating income, adjusted to exclude depreciation and amortization of intangible assets, and items that may include, but are not limited to, significant charges or credits, and unusual and infrequent non-operating items that impact current results but are not related to our ongoing operations, such as M&A, integration, and related costs.
Adjusted EBITDA margin is defined as adjusted EBITDA divided by revenue.
Adjusted net income is defined as net income, adjusted to exclude items that may include, but are not limited to, significant charges or credits, and unusual and infrequent non-operating items that impact current results but are not related to our ongoing operations, such as M&A, integration and related costs, amortization of acquired intangible assets, amortization of debt issuance costs, and loss on extinguishment of debt.
Adjusted diluted earnings per share is defined as adjusted net income divided by the weighted average diluted common shares outstanding.
Cash interest, net is defined as interest expense, net adjusted to exclude amortization of debt issuance costs.
Adjusted operating cash flow is defined as net cash provided by (or used in) operating activities adjusted to exclude infrequent non-operating items, such as M&A payments and related costs.
In this document, the Company presents certain forward-looking non-GAAP metrics. The Company does not provide outlook on a GAAP basis because the items that the Company excludes from GAAP to calculate the comparable non-GAAP measure can be dependent on future events that are less capable of being controlled or reliably predicted by management and are not part of the Company’s routine operating activities. Additionally, management does not forecast many of the excluded items for internal use and therefore cannot create or rely on outlook done on a GAAP basis. The occurrence, timing, and amount of any of the items excluded from GAAP to calculate non-GAAP measures could significantly impact the Company’s fiscal 2023 GAAP results.
CONTACT:
V2X, Inc. Mike Smith, CFA 719-637-5773 ir@gov2x.com
Second Quarter 2023 Revenues of $256.9 Million Increased 14.6 Percent Over Second Quarter 2022 Revenues of $224.2 Million, Including 17.1 Percent Organic Growth in Kratos Government Solutions Segment
Second Quarter 2023 and Last Twelve Months Ended June 25, 2023 Consolidated Book to Bill Ratio of 1.1 to 1
Affirms Full Year 2023 Financial Forecast
SAN DIEGO, Aug. 03, 2023 (GLOBE NEWSWIRE) — Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a Technology Company in the Defense, National Security and Global Markets, today reported its second quarter 2023 financial results. For the second quarter of 2023, Kratos reported Revenues of $256.9 million, Operating Income of $6.7 million, Net Loss of $2.7 million, Adjusted EBITDA of $21.6 million and a consolidated book to bill ratio of 1.1 to 1.0.
Included in second quarter 2023 Net Loss and Operating Income is non-cash stock compensation expense of $6.0 million and Company-funded Research and Development (R&D) expense of $9.9 million, primarily reflecting significant ongoing development efforts being made, including in our Space and Satellite business to develop our virtual, software-based OpenSpace command & control (C2), telemetry tracking & control (TT&C) and other ground system solutions. The second quarter 2023 Net Loss includes a $2.3 million loss attributable to a non-controlling interest, which includes a $2.0 million adjustment recorded to reflect the estimated increase in the value of the redeemable non-controlling interest to the estimated redemption amount by Kratos based upon current forecasted financial performance.
Kratos reported a second quarter 2023 GAAP Net Loss of $2.7 million and a GAAP Net Loss per share of $0.02, compared to a GAAP Net Loss of $4.7 million and a GAAP Net Loss per share of $0.04 for the second quarter of 2022. Adjusted earnings per share (EPS) was $0.09 for the second quarter of 2023, compared to $0.07 for the second quarter of 2022.
Second quarter 2023 Revenues of $256.9 million increased $32.7 million, or 14.6 percent, from second quarter 2022 Revenues of $224.2 million. Second quarter 2023 Revenues include contribution of $13.1 million of Revenue from the acquisition of the Engineering Division of Southern Research Institute (SRE), consolidated organic Revenue growth of 10.7 percent and organic Revenue growth of 17.1 percent in our KGS Segment, reflecting organic growth in each of the KGS businesses, with the most notable increases in our Space, Satellite and Cyber, C5ISR, and Turbine Technologies businesses.
Second quarter 2023 Cash Flow Generated from Operations was $23.6 million, reflecting the achievement of favorable billing milestones on certain contracts, offset partially by working capital requirements related to revenue growth and continued advanced inventory purchases in an effort to mitigate supply chain disruptions. Free Cash Flow Generated from Operations was $20.7 million after funding of $11.2 million of capital expenditures and receipt of $8.3 million of proceeds for sale of Valkyries that were built as Kratos capital assets.
For the second quarter of 2023, Kratos’ Unmanned Systems Segment (KUS) generated Revenues of $52.1 million, as compared to $56.4 million in the second quarter of 2022, primarily reflecting reduced tactical drone related activity as compared to 2022. KUS’s Operating Income was $1.2 million in the second quarter of 2023 compared to Operating Loss of $5.0 million in the second quarter of 2022, which included a litigation related settlement charge of $5.5 million.
KUS’s Adjusted EBITDA for the second quarter of 2023 was $3.6 million, compared to second quarter 2022 KUS Adjusted EBITDA of $2.9 million, reflecting a more favorable mix.
KUS’s book-to-bill ratio for the second quarter of 2023 was 1.2 to 1.0 and 1.3 to 1.0 for the last twelve months ended June 25, 2023, with bookings of $64.7 million for the three months ended June 25, 2023, and bookings of $266.2 million for the last twelve months ended June 25, 2023. Total backlog for KUS at the end of the second quarter of 2023 was $256.7 million compared to $244.1 million at the end of the first quarter of 2023.
For the second quarter of 2023, Kratos’ Government Solutions Segment (KGS) Revenues of $204.8 million increased 22.1 percent from Revenues of $167.8 million in the second quarter of 2022. The increased Revenues includes the contribution of approximately $13.1 million of Revenues from the SRE acquisition, and organic revenue growth in our Space, Satellite and Cyber, Turbine Technologies, C5ISR, Microwave Products and Defense Rocket Systems businesses. Excluding the SRE acquisition, KGS revenues grew organically 17.1 percent in the second quarter of 2023 as compared to the second quarter of 2022.
KGS reported operating income of $11.6 million in the second quarter of 2023 compared to $9.5 million in the second quarter of 2022, primarily reflecting the increased revenue volume. Second quarter 2023 KGS Adjusted EBITDA was $18.0 million, compared to second quarter 2022 KGS Adjusted EBITDA of $14.8 million, primarily reflecting the increased revenue volume.
Kratos’ Space, Satellite and Cyber business generated Revenues of $98.4 million in the second quarter of 2023 compared to $88.5 million in the second quarter of 2022, reflecting a 11.2 percent organic growth rate.
For the second quarter of 2023, KGS reported a book-to-bill ratio of 1.1 to 1.0, a book to bill ratio of 1.1 to 1.0 for the last twelve months ended June 25, 2023 and bookings of $217.1 million and $807.4 million for the three and last twelve months ended June 25, 2023, respectively. KGS includes Kratos’ Space, Training and Cyber business, which reported a book to bill ratio of 0.9 to 1.0 for the second quarter of 2023 and a book to bill ratio of 1.1 to 1.0 for the last twelve months ended June 25, 2023. Bookings for Kratos’ Space, Training and Cyber business for the three months and last twelve months ended June 25, 2023 were $95.6 million and $412.0 million, respectively. KGS’s total backlog at the end of the second quarter of 2023 was $900.6 million, as compared to $888.3 million at the end of the first quarter of 2023.
For the second quarter of 2023, Kratos reported consolidated bookings of $281.9 million and a book-to-bill ratio of 1.1 to 1.0, with consolidated bookings of $1.07 billion and a book-to-bill ratio of 1.1 to 1.0 for the last twelve months ended June 25, 2023. Consolidated backlog was $1.16 billion on June 25, 2023 and $1.13 billion on March 26, 2023. Kratos’ bid and proposal pipeline was $10 billion at June 25, 2023 and March 26, 2023. Backlog at June 25, 2023 was comprised of funded backlog of $863.9 million and unfunded backlog of $293.4 million.
Eric DeMarco, Kratos’ President and CEO, said, “For Q2, Kratos generated consolidated organic revenue growth of 10.7%, Adjusted EBITDA of $21.6 million, cash flow from operations of $23.6 million and free cash flow from operations of $20.7 million. Kratos’ Unmanned Systems book to bill ratio for Q2 was 1.2 to 1.0 and Kratos’ overall book to bill ratio both for the second quarter and year to date was 1.1 to 1.0. Additionally, we have a record backlog and a bid and proposal pipeline of approximately $10 billion, including hypersonic, space, propulsion system, satellite communications and drone opportunities, with several where multiple Kratos business units are collaborating in a company-wide Kratos cross-divisional pursuit.”
Mr. DeMarco continued, “Since our last quarterly report, we have successfully launched a customer’s new hypersonic system, ground tested Kratos’ new Zeus 1 solid rocket motor, including as related to Kratos’ Erinyes and Dark Fury hypersonic vehicles, received new space and satellite system program awards, including Kratos’ OpenSpace virtualized software C2 and TT&C System, reached customer agreement on a significant propulsion system program award and received a $95 million target drone system award. Kratos’ Tactical drone business also continues to progress, with multiple initiatives and customers, including bringing artificial intelligence driven combat drones to the warfighter.”
Mr. DeMarco concluded, “Kratos is a product, technology, system and software company. Kratos’ priorities include winning new program awards where Kratos offerings are disruptive differentiators, operational execution, organic growth and continued year over year increased revenue, profitability and cash flow. We will make certain, targeted investments, in areas where Kratos can be disruptive and first to market, with no significant acquisitions planned. A primary operational challenge remains obtaining and retaining qualified personnel to execute existing and expected program awards, including individuals willing and able to obtain National Security Clearances, and the significantly increased cost of these individuals, all of which every Kratos business is collaborating and working closely together to address.”
Financial Guidance
We are providing our initial 2023 third quarter financial guidance and affirming our full year 2023 guidance today, 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 third quarter 2023 revenues includes assumptions of forecasted execution, including the number of qualified personnel expected to be obtained and retained to successfully execute on our programs and contracts, as well as expected contract awards.
Our third quarter and full year 2023 guidance ranges are as follows:
Current Guidance Range
$M
Q323
FY23
Revenues
$240 – $260
$980 – $1,000
R&D
$9 – $10
$38 – $39
Operating Income
$3 – $6
$24 – $28
Depreciation
$7 – $8
$27 – $28
Amortization
$2 – $3
$8 – $10
Stock Based Compensation
$6 – $7
$24 – $26
Adjusted EBITDA
$18 – $22
$85 – $89
Operating Cash Flow
$55 – $65
Capital Expenditures
$45 – $50
Free Cash Flow Generation
$10 – $20
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 Company that develops and fields transformative, affordable systems, products and solutions for United States National Security, our allies and global commercial enterprises. At Kratos, Affordability is a Technology, and Kratos is changing the way breakthrough technology is rapidly brought to market – at a low cost – with actual products, systems, and technologies rather than slide decks or renderings. Through proven commercial and venture capital backed approaches, including proactive, internally funded research and streamlined development processes, Kratos is focused on being First to Market with our solutions, well in advance of competition. Kratos is the recognized Technology Disruptor in our core market areas, including Space and Satellite Communications, Cyber Security and Warfare, Unmanned Systems, Rocket and Hypersonic Systems, Next-Generation Jet Engines and Propulsion Systems, Microwave Electronics, C5ISR and Virtual and Augmented Reality Training Systems. 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 third quarter and full year 2023 revenues, R&D, operating income (loss), depreciation, amortization, stock based compensation expense, and Adjusted EBITDA, and full year 2023 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, 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 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 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 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 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. Department of Defense, or 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; 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 25, 2022, 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 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.
Unaudited Reconciliation of GAAP to Non-GAAP Measures
Note: (1) Adjusted EBITDA is a non-GAAP measure defined as GAAP net loss attributable to Kratos adjusted for net income attributable to noncontrolling interest, income from discontinued operations, net interest expense, provision (benefit) for income taxes, depreciation and amortization expense of intangible assets, amortization of capitalized contract and development costs, stock-based compensation, acquisition and restructuring related items and other, and foreign transaction loss.
Adjusted EBITDA as calculated by us may be calculated differently than Adjusted EBITDA for other companies. We have provided Adjusted EBITDA because we believe it is a commonly used measure of financial performance in comparable companies and is provided to help investors evaluate companies on a consistent basis, as well as to enhance understanding of our operating results. Adjusted EBITDA should not be construed as either an alternative to net income (loss) or as an indicator of our operating performance or an alternative to cash flows as a measure of liquidity. The adjustments to calculate this non-GAAP financial measure and the basis for such adjustments are outlined below. Please refer to the following table below that reconciles GAAP net loss to Adjusted EBITDA.
The adjustments to calculate this non-GAAP financial measure, and the basis for such adjustments, are outlined below:
Interest income and interest expense, net. The Company receives interest income on investments and incurs interest expense on loans, capital leases and other financing arrangements, including the amortization of issue discounts and deferred financing costs. These amounts may vary from period to period due to changes in cash and debt balances.
Income taxes. The Company’s tax expense can fluctuate materially from period to period due to tax adjustments that may not be directly related to underlying operating performance or to the current period of operations and may not necessarily reflect the impact of utilization of our NOLs.
Depreciation. The Company incurs depreciation expense (recorded in cost of revenues and in operating expenses) related to capital assets purchased, leased or constructed to support the ongoing operations of the business. The assets are recorded at cost or fair value and are depreciated over the estimated useful lives of individual assets.
Amortization of intangible assets. The Company incurs amortization of intangible expense related to acquisitions it has made. These intangible assets are valued at the time of acquisition and are amortized over the estimated useful lives.
Amortization of capitalized contract and development costs. The Company incurs amortization of previously capitalized software development and non-recurring engineering costs related to certain targets in its Unmanned Systems and ballistic missile target businesses as these units are sold.
Stock-based compensation expense. The Company incurs expense related to stock-based compensation included in its GAAP presentation of selling, general and administrative expense. Although stock-based compensation is an expense of the Company and viewed as a form of compensation, these expenses vary in amount from period to period, and are affected by market forces that are difficult to predict and are not within the control of management, such as the market price and volatility of the Company’s shares, risk-free interest rates and the expected term and forfeiture rates of the awards. Management believes that exclusion of these expenses allows comparison of operating results to those of other companies that disclose non-GAAP financial measures that exclude stock-based compensation.
Foreign transaction (gain) loss. The Company incurs transaction gains and losses related to transactions with foreign customers in currencies other than the U.S. dollar. In addition, certain intercompany transactions can give rise to realized and unrealized foreign currency gains and losses.
Acquisition and transaction related items. The Company incurs transaction related costs, such as legal and accounting fees and other expenses, related to acquisitions and divestiture activities. Management believes these items are outside the normal operations of the Company’s business and are not indicative of ongoing operating results.
Restructuring costs. The Company incurs restructuring costs for cost reduction actions which include employee termination costs, facility shut-down related costs and lease commitment costs for unused, excess or exited facilities. Management believes that these costs are not indicative of ongoing operating results as they are either non-recurring and/or not expected when full capacity and volumes are achieved.
Non-recoverable rates and costs. In fiscal 2022, the Company incurred non-recoverable rates and costs as a result of its inability to hire the required direct labor base to execute on its backlog due to a challenging environment in hiring and retaining skilled personnel. In addition, in 2022 the Company incurred non-recoverable rate growth resulting from a smaller than planned direct labor base due to delays in customer program execution and awards.
Legal related items. The Company incurs costs related to pending legal settlements and other legal related matters. Management believes these items are outside the normal operations of the Company’s business and are not indicative of ongoing operating results.
Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. The Company expects to continue to incur expenses similar to the Adjusted EBITDA financial adjustments described above, and investors should not infer from the Company’s presentation of this non-GAAP financial measure that these costs are unusual, infrequent, or non-recurring.
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.
Quarterly Revenue Over $100 Million; Active Pipeline of Opportunities to Accelerate Growth in Fiscal 2024
ATLANTA, Aug. 02, 2023 (GLOBE NEWSWIRE) — DLH Holdings Corp. (NASDAQ: DLHC) (“DLH” or the “Company”), a leading provider of research and development, systems engineering and integration, and digital transformation solutions to federal agencies, today announced financial results for its fiscal third quarter ended June 30, 2023.
Highlights
Third quarter revenue was $102.2 million in fiscal 2023 versus $66.4 million in fiscal 2022; the prior-year period included an adjustment of $(5.1) million related to the short-term FEMA task orders in Alaska, without which revenue was $71.6 million.
Operating and net income for the third quarter were $7.1 million and $1.7 million, respectively, as compared to $7.1 million and $4.9 million in the prior-year period. Operating income for the fiscal 2022 quarter included $0.6 million from the FEMA task orders.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was $11.4 million for the third quarter as compared to $9.0 million in fiscal 2022. The prior-year period included $0.6 million of EBITDA from the FEMA task orders.
Total debt at the end of the third quarter was $195.8 million compared to $204.2 million as of March 31, 2023.
Contract backlog was $817.8 million as of June 30, 2023 versus $940.6 million at the end of the fiscal second quarter.
Management Discussion “Third quarter performance once again highlighted the Company’s ability to produce strong underlying results,” said Zach Parker, DLH President and Chief Executive Officer. “We passed the $100 million revenue run rate, improved margins sequentially from the second quarter, used cash flow to continue paying down debt and successfully accomplished several milestones in the GRSi integration. The contract award environment continues to experience some headwinds, reflecting certain contract protests and extensive procurement cycles. The Company remains in excellent position to capitalize on current market dynamics and execute on new business development initiatives, resulting in an active bid environment. Our expanded health IT suite of solutions — leveraging unique applications and our highly-credentialed staff — provides us access to penetrate new programs within the key government agencies we serve. At the same time, with our ability to generate healthy cash from operations, we remain on track to de-lever the balance sheet in the coming quarters, which we expect will result in increased returns to our shareholders.
“In addition, we recently announced that DLH had been awarded a contract to expand our role at the National Heart, Lung and Blood Institute within the National Institutes of Health. The multiple-award contract has a total ceiling value of up to $85 million over five years, and we’ll be responsible for driving key digital transformation goals for the agency. Overall, we continue to see numerous opportunities to accelerate growth going forward, leveraging our expanded set of technology solutions, and are well prepared for further improved performance.”
Results for the Three Months Ended June 30, 2023 Revenue for the third quarter of fiscal 2023 was $102.2 million versus $66.4 million in fiscal 2022, with the prior-year period including an adjustment of $(5.1) million related to the Company’s short-term FEMA contracts in Alaska. Comparing this quarter’s revenue performance to the same period in the prior fiscal year, excluding the impact from the FEMA contracts, revenue increased $30.6 million, including contributions of $34.4 million from GRSi.
Income from operations was $7.1 million for the quarter versus $7.1 million in the prior-year period, which included $0.6 million from the FEMA task orders. Comparing this quarter’s operating income performance to the same period in the prior fiscal year, excluding the impact from the FEMA contracts, operating income increased $0.6 million. As a percentage of revenue, the Company reported an operating margin of 7.0% in the fiscal 2023 third quarter versus 10.7% in fiscal 2022, with the year-over-year decline primarily due to higher non-cash amortization expense as a result of the GRSi acquisition.
Interest expense was $4.9 million in the fiscal third quarter of 2023 versus $0.5 million in the prior-year period, reflecting higher debt outstanding due to the acquisition of GRSi and increased interest rates. Income before income taxes was $2.2 million this year versus $6.6 million in fiscal 2022, representing 2.1% and 9.9% of revenue, respectively, for each period.
For the three months ended June 30, 2023 and 2022, respectively, DLH recorded a $0.5 million and $1.7 million of income tax expense. The Company reported net income of approximately $1.7 million, or $0.12 per diluted share, for the third quarter of fiscal 2023 versus $4.9 million or $0.34 per diluted share, for the third quarter of fiscal 2022. As a percentage of revenue, net income was 1.7% for the third quarter of fiscal 2023 versus 7.3% for the prior-year period.
On a non-GAAP basis, EBITDA for the three months ended June 30, 2023 was approximately $11.4 million versus $9.0 million in the prior-year period, or 11.1% and 13.5% of revenue, respectively. Adjusted EBITDA1 was $11.4 million versus $8.4 million for the prior-year period, or 11.1% and 11.7% of adjusted revenue, respectively.
Key Financial Indicators For fiscal 2023, DLH has produced $15.0 million in operating cash. As of June 30, 2023, the Company had cash of $0.5 million and debt outstanding under its credit facilities of $195.8 million versus cash of $1.1 million and debt outstanding of $22.0 million as of September 30, 2022. The Company is on pace to reduce its total debt balance to between $185.0 million and $187.0 million by the end of this fiscal year.
At June 30, 2023, total backlog was approximately $817.8 million, including funded backlog of approximately $147.3 million and unfunded backlog of $670.5 million.
Conference Call and Webcast Details DLH management will discuss third quarter results and provide a general business update, including current competitive conditions and strategies, during a conference call beginning at 10:00 AM Eastern Time tomorrow, August 3, 2023. Interested parties may listen to the conference call by dialing 888-347-5290 or 412-317-5256. Presentation materials will also be posted on the Investor Relations section of the DLH website prior to the commencement of the conference call.
A digital recording of the conference call will be available for replay two hours after the completion of the call and can be accessed on the DLH Investor Relations website or by dialing 877-344-7529 and entering the conference ID 5343381.
About DLH DLH (NASDAQ:DLHC) enhances public health and national security readiness missions through science, technology, cyber, and engineering solutions and services. Our experts solve some of the most complex and critical missions faced by federal customers, 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 innovative solutions 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 ofouracquisition of GRSi or any other 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 resulting from our recent acquisition; 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 increased 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 ability to successfully integrate the operations of GRSi or any future acquisitions; 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, 2022, 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.
CONTACTS:
INVESTOR RELATIONS
Contact: Chris Witty
Phone: 646-438-9385
Email: cwitty@darrowir.com
Non-GAAP Financial Measures The Company uses EBITDA and EBITDA Margin on Revenue as supplemental non-GAAP measures of performance. We define EBITDA as net income excluding (i) interest expense, (ii) provision for or benefit from income taxes and (iii) depreciation and amortization. EBITDA Margin on Revenue is EBITDA for the measurement period divided by revenue for the same period.
The Company is presenting additional non-GAAP measures regarding its financial performance for the three and nine months ended June 30, 2023. The measures presented are Adjusted Revenue, Adjusted Operating Income, Adjusted EBITDA, and Adjusted EBITDA Margin on Adjusted Revenue. In calculating these measures, we have added the corporate development costs associated with completing the GRSi acquisition to our results for fiscal year 2023 and we have removed the contribution from the FEMA task orders from the results for fiscal year 2022. These resulting measures present the quarterly financial performance compared to results delivered in the prior year period. Definitions of these additional non-GAAP measures are set forth below.
We have prepared these additional non-GAAP measures to eliminate the impact of items that we do not consider indicative of ongoing operating performance due to their inherent unusual or extraordinary nature. These non-GAAP measures of performance are used by management to conduct and evaluate its business during its review of operating results for the periods presented. Management and the Company’s Board utilize these non-GAAP measures to make decisions about the use of the Company’s resources, analyze performance between periods, develop internal projections and measure management performance. We believe that these non-GAAP measures are useful to investors in evaluating the Company’s ongoing operating and financial results and understanding how such results compare with the Company’s historical performance.
These supplemental performance measurements may vary from and may not be comparable to similarly titled measures by other companies in our industry. Adjusted Revenue, Adjusted Operating Income, EBITDA, Adjusted EBITDA, EBITDA Margin on Revenue, and Adjusted EBITDA Margin on Adjusted Revenue are not recognized measurements under accounting principles generally accepted in the United States, or GAAP, and when analyzing our performance investors should (i) evaluate each adjustment in our reconciliation to the nearest GAAP financial measures and (ii) use the aforementioned non-GAAP measures in addition to, and not as an alternative to, revenue, operating income, net income or diluted EPS, as measures of operating results, each as defined under GAAP. We have defined these non-GAAP measures as follows:
“Adjusted Revenue” represents revenue less the contribution to revenue from the short-term FEMA task orders
“Adjusted Operating Income” represents operating income plus the corporate development costs associated with completing the GRSi acquisition incurred in fiscal 2023 less the contribution from the FEMA task orders, which occurred in fiscal 2022.
“Adjusted EBITDA” represents net income before income taxes, interest, depreciation and amortization and the corporate costs associated with completing the acquisition, less the contribution from FEMA task orders. “Adjusted EBITDA Margin on Adjusted Revenue” is calculated as Adjusted EBITDA divided by Adjusted Revenue.
Below is a reconciliation of Adjusted Revenue, Adjusted Operating Income, EBITDA, Adjusted EBITDA, EBITDA Margin on Revenue and Adjusted EBITDA Margin on Adjusted Revenue reported for the three and six months ended June 30, 2023 and 2022 compared to the most directly comparable financial measure calculated and presented in accordance with GAAP (in thousands except for per share amounts):
(a): Represents revenue adjusted to exclude revenue from the short-term FEMA task orders during the three and nine months ended June 30, 2022.
(b): Represents corporate development costs we incurred to complete the GRSi transaction. These costs primarily include legal counsel, financial due diligence, customer market analysis and representation and warranty insurance premiums.
(c): Adjusted operating income represents the Company’s consolidated operating income, determined in accordance with GAAP, adjusted to add the corporate development costs associated with the GRSi acquisition for fiscal year 2023 and adjusted to exclude the operating income derived from the FEMA task orders. Operating income for the FEMA task orders is derived by subtracting contract costs of ($5.7) million from the revenue attributable to such task orders during the three months ended June 30, 2022 of ($5.1) million. Similarly, for the nine months ended June 30, 2022 operating income for the FEMA task orders is derived by subtracting from the revenue attributable to the tasks orders of $125.8 million the following amounts associated with such task orders: contract costs $112.1 million and general & administrative costs of $1.2 million.
_______________________________ 1 Adjusted Operating Income, EBITDA, Adjusted EBITDA, EBITDA Margin on Revenue, and Adjusted EBITDA Margin on Adjusted Revenue are non-GAAP financial measures. See “Non-GAAP Financial Measures” below for additional detail.
MCLEAN, Va., July 26, 2023 /PRNewswire/ — V2X, Inc., (NYSE: VVX), a leading provider of critical mission solutions and support to defense clients globally, will report second quarter 2023 financial results on Tuesday, August 8, 2023, 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 at https://app.webinar.net/lZEXpEOLx9J 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 August 22, 2023, at 844-512-2921 (domestic) or 412-317-6671 (international) with passcode 10179631.
ABOUT V2X V2X builds smart solutions designed to integrate physical and digital infrastructure – from base to battlefield – 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 15,000 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.
ATLANTA, July 24, 2023 (GLOBE NEWSWIRE) — DLH Holdings Corp. (NASDAQ: DLHC) (“DLH” or the “Company”), a leading healthcare and human services provider to the federal government, will release financial results for its fiscal third quarter ended June 30, 2023 on August 2, 2023 after the market closes. DLH will then host a conference call for the investment community at 10:00 a.m. Eastern Time the following day, August 3, 2023, during which members of senior management will make a brief presentation focused on the financial results and operating trends. A question-and-answer session will follow.
Interested parties may listen to the conference call by dialing 888-347-5290 or 412-317-5256. Presentation materials will also be posted on the Investor Relations section of the DLH website prior to the commencement of the conference call. A digital recording of the conference call will be available for replay two hours after the completion of the call and can be accessed on the DLH Investor Relations website or by dialing 877-344-7529 and entering the conference ID 5343381.
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.
INVESTOR RELATIONS Contact: Chris Witty Phone: 646-438-9385 Email: cwitty@darrowir.com
SAN DIEGO, June 22, 2023 (GLOBE NEWSWIRE) — Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a Technology Company in the Defense, National Security and Global Markets, announced an expansion of its Space Domain Awareness (SDA) network locations into India. Kratos’ SDA network monitors the behavior of space-based radio frequency (RF) signals to identify critical information about satellites in orbit, such as their position, maneuvering, health, proximity to other satellites and more. It is the world’s largest global RF sensor network providing commercially available SDA services in all segments: orbital, link and terrestrial.
Recent strategic installations within the Asia Pacific region including the new India-based facility have increased Kratos’ global satellite tracking coverage by over 30 percent. The sensor network can offer SDA services in real-time for the full 360-degree GEO belt. Growth in the network supports a variety of services for international defense, civilian government and commercial customers, including development efforts from the U.S. Department of Commerce’s NOAA Office of Space Commerce to provide basic space situational awareness safety information and services through the Traffic Coordination System for Space. Kratos was the recipient of one of five commercial data contracts NOAA awarded for GEO space object tracking data last year.
Kratos’ SDA network includes over twenty worldwide sites hosting more than 140 fixed and steerable RF sensors and antennas. It can track and detect space vehicles in the GEO belt with great accuracy (closer than 100m) and in real-time as satellites maneuver frequently. Real-time detection gives the ability to adequately react to spacecraft anomalies or threats to nearby satellites.
Frank Backes, Senior VP of Kratos Federal Space said, “There are over 500 operational satellites in GEO. Many governments and commercial organizations rely on Kratos to enhance and augment their awareness of activity in the space domain. Our new India installation is important to expanding regional coverage.”
The Kratos SDA network supplies intelligence across all areas of the SDA mission through a variety of available services, among them signal characterization, interference mitigation, transmitter geolocation and more. Kratos’ satellite communications experts manage the 24/7 network operations center with coverage of L, S, C, X, and Ku bands.
About Kratos Defense & Security Solutions Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology company that develops and fields transformative, affordable systems, products, and solutions for United States National Security, our allies, and global commercial enterprises. At Kratos, Affordability is a Technology, and Kratos is changing the way breakthrough technology is rapidly brought to market – at a low cost – with actual products, systems, and technologies rather than slide decks or renderings. Through proven commercial and venture capital-backed approaches, including proactive, internally funded research and streamlined development processes, Kratos is focused on being First to Market with our solutions well in advance of the competition. Kratos is the recognized Technology Disruptor in our core market areas, including Space and Satellite Communications, Cyber Security and Warfare, Unmanned Systems, Rocket and Hypersonic Systems, Next-Generation Jet Engines and Propulsion Systems, Microwave Electronics, C5ISR, and Virtual and Augmented Reality Training Systems.
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.
Senior Vice President Susan Lynch honored by the Northern Virginia Technology Council
MCLEAN, Va. – V2X, Inc. (NYSE: VVX) proudly announces Chief Financial Officer, Susan Lynch, was named this year’s Greater Washington Public Company CFO of the Year by the Northern Virginia Technology Council (NVTC). This award reflects Lynch’s exceptional financial leadership, strategic awareness, and dedication to driving the company’s success.
“This award is a testament to the hard work and dedication of our entire finance team at V2X,” Lynch said. “I am deeply honored to receive this recognition, it highlights our commitment to excellence. It also honors the tireless efforts of over 15,000 V2X employees that has enabled us to achieve our financial goals and drive substantial growth. Thank you to the NVTC and congratulations to all of the other winners.”
The Public Company CFO of the Year award recognizes financial executives who demonstrate outstanding leadership, financial stewardship, and exemplary performance. Lynch’s contributions, innovative thinking, and ability to navigate complex financial landscapes earned her this prestigious accolade.
This achievement comes during a pivotal time in V2X’s growth. Lynch and a cohort of outstanding leaders have shepherded the company through a transformative post-merger period. Her strategic financial guidance remains instrumental in leading the company to enduring success and delivering value to its customers, stakeholders, and investors.
ABOUT V2X
V2X builds smart solutions designed to integrate physical and digital infrastructure – from base to battlefield – 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 15,000 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.
MCLEAN, Va., June 7, 2023 /PRNewswire/ — V2X, Inc. (NYSE: VVX) was awarded a position on the Training Systems Acquisition IV (TSA IV) program with the United States Air Force. The multiple award, indefinite-delivery/indefinite-quantity contract vehicle is valued up to $32.5 billion over ten-years, including all option periods. The contract aids in the development, installation, and long-term support of cutting-edge training systems designed for aircrew, maintenance personnel, and system-specific training. These systems are instrumental in enhancing global warfighter training efforts.
V2X wins seat on $32.5bn US Air training systems contract
“This partnership enables us to develop, install, and provide long-term support for cutting-edge technologies that shape the future of warfighter training,” said Chuck Prow, V2X President and CEO. “This win provides an opportunity for V2X to leverage its decades of Army training expertise to now deliver innovative training solutions to the Air Force. V2X is well-positioned to modernize system-specific training that enhances the capabilities and readiness of the Air Force and our armed forces.”
Benefiting from the collaboration of V2X and 36 other industry leaders, the Air Force will be able to significantly enhance its training programs and empower its personnel with the skills and knowledge to excel in their missions.
About V2X
V2X builds smart solutions designed to integrate physical and digital infrastructure – from base to battlefield – 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 15,000 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 Senior Media Strategist Communications@goV2X.com 571-338-5195
Investor Contact Mike Smith, CFA Vice President, Treasury, Corporate Development and Investor Relations IR@goV2X.com 571-337-3862
MCLEAN, Va., June 1, 2023 /PRNewswire/ — V2X, Inc., (NYSE: VVX), a leading provider of critical mission solutions and support to defense clients globally, announced that company management will address the Stifel 2023 Cross Sector Insight Conference on Wednesday, June 7, at 3:00 p.m. Eastern time.
ABOUT V2X V2X builds smart solutions designed to integrate physical and digital infrastructure – from base to battlefield – 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 15,000 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.
Contact Information
Investor Contact Mike Smith, CFA Vice President, Treasury, Corporate Development and Investor Relations IR@goV2X.com 719-637-5773
Media Contact Angelica Spanos Deoudes Senior Media Strategist Communications@goV2X.com 571-338-5195
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