Kratos Defense & Security Solutions Reports 9.6% Revenue Growth to $1.14 Billion for Fiscal Year 2024

Kratos Defense & Security Solutions, Inc. reported a revenue increase of 9.6% for the fiscal year ending December 29, 2024, totaling $1,136.3 million, up from $1,037.1 million in the previous year. The growth was driven by a $40.9 million rise in the Kratos Government Solutions (KGS) segment, attributed to increased activity in air defense systems and new contract awards in turbine technologies and training solutions. The Unmanned Systems (US) segment also saw significant growth, with revenues rising by 27.5% to $270.5 million, largely due to contributions from the acquisition of Sierra Technical Services and increased production of target drones.

The company's gross margin percentage decreased slightly to 25.3% from 25.9% year-over-year, with service margins improving to 26.8% while product margins fell to 24.4%. Total costs of revenues rose to $849.1 million, reflecting higher labor and material costs associated with increased production. Selling, general, and administrative expenses also increased by $16.2 million, primarily due to higher costs related to supporting increased revenues.

Kratos has made significant investments in research and development, spending $40.3 million in 2024, which represents 3.5% of total revenue. This investment is aimed at maintaining a competitive edge in rapidly evolving technology sectors, particularly in unmanned systems and microwave electronics. The company continues to focus on being "first to market" with innovative solutions, which it views as a critical strategy for growth.

As of December 29, 2024, Kratos reported a total backlog of approximately $1.45 billion, an increase from $1.24 billion in the previous year, indicating strong future revenue visibility. The company has also been proactive in addressing supply chain disruptions and inflationary pressures, which have impacted operational costs. Kratos anticipates that ongoing budgetary pressures and potential changes in U.S. government spending could pose challenges, but it remains optimistic about its positioning in key defense spending areas.

Looking ahead, Kratos is focused on expanding its capabilities and customer base, particularly in unmanned systems and advanced defense technologies. The company is well-positioned to capitalize on anticipated increases in defense spending, particularly in response to geopolitical threats. However, it acknowledges the risks associated with government funding uncertainties and macroeconomic conditions that could affect its operations and financial performance in the future.