Cover
Cover - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 09, 2024 | Jun. 23, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2023 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-34460 | ||
Entity Registrant Name | KRATOS DEFENSE & SECURITY SOLUTIONS, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 13-3818604 | ||
Entity Address, Address Line One | 1 Chisholm Trail | ||
Entity Address, Address Line Two | Suite 300 | ||
Entity Address, City or Town | Round Rock | ||
Entity Address, State or Province | TX | ||
Entity Address, Postal Zip Code | 78681 | ||
City Area Code | 512 | ||
Local Phone Number | 238-9840 | ||
Title of 12(b) Security | Common Stock, $0.001 par value | ||
Trading Symbol | KTOS | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 1.7 | ||
Entity Common Stock, Shares Outstanding | 129,997,441 | ||
Documents Incorporated by Reference | Items 10, 11, 12, 13 and 14 of Part III of this annual report on Form 10-K incorporate information by reference from the registrant’s definitive proxy statement to be filed pursuant to Regulation 14A in connection with the registrant’s 2024 Annual Meeting of Stockholders or an amendment to this annual report on Form 10-K to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year covered by this annual report on Form 10-K. | ||
Entity Central Index Key | 0001069258 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2023 | |
Audit Information [Abstract] | |
Auditor Name | Deloitte & Touche LLP |
Auditor Firm ID | 34 |
Auditor Location | San Diego, CA |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 25, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 72.8 | $ 81.3 |
Accounts receivable, net | 128.8 | 105.7 |
Unbilled receivables, net | 200.4 | 222.8 |
Inventoried costs | 156.2 | 125.5 |
Prepaid expenses | 16 | 11.9 |
Other current assets | 20 | 35.4 |
Total current assets | 594.2 | 582.6 |
Property, plant and equipment, net | 243.6 | 213.1 |
Operating lease right-of-use assets | 45.7 | 47.4 |
Goodwill | 569.1 | 558.2 |
Intangible assets, net | 62.4 | 55.2 |
Other assets | 117.5 | 95 |
Total assets | 1,632.5 | 1,551.5 |
Current liabilities: | ||
Accounts payable | 63.1 | 57.3 |
Accrued expenses | 35.4 | 33.8 |
Accrued compensation | 64.7 | 52.2 |
Accrued interest | 1.7 | 1.5 |
Billings in excess of costs and earnings on uncompleted contracts | 101.8 | 62.1 |
Current portion of operating lease liabilities | 12.1 | 10.8 |
Other current liabilities | 12.8 | 15.6 |
Current liabilities of discontinued operations | 0.9 | 0.9 |
Total current liabilities | 292.5 | 234.2 |
Long-term debt | 219.3 | 250.2 |
Operating lease liabilities, net of current portion | 37.8 | 40.8 |
Other long-term liabilities | 83.3 | 77.4 |
Long-term liabilities of discontinued operations | 1.1 | 1.4 |
Total liabilities | 634 | 604 |
Commitments and contingencies | ||
Redeemable noncontrolling interest | 22.5 | 11.2 |
Stockholders’ equity: | ||
Preferred stock, $0.001 par value, 5,000,000 authorized, 0 shares outstanding at December 31, 2023 and December 25, 2022 | 0 | 0 |
Common stock, $0.001 par value, 195,000,000 shares authorized; 129,286,964 and 125,985,306 shares issued and outstanding at December 31, 2023 and December 25, 2022, respectively | 0 | 0 |
Additional paid-in capital | 1,654.5 | 1,608.4 |
Accumulated other comprehensive income (loss) | 1.7 | (0.8) |
Accumulated deficit | (680.2) | (671.3) |
Total stockholders’ equity | 976 | 936.3 |
Total liabilities and stockholders’ equity | $ 1,632.5 | $ 1,551.5 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2023 | Dec. 25, 2022 |
Preferred Stock: | ||
Par value (in dollars per share) | $ 0.001 | $ 0.001 |
Shares authorized (in shares) | 5,000,000 | 5,000,000 |
Shares outstanding (in shares) | 0 | 0 |
Common Stock: | ||
Par value (in dollars per share) | $ 0.001 | $ 0.001 |
Shares authorized (in shares) | 195,000,000 | 195,000,000 |
Shares issued (in shares) | 129,286,964 | 125,985,306 |
Shares outstanding (in shares) | 129,286,964 | 125,985,306 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Total revenues | $ 1,037.1 | $ 898.3 | $ 811.5 |
Total costs | 768.5 | 672.3 | 586.4 |
Gross profit | 268.6 | 226 | 225.1 |
Selling, general and administrative expenses | 197.8 | 182.5 | 160.2 |
Merger and acquisition related items | 0.4 | 0.7 | 1.8 |
Research and development expenses | 38.4 | 38.6 | 35.2 |
Restructuring expenses and other | 0.9 | 6.8 | 0 |
Operating income (loss) | 31.1 | (2.6) | 27.9 |
Other expense: | |||
Interest expense, net | (20.5) | (17.7) | (23.4) |
Loss on extinguishment of debt | 0 | (13) | 0 |
Other income (expense), net | 0.5 | 0.6 | (0.1) |
Total other expense, net | (20) | (30.1) | (23.5) |
Income (loss) from continuing operations before income taxes | 11.1 | (32.7) | 4.4 |
Provision for income taxes from continuing operations | 8.9 | 1.4 | 3.9 |
Income (loss) from continuing operations | 2.2 | (34.1) | 0.5 |
Loss from operations of discontinued component | 0 | (0.3) | (2.3) |
Income tax benefit | (0.2) | (1.2) | (0.2) |
Income (loss) from discontinued operations | 0.2 | 0.9 | (2.1) |
Net income (loss) | 2.4 | (33.2) | (1.6) |
Less: Net income attributable to noncontrolling interest | 11.3 | 3.7 | 0.4 |
Net loss attributable to Kratos | $ (8.9) | $ (36.9) | $ (2) |
Basic income (loss) per common share attributable to Kratos: | |||
Income (loss) from continuing operations (in dollars per share) | $ (0.07) | $ (0.30) | $ 0 |
Income (loss) from discontinued operations (in dollars per share) | 0 | 0.01 | (0.02) |
Net loss per common share (in dollars per share) | (0.07) | (0.29) | (0.02) |
Diluted income (loss) per common share attributable to Kratos: | |||
Income (loss) from continuing operations (in dollars per share) | (0.07) | (0.30) | 0 |
Income (loss) from discontinued operations (in dollars per share) | 0 | 0.01 | (0.02) |
Net loss per common share (in dollars per share) | $ (0.07) | $ (0.29) | $ (0.02) |
Weighted average common shares outstanding: | |||
Basic (in shares) | 130.4 | 126.7 | 124.6 |
Diluted (in shares) | 130.4 | 126.7 | 128 |
Service revenues | |||
Total revenues | $ 402.6 | $ 325.2 | $ 219.4 |
Total costs | 303.2 | 239 | 156.2 |
Product sales | |||
Total revenues | 634.5 | 573.1 | 592.1 |
Total costs | $ 465.3 | $ 433.3 | $ 430.2 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 2.4 | $ (33.2) | $ (1.6) |
Other comprehensive loss: | |||
Change in unrealized cash flow hedge (net of taxes of $0.2 million, at December 31, 2023). | 0.7 | 0 | 0 |
Change in cumulative translation adjustment | 1.9 | (2.3) | (0.8) |
Postretirement benefit reserve adjustment net of tax income (expense) | (0.1) | 0.9 | 0 |
Other comprehensive income (loss), net of tax | 2.5 | (1.4) | (0.8) |
Comprehensive income (loss) | 4.9 | (34.6) | (2.4) |
Less: Comprehensive income attributable to noncontrolling interest | 11.3 | 3.7 | 0.4 |
Comprehensive loss attributable to Kratos | $ (6.4) | $ (38.3) | $ (2.8) |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) $ in Millions | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Statement of Comprehensive Income [Abstract] | |
Tax effect of change in unrealized cash flow hedge | $ 0.2 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Millions | Total | Redeemable Noncontrolling Interest | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Balance, beginning of period at Dec. 27, 2020 | $ 14.8 | |||||
Redeemable Noncontrolling Interest | ||||||
Net income (loss) | 0.4 | |||||
Balance, end of period at Dec. 26, 2021 | 15.2 | |||||
Balance, beginning of period (in shares) at Dec. 27, 2020 | 123,000,000 | |||||
Balance, beginning of period at Dec. 27, 2020 | $ 925.3 | $ 0 | $ 1,556.3 | $ 1.4 | $ (632.4) | |
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation | 25.8 | 25.8 | ||||
Issuance of common stock for employee stock purchase plan, options and warrants (in shares) | 400,000 | |||||
Issuance of common stock for employee stock purchase plan, options and warrants | 5.9 | 5.9 | ||||
Restricted stock issued and related taxes (in shares) | 600,000 | |||||
Restricted stock issued and related taxes | (9.1) | (9.1) | ||||
Gain on interest rate swap contract | 0 | |||||
Net income (loss) | (2) | (2) | ||||
Other comprehensive income (loss), net of tax | (0.8) | (0.8) | ||||
Balance, end of period (in shares) at Dec. 26, 2021 | 124,000,000 | |||||
Balance, end of period at Dec. 26, 2021 | 945.1 | $ 0 | 1,578.9 | 0.6 | (634.4) | |
Redeemable Noncontrolling Interest | ||||||
Net income (loss) | 3.7 | |||||
Acquisition of noncontrolling interest | 4.5 | (7.7) | 4.5 | |||
Balance, end of period at Dec. 25, 2022 | 11.2 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation | 26.3 | 26.3 | ||||
Issuance of common stock for employee stock purchase plan, options and warrants (in shares) | 500,000 | |||||
Issuance of common stock for employee stock purchase plan, options and warrants | 6.2 | 6.2 | ||||
Restricted stock issued and related taxes (in shares) | 1,000,000 | |||||
Restricted stock issued and related taxes | (12.5) | (12.5) | ||||
Issuance of common stock (in shares) | 300,000 | |||||
Issuance of common stock | 5 | 5 | ||||
Gain on interest rate swap contract | 0 | |||||
Net income (loss) | (36.9) | (36.9) | ||||
Other comprehensive income (loss), net of tax | (1.4) | (1.4) | ||||
Acquisition of noncontrolling interest (in shares) | 200,000 | |||||
Acquisition of noncontrolling interest | $ 4.5 | (7.7) | 4.5 | |||
Balance, end of period (in shares) at Dec. 25, 2022 | 125,985,306 | 126,000,000 | ||||
Balance, end of period at Dec. 25, 2022 | $ 936.3 | $ 0 | 1,608.4 | (0.8) | (671.3) | |
Redeemable Noncontrolling Interest | ||||||
Net income (loss) | 11.3 | |||||
Acquisition of noncontrolling interest | 3.2 | 3.2 | ||||
Balance, end of period at Dec. 31, 2023 | $ 22.5 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation | 25.3 | 25.3 | ||||
Issuance of common stock for employee stock purchase plan, options and warrants (in shares) | 800,000 | |||||
Issuance of common stock for employee stock purchase plan, options and warrants | 6.5 | 6.5 | ||||
Restricted stock issued and related taxes (in shares) | 700,000 | |||||
Restricted stock issued and related taxes | (3.7) | (3.7) | ||||
Issuance of common stock for acquisitions (in shares) | 1,000,000 | |||||
Issuance of common stock for acquisitions | 14.8 | 14.8 | ||||
Gain on interest rate swap contract | 0.7 | 0.7 | ||||
Net income (loss) | (8.9) | (8.9) | ||||
Other comprehensive income (loss), net of tax | 1.8 | 1.8 | ||||
Acquisition of noncontrolling interest (in shares) | 800,000 | |||||
Acquisition of noncontrolling interest | $ 3.2 | 3.2 | ||||
Balance, end of period (in shares) at Dec. 31, 2023 | 129,286,964 | 129,300,000 | ||||
Balance, end of period at Dec. 31, 2023 | $ 976 | $ 0 | $ 1,654.5 | $ 1.7 | $ (680.2) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Operating activities: | |||
Net income (loss) | $ 2.4 | $ (33.2) | $ (1.6) |
Income (loss) from discontinued operations | 0.2 | 0.9 | (2.1) |
Income (loss) from continuing operations | 2.2 | (34.1) | 0.5 |
Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities from continuing operations: | |||
Depreciation and amortization | 33.2 | 30.5 | 25.7 |
Deferred income taxes | 2.5 | (3.1) | (0.4) |
Amortization of lease right-of-use assets | 11.5 | 10.4 | 9 |
Stock-based compensation | 25.3 | 26.3 | 25.8 |
Loss on extinguishment of debt | 0 | 13 | 0 |
Amortization of deferred financing costs | 0.7 | 0.8 | 1 |
Provision (recovery) of doubtful accounts | 1 | 0 | (0.2) |
Litigation settlement charges | 0 | 5.5 | 0 |
Changes in assets and liabilities, net of acquisitions: | |||
Accounts receivable | (13.1) | (4.9) | 2.6 |
Unbilled receivables | 14.4 | (22.4) | (15.7) |
Inventoried costs | (29.6) | (23.8) | (5.3) |
Prepaid expenses | (3.9) | (1.9) | 2.4 |
Other assets | (12.3) | (18.7) | (6.9) |
Operating lease liabilities | (11.4) | (10.5) | (9.3) |
Accounts payable | 4.4 | 4.5 | (5.3) |
Accrued expenses | 1.4 | 5.6 | (7.4) |
Accrued compensation | 12.4 | 0.8 | (1.3) |
Accrued interest | 0.2 | 0.1 | (0.1) |
Billings in excess of costs and earnings on uncompleted contracts | 28.4 | 2.7 | 24.1 |
Income tax receivable and payable | (0.5) | 0.1 | 1.4 |
Other liabilities | (1.6) | (6.5) | (5.3) |
Net cash provided by (used in) operating activities from continuing operations | 65.2 | (25.6) | 35.3 |
Investing activities: | |||
Cash paid for acquisitions, net of cash acquired | 0.3 | (132.2) | (12.3) |
Proceeds from sale of assets | 8.3 | 0.2 | 2.2 |
Proceeds from insurance | 0 | 0 | 4.5 |
Capital expenditures | (52.4) | (45.4) | (46.5) |
Net cash used in investing activities from continuing operations | (43.8) | (177.4) | (52.1) |
Financing activities: | |||
Proceeds from the issuance of long-term debt | 0 | 200 | 0 |
Borrowing under credit facility | 69 | 100 | 0 |
Redemption of Senior Secured Notes | 0 | (309.8) | 0 |
Repayment under credit facility, term loan and other debt | (101) | (42.5) | (5.1) |
Payments of employee taxes withheld from share-based awards | (3.7) | (12.5) | (9.1) |
Debt issuance costs | 0 | (3.3) | 0 |
Payments under finance leases | (1.5) | (1.4) | (1) |
Proceeds from shares issued under equity plans | 6.5 | 6.2 | 5.9 |
Net cash used in financing activities from continuing operations | (30.7) | (63.3) | (9.3) |
Net cash used in continuing operations | (9.3) | (266.3) | (26.1) |
Net operating cash flows of discontinued operations | 0 | (0.1) | (4.5) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0.8 | (1.7) | (1.5) |
Net decrease in cash, cash equivalents and restricted cash | (8.5) | (268.1) | (32.1) |
Cash, cash equivalents and restricted cash at beginning of year | 81.3 | 349.4 | 381.5 |
Cash, cash equivalents and restricted cash at end of year | 72.8 | 81.3 | 349.4 |
Supplemental disclosure of cash flow information: | |||
Cash paid during the year for interest | 19.6 | 13.7 | 19.9 |
Net cash paid during the year for income taxes | 6.5 | 4.4 | 2 |
Non-cash financing and investing activities: | |||
Financing lease obligation incurred | 6.9 | 9.1 | 5.8 |
Capital expenditures included in accounts payable and accrued expenses | 0.6 | 2.7 | 3 |
Common stock issuance for purchase of noncontrolling interests | 10.7 | 2.7 | 0 |
Common stock issuance for acquisition | $ 14.8 | $ 5 | $ 0 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Significant Accounting Policies | Organization and Summary of Significant Accounting Policies (a) Description of Business Kratos is 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 the Company seeks 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, and enable the Company to be first to market with cost effective solutions. Kratos believes that it is known as the 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 the Company’s large traditional prime system integrator partners and also to the Company’s 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 is high and any investment required by Kratos is within our capital resource comfort level. Kratos intends to partner and team with a large, traditional system integrator when our assessment of probability of win 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. The Company conducts most of its business with the U.S. Government (which includes foreign military sales) and performs work as the prime contractor, subcontractor, or preferred supplier. The Company also conducts business with local, state, and foreign governments and domestic and international commercial customers. The Company operates in two reportable segments. The Kratos Government Solutions (“KGS”) reportable segment is comprised of an aggregation of KGS operating segments, including its microwave electronic products, space, satellite, training and cybersecurity, C5ISR/modular systems, turbine technologies and defense and rocket support services operating segments. The Unmanned Systems (“US”) reportable segment consists of its unmanned aerial system and unmanned ground and seaborne system products. The Public Safety & Security (“PSS”) reportable segment (which was divested in June 2018 and has been classified as discontinued operations - see Note 9 of these Notes to Consolidated Financial Statements) previously provided independent integrated solutions for advanced homeland security, public safety, critical infrastructure, and security and surveillance systems for government and commercial applications. The Company organizes its operating segments based primarily on the nature of the products, solutions and services offered. Transactions between segments are negotiated and accounted for under terms and conditions similar to other government and commercial contracts, and these intercompany transactions are eliminated in consolidation. For additional information regarding the Company’s operating segments, see Note 14 of these Notes to Consolidated Financial Statements. (b) Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Kratos and its majority owned subsidiaries, for which all intercompany transactions have been eliminated in consolidation. (c) Fiscal Year The Company has a 52/53 week fiscal year ending on the last Sunday of the calendar year, with interim fiscal periods ending on the last Sunday of each calendar quarter. There were 53 calendar weeks in the fiscal years ending on December 31, 2023, and 52 calendar weeks in the fiscal years ending on December 25, 2022 and December 26, 2021. (d) Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include revenue recognition, valuation of long-lived assets including identifiable intangibles and goodwill, accounting for income taxes including the related valuation allowance on the deferred tax asset and uncertain tax positions, contingencies and litigation, contingent acquisition consideration, and stock-based compensation. In the future, the Company may realize actual results that differ from the current reported estimates and if the estimates that the Company has used change in the future, such changes could have a material impact on the Company’s consolidated financial position, results of operations and cash flows. (e) Revenue Recognition Effective January 1, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) ASU 2014-09, Revenue from Contracts with Customers, and the related amendments, which are codified into Accounting Standards Codification (“ASC”) 606 (“ASC 606”). To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Once the contract is identified and determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under ASC 606. The majority of the Company’s contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected-cost-plus-margin approach, under which the Company forecasts the expected costs of satisfying a performance obligation and then adds an appropriate margin for that distinct good or service. For the majority of contracts, the Company satisfies the underlying performance obligations over time as the customer obtains control or receives benefits as work is performed on the contract. The Company generally recognizes revenue over time as work is performed on long-term contracts because of continuous transfer of control to the customer. For U.S. government contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay for costs incurred plus a reasonable profit and take control of any work in process. Similarly, for non-U.S. government contracts, the customer typically controls the work in process as evidenced either by contractual termination clauses or by our rights to payment of the transaction price associated with work performed to date on products or services that do not have an alternative use to the Company. As a result, under ASC 606 revenue is recognized over time using the cost-to-cost method (cost incurred relative to total estimated cost at completion). Remaining Performance Obligations Revenues from remaining performance obligations are calculated as the dollar value of the remaining performance obligations on executed contracts. On December 31, 2023, the Company had approximately $1,243.9 million of remaining performance obligations. The Company expects to recognize approximately 65.0% of the remaining performance obligations as revenue in 2024, an additional 14.0% in 2025, and the balance thereafter. Contract Estimates Due to the nature of the work required to be performed on many performance obligations, the estimation of total cost at completion is complex, subject to many variables and requires significant judgment. On a quarterly basis, the Company conducts its contract cost Estimate at Completion (“EAC”) process by reviewing the progress and execution of outstanding performance obligations within its contracts. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenues and costs. The risks and opportunities include management’s judgment about the ability and cost to achieve the schedule (e.g., the number and type of milestone events), technical requirements (e.g., a newly-developed product versus a mature product) and other contract requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the availability of materials, the length of time to complete the performance obligation (e.g., to estimate increases in wages and prices for materials and related support cost allocations), execution by subcontractors, the availability and timing of funding from customers and overhead cost rates, among other variables. In addition, certain of the Company’s long-term contracts contain award fees, incentive fees, or other provisions that can either increase or decrease the transaction price. These variable amounts generally are awarded upon achievement of certain performance metrics, program milestones or cost targets and can be based upon customer discretion. Variable consideration is estimated at the most likely amount to which the Company is expected to be entitled. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available. Contracts are often modified to account for changes in contract specifications and requirements. Contract modifications are considered to exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of the Company’s contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price, and the measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. As a result of the EAC process, any quarterly adjustments to revenues, cost of sales, and the related impact to operating income are recognized as necessary in the period they become known. These adjustments may result from positive program performance, and may result in an increase in operating income during the performance of individual performance obligations, if it is determined the Company will be successful in mitigating risks surrounding the technical, schedule and cost aspects of those performance obligations or realizing related opportunities. Likewise, these adjustments may result in a decrease in operating income if it is determined the Company will not be successful in mitigating these risks or realizing related opportunities. Changes in estimates of net sales, cost of sales and the related impact to operating income are recognized quarterly on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods. A significant change in one or more of these estimates could affect the profitability of one or more of the Company’s contracts. When estimates of total costs to be incurred on a performance obligation exceed total estimates of revenue to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is determined. For the year ended December 26, 2021 the Company recorded a $6.9 million favorable EAC adjustment on one of its long-term government contracts. No other cumulative catch-up adjustment on any one contract was material to the Company’s consolidated financial statements for the years ended December 31, 2023, December 25, 2022 and December 26, 2021. Likewise, other than the impact of the adjustment for the one contract in the year ended December 26, 2021, total cumulative catch-up adjustments were not material for the years ended December 31, 2023, December 25, 2022 and December 26, 2021. As of December 31, 2023 and December 25, 2022, accrued expenses included the accrual for losses on contracts of $2.0 million and $1.2 million, respectively. Contract Assets and Liabilities For each of the Company’s contracts, the timing of revenue recognition, customer billings, and cash collections results in a net contract asset or liability at the end of each reporting period. Fixed-price contracts are typically billed to the customer either using progress payments, whereby amounts are billed monthly as costs are incurred or work is completed, or performance based payments, which are based upon the achievement of specific, measurable events or accomplishments defined and valued at contract inception. Cost-type contracts are typically billed to the customer on a monthly or semi-monthly basis. Contract assets consist of unbilled receivables, primarily related to long-term contracts where revenue recognized under the cost-to-cost method exceeds amounts billed to customers. Unbilled receivables are classified as current assets and, in accordance with industry practice, include amounts that may be billed and collected beyond one year due to the long term nature of many of the Company’s contracts. Accumulated contract costs in unbilled receivables include direct production costs, factory and engineering overhead, production tooling costs, and, for government contracts, recovery of allowable general and administrative expenses. Unbilled receivables also include certain estimates of variable consideration described above. The Company’s contracts that give rise to contract assets are not considered to include a significant financing component as the payment terms are intended to protect the customer in the event the Company does not perform on its obligations under the contract. Contract liabilities include advance payments and billings in excess of revenue recognized. Certain customers make advance payments prior to the satisfaction of the Company’s performance obligations on the contract. These amounts are recorded as contract liabilities until such performance obligations are satisfied, either over time as costs are incurred or at a point in time when deliveries are made. The Company’s contracts that give rise to contract liabilities do not include a significant financing component as the underlying advance payments received are generally utilized to pay for contract costs within a one-year period or are used to ensure the customer meets contractual requirements. Net contract assets and liabilities are as follows (in millions): December 31, 2023 December 25, 2022 Net Change Contract assets $ 200.4 $ 222.8 $ (22.4) Contract liabilities $ 101.8 $ 62.1 $ 39.7 Net contract assets $ 98.6 $ 160.7 $ (62.1) The change in the balances of the Company’s contract assets and liabilities primarily results from timing differences between revenue recognition and customer billings and/or payments. Contract assets decreased $22.4 million during the year ended December 31, 2023, primarily due to lower unbilled receivables. There were no significant impairment losses related to any receivables or contract assets arising from the Company’s contracts with customers during the year ended December 31, 2023. Contract liabilities increased $39.7 million during the year ended December 31, 2023, primarily due to payments received in excess of revenue recognized on these performance obligations. For the years ended December 31, 2023 and December 25, 2022, the Company recognized revenue of $48.1 million and $47.5 million, respectively, that was previously included in the beginning balance of contract liabilities. In November 2019, a large training solutions program was terminated for convenience (“T for C”) by the customer. Under a T for C, a contractor is entitled to seek specified costs through a termination settlement process including (1) the contract price for completed supplies and services accepted by the government but not previously paid for; (2) the cost incurred in the performance of work terminated plus a reasonable profit on those costs; and (3) its costs incurred in settling with subcontractors and preparing and settling the termination proposal. Under a T for C, the Company would not be able to collect the total withheld amounts until the settlement terms of the T for C have been negotiated and agreed to with the customer. In March 2022, the Company and the customer agreed to a settlement of $6.0 million for a portion of the amounts outstanding on this project, which was collected in July 2022. At December 31, 2023, approximately $4.8 million in unbilled receivables was outstanding on this project, which is subject to negotiation and settlement with the customer. The Company was also in dispute with an international customer in the Unmanned Systems (US) segment concerning the completion of certain system requirements and certain contractual milestones related to a contract the Company acquired with the acquisition of CEi in 2012. On June 30, 2022, the parties entered into a settlement agreement to resolve their dispute and to settle all claims and counterclaims. The Company has recorded a $5.5 million litigation settlement charge included in restructuring expenses and other in the year ended December 25, 2022. In the year ended December 25, 2022, the Company paid approximately $3.7 million related to the settlement agreement. The Company has implemented all terms of the settlement agreement and the dispute is fully resolved effective July 2023. Disaggregation of Revenue The following series of tables presents the Company’s revenue disaggregated by several categories. For the majority of contracts, revenue is recognized over time as work is performed on the contract. Revenue by contract type was as follows (in millions): Year Ended December 31, 2023 Year Ended December 25, 2022 Kratos Government Solutions Fixed price $ 566.3 $ 476.1 Cost plus fee 209.5 158.4 Time and materials 49.1 42.1 Total Kratos Government Solutions 824.9 676.6 Unmanned Systems Fixed price 160.9 156.6 Cost plus fee 41.9 59.1 Time and materials 9.4 6.0 Total Unmanned Systems 212.2 221.7 Total Revenues $ 1,037.1 $ 898.3 Revenue by customer was as follows (in millions): Year Ended December 31, 2023 Year Ended December 25, 2022 Kratos Government Solutions U.S. Government (1) $ 512.5 $ 420.4 International (2) 192.8 157.5 U.S. Commercial and other customers 119.6 98.7 Total Kratos Government Solutions 824.9 676.6 Unmanned Systems U.S. Government (1) 200.2 203.3 International (2) 9.2 15.6 U.S. Commercial and other customers 2.8 2.8 Total Unmanned Systems 212.2 221.7 Total Revenues $ 1,037.1 $ 898.3 (1) Sales to the U.S. Government include sales from contracts for which the Company is the prime contractor, as well as those for which the Company is a subcontractor and the ultimate customer is the U.S. Government. Each of the Company’s segments derives substantial revenue from the U.S. Government. These sales include foreign military sales contracted through the U.S. Government. (2) International sales include sales from contracts for which the Company is the prime contractor, as well as those for which the Company is a subcontractor and the ultimate customer is an international customer. These sales include direct sales with governments outside the U.S. and commercial sales with customers outside the U.S. For federal contracts, the Company follows U.S. Government procurement and accounting standards in assessing the allowability and the allocability of costs to contracts. Recurring evaluations of contract cost, scheduling and technical matters are performed by management. Costs incurred and allocated to contracts with the U.S. Government are scrutinized for compliance with regulatory standards by the Company’s personnel, and are subject to audit by the Defense Contract Audit Agency (“DCAA”). From time to time, the Company may proceed with work based on customer direction prior to the completion and signing of formal contract documents. The Company has a formal review process for approving any such work. Revenue associated with such work is recognized only when the criteria to establish a contract under ASC 606 are met and the obligations under the contract are legally enforceable. As of December 31, 2023 and December 25, 2022, approximately $13.0 million and $12.2 million, respectively, of the Company’s unbilled accounts receivable balance were under an authorization to proceed or work order from its customers where a formal purchase order had not yet been received. (f) Inventoried costs Inventoried costs are stated at the lower of cost or estimated net realizable value. Cost is determined using the average cost or first-in, first-out methods and the applicable method is applied consistently within an operating entity. The Company capitalizes labor, material, subcontractor and overhead costs as work-in-process for contracts where control has not yet passed to the customer. In addition, the Company capitalizes costs incurred to fulfill a contract in advance of contract award in inventories as work-in-process if it is determined that contract award is probable. Pursuant to contract provisions of U.S. Government contracts, such customers may have title to, or a security interest in inventories related to such contracts as a result of advances, performance-based payments, and progress payments. The Company regularly reviews inventory quantities on hand, future purchase commitments with its suppliers, and the estimated utility of its inventory. If the Company’s review indicates a reduction in utility below carrying value, it reduces its inventory to a new cost basis. (g) Research and Development Costs incurred in research and development activities are expensed as incurred in accordance with FASB ASC Topic 730 , Research and Development. (h) Income Taxes The Company records deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company maintains a valuation allowance on the deferred tax assets for which it is more likely than not that the Company will not realize the benefits of these tax assets in future tax periods. The valuation allowance is based on estimates of future taxable income by tax jurisdiction in which the Company operates, the number of years over which the deferred tax assets will be recoverable, and scheduled reversals of deferred tax liabilities. In accordance with the recognition standards established by ASC Topic 740, Income Taxes (“Topic 740”), the Company makes a comprehensive review of its portfolio of uncertain tax positions regularly. In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return or claim, which has not been reflected in measuring income tax expense for financial reporting purposes. Until these positions are sustained by the taxing authorities, the Company has not recognized the tax benefits resulting from such positions and reports the tax effects as a liability for uncertain tax positions in its consolidated balance sheets. (i) Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC Topic 718 , Compensation-Stock Compensation (“Topic 718”). All of the Company’s stock-based compensation plans are considered equity plans under Topic 718 , and compensation expense recognized is net of estimated forfeitures over the vesting period. The Company issues stock options and stock awards under its existing plans. The fair value of stock options is estimated on the date of grant using a Black-Scholes option-pricing model and is expensed on a straight-line basis over the remaining vesting period of the options, which is generally six five When tax deductions from stock options and awards are less than the cumulative book compensation expense, the tax effect of the resulting difference is a shortfall. For the year ended December 31, 2023, an income tax expense of $0.4 million was recorded for shortfall generated from stock options and awards exercised in 2023. For the year ended December 25, 2022, an income tax benefit of $0.7 million was recorded for windfalls generated from stock options and awards exercised in 2022. For the tax year ended December 26, 2021, an income tax benefit of $2.4 million was recorded for windfalls generated from stock options and awards exercised in 2021. The following table shows the amounts recognized in the consolidated financial statements for stock-based compensation expense related to stock options, stock awards and stock offered under the Company’s employee stock purchase plan (in millions). Year ended December 31, 2023 Year ended December 25, 2022 Year ended December 26, 2021 Selling, general and administrative expenses $ 25.3 $ 26.3 $ 25.8 Total cost of employee stock-based compensation included in operating income (loss) from continuing operations $ 25.3 $ 26.3 $ 25.8 (j) Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments, which results in bad debt expense. Management determines the adequacy of this allowance by periodically evaluating the comprehensive risk profiles of all individual customer receivable balances including, but not limited to, the customer’s financial condition, credit agency reports, financial statements and overall current economic conditions. Additionally, on certain contracts whereby the Company performs services for a prime/general contractor, a specified percentage of the invoiced trade accounts receivable may be retained by the customer until the project is completed. The Company periodically reviews all retainages for collectability and records allowances for doubtful accounts when deemed appropriate, based on its assessment of the associated credit risks. Changes to estimates of contract value are recorded as adjustments to revenue and not as a component of the allowance for doubtful accounts. Individual accounts receivable are written off to the allowance for doubtful accounts when the Company becomes aware of a specific customer’s inability to meet its financial obligation, and all collection efforts are exhausted. The following table outlines the balance of the Company’s allowance for doubtful accounts for 2023, 2022 and 2021. The table identifies the additional provisions each year as well as the write-offs that utilized the allowance (in millions). Allowance for Doubtful Accounts Balance at Beginning of Year Provisions Write-offs/ Recoveries Balance at End of Year Year ended December 26, 2021 $ 1.8 $ (0.2) $ (1.2) $ 0.4 Year ended December 25, 2022 $ 0.4 $ — $ — $ 0.4 Year ended December 31, 2023 $ 0.4 $ 1.0 $ (0.3) $ 1.1 (k) Cash and Cash Equivalents The Company’s cash equivalents consist of its highly liquid investments with an original maturity of three months or less when purchased by the Company. (l) Property and Equipment, Net Property and equipment, net owned by the Company is depreciated over the estimated useful lives of individual assets. Equipment acquired under capital leases are amortized over the shorter of the lease term or the estimated useful life of the asset. Improvements, which significantly improve and extend the useful life of an asset, are capitalized and depreciated over the shorter of the lease period or the estimated useful life. Expenditures for maintenance and repairs are charged to operations as incurred. Assets are depreciated predominately using the straight-line method, with the following lives: Years Buildings and improvements 15 – 39 Machinery and equipment 3 – 20 Computer equipment and software 1 – 10 Vehicles, furniture, and office equipment 5 Leasehold improvements Shorter of useful life or length of lease (m) Leases The Company leases certain facilities, office space, vehicles and equipment. Lease assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using an incremental borrowing rate generally applicable to the location of the lease asset, unless the implicit rate is readily determinable. Lease assets also include any upfront lease payments made and exclude lease incentives. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. The Company has operating lease arrangements with lease and non-lease components. The non-lease components in these arrangements are not significant when compared to the lease components. For all operating leases, the Company accounts for the lease and non-lease components as a single component.in the calculation of the lease asset and corresponding liability. Variable lease payments are generally expensed as incurred. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and the expense for these short-term leases is recognized on a straight-line basis over the lease term. The depreciable life of lease assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. See Note 6 for additional disclosures related to the Company’s lease obligations. (n) Goodwill and Other Intangible Assets, Net In accordance with the provisions of ASC Topic 350, Intangibles-Goodwill and Other (“Top |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions CTT Inc. On December 10, 2021 , the Company acquired CTT Inc. (“CTT”), a company that designs, develops, and manufactures microwave application components and equipment primarily for customers in the defense industry. The purchase price was approximately $22.0 million in cash, subject to adjustments for transaction expenses, indebtedness, cash on hand, and post-closing working capital adjustments. Approximately $6.3 million of the purchase price was paid on December 10, 2021, $15.2 million of the purchase price was paid on December 30, 2021, and the remainder of the purchase price was paid during the three months ended June 26, 2022. The operating results of the acquisition have been included in the Company’s results of operations from the effective acquisition date. The amount of net sales and earnings of CTT included in the condensed consolidated statement of operations for the year ended December 26, 2021 are not material. Had the acquisition occurred as of December 28, 2020, net sales, net income from consolidated operations, net income attributable to Kratos, and basic and diluted net income per share attributable to Kratos on a pro forma basis for the year ended December 26, 2021 would not have been materially different than the reported amounts. CTT is included in the KGS segment. Cosmic Advanced Engineered Solutions, Inc. On December 27, 2021, Kratos Integral Holdings, LLC entered into a Stock Purchase Agreement to acquire Cosmic Advanced Engineered Solutions, Inc. (“Cosmic”) from the Carol L. Zanmiller Living Trust and the John G. Hutchens Living Trust for $37.9 million in cash (including a $0.4 million holdback which was subsequently settled). Cosmic focuses on radio frequency (“RF”), terrestrial, and space-based communication solutions, including digital signals processing and geolocation analysis. In addition, Cosmic provides overhead persistent infrared for missile defense systems and embedded cyber solutions to U.S. government agencies. On December 27, 2021, the acquisition was completed following the satisfaction of all closing conditions, including receipt of regulatory approval from all required government authorities. The operating results of the acquisition have been included in the Company’s results of operations from the effective acquisition date. Cosmic is included in the KGS segment. The excess of the purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed in the acquisition was allocated to goodwill. The goodwill represents the value the Company expects to be created by integrating Cosmic’s existing business with Kratos’ related products and customers. The transaction has been accounted for using the acquisition method of accounting, which requires, among other things, that the identifiable assets acquired and the liabilities assumed be recognized at their fair values as of the acquisition date. The fair value measurements are based primarily on significant inputs not observable in the marketplace and thus represent Level 3 measurements. The following table summarizes the allocation of the purchase price over the estimated fair values of the major assets acquired and liabilities assumed (in millions): Accounts receivable $ 3.8 Unbilled receivables 4.1 Other current assets 0.1 Property and equipment 1.3 Intangible assets 8.5 Total identifiable net assets acquired 17.8 Total identifiable net liabilities assumed (9.1) Goodwill 29.2 Net assets acquired, excluding cash $ 37.9 Based on the Company’s estimate of fair value, as of December 27, 2021, net liabilities included $6.7 million of current liabilities. The identifiable intangible assets include trade names of $0.6 million with a remaining useful life of 5 years, backlog of $1.7 million with an estimated useful life of 1 year, customer relationships of $4.4 million with a remaining useful life of 10 years, and developed technology of $1.8 million with a remaining useful life of 5 years. The Company also established a deferred tax liability of $2.4 million for the difference between the financial statement basis and tax basis of the acquired assets of Cosmic and a corresponding increase in goodwill. The goodwill recorded in this transaction is not expected to be tax-deductible. The value of customer relationships was estimated using the multi-period excess earnings method (“MPEEM”), an income approach (Level 3), which converts projected revenues and costs into cash flows. To reflect the fact that certain other assets contribute to the cash flows generated, the returns for these contributory assets were removed to arrive at estimated cash flows solely attributable to the acquired customer relationships, which were discounted at a rate of 11% to determine the fair value. The value of backlog was also valued using MPEEM. The value of developed technology was estimated using the relief-from-royalty method, an income approach (Level 3), which estimates the cost savings that accrue to the owner of the intangible asset that would otherwise be payable as royalties or license fees on revenues earned through the use of the asset. A royalty rate of 11% was applied to the projected revenues associated with the intangible asset to determine the amount of savings in order to determine the fair value. A summary of the consideration paid for the acquired ownership in Cosmic is as follows (in millions): Cash paid $ 39.4 Less: Cash acquired (1.5) Total consideration $ 37.9 Pro Forma Financial Information (Unaudited) The following tables summarize the supplemental condensed consolidated statements of operations information on an unaudited pro forma basis as if the acquisition of Cosmic occurred on December 28, 2020 and include adjustments that were directly attributable to the foregoing transactions. There are no material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and income (loss). The pro forma results are for illustrative purposes only for the applicable period. For the year ended December 26, 2021 (all amounts, except per share amounts, are in millions): Pro forma revenues $ 855.2 Pro forma net loss before tax $ (0.8) Pro forma net loss $ (2.9) Basic pro forma loss per share $ (0.03) Diluted pro forma loss per share $ (0.03) Southern Research Engineering Division On March 9, 2022, the Company executed an Asset Purchase Agreement to acquire the assets of the Engineering Division of Southern Research Institute (“SRI”), an Alabama non-profit corporation, for a purchase price of approximately $79.4 million, comprised of $74.4 million in cash, subject to adjustments for working capital, potential earn-out consideration tied to revenue from certain in-development products, indebtedness and transaction expenses, and $5.0 million in Kratos common stock. SRI’s Engineering Division (“SRE”) is the market leader in assisting customers in the development, modeling, and deployment of advanced materials for extreme environments, including hypersonic, space, missile, missile defense, strategic deterrence, propulsion systems, and energy applications. SRE also specializes in Intelligence Surveillance and Reconnaissance (“ISR”) sensor development, electromechanical systems design and integration, aerospace engineering, materials engineering, artificial intelligence and machine learning, directed energy, RF systems design and integration, advanced manufacturing, and computational sciences. The acquisition established Kratos SRE, Inc., a new business within Kratos’ Defense and Rocket Support Services Division. On May 23, 2022, the acquisition was completed following the satisfaction of all closing conditions, including receipt of necessary approval from all required government authorities. The operating results of the acquisition have been included in the Company’s results of operations from the effective acquisition date. The excess of the purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed in the acquisition was allocated to goodwill. The goodwill represents the value the Company expects to be created by integrating SRE’s existing business with Kratos’ related products and customers. The transaction has been accounted for using the acquisition method of accounting, which requires, among other things, that the identifiable assets acquired and the liabilities assumed be recognized at their fair values as of the acquisition date. The fair value measurements are based primarily on significant inputs not observable in the marketplace and thus represent Level 3 measurements. The following table summarizes the allocation of the purchase price over the estimated fair values of the major assets acquired and liabilities assumed (in millions): Accounts receivable $ 2.9 Unbilled receivables 11.1 Inventory 0.5 Other current assets 0.2 Property and equipment 22.8 Other assets 0.2 Intangible assets 10.8 Total identifiable net assets acquired 48.5 Total identifiable net liabilities assumed (3.4) Goodwill 34.3 Net assets acquired, excluding cash $ 79.4 Based on the Company’s estimate of fair value, as of May 23, 2022, net liabilities included $2.5 million of current liabilities. The identifiable intangible assets include trade names of $0.5 million with a remaining useful life of 5 years, contracts and backlog of $2.5 million with an estimated useful life of 3 years, in-process research and development of $7.3 million that will commence amortization at the completion of the development, and developed technology of $0.5 million with a remaining useful life of 3 years. The Company also established a deferred tax asset of $0.2 million for the difference between the financial statement basis and tax basis of the acquired assets of SRE and a corresponding decrease in goodwill. The goodwill recorded in this transaction is expected to be tax-deductible. The value of backlog was estimated using MPEEM, an income approach (Level 3), which converts projected revenues and costs into cash flows. To reflect the fact that certain other assets contribute to the cash flows generated, the returns for these contributory assets were removed to arrive at estimated cash flows solely attributable to the acquired backlog, which were discounted at a rate of 6.4% to determine the fair value. The value of developed technology was estimated using the relief-from-royalty method, an income approach (Level 3), which estimates the cost savings that accrue to the owner of the intangible asset that would otherwise be payable as royalties or license fees on revenues earned through the use of the asset. A royalty rate was applied to the projected revenues associated with the intangible asset to determine the amount of savings, which was at a rate of 11% to determine the fair value. The value of in-process research and development was also estimated using the relief-from-royalty method. A royalty rate of 12% was applied to the projected revenues associated with the intangible asset to determine the amount of savings in order to determine the fair value. The amounts of revenue and operating income of SRE included in the Company’s condensed consolidated statement of operations for the year end December 31, 2023 were $53.2 million and $3.6 million, respectively. The amounts of revenue and operating income of SRE included in the Company’s condensed consolidated statement of operations for the year end December 25, 2022 were $26.8 million and $2.9 million, respectively. A summary of the consideration paid for the acquired assets is as follows (in millions): Cash paid $ 74.4 Common stock issued 5.0 Total consideration $ 79.4 Pro Forma Financial Information (Unaudited) The following tables summarize the supplemental condensed consolidated statements of operations information on an unaudited pro forma basis as if the acquisition of SRE occurred on December 28, 2020 and include adjustments that were directly attributable to the foregoing transactions. There are no material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and income (loss). The pro forma results are for illustrative purposes only for the applicable period. For the years ended December 25, 2022 and December 26, 2021 (all amounts, except per share amounts, are in millions): 2022 2021 Pro forma revenues $ 915.3 $ 850.7 Pro forma net income (loss) before tax $ (31.6) $ 3.8 Pro forma net income ( loss) $ (35.8) $ 1.3 Basic pro forma income (loss) per share $ (0.28) $ 0.01 Diluted pro forma income (loss) per share $ (0.28) $ 0.01 Sierra Technical Services, Inc. On October 3, 2023, the Company entered into an agreement to acquire all of the outstanding equity securities of aerial target drone designer Sierra Technical Services, Inc. (“STS”) pursuant to which the Company (i) issued 866,026 shares of Kratos common stock valued at $12.8 million on October 3, 2023 and (ii) agreed to issue up to an additional 979,038 shares of Kratos common stock valued at $14.5 million pursuant to certain holdback and earn-out provisions, in each case, to the former stockholders of STS. The Company recorded net assets of $12.4 million and goodwill of $10.9 million related to the STS acquisition. Significant assets of STS acquired by the Company included accounts receivable of $11.0 million, and identified intangibles (contracts and backlog) of $14.0 million. Significant liabilities of STS assumed by the Company included deferred revenue of $11.4 million. The allocation of the total consideration for this acquisition to the tangible and identifiable intangible assets acquired and liabilities assumed is preliminary until the Company obtains final information regarding their fair values. However, the Company does not expect any adjustment to such allocations to be material to the Company's consolidated financial statements. The operating results of the acquisition have been included in the Company’s results of operations from the effective date of the acquisition. The amount of net sales and earnings of STS included in the condensed consolidated statement of operations for the year ended December 31, 2023 are not material. Had the acquisition occurred as of December 26, 2022, net sales, net income from consolidated operations, net income attributable to Kratos, and basic and diluted net income per share attributable to Kratos on a pro forma basis for the year ended December 31, 2023 would not have been materially different than the reported amounts. STS is included in the US segment. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets (a) Goodwill The Company performs its annual impairment test for goodwill in accordance with Topic 350 as of the last day of its fiscal October or when evidence of potential impairment exists. The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. The Company determines its reporting units by first identifying its operating segments, and then assessing whether any components of these segments constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component. The Company aggregates components within an operating segment that have similar economic characteristics. The KGS reportable segment has five operating businesses: Defense and Rocket Support Systems (“DRSS”), Microwave Electronics (“ME”), Space, Training and Cybersecurity Solutions (“ST&C”), C5ISR/Modular Systems (“MS”), and Kratos Turbine Technologies (“KTT”). All of the KGS operating segments provide technology based defense solutions, involving products and services, primarily for mission critical U.S. National Security priorities, with the primary focus relating to the nation’s C5ISR requirements. The US reportable segment consists of its unmanned aerial system, unmanned ground, and unmanned seaborne system products. The Company identified its reporting units to be the DRSS, ME, ST&C, MS, KTT and US operating segments. The Company tests goodwill for impairment by first performing a qualitative assessment. If, based on its qualitative assessment management determines it is not more likely than not that the fair value of the reporting unit exceeds its carrying value, a quantitative assessment is then performed. For operations where a quantitative assessment is performed, the identification and measurement of impairment involves the estimation of the fair value of reporting units. If the fair value is determined to be less than the carrying value, a charge to operations is recorded for the amount that the carrying value exceeds fair value. As part of its quantitative assessment, the Company estimates the fair value of each of the reporting units based on a comparison and weighting of the income approach, specifically the discounted cash flow method and the market approach, which estimates the fair value of the reporting units based upon comparable market prices and recent transactions and also validates the reasonableness of the implied multiples from the income approach. In determining the fair value for the reporting units, where a quantitative assessment is performed, there are key assumptions relating to future expected cash flows, terminal growth rates, appropriate discount rates, market multiples, and the control premium a controlling shareholder could be expected to pay. The carrying amounts of goodwill as of December 31, 2023 and December 25, 2022 by reportable segment are as follows (in millions): As of December 31, 2023 US KGS Total Gross value $ 138.8 $ 683.6 $ 822.4 Less accumulated impairment 13.8 239.5 253.3 Net $ 125.0 $ 444.1 $ 569.1 As of December 25, 2022 US KGS Total Gross value $ 127.9 $ 683.6 $ 811.5 Less accumulated impairment 13.8 239.5 253.3 Net $ 114.1 $ 444.1 $ 558.2 (b) Purchased Intangible Assets The following table sets forth information for acquired finite-lived and indefinite-lived intangible assets (in millions): As of December 31, 2023 As of December 25, 2022 Gross Accumulated Net Gross Accumulated Net Acquired finite-lived intangible assets: Customer relationships $ 80.9 $ (62.8) $ 18.1 $ 80.9 $ (60.1) $ 20.8 Contracts and backlog 53.1 (38.8) 14.3 39.1 (36.3) 2.8 Developed technology and technical know-how 33.7 (28.2) 5.5 33.7 (27.0) 6.7 Trade names 3.8 (2.7) 1.1 3.8 (2.3) 1.5 In-process research and development 16.8 (0.3) 16.5 16.8 (0.3) 16.5 Total finite-lived intangible assets 188.3 (132.8) 55.5 174.3 (126.0) 48.3 Indefinite-lived trade names 6.9 — 6.9 6.9 — 6.9 Total intangible assets $ 195.2 $ (132.8) $ 62.4 $ 181.2 $ (126.0) $ 55.2 The aggregate amortization expense for finite-lived intangible assets was $6.8 million, $7.4 million and $4.7 million, for the years ended December 31, 2023, December 25, 2022, and December 26, 2021, respectively. The Company records all amortization expense in selling, general and administrative expenses. The estimated future amortization expense of acquired intangible assets with finite lives as of December 31, 2023 is as follows (in millions): Fiscal Year Amount 2024 9.4 2025 9.7 2026 9.1 2027 7.4 2028 4.5 Thereafter 15.4 Total $ 55.5 |
Balance Sheet Details
Balance Sheet Details | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Details | Balance Sheet Details The detail of certain assets in the consolidated balance sheets consists of the following: Cash and cash equivalents The Company’s cash equivalents consist of overnight cash sweep accounts that are invested on a daily basis. Cash and cash equivalents at December 31, 2023 and December 25, 2022 were $72.8 million and $81.3 million, respectively, and approximated their fair value. Accounts receivable, net and Unbilled receivables, net Receivables including amounts due under long-term contracts are summarized as follows (in millions) : December 31, 2023 December 25, 2022 Billed, current $ 129.8 $ 105.9 Unbilled, current 200.5 223.0 Total current accounts receivable 330.3 328.9 Allowance for doubtful accounts (1.1) (0.4) Total accounts receivable and unbilled receivables, net $ 329.2 $ 328.5 Substantially all accounts receivable at December 31, 2023, are expected to be collected in 2024. The Company does not believe it has significant exposure to credit risk, as accounts receivable and the related unbilled amounts are primarily from contracts associated with the U.S. Government. U.S. Government contract receivables where the Company is the prime contractor included in accounts receivable, net (in millions): December 31, 2023 December 25, 2022 Billed $ 21.0 $ 15.9 Unbilled 71.0 87.4 Total U.S. Government contract receivables $ 92.0 $ 103.3 Inventoried costs (in millions): December 31, December 25, Raw materials $ 78.0 $ 73.6 Work in process 72.9 50.8 Finished goods 5.3 1.1 Total inventoried costs $ 156.2 $ 125.5 Property, plant and equipment, net (in millions) December 31, 2023 December 25, 2022 Finance lease right of use assets $ 56.1 $ 54.9 Land and buildings 40.8 38.4 Computer equipment and software 51.4 45.7 Machinery and equipment 152.8 129.9 Furniture and office equipment 8.2 7.6 Leasehold improvements 24.0 22.9 Construction in progress 69.7 51.0 Property and equipment 403.0 350.4 Accumulated depreciation and amortization (159.4) (137.3) Total property and equipment, net $ 243.6 $ 213.1 Depreciation expense was $26.4 million, $23.1 million and $21.0 million for the years ended December 31, 2023, December 25, 2022, and December 26, 2021, respectively. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt (a) 2022 Credit Facility On February 18, 2022, the Company completed the refinancing of its then-outstanding $90 million revolving credit facility and $300 million 6.5% Senior Secured Notes due November 2025 (the “Senior Secured Notes”), with a new 5-year $200 million Revolving Credit Facility and 5-year $200 million Term Loan A (collectively, the “2022 Credit Facility”). The Company incurred debt issuance costs of $3.3 million associated with the 2022 Credit Facility. During the year ended December 31, 2023, the Company made $5.0 million of principal payments on Term Loan A. The Company has net amounts outstanding of approximately $35.0 million under the new Revolving Credit Facility, with approximately $165.0 million remaining in borrowing capacity, less approximately $10.2 million of letters of credit outstanding. On February 18, 2022, the proceeds of $300 million from the 2022 Credit Facility, along with cash funded by the Company for the 3.25% call premium to redeem the Company’s then-outstanding Senior Secured Notes, plus accrued interest, was distributed to the trustee for redemption of the Senior Secured Notes. The redemption of the Company’s outstanding Senior Secured Notes closed on March 14, 2022, for an amount of cash equal to 103.25% of the principal amount thereof plus accrued and unpaid interest thereon. The Company incurred a loss on the extinguishment of debt of $9.8 million related to the call premium on the Senior Secured Notes and the write-off of $3.2 million of unamortized debt issuance costs, resulting in a total loss on extinguishment of debt of $13.0 million. The 2022 Credit Facility is governed by a Credit Agreement (the “Credit Agreement”), dated February 18, 2022, by and among the Company, the lenders from time to time party thereto (the “Lenders”), the Issuing Banks party thereto (as defined in the Credit Agreement) and Truist Bank, in its capacity as administrative agent for the Lenders, and as an issuing bank and as the swingline lender which established a five-year senior secured credit facility which is comprised of a $200 million revolving credit facility (the “Revolving Credit Facility”) (which includes sub-facilities for the incurrence of up to $10.0 million of swingline loans and the issuance of up to $50.0 million of Letters of Credit) and a $200 million term loan (the “Term Loan A”). The Credit Agreement contemplates uncommitted incremental credit facilities of up to $200 million (which amount would be reduced by the aggregate amount of any and all incremental credit facilities actually established under the Credit Agreement) plus additional uncommitted incremental capacity subject to a limitation based on the Company’s pro forma total net leverage ratio (including any such additional uncommitted incremental capacity). Borrowings under the revolving credit facility and the term loan credit facility may take the form of base rate loans or Secured Overnight Financing Rate (“SOFR”) loans. Base rate loans under the Credit Agreement will bear interest at a rate per annum equal to the sum of the Applicable Margin (as defined in the Credit Agreement) from time to time in effect plus the highest of (i) the Agent’s (as defined in the Credit Agreement) prime lending rate, as in effect at such time, (ii) the Federal Funds Rate (as defined in the Credit Agreement), as in effect at such time, plus 0.50%, (iii) the Adjusted Term SOFR (as defined in the Credit Agreement) for a one-month tenor in effect on such day, plus 1.00% and (iv) 1.00%. SOFR loans will bear interest at a rate per annum equal to the sum of the Applicable Margin from time to time in effect plus the Adjusted Term SOFR for an Interest Period (as defined in the Credit Agreement) selected by the Company of one, three or six months. The Applicable Margin varies between 1.25% and 2.25% per annum for SOFR loans and between 0.25% and 1.25% per annum for base rate loans, and is based on the Company’s total net leverage ratio from time to time. Mandatory amortization on the Term Loan A is 2.5% in each of the first and second years and 5.0% in each of the third, fourth and fifth years, with the remaining outstanding balance due at maturity. The Credit Agreement contains certain covenants, which include, but are not limited to, restrictions on indebtedness, liens, fundamental changes, restricted payments, asset sales, and investments, and places limits on various other payments. The Company was in compliance with the covenants contained in the Credit Agreement as of December 31, 2023. On April 28, 2023, the Company entered into an interest rate swap contract to hedge U.S. dollar-one month Term SOFR in order to fix the interest rate movements associated with the Company’s Term Loan A. The initial hedge amount was $195.0 million and amortizes in accordance with Term Loan A. The swap is at a fixed rate of one-month term SOFR of 3.721% and settles monthly on the last day of each calendar month. The swap has an effective date of May 1, 2023 and terminates on May 1, 2026. Refer to Note 17 for further discussion of the accounting treatment of the swap arrangement. Term Loan and Revolving Credit Debt Term loan and revolving credit debt and the current period interest rates are as follows (in millions): December 31, 2023 December 25, 2022 Term Loan A $ 192.5 $ 197.5 Revolving credit facility 35.0 60.0 Total debt 227.5 257.5 Less current portion 7.5 6.3 Total long-term debt, less current portion 220.0 251.2 Less long-term unamortized debt issuance costs - term loans 0.7 1.0 Total long-term debt, net of unamortized debt issuance costs - term loans $ 219.3 $ 250.2 Unamortized debt issuance costs - revolving credit facility $ 0.7 $ 1.0 Current period interest rate 7.7 % 6.4 % Future long-term debt principal payments at December 31, 2023 were as follows (in millions): 2024 $ 7.5 2025 $ 10.0 2026 $ 10.0 2027 $ 200.0 $ 227.5 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Leases | Leases The components of lease expense for the years ended December 31, 2023, and December 25, 2022 were as follows (in millions): December 31, 2023 December 25, 2022 Amortization of right of use assets - finance leases $ 3.1 $ 2.9 Interest expense on lease liabilities - finance leases 3.1 3.0 Operating lease cost (expense resulting from amortization of total lease payments) 14.0 12.9 Short-term lease cost 1.2 0.8 Variable lease cost (cost excluded from lease payments) 0.1 0.1 Sublease income — — Total lease cost $ 21.5 $ 19.7 The components of leases on the balance sheet were as follows (in millions): December 31, 2023 December 25, 2022 Operating Leases: Operating lease right-of-use assets $ 45.7 $ 47.4 Current portion of operating lease liabilities $ 12.1 $ 10.8 Operating lease liabilities, net of current portion $ 37.8 $ 40.8 Finance leases: Property, plant and equipment, net $ 45.4 $ 45.8 Other current liabilities $ 1.3 $ 1.7 Other long-term liabilities $ 50.9 $ 49.9 Cash paid for amounts included in the measurement of lease liabilities for the years ended December 31, 2023, and December 25, 2022 were as follows (in millions): December 31, 2023 December 25, 2022 Finance lease - cash paid for interest $ 3.1 $ 3.0 Finance lease - financing cash flows $ 1.5 $ 1.4 Operating lease - operating cash flows (fixed payments) $ 14.1 $ 13.3 Other supplemental noncash information (in millions): December 31, 2023 December 25, 2022 Operating lease liabilities arising from obtaining right-of-use assets $ 12.1 $ 20.1 Finance lease liabilities arising from obtaining right-of-use assets $ 6.9 $ 9.1 Weighted-average remaining lease term (in years): Operating leases 4.59 5.14 Finance leases 14.91 15.20 Weighted-average discount rate: Operating leases 4.95 % 4.92 % Finance leases 6.35 % 6.02 % The maturity of lease liabilities is (in millions): Operating Leases Finance Leases 2024 $ 14.1 $ 4.6 2025 12.0 4.8 2026 10.2 5.0 2027 9.5 5.1 2028 6.4 5.2 Thereafter 3.5 58.0 Total lease payments 55.7 82.7 Less: imputed interest (5.8) (30.5) Total present value of lease liabilities $ 49.9 $ 52.2 |
Leases | Leases The components of lease expense for the years ended December 31, 2023, and December 25, 2022 were as follows (in millions): December 31, 2023 December 25, 2022 Amortization of right of use assets - finance leases $ 3.1 $ 2.9 Interest expense on lease liabilities - finance leases 3.1 3.0 Operating lease cost (expense resulting from amortization of total lease payments) 14.0 12.9 Short-term lease cost 1.2 0.8 Variable lease cost (cost excluded from lease payments) 0.1 0.1 Sublease income — — Total lease cost $ 21.5 $ 19.7 The components of leases on the balance sheet were as follows (in millions): December 31, 2023 December 25, 2022 Operating Leases: Operating lease right-of-use assets $ 45.7 $ 47.4 Current portion of operating lease liabilities $ 12.1 $ 10.8 Operating lease liabilities, net of current portion $ 37.8 $ 40.8 Finance leases: Property, plant and equipment, net $ 45.4 $ 45.8 Other current liabilities $ 1.3 $ 1.7 Other long-term liabilities $ 50.9 $ 49.9 Cash paid for amounts included in the measurement of lease liabilities for the years ended December 31, 2023, and December 25, 2022 were as follows (in millions): December 31, 2023 December 25, 2022 Finance lease - cash paid for interest $ 3.1 $ 3.0 Finance lease - financing cash flows $ 1.5 $ 1.4 Operating lease - operating cash flows (fixed payments) $ 14.1 $ 13.3 Other supplemental noncash information (in millions): December 31, 2023 December 25, 2022 Operating lease liabilities arising from obtaining right-of-use assets $ 12.1 $ 20.1 Finance lease liabilities arising from obtaining right-of-use assets $ 6.9 $ 9.1 Weighted-average remaining lease term (in years): Operating leases 4.59 5.14 Finance leases 14.91 15.20 Weighted-average discount rate: Operating leases 4.95 % 4.92 % Finance leases 6.35 % 6.02 % The maturity of lease liabilities is (in millions): Operating Leases Finance Leases 2024 $ 14.1 $ 4.6 2025 12.0 4.8 2026 10.2 5.0 2027 9.5 5.1 2028 6.4 5.2 Thereafter 3.5 58.0 Total lease payments 55.7 82.7 Less: imputed interest (5.8) (30.5) Total present value of lease liabilities $ 49.9 $ 52.2 |
Net Income (Loss) Per Common Sh
Net Income (Loss) Per Common Share | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share The Company calculates net income (loss) per common share in accordance with FASB ASC Topic 260, Earnings per Share (“Topic 260”). Under Topic 260, basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. Diluted net income (loss) per common share reflects the effects of potentially dilutive securities. The following shares were excluded from the calculation of diluted income (loss) per common share because their inclusion would have been anti-dilutive (in millions): Year Ended December 31, 2023 December 25, 2022 December 26, 2021 Shares from stock options and awards 1.8 1.5 0.1 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The components of income (loss) from continuing operations before income taxes are comprised of the following (in millions): December 31, 2023 December 25, 2022 December 26, 2021 Domestic $ (9.6) $ (48.4) $ (6.7) Foreign 20.7 15.7 11.1 Total $ 11.1 $ (32.7) $ 4.4 The provision (benefit) for income taxes from continuing operations are comprised of the following (in millions): Year Ended December 31, 2023 December 25, 2022 December 26, 2021 Federal income taxes: Current $ — $ — $ — Deferred 2.4 (4.5) (0.1) Total Federal 2.4 (4.5) (0.1) State and local income taxes: Current 1.3 0.6 1.5 Deferred 0.3 1.9 0.5 Total State and local 1.6 2.5 2.0 Foreign income taxes: Current 5.1 3.9 2.9 Deferred (0.2) (0.5) (0.9) Total Foreign 4.9 3.4 2.0 Total $ 8.9 $ 1.4 $ 3.9 A reconciliation of the total income tax provision (benefit) to the amount computed by applying the statutory federal income tax rate of 21% to the income from continuing operations before income taxes for the years ended December 31, 2023, December 25, 2022 and December 26, 2021 is as follows (in millions): Year Ended December 31, 2023 December 25, 2022 December 26, 2021 Income tax (benefit) at federal statutory rate $ 2.3 $ (6.9) $ 0.9 State taxes (benefit), net of federal tax benefit and valuation allowance 3.7 (0.3) 0.5 Difference in tax rates between U.S. and foreign 1.7 (0.2) (0.5) Increase (decrease) in valuation allowance (2.0) 4.9 1.2 Nondeductible expense 0.5 0.5 0.8 Increase in reserve for uncertain tax positions 0.5 0.3 0.9 Other 0.1 0.2 0.1 Officer’s compensation 162(m) limitation 0.5 1.0 0.9 R&D tax credit (0.9) (0.9) (0.9) Stock-based compensation 2.5 2.8 — Total $ 8.9 $ 1.4 $ 3.9 On August 16, 2022, the President signed into law the Inflation Reduction Act of 2022 which contained provisions effective January 1, 2023, including a 15% corporate minimum tax and a 1% excise tax on stock buybacks, both of which we expect to be immaterial to our financial results, financial position and cash flows. The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities are as follows (in millions): December 31, 2023 December 25, 2022 Deferred tax assets: Stock-based compensation $ 9.3 $ 9.4 Payroll related accruals 8.6 6.7 Lease accruals 27.0 25.7 Net operating loss carryforwards 44.7 55.1 Tax credit carryforwards 12.2 11.3 Deferred expenses 12.6 14.1 Other 19.8 19.4 134.2 141.7 Valuation allowance (12.6) (14.6) Total deferred tax assets, net of valuation allowance 121.6 127.1 Deferred tax liabilities: Unearned revenue (2.9) (3.3) Operating lease right-of-use assets (24.2) (23.2) Other intangibles (22.2) (23.1) Property and equipment, principally due to differences in depreciation (6.3) (5.6) Other (2.0) (1.6) Total deferred tax liabilities (57.6) (56.8) Net deferred tax asset $ 64.0 $ 70.3 During the fourth quarter of 2023, the Company evaluated all available evidence, both positive and negative, to determine whether based on the weight of that evidence, a valuation allowance for deferred tax assets was needed. Evidence evaluated by the Company included but was not limited to, its three-year cumulative results, and its forecast of taxable income. As a result, the Company determined that the majority of the Company’s U.S. deferred tax assets were more likely than not to be realized and that a valuation allowance with respect to a majority of the Company’s deferred tax assets was not required. The remaining valuation allowance on the Company’s U.S. deferred tax assets as of December 31, 2023 relates primarily to state net operating loss carryforwards, capital loss carryforwards and research & development tax credit carryforwards the Company estimates it may not be able to utilize in future periods. During fiscal 2023, the Company recorded a net decrease in its valuation allowance of $2.0 million. At December 31, 2023, the Company had federal tax loss carryforwards of $169.6 million and various state tax loss carryforwards of $207.8 million. The federal tax loss carryforwards will begin to expire in 2032 and state tax loss carryforwards begin to expire in 2024 in certain states. At December 31, 2023, the Company had federal tax credit carryforwards of $14.2 million and various state tax credit carryforwards of $0.9 million. The federal tax credit carryforwards will begin to expire in 2024 and the state tax credit carryforwards do not have an expiration. Federal and state income tax laws impose restrictions on the utilization of net operating losses (“NOLs”) and tax credit carryforwards in the event that an “ownership change” occurs for tax purposes, as defined by Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”). In general, an ownership change occurs when shareholders owning 5% or more of a “loss corporation” (a corporation entitled to use NOLs or other loss carryovers) have increased their ownership of stock in such corporation by more than 50 percentage points during any 3-year period. The annual base Section 382 limitation is calculated by multiplying the loss corporation’s value at the time of the ownership change by the greater of the long-term tax-exempt rate determined by the Internal Revenue Service in the month of the ownership change or the two preceding months. This base limitation is subject to adjustments, including an increase for built-in gains recognized in the five year period after the ownership change. In tax years 2010 and 2011 the Company experienced a Section 382 “ownership change” that will limit the utilization of NOL carryforwards. Additionally, in prior years the Company acquired corporations with NOL carryforwards at the date of acquisition (“Acquired NOLs”). The Acquired NOLs are subject to separate limitations that may further restrict the use of Acquired NOLs. For the year ended December 31, 2023, there was no impact of such Section 382 limitations on the income tax provision since the amount of taxable income did not exceed the annual limitation amount. However, future equity offerings or acquisitions that have equity as a component of the purchase price could also cause an “ownership change.” If and when any other “ownership change” occurs, utilization of the NOLs or other tax attributes may be further limited. As of December 31, 2017, all accumulated undistributed earnings of our foreign subsidiaries were subject to the one-time transition tax on foreign earnings required by the 2017 Tax Cuts and Jobs Act. It is the Company’s intention to permanently reinvest undistributed earnings of its foreign subsidiaries. As such, the Company has not provided deferred U.S. income taxes or foreign withholding taxes of approximately $6.4 million on temporary differences relating to the outside basis in its investment in foreign subsidiaries. As of December 31, 2023, the Company has $44.1 million of cash and cash equivalents available for distribution. The Company is subject to taxation in the U.S., various state tax jurisdictions and various foreign tax jurisdictions. The Company’s tax years for 2003 and later are subject to examination by the U.S. and state tax authorities due to the existence of NOL carryforwards. Generally, the Company’s tax years for 2018 and later are subject to examination by various foreign tax authorities as well. The following table summarizes the activity related to the Company’s unrecognized tax benefits (in millions): Balance as of December 27, 2020 $ 25.4 Increases related to prior periods 0.1 Increases related to current year tax positions 0.5 Expiration of applicable statutes of limitations (0.2) Increases related to acquisitions 0.1 Balance as of December 26, 2021 25.9 Decreases related to prior periods (0.7) Increases related to current year tax positions 0.2 Expiration of applicable statutes of limitations (0.4) Balance as of December 25, 2022 25.0 Increases related to prior periods 0.2 Increases related to current year tax positions 0.2 Expiration of applicable statutes of limitations (0.1) Balance as of December 31, 2023 $ 25.3 Included in the balance of unrecognized tax benefits at December 31, 2023, are $22.7 million of tax benefits that, if recognized, would impact the effective tax rate. Included in this amount is $11.3 million that would become a deferred tax asset if the tax benefit were recognized. As such, this benefit may be impacted by a corresponding valuation allowance depending upon the Company’s assessment of the realizability of the deferred tax asset at the time the benefits are recognized. The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. For the years ended December 31, 2023, December 25, 2022 and December 26, 2021, the Company recorded $0.3 million, $0.3 million, and $0.6 million, respectively, in interest or penalty expenses. These amounts are netted by a benefit for interest and penalties related to the reversal of prior positions of $0.1 million, $0.2 million, and $0.1 million for the years ended December 31, 2023, December 25, 2022, and December 26, 2021, respectively. As of December 31, 2023, December 25, 2022, and December 26, 2021, the Company had accrued total interest and penalties of $5.3 million, $5.1 million and $5.0 million, respectively. |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
Dec. 31, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations On February 28, 2018, the Company entered into a Stock Purchase Agreement to sell the operations of Kratos Public Safety & Security Solutions, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“PSS”), to Securitas Electronic Security, Inc., a Delaware corporation (“Buyer”). On June 11, 2018, the Company completed the sale of all of the issued and outstanding capital stock of PSS to Buyer for a purchase price of $69 million in cash, subject to a closing net working capital adjustment (the “Transaction”). The Company received approximately $68.7 million of aggregate net cash proceeds from the Transaction, after taking into account amounts that were paid by the Company pursuant to a negotiated transaction services agreement between the Company and the Buyer, receipt of approximately $7.3 million in net working capital retained by the Company, and associated transaction fees and expenses and including the impact of the final settlement and determination of the closing net working capital adjustment which was settled with the Buyer in the fourth quarter of 2021. Included in the year ended December 26, 2021 is approximately $1.1 million of loss from discontinued operations related to the final working capital settlement. Included in the year ended December 25, 2022 is an approximate $0.9 million gain as a result of the release of an indemnification liability following the lapse of the statute of limitations associated with a potential tax liability that was recorded in 2019 as part of the sale of PSS. Included in the year ended December 31, 2023 is an approximate $0.2 million gain as a result of the release of an indemnification liability following the lapse of the statute of limitations associated with a potential tax liability that was recorded in 2019 as part of the sale of PSS. In accordance with ASC 360-10-45-9, Property, Plant, and Equipment (Topic 360) and ASC 205-20-45-3 Presentation of Financial Statements (Topic 205), PSS and its subsidiaries have been reported in discontinued operations in the accompanying consolidated financial statements for all periods presented. The following table presents the results of discontinued operations (in millions): Year ended December 31, 2023 Year ended December 25, 2022 Year ended December 26, 2021 Revenue $ — $ — $ 0.1 Cost of sales — — — Selling, general and administrative expenses — 0.3 2.4 Loss from discontinued operations before income taxes — (0.3) (2.3) Gain on disposal of discontinued operations before income taxes — — — Total loss of discontinued operations before income taxes — (0.3) (2.3) Income tax benefit (0.2) (1.2) (0.2) Income (loss) from discontinued operations $ 0.2 $ 0.9 $ (2.1) Revenue and operating results for the year ended December 26, 2021 reflect the final settlement of the working capital dispute with the Buyer which resulted in expenses of approximately $1.1 million, and related legal fees as well as performance on the contracts and working capital retained by the Company. The following is a summary of the assets and liabilities of discontinued operations as of December 31, 2023 and December 25, 2022 (in millions): December 31, 2023 December 25, 2022 Other current liabilities 0.9 0.9 Current liabilities of discontinued operations $ 0.9 $ 0.9 Other long-term liabilities of discontinued operations $ 1.1 $ 1.4 |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement ASC Topic 820 , Fair Value Measurement, establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. As more fully described in Note 17, Derivative Financial Instruments |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stockholders' Equity | Stockholders’ Equity (a) Equity Incentive Plans In May 2023, the Company’s board of directors (the “Board”) and stockholders approved the 2023 Equity Incentive Plan (the “2023 Equity Plan”). The 2023 Equity Plan is the successor the Amended and Restated Kratos Defense & Security Systems, Inc. 2014 Equity Incentive Plan (the “2014 Plan”), the Kratos Defense & Security Solutions, Inc. 2011 Equity Incentive Plan (the “2011 Plan”), and the Kratos Defense & Security Solutions, Inc. Amended and Restated 2005 Equity Incentive Plan (the “2005 Plan”), (collectively, the “Prior Plans”). The 2023 Equity Plan became effective May 24, 2023 and no additional stock awards were granted under the Prior Plans as of May 24, 2023. All outstanding stock awards granted subject to the terms of the Prior Plans will continue to be subject to the terms and conditions as set forth in the agreements evidencing such stock awards and the terms of the respective Prior Plans. As of May 23, 2023, there were 2,280,707 shares remaining available for issuance under the Prior Plans. The 2023 Equity Plan increased the number of shares remaining available for issuance under its equity compensation plans by 2,466,983 shares to 4,747,690 shares. The Board may grant equity-based awards to selected employees, directors and consultants of the Company pursuant to its 2023 Equity Plan. As of December 31, 2023, there were 4,605,190 shares reserved for issuance for future grant under the 2023 Equity Plan. The Board may amend or terminate the 2023 Equity Plan at any time. Certain amendments, including an increase in the share reserve, require stockholder approval. Generally, options and restricted stock units outstanding vest over periods not exceeding ten years. When the Company grants stock options, they are granted with a per share exercise price not less than the fair market value of the Company’s common stock on the date of grant, and generally would be exercisable for up to ten years from the grant date. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model or a trinomial lattice options pricing model with the weighted average assumptions (annualized percentages). There were no stock options granted or related expenses for stock options in 2023, 2022 or 2021. A summary of the status of the Company’s stock option plan as of December 31, 2023, and changes in options outstanding under the plan for the year ended December 31, 2023, is as follows: Number of Weighted-Average Exercise Price per Share Weighted- Aggregate Intrinsic Value (000’s) (000’s) Options outstanding at December 25, 2022 18 $ 4.98 0.0 $ 79.9 Granted — $ — Exercised (18) $ 4.98 Forfeited or expired — $ — Options outstanding at December 31, 2023 — $ — 0.0 $ — Options exercisable at December 31, 2023 — $ — 0.0 $ — Upon exercise of an option, the Company issues new shares of common stock. During the years ended December 31, 2023, December 25, 2022, and December 26, 2021, the following values relate to the exercises under the Company’s option plans: 2023 2022 2021 Total intrinsic value of options exercised (in thousands) $ 80.8 $ 163.0 $ — The following table summarizes the Company’s Restricted Stock Unit activity: Restricted Weighted-Average Grant Date Fair Value Nonvested balance at December 25, 2022 4,659 $ 12.88 Granted 1,427 $ 11.39 Vested (871) $ 11.34 Forfeited or expired (35) $ 16.12 Vested but not released (245) $ 12.55 Nonvested balance at December 31, 2023 4,935 $ — As of December 31, 2023, there was $29.9 million of total unrecognized stock-based compensation expense related to nonvested restricted stock units which is expected to be recognized over a remaining weighted-average vesting period of 1.9 years. The fair value of restricted stock unit awards that vested in 2023, 2022, and 2021 was $9.8 million, $30.5 million, and $24.7 million, respectively. (b) Employee Stock Purchase Plans In May 2023, the Board approved the 2023 Employee Stock Purchase Plan (as amended from time to time, the “2023 Purchase Plan”). The 2023 Purchase Plan is the successor to the 1999 Employee Stock Purchase Plan (as amended from time to time, the “1999 Purchase Plan”). The total number of shares of our common stock that were authorized for issuance under the 2023 ESPP is equal to the sum of (1) 3,500,000 shares, plus (2) 766,586 shares, which is the number of shares that remained available for issuance under the 1999 Purchase Plan as of its termination on June 30, 2023 (after giving effect to the purchases pursuant to the offering period ending on such date under the Existing ESPP). The 2023 Purchase Plan qualifies as an employee stock purchase plan within the meaning of Section 423 of the Internal Revenue Service Code. Unless otherwise determined by the Compensation Committee of the Board, all U.S. employees are eligible to participate in the 2023 Purchase Plan, so long as they are employed by the Company (or a subsidiary designated by the Board) for at least 20 hours per week and were customarily employed by the Company (or a subsidiary designated by the Board) for at least 5 months per calendar year. The 2023 Plan also allows the Board to extend the employee stock purchase program to eligible employees outside of the U.S. In 2023, Kratos employees in Canada and the United Kingdom have been allowed to participate in the 2023 Purchase Plan. Employees who actively participate in the 2023 Purchase Plan are eligible to have up to 15% of their earnings for each purchase period withheld pursuant to the 2023 Purchase Plan. The amount that is withheld is used at various purchase dates within the offering period to purchase shares of common stock. The price paid for common stock at each such purchase date is equal to the lower of 85% of the fair market value of the common stock at the commencement date of that offering period or 85% of the fair market value of the common stock on the relevant purchase date. Employees are also able to end their participation in the offering at any time during the offering period, and participation ends automatically upon termination of employment. From the 1999 Purchase Plan’s inception through December 31, 2023, the cumulative number of shares of common stock that have been issued under the 1999 Purchase Plan and the 2023 Purchase Plan is 7.7 million and approximately 4.0 million shares are available for future issuance under the 2023 Purchase Plan. During 2023, approximately 1,036,000 shares were issued under the 2023 and 1999 Purchase Plans at an average price of $9.70 per share. The fair value of shares issued under the 1999 Purchase Plan and the 2023 Purchase Plan for 2023 was estimated using the Black-Scholes option pricing model. The assumptions and resulting fair values of options granted for 2023, 2022 and 2021 were as follows: Offering Periods January 1 to December 31 2023 Offering Offering Expected term (in years)(1) 0.5 0.5 0.5 Risk-free interest rate(2) 4.76% - 5.47% 0.19% - 2.51% 0.06% - 0.09% Expected volatility(3) 41.65% - 45.77% 40.52% - 60.79% 41.40% - 45.93% Expected dividend yield(4) —% —% —% Weighted average grant-date fair value per share $3.30 $4.80 $7.60 (1) The expected term is equivalent to the offering period. (2) The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant with a term equal to the expected term. (3) The Company estimated implied volatility based upon trailing volatility. (4) The Company has no history or expectation of paying dividends on its common stock. As of December 31, 2023, there was no material unrecognized compensation expense related to the 2023 Purchase Plan or the 1999 Purchase Plan. |
Retirement Plans
Retirement Plans | 12 Months Ended |
Dec. 31, 2023 | |
Retirement Benefits [Abstract] | |
Retirement Plans | Retirement Plans The Company provides eligible employees the opportunity to participate in defined-contribution savings plans (commonly known as 401(k) plans), which permit contributions on a before-tax basis. Generally, salaried employees and certain hourly employees are eligible to participate in the plans. Under most plans, the employee may contribute to various investment alternatives. In certain plans, the Company matches a portion of the employees’ contributions. The Company’s matching contributions to these defined-contribution savings plans totaled $10.7 million in 2023, $8.1 million in 2022, and $6.4 million in 2021. |
Significant Customers
Significant Customers | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Significant Customers | Significant Customers |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company operates in two reportable segments. The KGS reportable segment is comprised of an aggregation of KGS operating segments, including DRSS, ME, ST&C, MS, and KTT. The US reportable segment consists of the Company’s unmanned aerial, unmanned ground, unmanned seaborne and command, control and communications system products. The KGS and US segments provide products, solutions and services for mission critical National Security programs. KGS and US customers primarily include National Security related agencies, the DoD, intelligence agencies and classified agencies, and to a lesser degree, international government agencies and domestic and international commercial customers. The Company organizes its reportable segments based on the nature of the products, solutions and services offered. Transactions between segments are generally negotiated and accounted for under terms and conditions similar to other government and commercial contracts. In the following table total operating income (loss) from continuing operations of the reportable business segments is reconciled to the corresponding consolidated amount. “Corporate activities” 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, merger and acquisition expenses, corporate costs not allocated to the segments, and other miscellaneous corporate activities. Revenues, operating income (loss) and assets disclosed below provided by the Company’s reportable segments for the years ended December 31, 2023, December 25, 2022, and December 26, 2021, are as follows (in millions): 2023 2022 2021 Revenues: Kratos Government Solutions Service revenues $ 395.9 $ 320.0 $ 214.5 Product sales 429.0 356.6 365.1 Total Kratos Government Solutions 824.9 676.6 579.6 Unmanned Systems Service revenues 6.7 5.2 4.9 Product sales 205.5 216.5 227.0 Total Unmanned Systems 212.2 221.7 231.9 Total revenues $ 1,037.1 $ 898.3 $ 811.5 Depreciation and amortization: Kratos Government Solutions $ 24.1 $ 22.7 $ 17.4 Unmanned Systems 9.1 7.8 8.3 Total depreciation and amortization $ 33.2 $ 30.5 $ 25.7 Operating income (loss): Kratos Government Solutions $ 52.7 $ 27.2 $ 42.3 Unmanned Systems 4.2 (2.8) 13.2 Corporate activities (25.8) (27.0) (27.6) Total operating income (loss) $ 31.1 $ (2.6) $ 27.9 The US operating loss for the year ended December 25, 2022 included a $5.5 million litigation settlement charge related to the resolution of a dispute with an international customer, for which the contractual arrangement was entered into in March 2011, prior to Kratos’ acquisition of Composite Engineering Inc. The KGS operating income for the year ended December 25, 2022 includes $6.4 million of expenses related to certain non-recoverable costs, including rate and cost growth items, resulting from the inability to hire the required planned direct labor base both internally and by the Company’s subcontractors to execute on its backlog, due to the continued challenges in both hiring and retaining skilled manufacturing personnel, including approximately $3.4 million in expenses in the Company’s C5ISR business, and non-recoverable indirect cost rate growth resulting from a smaller than planned direct labor base due to delays in customer program execution and awards in the Company’s Training Solutions business of approximately $3.0 million. Revenues from foreign customers were approximately $202.0 million or 19%, $173.1 million or 19% and $169.8 million or 21% of total revenue for the years ended December 31, 2023, December 25, 2022, and December 26, 2021, respectively. Reportable segment assets are as follows (in millions): December 31, 2023 December 25, 2022 December 26, 2021 Assets: Kratos Government Solutions $ 1,190.2 $ 1,105.1 $ 907.6 Unmanned Systems 378.6 349.7 327.1 Corporate activities 63.7 96.7 354.8 Total assets $ 1,632.5 $ 1,551.5 $ 1,589.5 Assets of foreign subsidiaries in the KGS segment were $204.6 million, $178.3 million and $166.2 million as of December 31, 2023, December 25, 2022 and December 26, 2021, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In addition to commitments and obligations in the ordinary course of business, the Company is subject to various claims, pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of the Company’s business. The Company assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its consolidated financial statements. An estimated loss contingency is accrued in the Company’s consolidated financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing litigation contingencies is highly subjective and requires judgments about future events. When evaluating contingencies, the Company may be unable to provide a meaningful estimate due to a number of factors, including but not limited to the procedural status of the matter in question, the presence of complex or novel legal theories, and the ongoing discovery and development of information important to the matters. In addition, damage amounts claimed in litigation against it may be unsupported, exaggerated or unrelated to possible outcomes, and as such are not meaningful indicators of its potential liability. The Company regularly reviews contingencies to determine the adequacy of its accruals and related disclosures. The amount of ultimate loss may differ from these estimates. It is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies. Whether any losses finally determined in any claim, action, investigation or proceeding could reasonably have a material effect on the Company’s business, financial condition, results of operations or cash flows will depend on a number of variables, including: the timing and amount of such losses; the structure and type of any remedies; the monetary significance any such losses, damages or remedies may have on the consolidated financial statements; and the unique facts and circumstances of the particular matter that may give rise to additional factors. Legal and Regulatory Matters. U.S. Government Cost Claims The Company’s contracts with the DoD are subject to audit by the DCAA. As a result of these audits, from time to time the Company is advised of claims concerning potential disallowed, overstated or disputed costs. For example, during the course of recent audits of the Company’s contracts, the DCAA is closely examining and questioning certain of the established and disclosed practices that it had previously audited and accepted. Costs incurred and allocated to contracts with the U.S. Government are regularly scrutinized for compliance with regulatory standards by the Company’s personnel. For those Company subsidiaries and fiscal years which have not yet been audited by the DCAA or for those audits which are in process which have not been completed by the DCAA, the Company cannot reasonably estimate the range of loss, if any, that may result from audits and reviews in which it is currently involved given the inherent difficulty in predicting regulatory action, fines and penalties, if any, and the various remedies and levels of judicial review available to the Company in the event of an adverse finding. As a result, the Company has not recorded any liability related to these matters. Other Litigation Matters The Company is subject to normal and routine litigation arising from the ordinary course and conduct of business, and, at times, as a result of acquisitions and dispositions. Such disputes include, for example, commercial, employment, intellectual property, environmental and securities matters. The aggregate amounts accrued related to these matters are not material to the total liabilities of the Company. The Company intends to defend itself in any such matters and does not currently believe that the outcome of any such matters will have a material adverse impact on its financial condition, results of operations or cash flows. |
Redeemable Noncontrolling Inter
Redeemable Noncontrolling Interest | 12 Months Ended |
Dec. 31, 2023 | |
Noncontrolling Interest [Abstract] | |
Redeemable Noncontrolling Interest | Redeemable Noncontrolling Interest On February 27, 2019, the Company acquired 80.1% of the issued and outstanding shares of capital stock of Florida Turbine Technologies Inc., a Florida corporation (“FTT Inc.”), and 80.1% of the membership interests in KTT Core, a Delaware limited liability company, for an aggregate purchase price of approximately $60 million. On February 18, 2022, the capital stock of FTT Inc. was conveyed to KTT Core for organizational purposes such that FTT Inc. is now a wholly owned subsidiary of KTT Core. In connection with the Company’s acquisition of FTT Inc., and KTT Core, (i) beginning in January 2024, the holders (the “Holders”) of the minority interests in KTT Core (the “Minority Interests”) will have an annual right (the “Put Right”) to sell all of the Minority Interests to the Company at a purchase price based on a specified multiple of the trailing 12 months EBITDA of KTT Core and its subsidiaries (the “Acquired Companies”), subject to adjustment as set forth in the Exchange Agreement entered into by and among the Company, the Acquired Companies and the Holders, as amended on February 18, 2022 (the “Exchange Agreement”) (provided, however, that following certain events, including a change of control, the Put Right will be accelerated and the Minority Interest Purchase Price (as defined in the Exchange Agreement) will be a specified increased multiple of the trailing 12 months EBITDA of the Acquired Companies); and (ii) beginning in January 2025, the Company will have an annual right to purchase all of the Minority Interests from the Holders at the Minority Interest Purchase Price. On June 13, 2022, the Company entered into an Equity Purchase Agreement (the “Equity Purchase Agreement”) to acquire an additional 9.95% (the “Purchased Shares”) of the issued and outstanding shares of capital stock of KTT Core (together with its wholly-owned subsidiaries including FTT Inc.), a majority owned subsidiary of the Company, for an aggregate estimated purchase price of approximately $6.4 million, to be paid in shares of Kratos common stock. Pursuant to the Equity Purchase Agreement, the Company paid consideration of $2.7 million, paid in 190,258 shares of its common stock, based upon Kratos’ trading price on the date of distribution, representing half of the aggregate estimated purchase price to be paid by the Company for the Purchased Shares. Following the closing of the transactions contemplated by the Equity Purchase Agreement, the Company owned 90.05% of KTT Core. On April 7, 2023, the final aggregate purchase price, as updated to reflect the actual 2022 operating results and to reflect the market price of Kratos common stock on the day of issuance, was determined and 828,128 shares of Kratos common stock were issued to the Holders of the minority interest with a value of $10.7 million. The Put Right and annual purchase right of the Holders and the Company, respectively, remain available under the Exchange Agreement as to the remaining 9.95% minority interest in KTT Core. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments The Company’s derivative portfolio consists of forward exchange contracts used to manage foreign currency risks and an interest rate swap contract to hedge U.S. dollar-one month Term SOFR in order to mitigate the exposure to interest rate movements associated with the Company’s Term Loan A. Derivative financial instruments are recognized on the Consolidated Balance Sheets as either assets or liabilities and are measured at fair value. Forward Exchange Contracts Changes in the fair values of foreign currency exchange contracts are recorded each period in earnings. As of December 31, 2023, the Company did not use hedge accounting for its foreign currency exchange contracts. The notional value of the Company’s foreign currency forward contracts at December 31, 2023 was $9.3 million. At December 31, 2023, the fair value amounts of the forward exchange contracts were a $0.3 million asset and a $0.1 million liability. The net loss from these derivative instruments of $1.3 million is included in other income (expense) for the year ended December 31, 2023. The notional value of the Company’s foreign currency forward contracts at December 25, 2022, was $10.2 million. At December 25, 2022, the fair value amounts of the forward exchange contracts were a $0.1 million asset and a $0.3 million liability. The net loss from these derivative instruments of $0.2 million is included in other income (expense) for the year ended December 25, 2022. Interest Rate Swap Contract On April 28, 2023, the Company entered into an interest rate swap contract with an initial notional amount of $195.0 million to manage the variability of cash flows associated with the Term Loan A. The interest rate swap contract matures on May 1, 2026 and requires periodic interest rate settlements. The swap is at a fixed SOFR of 3.721% and settles monthly on the last day of each calendar month. The Company has designated the interest rate swap contract as a cash flow hedge and assesses the hedge effectiveness both at the onset of the hedge and at regular intervals throughout the life of the derivative. Changes in fair value (gains and losses) related to derivative financial instruments that qualify as cash flow hedges are deferred in Accumulated Other Comprehensive Income (Loss) (“AOCI”) until the underlying transaction is reflected in earnings. The net gain reclassified from AOCI from the interest rate swap reflected in earnings was $2.0 million for the year ended December 31, 2023 and is recorded as an offset to interest expense. The Company did not have any interest rate swap contracts on December 25, 2022. The fair value of this derivative represents the discounted value of the expected future discounted cash flows for the interest rate swap, based on the amortization schedule and the current forward curve for the remaining term of the contract, as of the date of each reporting period (in millions): December 31, 2023 December 25, 2022 Notional Value Fair Value Notional Value Fair Value Interest rate swap contract designated as a cash flow hedge, net of taxes $ 192.5 $ 0.7 $ — $ — |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Pay vs Performance Disclosure | |||
Net Income (Loss) Attributable to Parent | $ (8.9) | $ (36.9) | $ (2) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended | 12 Months Ended |
Dec. 31, 2023 shares | Dec. 31, 2023 shares | |
Trading Arrangements, by Individual | ||
Non-Rule 10b5-1 Arrangement Adopted | false | |
Non-Rule 10b5-1 Arrangement Terminated | false | |
Marie Mendoza [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | During the fiscal quarter ended December 31, 2023, none of our directors or officers (as defined in Rule 16a-1 under the Exchange Act) adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 105b-1 trading arrangement" (as those terms are defined in Item 408 of Regulation S-K), except as described in the table below: Name Title Action Applicable Date Expiration Date Rule 10b5-1 Trading Arrangement? (Y/N) (1) Aggregated Number of Securities Subject to Trading Arrangement Marie Mendoza Senior Vice President and General Counsel Adopted 12/4/2023 4/11/2025 Y 19,032 (3) Marie Mendoza Senior Vice President and General Counsel Terminated 9/12/22 12/4/23 N (2) 25,205 (3) (1) Denotes whether the trading arrangement is intended to satisfy the affirmative defense of Rule 10b5-1(c). (2 Complied with the then-applicable requirements of Rule 10b5-1(c) when adopted in September 2022. (3) This number represents the maximum number of shares of our common stock that may be sold pursuant to the trading arrangement. The number of shares actually sold will depend on the satisfaction of certain conditions set forth in the trading arrangement. | |
Arrangement Duration | 494 days | |
Marie Mendoza December 2023 Plan [Member] | Marie Mendoza [Member] | ||
Trading Arrangements, by Individual | ||
Name | Marie Mendoza | |
Title | Senior Vice President and General Counsel | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | 12/4/2023 | |
Aggregate Available | 19,032 | 19,032 |
Marie Mendoza 2022 Plan [Member] | Marie Mendoza [Member] | ||
Trading Arrangements, by Individual | ||
Name | Marie Mendoza | |
Title | Senior Vice President and General Counsel | |
Rule 10b5-1 Arrangement Terminated | true | |
Termination Date | 9/12/22 | |
Aggregate Available | 25,205 | 25,205 |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation | Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Kratos and its majority owned subsidiaries, for which all intercompany transactions have been eliminated in consolidation. |
Basis of Presentation | Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Kratos and its majority owned subsidiaries, for which all intercompany transactions have been eliminated in consolidation. |
Fiscal Year | Fiscal Year The Company has a 52/53 week fiscal year ending on the last Sunday of the calendar year, with interim fiscal periods ending on the last Sunday of each calendar quarter. There were 53 calendar weeks in the fiscal years ending on December 31, 2023, and 52 calendar weeks in the fiscal years ending on December 25, 2022 and December 26, 2021. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include revenue recognition, valuation of long-lived assets including identifiable intangibles and goodwill, accounting for income taxes including the related valuation allowance on the deferred tax asset and uncertain tax positions, contingencies and litigation, contingent acquisition consideration, and stock-based compensation. In the future, the Company may realize actual results that differ from the current reported estimates and if the estimates that the Company has used change in the future, such changes could have a material impact on the Company’s consolidated financial position, results of operations and cash flows. |
Revenue Recognition | Revenue Recognition Effective January 1, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) ASU 2014-09, Revenue from Contracts with Customers, and the related amendments, which are codified into Accounting Standards Codification (“ASC”) 606 (“ASC 606”). To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Once the contract is identified and determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under ASC 606. The majority of the Company’s contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected-cost-plus-margin approach, under which the Company forecasts the expected costs of satisfying a performance obligation and then adds an appropriate margin for that distinct good or service. For the majority of contracts, the Company satisfies the underlying performance obligations over time as the customer obtains control or receives benefits as work is performed on the contract. The Company generally recognizes revenue over time as work is performed on long-term contracts because of continuous transfer of control to the customer. For U.S. government contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay for costs incurred plus a reasonable profit and take control of any work in process. Similarly, for non-U.S. government contracts, the customer typically controls the work in process as evidenced either by contractual termination clauses or by our rights to payment of the transaction price associated with work performed to date on products or services that do not have an alternative use to the Company. As a result, under ASC 606 revenue is recognized over time using the cost-to-cost method (cost incurred relative to total estimated cost at completion). Remaining Performance Obligations Revenues from remaining performance obligations are calculated as the dollar value of the remaining performance obligations on executed contracts. On December 31, 2023, the Company had approximately $1,243.9 million of remaining performance obligations. The Company expects to recognize approximately 65.0% of the remaining performance obligations as revenue in 2024, an additional 14.0% in 2025, and the balance thereafter. Contract Estimates Due to the nature of the work required to be performed on many performance obligations, the estimation of total cost at completion is complex, subject to many variables and requires significant judgment. On a quarterly basis, the Company conducts its contract cost Estimate at Completion (“EAC”) process by reviewing the progress and execution of outstanding performance obligations within its contracts. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenues and costs. The risks and opportunities include management’s judgment about the ability and cost to achieve the schedule (e.g., the number and type of milestone events), technical requirements (e.g., a newly-developed product versus a mature product) and other contract requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the availability of materials, the length of time to complete the performance obligation (e.g., to estimate increases in wages and prices for materials and related support cost allocations), execution by subcontractors, the availability and timing of funding from customers and overhead cost rates, among other variables. In addition, certain of the Company’s long-term contracts contain award fees, incentive fees, or other provisions that can either increase or decrease the transaction price. These variable amounts generally are awarded upon achievement of certain performance metrics, program milestones or cost targets and can be based upon customer discretion. Variable consideration is estimated at the most likely amount to which the Company is expected to be entitled. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available. Contracts are often modified to account for changes in contract specifications and requirements. Contract modifications are considered to exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of the Company’s contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price, and the measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. As a result of the EAC process, any quarterly adjustments to revenues, cost of sales, and the related impact to operating income are recognized as necessary in the period they become known. These adjustments may result from positive program performance, and may result in an increase in operating income during the performance of individual performance obligations, if it is determined the Company will be successful in mitigating risks surrounding the technical, schedule and cost aspects of those performance obligations or realizing related opportunities. Likewise, these adjustments may result in a decrease in operating income if it is determined the Company will not be successful in mitigating these risks or realizing related opportunities. Changes in estimates of net sales, cost of sales and the related impact to operating income are recognized quarterly on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods. A significant change in one or more of these estimates could affect the profitability of one or more of the Company’s contracts. When estimates of total costs to be incurred on a performance obligation exceed total estimates of revenue to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is determined. For the year ended December 26, 2021 the Company recorded a $6.9 million favorable EAC adjustment on one of its long-term government contracts. No other cumulative catch-up adjustment on any one contract was material to the Company’s consolidated financial statements for the years ended December 31, 2023, December 25, 2022 and December 26, 2021. Likewise, other than the impact of the adjustment for the one contract in the year ended December 26, 2021, total cumulative catch-up adjustments were not material for the years ended December 31, 2023, December 25, 2022 and December 26, 2021. As of December 31, 2023 and December 25, 2022, accrued expenses included the accrual for losses on contracts of $2.0 million and $1.2 million, respectively. Contract Assets and Liabilities For each of the Company’s contracts, the timing of revenue recognition, customer billings, and cash collections results in a net contract asset or liability at the end of each reporting period. Fixed-price contracts are typically billed to the customer either using progress payments, whereby amounts are billed monthly as costs are incurred or work is completed, or performance based payments, which are based upon the achievement of specific, measurable events or accomplishments defined and valued at contract inception. Cost-type contracts are typically billed to the customer on a monthly or semi-monthly basis. Contract assets consist of unbilled receivables, primarily related to long-term contracts where revenue recognized under the cost-to-cost method exceeds amounts billed to customers. Unbilled receivables are classified as current assets and, in accordance with industry practice, include amounts that may be billed and collected beyond one year due to the long term nature of many of the Company’s contracts. Accumulated contract costs in unbilled receivables include direct production costs, factory and engineering overhead, production tooling costs, and, for government contracts, recovery of allowable general and administrative expenses. Unbilled receivables also include certain estimates of variable consideration described above. The Company’s contracts that give rise to contract assets are not considered to include a significant financing component as the payment terms are intended to protect the customer in the event the Company does not perform on its obligations under the contract. Contract liabilities include advance payments and billings in excess of revenue recognized. Certain customers make advance payments prior to the satisfaction of the Company’s performance obligations on the contract. These amounts are recorded as contract liabilities until such performance obligations are satisfied, either over time as costs are incurred or at a point in time when deliveries are made. The Company’s contracts that give rise to contract liabilities do not include a significant financing component as the underlying advance payments received are generally utilized to pay for contract costs within a one-year period or are used to ensure the customer meets contractual requirements. For federal contracts, the Company follows U.S. Government procurement and accounting standards in assessing the allowability and the allocability of costs to contracts. Recurring evaluations of contract cost, scheduling and technical matters are performed by management. Costs incurred and allocated to contracts with the U.S. Government are scrutinized for compliance with regulatory standards by the Company’s personnel, and are subject to audit by the Defense Contract Audit Agency (“DCAA”). From time to time, the Company may proceed with work based on customer direction prior to the completion and signing of formal contract documents. The Company has a formal review process for approving any such work. Revenue associated with such work is recognized only when the criteria to establish a contract under ASC 606 are met and the obligations under the contract are legally enforceable. As of December 31, 2023 and December 25, 2022, approximately $13.0 million and $12.2 million, respectively, of the Company’s unbilled accounts receivable balance were under an authorization to proceed or work order from its customers where a formal purchase order had not yet been received. |
Inventoried Costs | Inventoried costs Inventoried costs are stated at the lower of cost or estimated net realizable value. Cost is determined using the average cost or first-in, first-out methods and the applicable method is applied consistently within an operating entity. The Company capitalizes labor, material, subcontractor and overhead costs as work-in-process for contracts where control has not yet passed to the customer. In addition, the Company capitalizes costs incurred to fulfill a contract in advance of contract award in inventories as work-in-process if it is determined that contract award is probable. Pursuant to contract provisions of U.S. Government contracts, such customers may have title to, or a security interest in inventories related to such contracts as a result of advances, performance-based payments, and progress payments. The Company regularly reviews inventory quantities on hand, future purchase commitments with its suppliers, and the estimated utility of its inventory. If the Company’s review indicates a reduction in utility below carrying value, it reduces its inventory to a new cost basis. |
Research and Development | Research and Development Costs incurred in research and development activities are expensed as incurred in accordance with FASB ASC Topic 730 , Research and Development. |
Income Taxes | Income Taxes The Company records deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company maintains a valuation allowance on the deferred tax assets for which it is more likely than not that the Company will not realize the benefits of these tax assets in future tax periods. The valuation allowance is based on estimates of future taxable income by tax jurisdiction in which the Company operates, the number of years over which the deferred tax assets will be recoverable, and scheduled reversals of deferred tax liabilities. |
Income Taxes - Uncertain Tax Positions | In accordance with the recognition standards established by ASC Topic 740, Income Taxes (“Topic 740”), the Company makes a comprehensive review of its portfolio of uncertain tax positions regularly. In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return or claim, which has not been reflected in measuring income tax expense for financial reporting purposes. Until these positions are sustained by the taxing authorities, the Company has not recognized the tax benefits resulting from such positions and reports the tax effects as a liability for uncertain tax positions in its consolidated balance sheets. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC Topic 718 , Compensation-Stock Compensation (“Topic 718”). All of the Company’s stock-based compensation plans are considered equity plans under Topic 718 , and compensation expense recognized is net of estimated forfeitures over the vesting period. The Company issues stock options and stock awards under its existing plans. The fair value of stock options is estimated on the date of grant using a Black-Scholes option-pricing model and is expensed on a straight-line basis over the remaining vesting period of the options, which is generally six five |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments, which results in bad debt expense. Management determines the adequacy of this allowance by periodically evaluating the comprehensive risk profiles of all individual customer receivable balances including, but not limited to, the customer’s financial condition, credit agency reports, financial statements and overall current economic conditions. Additionally, on certain contracts whereby the Company performs services for a prime/general contractor, a specified percentage of the invoiced trade accounts receivable may be retained by the customer until the project is completed. The Company periodically reviews all retainages for collectability and records allowances for doubtful accounts when deemed appropriate, based on its assessment of the associated credit risks. Changes to estimates of contract value are recorded as adjustments to revenue and not as a component of the allowance for doubtful accounts. Individual accounts receivable are written off to the allowance for doubtful accounts when the Company becomes aware of a specific customer’s inability to meet its financial obligation, and all collection efforts are exhausted. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company’s cash equivalents consist of its highly liquid investments with an original maturity of three months or less when purchased by the Company. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net owned by the Company is depreciated over the estimated useful lives of individual assets. Equipment acquired under capital leases are amortized over the shorter of the lease term or the estimated useful life of the asset. Improvements, which significantly improve and extend the useful life of an asset, are capitalized and depreciated over the shorter of the lease period or the estimated useful life. Expenditures for maintenance and repairs are charged to operations as incurred. |
Leases | Leases The Company leases certain facilities, office space, vehicles and equipment. Lease assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using an incremental borrowing rate generally applicable to the location of the lease asset, unless the implicit rate is readily determinable. Lease assets also include any upfront lease payments made and exclude lease incentives. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. The Company has operating lease arrangements with lease and non-lease components. The non-lease components in these arrangements are not significant when compared to the lease components. For all operating leases, the Company accounts for the lease and non-lease components as a single component.in the calculation of the lease asset and corresponding liability. Variable lease payments are generally expensed as incurred. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and the expense for these short-term leases is recognized on a straight-line basis over the lease term. The depreciable life of lease assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. See Note 6 for additional disclosures related to the Company’s lease obligations. |
Goodwill and Other Intangible Assets, Net | Goodwill and Other Intangible Assets, Net In accordance with the provisions of ASC Topic 350, Intangibles-Goodwill and Other (“Topic 350”), the Company performs impairment tests for goodwill and indefinite lived intangibles as of the last day of its fiscal October, or when evidence of potential impairment exists. When it is determined that impairment has occurred, a charge to operations is recorded. Goodwill and other purchased intangible asset balances are included in the identifiable assets of the operating segment to which they have been assigned. Any goodwill impairment, as well as the amortization of other purchased intangible assets, is charged against the respective segments’ operating income. In accordance with Topic 350 , the Company classifies intangible assets into two categories: (1) intangible assets with finite lives subject to amortization and (2) intangible assets with indefinite lives not subject to amortization. Separately, the Company tests intangible assets with finite lives for impairment if conditions exist that indicate the carrying value may not be recoverable. Such conditions may include an economic downturn in a geographic market or a change in the assessment of future operations. The Company records an impairment charge when the carrying value of the finite lived intangible asset is not recoverable by the cash flows generated from the use of the asset. The Company determines the useful lives of identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors considered when determining useful lives include the contractual term of any agreement, the history of the asset, the Company’s long-term strategy for the use of the asset, any laws or other local regulations that could impact the useful life of the asset, and other economic factors, including competition and specific market conditions. Intangible assets that are deemed to have finite lives are amortized, generally on a straight-line basis, over their useful lives, ranging from one |
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of | Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of Long-lived assets are reviewed for impairment in accordance with ASC Topic 360, Property, Plant, and Equipment , whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future net cash flows (undiscounted and without interest) expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC Topic 825 , Financial Instruments, requires that fair values be disclosed for the Company’s financial instruments. The carrying amounts of cash equivalents, accounts receivable, accounts payable, accrued expenses, billings in excess of costs and earnings on uncompleted contracts, and income taxes payable, approximate fair value due to the short-term nature of these instruments. The fair value of the Company’s long-term debt outstanding at December 31, 2023 is recorded at fair value. The fair value of the Company’s Senior Secured Notes (as defined below in Note 5), which were redeemed on March 14, 2022, is based upon quoted market prices. The Company uses forward exchange contracts to manage interest rate risk associated with our debts as well as foreign currency risks associated with certain transactions, specifically forecasted materials and salaries paid in foreign currencies. These derivative instruments are measured at fair value using observable market inputs such as forward rates. Based on these inputs, the derivative instruments are classified within Level 2 of the valuation hierarchy. At December 31, 2023, the derivative instruments were included in other current assets and other current liabilities on the Company's Condensed Consolidated Balance Sheets. The carrying amounts and the related fair values of the Company’s derivative instruments measured at fair value on a recurring basis at December 31, 2023 and December 25, 2022, are presented in Note 17. There were no derivative instruments for forward exchange contracts at December 26, 2021. |
Concentrations and Uncertainties | Concentrations and Uncertainties The Company maintains cash balances at various financial institutions and such balances commonly exceed the $250,000 insured amount by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to any significant credit risk with respect to such cash and cash equivalents. Financial instruments, which subject the Company to potential concentrations of credit risk, consist principally of the Company’s billed and unbilled accounts receivable. The Company’s accounts receivable result from sales to customers within the U.S. Government, state and local agencies and with commercial customers in various industries. The Company performs ongoing credit evaluations of its commercial customers. Credit is extended based on evaluation of the customer’s financial condition and collateral is not required. Accounts receivable are recorded at the invoiced amount and do not bear interest. See Note 13 for a discussion of the Company’s significant customers. |
Debt Issuance Costs | Debt Issuance Costs Fees paid to obtain debt financing and revolving credit facilities or amendments under such debt financing and revolving credit facilities are treated as debt issuance costs and are capitalized and amortized over the expected term of the related debt or revolving credit facility and are shown as a financing activity in the consolidated statements of cash flows. Issuance costs related to debt are presented in the consolidated balance sheets as a direct deduction from the carrying amount of the associated debt liability. Issuance costs related to a revolving credit facility are included in other assets in the consolidated balance sheets. |
Foreign Currency | Foreign Currency For operations outside the U.S. that prepare financial statements in currencies other than the U.S. dollar, results of operations and cash flows are translated at average exchange rates during the period, and assets and liabilities are generally translated at end-of-period exchange rates. Translation adjustments are included as a separate component of accumulated other comprehensive loss. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. ASU 2023-07 also requires all segment profit or loss and assets disclosures to be provided on an annual and interim basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning one year later. The amendments must be applied retrospectively to all prior periods presented. The Company is currently evaluating the impact of the adoption of ASU 2023-07 on its consolidated financial statements. |
Goodwill | Goodwill The Company performs its annual impairment test for goodwill in accordance with Topic 350 as of the last day of its fiscal October or when evidence of potential impairment exists. The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. The Company determines its reporting units by first identifying its operating segments, and then assessing whether any components of these segments constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component. The Company aggregates components within an operating segment that have similar economic characteristics. The KGS reportable segment has five operating businesses: Defense and Rocket Support Systems (“DRSS”), Microwave Electronics (“ME”), Space, Training and Cybersecurity Solutions (“ST&C”), C5ISR/Modular Systems (“MS”), and Kratos Turbine Technologies (“KTT”). All of the KGS operating segments provide technology based defense solutions, involving products and services, primarily for mission critical U.S. National Security priorities, with the primary focus relating to the nation’s C5ISR requirements. The US reportable segment consists of its unmanned aerial system, unmanned ground, and unmanned seaborne system products. The Company identified its reporting units to be the DRSS, ME, ST&C, MS, KTT and US operating segments. The Company tests goodwill for impairment by first performing a qualitative assessment. If, based on its qualitative assessment management determines it is not more likely than not that the fair value of the reporting unit exceeds its carrying value, a quantitative assessment is then performed. For operations where a quantitative assessment is performed, the identification and measurement of impairment involves the estimation of the fair value of reporting units. If the fair value is determined to be less than the carrying value, a charge to operations is recorded for the amount that the carrying value exceeds fair value. As part of its quantitative assessment, the Company estimates the fair value of each of the reporting units based on a comparison and |
Fair Value Measurement | Fair Value Measurement ASC Topic 820 , Fair Value Measurement, establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. As more fully described in Note 17, Derivative Financial Instruments |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Net Contract Assets and Liabilities | Net contract assets and liabilities are as follows (in millions): December 31, 2023 December 25, 2022 Net Change Contract assets $ 200.4 $ 222.8 $ (22.4) Contract liabilities $ 101.8 $ 62.1 $ 39.7 Net contract assets $ 98.6 $ 160.7 $ (62.1) |
Schedule of Disaggregation of Revenue | The following series of tables presents the Company’s revenue disaggregated by several categories. For the majority of contracts, revenue is recognized over time as work is performed on the contract. Revenue by contract type was as follows (in millions): Year Ended December 31, 2023 Year Ended December 25, 2022 Kratos Government Solutions Fixed price $ 566.3 $ 476.1 Cost plus fee 209.5 158.4 Time and materials 49.1 42.1 Total Kratos Government Solutions 824.9 676.6 Unmanned Systems Fixed price 160.9 156.6 Cost plus fee 41.9 59.1 Time and materials 9.4 6.0 Total Unmanned Systems 212.2 221.7 Total Revenues $ 1,037.1 $ 898.3 Revenue by customer was as follows (in millions): Year Ended December 31, 2023 Year Ended December 25, 2022 Kratos Government Solutions U.S. Government (1) $ 512.5 $ 420.4 International (2) 192.8 157.5 U.S. Commercial and other customers 119.6 98.7 Total Kratos Government Solutions 824.9 676.6 Unmanned Systems U.S. Government (1) 200.2 203.3 International (2) 9.2 15.6 U.S. Commercial and other customers 2.8 2.8 Total Unmanned Systems 212.2 221.7 Total Revenues $ 1,037.1 $ 898.3 (1) Sales to the U.S. Government include sales from contracts for which the Company is the prime contractor, as well as those for which the Company is a subcontractor and the ultimate customer is the U.S. Government. Each of the Company’s segments derives substantial revenue from the U.S. Government. These sales include foreign military sales contracted through the U.S. Government. (2) International sales include sales from contracts for which the Company is the prime contractor, as well as those for which the Company is a subcontractor and the ultimate customer is an international customer. These sales include direct sales with governments outside the U.S. and commercial sales with customers outside the U.S. |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | The following table shows the amounts recognized in the consolidated financial statements for stock-based compensation expense related to stock options, stock awards and stock offered under the Company’s employee stock purchase plan (in millions). Year ended December 31, 2023 Year ended December 25, 2022 Year ended December 26, 2021 Selling, general and administrative expenses $ 25.3 $ 26.3 $ 25.8 Total cost of employee stock-based compensation included in operating income (loss) from continuing operations $ 25.3 $ 26.3 $ 25.8 |
Schedule of Valuation and Qualifying Accounts Disclosure | The following table outlines the balance of the Company’s allowance for doubtful accounts for 2023, 2022 and 2021. The table identifies the additional provisions each year as well as the write-offs that utilized the allowance (in millions). Allowance for Doubtful Accounts Balance at Beginning of Year Provisions Write-offs/ Recoveries Balance at End of Year Year ended December 26, 2021 $ 1.8 $ (0.2) $ (1.2) $ 0.4 Year ended December 25, 2022 $ 0.4 $ — $ — $ 0.4 Year ended December 31, 2023 $ 0.4 $ 1.0 $ (0.3) $ 1.1 |
Schedule of Property, Plant and Equipment | Assets are depreciated predominately using the straight-line method, with the following lives: Years Buildings and improvements 15 – 39 Machinery and equipment 3 – 20 Computer equipment and software 1 – 10 Vehicles, furniture, and office equipment 5 Leasehold improvements Shorter of useful life or length of lease Property, plant and equipment, net (in millions) December 31, 2023 December 25, 2022 Finance lease right of use assets $ 56.1 $ 54.9 Land and buildings 40.8 38.4 Computer equipment and software 51.4 45.7 Machinery and equipment 152.8 129.9 Furniture and office equipment 8.2 7.6 Leasehold improvements 24.0 22.9 Construction in progress 69.7 51.0 Property and equipment 403.0 350.4 Accumulated depreciation and amortization (159.4) (137.3) Total property and equipment, net $ 243.6 $ 213.1 |
Schedule of Interest Expense, Net | Interest expense, net is summarized in the following table (in millions): Year ended December 31, 2023 Year ended December 25, 2022 Year ended December 26, 2021 Interest expense incurred primarily on indebtedness $ (21.7) $ (18.3) $ (23.7) Miscellaneous interest income 1.2 0.6 0.3 Interest expense, net $ (20.5) $ (17.7) $ (23.4) |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the allocation of the purchase price over the estimated fair values of the major assets acquired and liabilities assumed (in millions): Accounts receivable $ 3.8 Unbilled receivables 4.1 Other current assets 0.1 Property and equipment 1.3 Intangible assets 8.5 Total identifiable net assets acquired 17.8 Total identifiable net liabilities assumed (9.1) Goodwill 29.2 Net assets acquired, excluding cash $ 37.9 The following table summarizes the allocation of the purchase price over the estimated fair values of the major assets acquired and liabilities assumed (in millions): Accounts receivable $ 2.9 Unbilled receivables 11.1 Inventory 0.5 Other current assets 0.2 Property and equipment 22.8 Other assets 0.2 Intangible assets 10.8 Total identifiable net assets acquired 48.5 Total identifiable net liabilities assumed (3.4) Goodwill 34.3 Net assets acquired, excluding cash $ 79.4 |
Schedule of Business Acquisitions by Acquisition, Contingent Consideration | A summary of the consideration paid for the acquired ownership in Cosmic is as follows (in millions): Cash paid $ 39.4 Less: Cash acquired (1.5) Total consideration $ 37.9 A summary of the consideration paid for the acquired assets is as follows (in millions): Cash paid $ 74.4 Common stock issued 5.0 Total consideration $ 79.4 |
Schedule of Business Acquisition, Pro Forma Information | For the year ended December 26, 2021 (all amounts, except per share amounts, are in millions): Pro forma revenues $ 855.2 Pro forma net loss before tax $ (0.8) Pro forma net loss $ (2.9) Basic pro forma loss per share $ (0.03) Diluted pro forma loss per share $ (0.03) For the years ended December 25, 2022 and December 26, 2021 (all amounts, except per share amounts, are in millions): 2022 2021 Pro forma revenues $ 915.3 $ 850.7 Pro forma net income (loss) before tax $ (31.6) $ 3.8 Pro forma net income ( loss) $ (35.8) $ 1.3 Basic pro forma income (loss) per share $ (0.28) $ 0.01 Diluted pro forma income (loss) per share $ (0.28) $ 0.01 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The carrying amounts of goodwill as of December 31, 2023 and December 25, 2022 by reportable segment are as follows (in millions): As of December 31, 2023 US KGS Total Gross value $ 138.8 $ 683.6 $ 822.4 Less accumulated impairment 13.8 239.5 253.3 Net $ 125.0 $ 444.1 $ 569.1 As of December 25, 2022 US KGS Total Gross value $ 127.9 $ 683.6 $ 811.5 Less accumulated impairment 13.8 239.5 253.3 Net $ 114.1 $ 444.1 $ 558.2 |
Schedule of Acquired Finite-Lived Intangible Assets | The following table sets forth information for acquired finite-lived and indefinite-lived intangible assets (in millions): As of December 31, 2023 As of December 25, 2022 Gross Accumulated Net Gross Accumulated Net Acquired finite-lived intangible assets: Customer relationships $ 80.9 $ (62.8) $ 18.1 $ 80.9 $ (60.1) $ 20.8 Contracts and backlog 53.1 (38.8) 14.3 39.1 (36.3) 2.8 Developed technology and technical know-how 33.7 (28.2) 5.5 33.7 (27.0) 6.7 Trade names 3.8 (2.7) 1.1 3.8 (2.3) 1.5 In-process research and development 16.8 (0.3) 16.5 16.8 (0.3) 16.5 Total finite-lived intangible assets 188.3 (132.8) 55.5 174.3 (126.0) 48.3 Indefinite-lived trade names 6.9 — 6.9 6.9 — 6.9 Total intangible assets $ 195.2 $ (132.8) $ 62.4 $ 181.2 $ (126.0) $ 55.2 |
Schedule of Acquired Indefinite-Lived Intangible Assets | The following table sets forth information for acquired finite-lived and indefinite-lived intangible assets (in millions): As of December 31, 2023 As of December 25, 2022 Gross Accumulated Net Gross Accumulated Net Acquired finite-lived intangible assets: Customer relationships $ 80.9 $ (62.8) $ 18.1 $ 80.9 $ (60.1) $ 20.8 Contracts and backlog 53.1 (38.8) 14.3 39.1 (36.3) 2.8 Developed technology and technical know-how 33.7 (28.2) 5.5 33.7 (27.0) 6.7 Trade names 3.8 (2.7) 1.1 3.8 (2.3) 1.5 In-process research and development 16.8 (0.3) 16.5 16.8 (0.3) 16.5 Total finite-lived intangible assets 188.3 (132.8) 55.5 174.3 (126.0) 48.3 Indefinite-lived trade names 6.9 — 6.9 6.9 — 6.9 Total intangible assets $ 195.2 $ (132.8) $ 62.4 $ 181.2 $ (126.0) $ 55.2 |
Schedule of Future Amortization Expense of Finite-Lived Intangible Assets | The estimated future amortization expense of acquired intangible assets with finite lives as of December 31, 2023 is as follows (in millions): Fiscal Year Amount 2024 9.4 2025 9.7 2026 9.1 2027 7.4 2028 4.5 Thereafter 15.4 Total $ 55.5 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Accounts, Notes, Loans and Financing Receivable | Receivables including amounts due under long-term contracts are summarized as follows (in millions) : December 31, 2023 December 25, 2022 Billed, current $ 129.8 $ 105.9 Unbilled, current 200.5 223.0 Total current accounts receivable 330.3 328.9 Allowance for doubtful accounts (1.1) (0.4) Total accounts receivable and unbilled receivables, net $ 329.2 $ 328.5 U.S. Government contract receivables where the Company is the prime contractor included in accounts receivable, net (in millions): December 31, 2023 December 25, 2022 Billed $ 21.0 $ 15.9 Unbilled 71.0 87.4 Total U.S. Government contract receivables $ 92.0 $ 103.3 |
Schedule of Inventory | Inventoried costs (in millions): December 31, December 25, Raw materials $ 78.0 $ 73.6 Work in process 72.9 50.8 Finished goods 5.3 1.1 Total inventoried costs $ 156.2 $ 125.5 |
Schedule of Property, Plant and Equipment | Assets are depreciated predominately using the straight-line method, with the following lives: Years Buildings and improvements 15 – 39 Machinery and equipment 3 – 20 Computer equipment and software 1 – 10 Vehicles, furniture, and office equipment 5 Leasehold improvements Shorter of useful life or length of lease Property, plant and equipment, net (in millions) December 31, 2023 December 25, 2022 Finance lease right of use assets $ 56.1 $ 54.9 Land and buildings 40.8 38.4 Computer equipment and software 51.4 45.7 Machinery and equipment 152.8 129.9 Furniture and office equipment 8.2 7.6 Leasehold improvements 24.0 22.9 Construction in progress 69.7 51.0 Property and equipment 403.0 350.4 Accumulated depreciation and amortization (159.4) (137.3) Total property and equipment, net $ 243.6 $ 213.1 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt and the Current Period Interest Rates | Term loan and revolving credit debt and the current period interest rates are as follows (in millions): December 31, 2023 December 25, 2022 Term Loan A $ 192.5 $ 197.5 Revolving credit facility 35.0 60.0 Total debt 227.5 257.5 Less current portion 7.5 6.3 Total long-term debt, less current portion 220.0 251.2 Less long-term unamortized debt issuance costs - term loans 0.7 1.0 Total long-term debt, net of unamortized debt issuance costs - term loans $ 219.3 $ 250.2 Unamortized debt issuance costs - revolving credit facility $ 0.7 $ 1.0 Current period interest rate 7.7 % 6.4 % |
Schedule of Future Long-Term Debt Principal Payments | Future long-term debt principal payments at December 31, 2023 were as follows (in millions): 2024 $ 7.5 2025 $ 10.0 2026 $ 10.0 2027 $ 200.0 $ 227.5 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Schedule of Lease Cost | The components of lease expense for the years ended December 31, 2023, and December 25, 2022 were as follows (in millions): December 31, 2023 December 25, 2022 Amortization of right of use assets - finance leases $ 3.1 $ 2.9 Interest expense on lease liabilities - finance leases 3.1 3.0 Operating lease cost (expense resulting from amortization of total lease payments) 14.0 12.9 Short-term lease cost 1.2 0.8 Variable lease cost (cost excluded from lease payments) 0.1 0.1 Sublease income — — Total lease cost $ 21.5 $ 19.7 Cash paid for amounts included in the measurement of lease liabilities for the years ended December 31, 2023, and December 25, 2022 were as follows (in millions): December 31, 2023 December 25, 2022 Finance lease - cash paid for interest $ 3.1 $ 3.0 Finance lease - financing cash flows $ 1.5 $ 1.4 Operating lease - operating cash flows (fixed payments) $ 14.1 $ 13.3 Other supplemental noncash information (in millions): December 31, 2023 December 25, 2022 Operating lease liabilities arising from obtaining right-of-use assets $ 12.1 $ 20.1 Finance lease liabilities arising from obtaining right-of-use assets $ 6.9 $ 9.1 Weighted-average remaining lease term (in years): Operating leases 4.59 5.14 Finance leases 14.91 15.20 Weighted-average discount rate: Operating leases 4.95 % 4.92 % Finance leases 6.35 % 6.02 % |
Schedule of Balance Sheet Information | The components of leases on the balance sheet were as follows (in millions): December 31, 2023 December 25, 2022 Operating Leases: Operating lease right-of-use assets $ 45.7 $ 47.4 Current portion of operating lease liabilities $ 12.1 $ 10.8 Operating lease liabilities, net of current portion $ 37.8 $ 40.8 Finance leases: Property, plant and equipment, net $ 45.4 $ 45.8 Other current liabilities $ 1.3 $ 1.7 Other long-term liabilities $ 50.9 $ 49.9 |
Schedule of Maturities of Operating Lease Liabilities | The maturity of lease liabilities is (in millions): Operating Leases Finance Leases 2024 $ 14.1 $ 4.6 2025 12.0 4.8 2026 10.2 5.0 2027 9.5 5.1 2028 6.4 5.2 Thereafter 3.5 58.0 Total lease payments 55.7 82.7 Less: imputed interest (5.8) (30.5) Total present value of lease liabilities $ 49.9 $ 52.2 |
Schedule of Maturities of Financing Lease Liabilities | The maturity of lease liabilities is (in millions): Operating Leases Finance Leases 2024 $ 14.1 $ 4.6 2025 12.0 4.8 2026 10.2 5.0 2027 9.5 5.1 2028 6.4 5.2 Thereafter 3.5 58.0 Total lease payments 55.7 82.7 Less: imputed interest (5.8) (30.5) Total present value of lease liabilities $ 49.9 $ 52.2 |
Net Income (Loss) Per Common _2
Net Income (Loss) Per Common Share (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following shares were excluded from the calculation of diluted income (loss) per common share because their inclusion would have been anti-dilutive (in millions): Year Ended December 31, 2023 December 25, 2022 December 26, 2021 Shares from stock options and awards 1.8 1.5 0.1 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income (Loss) before Income Tax, Domestic and Foreign | The components of income (loss) from continuing operations before income taxes are comprised of the following (in millions): December 31, 2023 December 25, 2022 December 26, 2021 Domestic $ (9.6) $ (48.4) $ (6.7) Foreign 20.7 15.7 11.1 Total $ 11.1 $ (32.7) $ 4.4 |
Schedule of Components of Income Tax Expense (Benefit) | The provision (benefit) for income taxes from continuing operations are comprised of the following (in millions): Year Ended December 31, 2023 December 25, 2022 December 26, 2021 Federal income taxes: Current $ — $ — $ — Deferred 2.4 (4.5) (0.1) Total Federal 2.4 (4.5) (0.1) State and local income taxes: Current 1.3 0.6 1.5 Deferred 0.3 1.9 0.5 Total State and local 1.6 2.5 2.0 Foreign income taxes: Current 5.1 3.9 2.9 Deferred (0.2) (0.5) (0.9) Total Foreign 4.9 3.4 2.0 Total $ 8.9 $ 1.4 $ 3.9 |
Schedule of Income Tax Reconciliation | A reconciliation of the total income tax provision (benefit) to the amount computed by applying the statutory federal income tax rate of 21% to the income from continuing operations before income taxes for the years ended December 31, 2023, December 25, 2022 and December 26, 2021 is as follows (in millions): Year Ended December 31, 2023 December 25, 2022 December 26, 2021 Income tax (benefit) at federal statutory rate $ 2.3 $ (6.9) $ 0.9 State taxes (benefit), net of federal tax benefit and valuation allowance 3.7 (0.3) 0.5 Difference in tax rates between U.S. and foreign 1.7 (0.2) (0.5) Increase (decrease) in valuation allowance (2.0) 4.9 1.2 Nondeductible expense 0.5 0.5 0.8 Increase in reserve for uncertain tax positions 0.5 0.3 0.9 Other 0.1 0.2 0.1 Officer’s compensation 162(m) limitation 0.5 1.0 0.9 R&D tax credit (0.9) (0.9) (0.9) Stock-based compensation 2.5 2.8 — Total $ 8.9 $ 1.4 $ 3.9 |
Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities are as follows (in millions): December 31, 2023 December 25, 2022 Deferred tax assets: Stock-based compensation $ 9.3 $ 9.4 Payroll related accruals 8.6 6.7 Lease accruals 27.0 25.7 Net operating loss carryforwards 44.7 55.1 Tax credit carryforwards 12.2 11.3 Deferred expenses 12.6 14.1 Other 19.8 19.4 134.2 141.7 Valuation allowance (12.6) (14.6) Total deferred tax assets, net of valuation allowance 121.6 127.1 Deferred tax liabilities: Unearned revenue (2.9) (3.3) Operating lease right-of-use assets (24.2) (23.2) Other intangibles (22.2) (23.1) Property and equipment, principally due to differences in depreciation (6.3) (5.6) Other (2.0) (1.6) Total deferred tax liabilities (57.6) (56.8) Net deferred tax asset $ 64.0 $ 70.3 |
Schedule of Unrecognized Tax Benefits Roll Forward | The following table summarizes the activity related to the Company’s unrecognized tax benefits (in millions): Balance as of December 27, 2020 $ 25.4 Increases related to prior periods 0.1 Increases related to current year tax positions 0.5 Expiration of applicable statutes of limitations (0.2) Increases related to acquisitions 0.1 Balance as of December 26, 2021 25.9 Decreases related to prior periods (0.7) Increases related to current year tax positions 0.2 Expiration of applicable statutes of limitations (0.4) Balance as of December 25, 2022 25.0 Increases related to prior periods 0.2 Increases related to current year tax positions 0.2 Expiration of applicable statutes of limitations (0.1) Balance as of December 31, 2023 $ 25.3 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | The following table presents the results of discontinued operations (in millions): Year ended December 31, 2023 Year ended December 25, 2022 Year ended December 26, 2021 Revenue $ — $ — $ 0.1 Cost of sales — — — Selling, general and administrative expenses — 0.3 2.4 Loss from discontinued operations before income taxes — (0.3) (2.3) Gain on disposal of discontinued operations before income taxes — — — Total loss of discontinued operations before income taxes — (0.3) (2.3) Income tax benefit (0.2) (1.2) (0.2) Income (loss) from discontinued operations $ 0.2 $ 0.9 $ (2.1) The following is a summary of the assets and liabilities of discontinued operations as of December 31, 2023 and December 25, 2022 (in millions): December 31, 2023 December 25, 2022 Other current liabilities 0.9 0.9 Current liabilities of discontinued operations $ 0.9 $ 0.9 Other long-term liabilities of discontinued operations $ 1.1 $ 1.4 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock Options Roll Forward | A summary of the status of the Company’s stock option plan as of December 31, 2023, and changes in options outstanding under the plan for the year ended December 31, 2023, is as follows: Number of Weighted-Average Exercise Price per Share Weighted- Aggregate Intrinsic Value (000’s) (000’s) Options outstanding at December 25, 2022 18 $ 4.98 0.0 $ 79.9 Granted — $ — Exercised (18) $ 4.98 Forfeited or expired — $ — Options outstanding at December 31, 2023 — $ — 0.0 $ — Options exercisable at December 31, 2023 — $ — 0.0 $ — |
Schedule of Grants and Exercises Under the Company's Option Plans | During the years ended December 31, 2023, December 25, 2022, and December 26, 2021, the following values relate to the exercises under the Company’s option plans: 2023 2022 2021 Total intrinsic value of options exercised (in thousands) $ 80.8 $ 163.0 $ — |
Schedule of Restricted Stock Units Activity | The following table summarizes the Company’s Restricted Stock Unit activity: Restricted Weighted-Average Grant Date Fair Value Nonvested balance at December 25, 2022 4,659 $ 12.88 Granted 1,427 $ 11.39 Vested (871) $ 11.34 Forfeited or expired (35) $ 16.12 Vested but not released (245) $ 12.55 Nonvested balance at December 31, 2023 4,935 $ — |
Schedule of Assumptions and Resulting Fair Values of Options Granted | The assumptions and resulting fair values of options granted for 2023, 2022 and 2021 were as follows: Offering Periods January 1 to December 31 2023 Offering Offering Expected term (in years)(1) 0.5 0.5 0.5 Risk-free interest rate(2) 4.76% - 5.47% 0.19% - 2.51% 0.06% - 0.09% Expected volatility(3) 41.65% - 45.77% 40.52% - 60.79% 41.40% - 45.93% Expected dividend yield(4) —% —% —% Weighted average grant-date fair value per share $3.30 $4.80 $7.60 (1) The expected term is equivalent to the offering period. (2) The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant with a term equal to the expected term. (3) The Company estimated implied volatility based upon trailing volatility. (4) The Company has no history or expectation of paying dividends on its common stock. |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Revenues, operating income (loss) and assets disclosed below provided by the Company’s reportable segments for the years ended December 31, 2023, December 25, 2022, and December 26, 2021, are as follows (in millions): 2023 2022 2021 Revenues: Kratos Government Solutions Service revenues $ 395.9 $ 320.0 $ 214.5 Product sales 429.0 356.6 365.1 Total Kratos Government Solutions 824.9 676.6 579.6 Unmanned Systems Service revenues 6.7 5.2 4.9 Product sales 205.5 216.5 227.0 Total Unmanned Systems 212.2 221.7 231.9 Total revenues $ 1,037.1 $ 898.3 $ 811.5 Depreciation and amortization: Kratos Government Solutions $ 24.1 $ 22.7 $ 17.4 Unmanned Systems 9.1 7.8 8.3 Total depreciation and amortization $ 33.2 $ 30.5 $ 25.7 Operating income (loss): Kratos Government Solutions $ 52.7 $ 27.2 $ 42.3 Unmanned Systems 4.2 (2.8) 13.2 Corporate activities (25.8) (27.0) (27.6) Total operating income (loss) $ 31.1 $ (2.6) $ 27.9 December 31, 2023 December 25, 2022 December 26, 2021 Assets: Kratos Government Solutions $ 1,190.2 $ 1,105.1 $ 907.6 Unmanned Systems 378.6 349.7 327.1 Corporate activities 63.7 96.7 354.8 Total assets $ 1,632.5 $ 1,551.5 $ 1,589.5 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The fair value of this derivative represents the discounted value of the expected future discounted cash flows for the interest rate swap, based on the amortization schedule and the current forward curve for the remaining term of the contract, as of the date of each reporting period (in millions): December 31, 2023 December 25, 2022 Notional Value Fair Value Notional Value Fair Value Interest rate swap contract designated as a cash flow hedge, net of taxes $ 192.5 $ 0.7 $ — $ — |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies - Description of Business (Details) | 12 Months Ended |
Dec. 31, 2023 segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable (in segments) | 2 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - Remaining Performance Obligations (Details) $ in Millions | Dec. 31, 2023 USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Remaining performance obligation | $ 1,243.9 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 1,243.9 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 65% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 14% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - Contract Estimates (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Long-term government contracts | $ 6.9 | ||
Provision for loss on contracts | $ 2 | $ 1.2 |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies - Contract Assets and Liabilities (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 25, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Contract assets | $ 200.4 | $ 222.8 |
Contract assets, net change | (22.4) | |
Contract liabilities | 101.8 | 62.1 |
Contract liabilities, net change | 39.7 | |
Net contract assets | 98.6 | $ 160.7 |
Net contract assets, net change | $ (62.1) |
Organization and Summary of S_8
Organization and Summary of Significant Accounting Policies - Contract Assets and Liabilities - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Significant Accounting Policies Disclosure [Line Items] | ||||
Contract assets, net change | $ (22.4) | |||
Contract liabilities, net change | 39.7 | |||
Revenue recognized | 48.1 | $ 47.5 | ||
Contract assets | 200.4 | 222.8 | ||
Litigation settlement charges | 0 | $ 5.5 | $ 0 | |
Payments for legal settlements | 3.7 | |||
T for C | Unbilled | ||||
Significant Accounting Policies Disclosure [Line Items] | ||||
Amount agreed to settlement | $ 6 | |||
Contract assets | $ 4.8 |
Organization and Summary of S_9
Organization and Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 1,037.1 | $ 898.3 | $ 811.5 |
Kratos Government Solutions | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 824.9 | 676.6 | |
Kratos Government Solutions | U.S. Government | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 512.5 | 420.4 | |
Kratos Government Solutions | International | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 192.8 | 157.5 | |
Kratos Government Solutions | U.S. Commercial and other customers | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 119.6 | 98.7 | |
Kratos Government Solutions | Fixed price | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 566.3 | 476.1 | |
Kratos Government Solutions | Cost plus fee | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 209.5 | 158.4 | |
Kratos Government Solutions | Time and materials | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 49.1 | 42.1 | |
Unmanned Systems | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 212.2 | 221.7 | |
Unmanned Systems | U.S. Government | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 200.2 | 203.3 | |
Unmanned Systems | International | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 9.2 | 15.6 | |
Unmanned Systems | U.S. Commercial and other customers | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 2.8 | 2.8 | |
Unmanned Systems | Fixed price | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 160.9 | 156.6 | |
Unmanned Systems | Cost plus fee | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 41.9 | 59.1 | |
Unmanned Systems | Time and materials | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 9.4 | $ 6 |
Organization and Summary of _10
Organization and Summary of Significant Accounting Policies - Disaggregation of Revenue - Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 25, 2022 |
Unbilled | ||
Disaggregation of Revenue [Line Items] | ||
Accounts receivable | $ 13 | $ 12.2 |
Organization and Summary of _11
Organization and Summary of Significant Accounting Policies - Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Significant Accounting Policies Disclosure [Line Items] | |||
ESPP offering & expense recognition period | 6 months | ||
Deferred tax benefit from stock options exercised | $ 0.4 | $ 0.7 | $ 2.4 |
Maximum | |||
Significant Accounting Policies Disclosure [Line Items] | |||
Share-based incentive award vesting period | 10 years | ||
Maximum | Stock options | |||
Significant Accounting Policies Disclosure [Line Items] | |||
Share-based incentive award vesting period | 6 years | ||
Minimum | |||
Significant Accounting Policies Disclosure [Line Items] | |||
Share-based incentive award vesting period | 5 years |
Organization and Summary of _12
Organization and Summary of Significant Accounting Policies - Stock-Based Compensation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Selling, general and administrative expenses | |||
Significant Accounting Policies Disclosure [Line Items] | |||
Stock-based compensation expense, amount recognized in the consolidated financial statements | $ 25.3 | $ 26.3 | $ 25.8 |
Total cost of employee stock-based compensation included in operating income (loss) from continuing operations | |||
Significant Accounting Policies Disclosure [Line Items] | |||
Stock-based compensation expense, amount recognized in the consolidated financial statements | $ 25.3 | $ 26.3 | $ 25.8 |
Organization and Summary of _13
Organization and Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Allowance for Doubtful Accounts | |||
Provisions | $ (1) | $ 0 | $ 0.2 |
Allowance for Doubtful Accounts | |||
Allowance for Doubtful Accounts | |||
Balance at Beginning of Year | 0.4 | 0.4 | 1.8 |
Provisions | 1 | 0 | (0.2) |
Write-offs/ Recoveries | (0.3) | 0 | (1.2) |
Balance at End of Year | $ 1.1 | $ 0.4 | $ 0.4 |
Organization and Summary of _14
Organization and Summary of Significant Accounting Policies - Property and Equipment, Net (Details) | Dec. 31, 2023 |
Vehicles, furniture, and office equipment | |
Significant Accounting Policies Disclosure [Line Items] | |
Useful life of property and equipment | 5 years |
Minimum | Buildings and improvements | |
Significant Accounting Policies Disclosure [Line Items] | |
Useful life of property and equipment | 15 years |
Minimum | Machinery and equipment | |
Significant Accounting Policies Disclosure [Line Items] | |
Useful life of property and equipment | 3 years |
Minimum | Computer equipment and software | |
Significant Accounting Policies Disclosure [Line Items] | |
Useful life of property and equipment | 1 year |
Maximum | Buildings and improvements | |
Significant Accounting Policies Disclosure [Line Items] | |
Useful life of property and equipment | 39 years |
Maximum | Machinery and equipment | |
Significant Accounting Policies Disclosure [Line Items] | |
Useful life of property and equipment | 20 years |
Maximum | Computer equipment and software | |
Significant Accounting Policies Disclosure [Line Items] | |
Useful life of property and equipment | 10 years |
Organization and Summary of _15
Organization and Summary of Significant Accounting Policies - Goodwill and Other Intangible Assets, Net (Details) | Dec. 31, 2023 |
Minimum | |
Significant Accounting Policies Disclosure [Line Items] | |
Finite-lived intangible asset, useful life | 1 year |
Maximum | |
Significant Accounting Policies Disclosure [Line Items] | |
Finite-lived intangible asset, useful life | 15 years |
Organization and Summary of _16
Organization and Summary of Significant Accounting Policies - Interest Expense, Net (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Interest expense incurred primarily on indebtedness | $ (21.7) | $ (18.3) | $ (23.7) |
Miscellaneous interest income | 1.2 | 0.6 | 0.3 |
Interest expense, net | $ (20.5) | $ (17.7) | $ (23.4) |
Organization and Summary of _17
Organization and Summary of Significant Accounting Policies - Foreign Currency (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Foreign currency transaction gain (loss) | $ (1.7) | $ (0.1) | $ (0.8) |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) $ in Millions | 1 Months Ended | 12 Months Ended | |||||||
May 23, 2022 USD ($) | Mar. 09, 2022 USD ($) | Dec. 30, 2021 USD ($) | Dec. 27, 2021 USD ($) | Dec. 10, 2021 USD ($) | Dec. 30, 2021 USD ($) | Dec. 31, 2023 USD ($) | Dec. 25, 2022 USD ($) | Oct. 03, 2023 USD ($) shares | |
Business Acquisition [Line Items] | |||||||||
Deferred tax assets, net | $ 64 | $ 70.3 | |||||||
Goodwill | $ 569.1 | 558.2 | |||||||
Level 3 | Discount Rate | Income Approach | |||||||||
Business Acquisition [Line Items] | |||||||||
Discount rate | 0.064 | 0.11 | |||||||
Level 3 | Royalty Rate | Income Approach | |||||||||
Business Acquisition [Line Items] | |||||||||
Discount rate | 0.11 | ||||||||
Level 3 | Royalty Rate | Income Approach | Minimum | |||||||||
Business Acquisition [Line Items] | |||||||||
Discount rate | 0.11 | ||||||||
Level 3 | Royalty Rate | Income Approach | Maximum | |||||||||
Business Acquisition [Line Items] | |||||||||
Discount rate | 0.12 | ||||||||
CTT, Inc. | |||||||||
Business Acquisition [Line Items] | |||||||||
Cash paid | $ 15.2 | $ 6.3 | $ 22 | ||||||
Cosmic Advanced Engineering Solutions, Inc. | |||||||||
Business Acquisition [Line Items] | |||||||||
Cash paid | $ 39.4 | ||||||||
Payments to acquire business, subject to adjustments | 37.9 | ||||||||
Payments to acquire businesses, amount not included holdback paid at later | 0.4 | ||||||||
Net liabilities | 6.7 | ||||||||
Deferred tax liabilities, net | 2.4 | ||||||||
Total consideration | 37.9 | ||||||||
Goodwill | 29.2 | ||||||||
Accounts receivable | 3.8 | ||||||||
Cosmic Advanced Engineering Solutions, Inc. | Customer relationships | |||||||||
Business Acquisition [Line Items] | |||||||||
Finite-lived intangible assets acquired | $ 4.4 | ||||||||
Acquired finite-lived intangible assets, weighted average useful life | 10 years | ||||||||
Cosmic Advanced Engineering Solutions, Inc. | Contracts and backlog | |||||||||
Business Acquisition [Line Items] | |||||||||
Finite-lived intangible assets acquired | $ 1.7 | ||||||||
Acquired finite-lived intangible assets, weighted average useful life | 1 year | ||||||||
Cosmic Advanced Engineering Solutions, Inc. | Trade names | |||||||||
Business Acquisition [Line Items] | |||||||||
Finite-lived intangible assets acquired | $ 0.6 | ||||||||
Acquired finite-lived intangible assets, weighted average useful life | 5 years | ||||||||
Cosmic Advanced Engineering Solutions, Inc. | Developed technology and technical know-how | |||||||||
Business Acquisition [Line Items] | |||||||||
Finite-lived intangible assets acquired | $ 1.8 | ||||||||
Acquired finite-lived intangible assets, weighted average useful life | 5 years | ||||||||
Southern Research Engineering Division | |||||||||
Business Acquisition [Line Items] | |||||||||
Cash paid | $ 74.4 | $ 74.4 | |||||||
Net liabilities | 2.5 | ||||||||
Total consideration | 79.4 | 79.4 | |||||||
Common stock issued | 5 | $ 5 | |||||||
Deferred tax assets, net | 0.2 | ||||||||
Business combination, pro forma information, revenue of acquiree since acquisition date, actual | $ 53.2 | 26.8 | |||||||
Business combination, pro forma information, earnings or loss of acquiree since acquisition date, actual | $ 3.6 | $ 2.9 | |||||||
Goodwill | 34.3 | ||||||||
Accounts receivable | 2.9 | ||||||||
Southern Research Engineering Division | Contracts and backlog | |||||||||
Business Acquisition [Line Items] | |||||||||
Finite-lived intangible assets acquired | $ 2.5 | ||||||||
Acquired finite-lived intangible assets, weighted average useful life | 3 years | ||||||||
Southern Research Engineering Division | In orocess research and development | |||||||||
Business Acquisition [Line Items] | |||||||||
Finite-lived intangible assets acquired | $ 7.3 | ||||||||
Southern Research Engineering Division | Trade names | |||||||||
Business Acquisition [Line Items] | |||||||||
Finite-lived intangible assets acquired | $ 0.5 | ||||||||
Acquired finite-lived intangible assets, weighted average useful life | 5 years | ||||||||
Southern Research Engineering Division | Developed technology and technical know-how | |||||||||
Business Acquisition [Line Items] | |||||||||
Finite-lived intangible assets acquired | $ 0.5 | ||||||||
Acquired finite-lived intangible assets, weighted average useful life | 3 years | ||||||||
Sierra Technical Services Inc | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of common stock shares acquired (in shares) | shares | 866,026 | ||||||||
Business acquisition, common stock value acquired | $ 12.8 | ||||||||
Number of additional common shares to be acquired (in shares) | shares | 979,038 | ||||||||
Additional equity interests issuable | $ 14.5 | ||||||||
Net assets | 12.4 | ||||||||
Goodwill | 10.9 | ||||||||
Accounts receivable | 11 | ||||||||
Finite-lived intangible assets acquired | 14 | ||||||||
Deferred revenue | $ 11.4 |
Acquisitions - Assets Acquired
Acquisitions - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 25, 2022 | May 23, 2022 | Dec. 27, 2021 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 569.1 | $ 558.2 | ||
Cosmic Advanced Engineering Solutions, Inc. | ||||
Business Acquisition [Line Items] | ||||
Accounts receivable | $ 3.8 | |||
Unbilled receivables | 4.1 | |||
Other current assets | 0.1 | |||
Property and equipment | 1.3 | |||
Intangible assets | 8.5 | |||
Total identifiable net assets acquired | 17.8 | |||
Total identifiable net liabilities assumed | (9.1) | |||
Goodwill | 29.2 | |||
Net assets acquired, excluding cash | $ 37.9 | |||
Southern Research Engineering Division | ||||
Business Acquisition [Line Items] | ||||
Accounts receivable | $ 2.9 | |||
Unbilled receivables | 11.1 | |||
Inventory | 0.5 | |||
Other current assets | 0.2 | |||
Property and equipment | 22.8 | |||
Other assets | 0.2 | |||
Intangible assets | 10.8 | |||
Total identifiable net assets acquired | 48.5 | |||
Total identifiable net liabilities assumed | (3.4) | |||
Goodwill | 34.3 | |||
Net assets acquired, excluding cash | $ 79.4 |
Acquisitions - Consideration Pa
Acquisitions - Consideration Paid (Details) - USD ($) $ in Millions | May 23, 2022 | Mar. 09, 2022 | Dec. 27, 2021 |
Cosmic Advanced Engineering Solutions, Inc. | |||
Business Acquisition [Line Items] | |||
Cash paid | $ 39.4 | ||
Less: Cash acquired | (1.5) | ||
Total consideration | $ 37.9 | ||
Southern Research Engineering Division | |||
Business Acquisition [Line Items] | |||
Cash paid | $ 74.4 | $ 74.4 | |
Common stock issued | 5 | 5 | |
Total consideration | $ 79.4 | $ 79.4 |
Acquisitions - Pro Forma Financ
Acquisitions - Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 25, 2022 | Dec. 26, 2021 | |
Cosmic Advanced Engineering Solutions, Inc. | ||
Business Acquisition [Line Items] | ||
Pro forma revenues | $ 855.2 | |
Pro forma net income (loss) before tax | (0.8) | |
Pro forma net income ( loss) | $ (2.9) | |
Basic pro format income (loss) per share (in dollars per share) | $ (0.03) | |
Diluted pro forma income (loss) per share (in dollars per share) | $ (0.03) | |
Southern Research Engineering Division | ||
Business Acquisition [Line Items] | ||
Pro forma revenues | $ 915.3 | $ 850.7 |
Pro forma net income (loss) before tax | (31.6) | 3.8 |
Pro forma net income ( loss) | $ (35.8) | $ 1.3 |
Basic pro format income (loss) per share (in dollars per share) | $ (0.28) | $ 0.01 |
Diluted pro forma income (loss) per share (in dollars per share) | $ (0.28) | $ 0.01 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Narrative (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 USD ($) segment | Dec. 25, 2022 USD ($) | Dec. 26, 2021 USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Number of operating (in segments) | segment | 5 | ||
Amortization of intangible assets | $ | $ 6.8 | $ 7.4 | $ 4.7 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 25, 2022 |
Goodwill [Line Items] | ||
Gross value | $ 822.4 | $ 811.5 |
Less accumulated impairment | 253.3 | 253.3 |
Net | 569.1 | 558.2 |
US | ||
Goodwill [Line Items] | ||
Gross value | 138.8 | 127.9 |
Less accumulated impairment | 13.8 | 13.8 |
Net | 125 | 114.1 |
KGS | ||
Goodwill [Line Items] | ||
Gross value | 683.6 | 683.6 |
Less accumulated impairment | 239.5 | 239.5 |
Net | $ 444.1 | $ 444.1 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Purchased Intangible Assets (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 25, 2022 |
Acquired finite-lived intangible assets: | ||
Gross Value | $ 188.3 | $ 174.3 |
Accumulated Amortization | (132.8) | (126) |
Total | 55.5 | 48.3 |
Total intangible assets, Gross Value | 195.2 | 181.2 |
Total intangible assets, Net Value | 62.4 | 55.2 |
Trade names | ||
Acquired finite-lived intangible assets: | ||
Indefinite-lived trade names | 6.9 | 6.9 |
Customer relationships | ||
Acquired finite-lived intangible assets: | ||
Gross Value | 80.9 | 80.9 |
Accumulated Amortization | (62.8) | (60.1) |
Total | 18.1 | 20.8 |
Contracts and backlog | ||
Acquired finite-lived intangible assets: | ||
Gross Value | 53.1 | 39.1 |
Accumulated Amortization | (38.8) | (36.3) |
Total | 14.3 | 2.8 |
Developed technology and technical know-how | ||
Acquired finite-lived intangible assets: | ||
Gross Value | 33.7 | 33.7 |
Accumulated Amortization | (28.2) | (27) |
Total | 5.5 | 6.7 |
Trade names | ||
Acquired finite-lived intangible assets: | ||
Gross Value | 3.8 | 3.8 |
Accumulated Amortization | (2.7) | (2.3) |
Total | 1.1 | 1.5 |
In-process research and development | ||
Acquired finite-lived intangible assets: | ||
Gross Value | 16.8 | 16.8 |
Accumulated Amortization | (0.3) | (0.3) |
Total | $ 16.5 | $ 16.5 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Intangible Asset Amortization (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 25, 2022 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2024 | $ 9.4 | |
2025 | 9.7 | |
2026 | 9.1 | |
2027 | 7.4 | |
2028 | 4.5 | |
Thereafter | 15.4 | |
Total | $ 55.5 | $ 48.3 |
Balance Sheet Details - Narrati
Balance Sheet Details - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Cash and cash equivalents | $ 72.8 | $ 81.3 | |
Depreciation expense | $ 26.4 | $ 23.1 | $ 21 |
Balance Sheet Details - Account
Balance Sheet Details - Accounts Receivable and Unbilled Receivables (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 25, 2022 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total current accounts receivable | $ 330.3 | $ 328.9 |
Allowance for doubtful accounts | (1.1) | (0.4) |
Total accounts receivable and unbilled receivables, net | 329.2 | 328.5 |
U.S. Government | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total U.S. Government contract receivables | 92 | 103.3 |
Billed | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total current accounts receivable | 129.8 | 105.9 |
Billed | U.S. Government | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total U.S. Government contract receivables | 21 | 15.9 |
Unbilled | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total current accounts receivable | 200.5 | 223 |
Unbilled | U.S. Government | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total U.S. Government contract receivables | $ 71 | $ 87.4 |
Balance Sheet Details - Invento
Balance Sheet Details - Inventory (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 25, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 78 | $ 73.6 |
Work in process | 72.9 | 50.8 |
Finished goods | 5.3 | 1.1 |
Inventoried costs | $ 156.2 | $ 125.5 |
Balance Sheet Details - Propert
Balance Sheet Details - Property, Plant and Equipment (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 25, 2022 |
Property, Plant and Equipment [Line Items] | ||
Finance lease right of use assets | $ 56.1 | $ 54.9 |
Property and equipment | 403 | 350.4 |
Accumulated depreciation and amortization | (159.4) | (137.3) |
Total property and equipment, net | 243.6 | 213.1 |
Land and buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 40.8 | 38.4 |
Computer equipment and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 51.4 | 45.7 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 152.8 | 129.9 |
Furniture and office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 8.2 | 7.6 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 24 | 22.9 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 69.7 | $ 51 |
Debt - New Credit Facility (Det
Debt - New Credit Facility (Details) - USD ($) | 12 Months Ended | |||||
Mar. 14, 2022 | Feb. 18, 2022 | Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | Apr. 28, 2023 | |
Debt Instrument [Line Items] | ||||||
Debt issuance costs | $ 0 | $ 3,300,000 | $ 0 | |||
Borrowing under credit facility | 69,000,000 | 100,000,000 | 0 | |||
Loss on extinguishment of debt | 0 | $ (13,000,000) | $ 0 | |||
Interest Rate Swap | ||||||
Debt Instrument [Line Items] | ||||||
Fixed interest rate | 3.721% | |||||
SOFR | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (percent) | 1% | |||||
SOFR | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (percent) | 1.25% | |||||
SOFR | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (percent) | 2.25% | |||||
Base rate | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (percent) | 0.25% | |||||
Base rate | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (percent) | 1.25% | |||||
Senior notes | ||||||
Debt Instrument [Line Items] | ||||||
Premium | $ 9,800,000 | |||||
Write off of deferred debt issuance cost | 3,200,000 | |||||
Loss on extinguishment of debt | $ 13,000,000 | |||||
6.5% Notes | Senior notes | ||||||
Debt Instrument [Line Items] | ||||||
Carrying amount | $ 300,000,000 | |||||
Current period interest rate | 6.50% | |||||
Redemption percentage | 103.25% | |||||
Term Loan A | Interest Rate Swap | ||||||
Debt Instrument [Line Items] | ||||||
Initial hedge amount | $ 195,000,000 | |||||
Revolving credit facility | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding borrowings | $ 90,000,000 | |||||
Maximum borrowing capacity | $ 200,000,000 | |||||
Basis spread on variable rate (percent) | 0.50% | |||||
Revolving credit facility | New Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, term | 5 years | |||||
Debt instrument, face amount | $ 200,000,000 | 35,000,000 | ||||
Remaining borrowing capacity | 165,000,000 | |||||
Letters of credit outstanding, amount | 10,200,000 | |||||
Revolving credit facility | Term Loan Payment on June 30, 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Repayments of lines of credit | $ 5,000,000 | |||||
Revolving credit facility | New Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Borrowing under credit facility | $ 300,000,000 | |||||
Premium redemption price percentage | 3.25% | |||||
Secured debt | Term Loan A | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, term | 5 years | |||||
Debt instrument, face amount | $ 200,000,000 | |||||
Secured debt | Term Loan A | First and second year | ||||||
Debt Instrument [Line Items] | ||||||
Amortization percentage | 2.50% | |||||
Secured debt | Term Loan A | Third, fourth and fifth year | ||||||
Debt Instrument [Line Items] | ||||||
Amortization percentage | 5% | |||||
Swing line loan | New Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 10,000,000 | |||||
Letter of credit | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 50,000,000 |
Debt - Long-Term Debt and the C
Debt - Long-Term Debt and the Current Period Interest Rates (Details) - Line of credit - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 25, 2022 |
Line of Credit Facility [Line Items] | ||
Total debt | $ 227.5 | $ 257.5 |
Less current portion | 7.5 | 6.3 |
Total long-term debt, less current portion | $ 220 | $ 251.2 |
Current period interest rate | 7.70% | 6.40% |
Secured debt | ||
Line of Credit Facility [Line Items] | ||
Total debt | $ 192.5 | $ 197.5 |
Unamortized debt issuance costs | 0.7 | 1 |
Total long-term debt, net of unamortized debt issuance costs - term loans | 219.3 | 250.2 |
Revolving credit facility | ||
Line of Credit Facility [Line Items] | ||
Total debt | 35 | 60 |
Unamortized debt issuance costs | $ 0.7 | $ 1 |
Debt - Future Long-Term Debt Pr
Debt - Future Long-Term Debt Principal Payments (Details) - Line of credit - Secured debt $ in Millions | Dec. 31, 2023 USD ($) |
Debt Instrument [Line Items] | |
2024 | $ 7.5 |
2025 | 10 |
2026 | 10 |
2027 | 200 |
Total debt | $ 227.5 |
Leases - Lease Expense (Details
Leases - Lease Expense (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 25, 2022 | |
Leases [Abstract] | ||
Amortization of right of use assets - finance leases | $ 3.1 | $ 2.9 |
Interest expense on lease liabilities - finance leases | 3.1 | 3 |
Operating lease cost (expense resulting from amortization of total lease payments) | 14 | 12.9 |
Short-term lease cost | 1.2 | 0.8 |
Variable lease cost (cost excluded from lease payments) | 0.1 | 0.1 |
Sublease income | 0 | 0 |
Total lease cost | $ 21.5 | $ 19.7 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 25, 2022 |
Operating Leases: | ||
Operating lease right-of-use assets | $ 45.7 | $ 47.4 |
Current portion of operating lease liabilities | 12.1 | 10.8 |
Operating lease liabilities, net of current portion | 37.8 | 40.8 |
Finance leases: | ||
Property, plant and equipment, net | 45.4 | 45.8 |
Other current liabilities | 1.3 | 1.7 |
Other long-term liabilities | $ 50.9 | $ 49.9 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Property, plant and equipment, net | Property, plant and equipment, net |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other current liabilities | Other current liabilities |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other long-term liabilities | Other long-term liabilities |
Leases - Cash Paid (Details)
Leases - Cash Paid (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Leases [Abstract] | |||
Finance lease - cash paid for interest | $ 3.1 | $ 3 | |
Finance lease - financing cash flows | 1.5 | 1.4 | $ 1 |
Operating lease - operating cash flows (fixed payments) | $ 14.1 | $ 13.3 |
Leases - Weighted Average (Deta
Leases - Weighted Average (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Leases [Abstract] | |||
Operating lease liabilities arising from obtaining right-of-use assets | $ 12.1 | $ 20.1 | |
Finance lease liabilities arising from obtaining right-of-use assets | $ 6.9 | $ 9.1 | $ 5.8 |
Weighted-average remaining lease term (in years): | |||
Operating leases | 4 years 7 months 2 days | 5 years 1 month 20 days | |
Finance leases | 14 years 10 months 28 days | 15 years 2 months 12 days | |
Weighted-average discount rate: | |||
Operating leases | 4.95% | 4.92% | |
Finance leases | 6.35% | 6.02% |
Leases - Maturities of Operatin
Leases - Maturities of Operating and Financing Lease Liabilities (Details) $ in Millions | Dec. 31, 2023 USD ($) |
Operating Leases | |
2024 | $ 14.1 |
2025 | 12 |
2026 | 10.2 |
2027 | 9.5 |
2028 | 6.4 |
Thereafter | 3.5 |
Total lease payments | 55.7 |
Less: imputed interest | (5.8) |
Total present value of lease liabilities | 49.9 |
Finance Leases | |
2024 | 4.6 |
2025 | 4.8 |
2026 | 5 |
2027 | 5.1 |
2028 | 5.2 |
Thereafter | 58 |
Total lease payments | 82.7 |
Less: imputed interest | (30.5) |
Total present value of lease liabilities | $ 52.2 |
Net Income (Loss) Per Common _3
Net Income (Loss) Per Common Share - Antidilutive Securities (Details) - shares shares in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Shares from stock options and awards | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of EPS (in shares) | 1.8 | 1.5 | 0.1 |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income before Income Tax, Domestic and Foreign (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Components of income (loss) from continuing operations before income taxes | |||
Domestic | $ (9.6) | $ (48.4) | $ (6.7) |
Foreign | 20.7 | 15.7 | 11.1 |
Income (loss) from continuing operations before income taxes | $ 11.1 | $ (32.7) | $ 4.4 |
Income Taxes - Components of In
Income Taxes - Components of Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Federal income taxes: | |||
Current | $ 0 | $ 0 | $ 0 |
Deferred | 2.4 | (4.5) | (0.1) |
Total Federal | 2.4 | (4.5) | (0.1) |
State and local income taxes: | |||
Current | 1.3 | 0.6 | 1.5 |
Deferred | 0.3 | 1.9 | 0.5 |
Total State and local | 1.6 | 2.5 | 2 |
Foreign income taxes: | |||
Current | 5.1 | 3.9 | 2.9 |
Deferred | (0.2) | (0.5) | (0.9) |
Total Foreign | 4.9 | 3.4 | 2 |
Total | $ 8.9 | $ 1.4 | $ 3.9 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Tax Provision (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Income Tax Disclosure [Abstract] | |||
Income tax (benefit) at federal statutory rate | $ 2.3 | $ (6.9) | $ 0.9 |
State taxes (benefit), net of federal tax benefit and valuation allowance | 3.7 | (0.3) | 0.5 |
Difference in tax rates between U.S. and foreign | 1.7 | (0.2) | (0.5) |
Increase (decrease) in valuation allowance | (2) | 4.9 | 1.2 |
Nondeductible expense | 0.5 | 0.5 | 0.8 |
Increase in reserve for uncertain tax positions | 0.5 | 0.3 | 0.9 |
Other | 0.1 | 0.2 | 0.1 |
Officer’s compensation 162(m) limitation | 0.5 | 1 | 0.9 |
R&D tax credit | (0.9) | (0.9) | (0.9) |
Stock-based compensation | 2.5 | 2.8 | 0 |
Total | $ 8.9 | $ 1.4 | $ 3.9 |
Income Taxes - Deferred Taxes (
Income Taxes - Deferred Taxes (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 25, 2022 |
Deferred tax assets: | ||
Stock-based compensation | $ 9.3 | $ 9.4 |
Payroll related accruals | 8.6 | 6.7 |
Lease accruals | 27 | 25.7 |
Net operating loss carryforwards | 44.7 | 55.1 |
Tax credit carryforwards | 12.2 | 11.3 |
Deferred expenses | 12.6 | 14.1 |
Other | 19.8 | 19.4 |
Gross deferred tax assets | 134.2 | 141.7 |
Valuation allowance | (12.6) | (14.6) |
Total deferred tax assets, net of valuation allowance | 121.6 | 127.1 |
Deferred tax liabilities: | ||
Unearned revenue | (2.9) | (3.3) |
Operating lease right-of-use assets | (24.2) | (23.2) |
Other intangibles | (22.2) | (23.1) |
Property and equipment, principally due to differences in depreciation | (6.3) | (5.6) |
Other | (2) | (1.6) |
Total deferred tax liabilities | (57.6) | (56.8) |
Net deferred tax asset | $ 64 | $ 70.3 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | Dec. 31, 2017 | |
Operating Loss Carryforwards [Line Items] | ||||
Decrease in deferred tax asset | $ 2 | |||
Unrecognized deferred income taxes or foreign withholding taxes | $ 6.4 | |||
Unrecognized deferred income taxes or foreign withholding taxes, cash and cash equivalents available for distribution | 44.1 | |||
Unrecognized tax benefits that if recognized would affect effective tax rate | 22.7 | |||
Amount that would become a deferred tax asset included in unrecognized tax benefits that would impact the effective tax rate | 11.3 | |||
Income tax penalties and interest expense | 0.3 | $ 0.3 | $ 0.6 | |
Benefit for income tax penalties and interest related to reversal of prior positions | 0.1 | 0.2 | 0.1 | |
Total interest and penalties accrued | 5.3 | $ 5.1 | $ 5 | |
Federal | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards | 169.6 | |||
Tax credit carryforward, amount | 14.2 | |||
State | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards | 207.8 | |||
Tax credit carryforward, amount | $ 0.9 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Unrecognized Tax Benefits | |||
Balance at the beginning of period | $ 25 | $ 25.9 | $ 25.4 |
Increases related to prior periods | 0.2 | 0.1 | |
Increases related to current year tax positions | 0.2 | 0.2 | 0.5 |
Expiration of applicable statutes of limitations | (0.1) | (0.4) | (0.2) |
Increases related to acquisitions | 0.1 | ||
Decreases related to prior periods | (0.7) | ||
Balance at the end of period | $ 25.3 | $ 25 | $ 25.9 |
Discontinued Operations - Narra
Discontinued Operations - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | 67 Months Ended | |||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | Dec. 31, 2023 | Jun. 11, 2018 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Final working capital settlement | $ 1.1 | ||||
Final working capital settlement related expenses | $ 1.1 | ||||
Public Safety & Security | Discontinued operations, disposed of by sale | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Purchase price, in cash | $ 69 | ||||
Sale of discontinued operations | $ 68.7 | ||||
Working capital adjustments | $ 7.3 | ||||
Potential tax liability | $ 0.2 | $ 0.9 |
Discontinued Operations - Resul
Discontinued Operations - Results of Discontinued Operations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Total loss of discontinued operations before income taxes | $ 0 | $ (0.3) | $ (2.3) |
Income tax benefit | (0.2) | (1.2) | (0.2) |
Income (loss) from discontinued operations | 0.2 | 0.9 | (2.1) |
Herley | Discontinued operations, disposed of by sale | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Revenue | 0 | 0 | 0.1 |
Cost of sales | 0 | 0 | 0 |
Selling, general and administrative expenses | 0 | 0.3 | 2.4 |
Loss from discontinued operations before income taxes | 0 | (0.3) | (2.3) |
Gain on disposal of discontinued operations before income taxes | 0 | 0 | 0 |
Total loss of discontinued operations before income taxes | 0 | (0.3) | (2.3) |
Income tax benefit | (0.2) | (1.2) | (0.2) |
Income (loss) from discontinued operations | $ 0.2 | $ 0.9 | $ (2.1) |
Discontinued Operations - Asset
Discontinued Operations - Assets and Liabilities of Discontinued Operations (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 25, 2022 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Current liabilities of discontinued operations | $ 0.9 | $ 0.9 |
Herley | Discontinued operations, disposed of by sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Other current liabilities | 0.9 | 0.9 |
Current liabilities of discontinued operations | 0.9 | 0.9 |
Other long-term liabilities of discontinued operations | $ 1.1 | $ 1.4 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Option Plans and Restricted Stock Units Plans (Details) - USD ($) $ in Millions | 12 Months Ended | |||||
May 24, 2023 | Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | May 23, 2023 | May 22, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock awards granted (in shares) | 0 | 0 | ||||
Number of shares available for issuance (in shares) | 2,280,707 | |||||
RSUs | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Total unrecognized stock-based compensation expense related to nonvested restricted stock units | $ 29.9 | |||||
Unrecognized stock-based compensation expense, period for recognition | 1 year 10 months 24 days | |||||
Fair value of vested awards | $ 9.8 | $ 30.5 | $ 24.7 | |||
Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based incentive award vesting period | 10 years | |||||
Maximum | Stock Options and Restricted Stock Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based incentive award vesting period | 10 years | |||||
Maximum | Stock options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based incentive award vesting period | 6 years | |||||
Award term or expiration period | 10 years | |||||
2023 Equity Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares available for issuance (in shares) | 4,605,190 | 4,747,690 | 2,466,983 |
Stockholders' Equity - Stock _2
Stockholders' Equity - Stock Options Roll Forward (Details) - USD ($) | 12 Months Ended | ||
May 24, 2023 | Dec. 31, 2023 | Dec. 25, 2022 | |
Number of Shares Under Option | |||
Options outstanding at beginning of period, number of options (in shares) | 18,000 | ||
Granted, number of options (in shares) | 0 | 0 | |
Exercised, number of options (in shares) | (18,000) | ||
Forfeited or expired, number of options (in shares) | 0 | ||
Options outstanding at end of period, number of options (in shares) | 0 | 18,000 | |
Options exercisable at the end of period, number of options (in shares) | 0 | ||
Weighted-Average Exercise Price per Share | |||
Options outstanding at beginning of period, weighted-average exercise price per share (in dollars per share) | $ 4.98 | ||
Granted, weighted-average exercise price per share (in dollars per share) | 0 | ||
Exercised, weighted-average exercise price per share (in dollars per share) | 4.98 | ||
Forfeited or expired, weighted average exercise price per share (in dollars per share) | 0 | ||
Options outstanding at end of period, weighted-average exercise price per share(in dollars per share) | 0 | $ 4.98 | |
Options exercisable, weighted average exercise price per share (in dollars per share) | $ 0 | ||
Weighted- Average Remaining Contractual Term and Aggregate Intrinsic Value | |||
Options outstanding, weighted average remaining contractual term | 0 years | 0 years | |
Options exercisable, weighted average remaining contractual term | 0 years | ||
Options outstanding, aggregate intrinsic value | $ 0 | $ 79,900 | |
Options exercisable, aggregate intrinsic value | $ 0 |
Stockholders' Equity - Grants a
Stockholders' Equity - Grants and Exercises Under Option Plans (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Share-Based Payment Arrangement [Abstract] | |||
Total intrinsic value of options exercised | $ 80,800 | $ 163,000 | $ 0 |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted Stock Unit Activity (Details) - RSUs shares in Thousands | 12 Months Ended |
Dec. 31, 2023 $ / shares shares | |
Restricted Stock Units | |
Nonvested balance at beginning of period (in shares) | shares | 4,659 |
Granted (in shares) | shares | 1,427 |
Vested (in shares) | shares | (871) |
Forfeitured or expired (in shares) | shares | (35) |
Vested but not released (in shares) | shares | (245) |
Nonvested balance at end of period (in shares) | shares | 4,935 |
Weighted-Average Grant Date Fair Value | |
Nonvested balance at beginning of period, weighted-average grant date fair value (in dollars per share) | $ / shares | $ 12.88 |
Granted, weighted average grant date fair value (in dollars per share) | $ / shares | 11.39 |
Vested, weighted-average grant date fair value (in dollars per share) | $ / shares | 11.34 |
Forfeitured or expired, weighted-average grant date fair value (in dollars per share) | $ / shares | 16.12 |
Vested but not released, weighted-average grant date fair value (in dollars per share) | $ / shares | 12.55 |
Nonvested balance at end of period, weighted average grant fair value (in dollars per share) | $ / shares | $ 0 |
Stockholders' Equity - Amended
Stockholders' Equity - Amended and Restated Employee Stock Purchase Plan (Details) - $ / shares | 12 Months Ended | |||
Dec. 31, 2023 | May 31, 2023 | May 23, 2023 | May 22, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares available for issuance (in shares) | 2,280,707 | |||
2023 Equity Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares available for issuance (in shares) | 4,605,190 | 4,747,690 | 2,466,983 | |
Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares issued under the plan (in shares) | 1,036,000 | |||
Average share price of shares issued under the plan (in dollars per share) | $ 9.70 | |||
Employee Stock Purchase Plan | 2023 ESPP | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares authorized (in shares) | 3,500,000 | |||
Number of shares available for issuance (in shares) | 766,586 | |||
Employee Stock Purchase Plan | 2023 Equity Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares available for issuance (in shares) | 4,000,000 | |||
Minimum weekly employment threshold to qualify for ESPP | 20 hours | |||
Minimum annual employment threshold to qualify for ESPP | 5 months | |||
Maximum percentage of employee compensation eligible to purchase shares under ESPP (percent) | 15% | |||
Purchase price of common stock as a percent of fair market value (percent) | 85% | |||
Employee Stock Purchase Plan | 1999 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cumulative number of shares issued under ESPP (in shares) | 7,700,000 |
Stockholders' Equity - Employee
Stockholders' Equity - Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan - $ / shares | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Assumptions and resulting fair values of options granted | |||
Expected term (in years) | 6 months | 6 months | 6 months |
Risk-free interest rate, lower range (percent) | 4.76% | 0.19% | 0.06% |
Risk-free interest rate, upper range (percent) | 5.47% | 2.51% | 0.09% |
Expected volatility, lower range (percent) | 41.65% | 40.52% | 41.40% |
Expected volatility, upper range (percent) | 45.77% | 60.79% | 45.93% |
Expected dividend yield (percent) | 0% | 0% | 0% |
Weighted average grant-date fair value per share (in dollars per share) | $ 3.30 | $ 4.80 | $ 7.60 |
Retirement Plans - Narrative (D
Retirement Plans - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Retirement Benefits [Abstract] | |||
Company's contributions to defined-contribution plans | $ 10.7 | $ 8.1 | $ 6.4 |
Significant Customers - Narrati
Significant Customers - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Revenue, Major Customer [Line Items] | |||
Revenue | $ 1,037.1 | $ 898.3 | $ 811.5 |
KGS | |||
Revenue, Major Customer [Line Items] | |||
Revenue | 824.9 | 676.6 | |
U.S. Government | KGS | |||
Revenue, Major Customer [Line Items] | |||
Revenue | $ 712.7 | $ 623.7 | $ 571.1 |
U.S. Government | KGS | Revenue Benchmark | Customer Concentration Risk | |||
Revenue, Major Customer [Line Items] | |||
Sales to the U.S. Government, percentage of total revenue (percent) | 69% | 69% | 70% |
Segment Information - Narrative
Segment Information - Narrative (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 USD ($) segment | Dec. 25, 2022 USD ($) | Dec. 26, 2021 USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of reportable (in segments) | segment | 2 | ||
Litigation settlement charges | $ 0 | $ 5.5 | $ 0 |
Operating income | 31.1 | (2.6) | 27.9 |
Total revenues | $ 1,037.1 | $ 898.3 | $ 811.5 |
Percentage of foreign revenue to total revenue (percent) | 19% | 19% | 21% |
Company's C5ISR | |||
Segment Reporting Information [Line Items] | |||
Litigation settlement charges | $ 3.4 | ||
Company's Training Solutions | |||
Segment Reporting Information [Line Items] | |||
Litigation settlement charges | 3 | ||
Kratos Government Solutions | |||
Segment Reporting Information [Line Items] | |||
Litigation settlement charges | $ 5.5 | ||
Operating income | 6.4 | ||
Total revenues | 824.9 | 676.6 | |
Assets of foreign subsidiaries | 204.6 | 178.3 | $ 166.2 |
Non-US | |||
Segment Reporting Information [Line Items] | |||
Total revenues | $ 202 | $ 173.1 | $ 169.8 |
Segment Information - Revenues,
Segment Information - Revenues, Operating Income (Loss) and Assets by Reportable Segments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 25, 2022 | Dec. 26, 2021 | |
Segment Reporting Information [Line Items] | |||
Total revenues | $ 1,037.1 | $ 898.3 | $ 811.5 |
Depreciation and amortization | 33.2 | 30.5 | 25.7 |
Total operating income (loss) | 31.1 | (2.6) | 27.9 |
Total assets | 1,632.5 | 1,551.5 | 1,589.5 |
Kratos Government Solutions | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 824.9 | 676.6 | |
Total operating income (loss) | 6.4 | ||
Unmanned Systems | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 212.2 | 221.7 | |
Operating segments | Kratos Government Solutions | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 824.9 | 676.6 | 579.6 |
Depreciation and amortization | 24.1 | 22.7 | 17.4 |
Total operating income (loss) | 52.7 | 27.2 | 42.3 |
Total assets | 1,190.2 | 1,105.1 | 907.6 |
Operating segments | Unmanned Systems | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 212.2 | 221.7 | 231.9 |
Depreciation and amortization | 9.1 | 7.8 | 8.3 |
Total operating income (loss) | 4.2 | (2.8) | 13.2 |
Total assets | 378.6 | 349.7 | 327.1 |
Corporate activities | |||
Segment Reporting Information [Line Items] | |||
Total operating income (loss) | (25.8) | (27) | (27.6) |
Total assets | 63.7 | 96.7 | 354.8 |
Service revenues | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 402.6 | 325.2 | 219.4 |
Service revenues | Operating segments | Kratos Government Solutions | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 395.9 | 320 | 214.5 |
Service revenues | Operating segments | Unmanned Systems | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 6.7 | 5.2 | 4.9 |
Product sales | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 634.5 | 573.1 | 592.1 |
Product sales | Operating segments | Kratos Government Solutions | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 429 | 356.6 | 365.1 |
Product sales | Operating segments | Unmanned Systems | |||
Segment Reporting Information [Line Items] | |||
Total revenues | $ 205.5 | $ 216.5 | $ 227 |
Redeemable Noncontrolling Int_2
Redeemable Noncontrolling Interest (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Apr. 07, 2023 | Jun. 13, 2022 | Feb. 27, 2019 | Dec. 31, 2023 | Dec. 25, 2022 | |
Noncontrolling Interest [Line Items] | |||||
Noncontrolling interest, change in redemption value | $ 9.9 | $ 3.1 | |||
Redeemable noncontrolling interest | $ 22.5 | $ 11.2 | |||
KTT CORE, LLC | |||||
Noncontrolling Interest [Line Items] | |||||
Percentage of voting interests acquired | 9.95% | 80.10% | |||
Aggregate purchase price | $ 60 | ||||
Common stock issued | $ 2.7 | ||||
KTT CORE, LLC | Common Stock | |||||
Noncontrolling Interest [Line Items] | |||||
Number of shares issued (in shares) | 190,258 | ||||
KTT CORE, LLC | KTT CORE, LLC | |||||
Noncontrolling Interest [Line Items] | |||||
Common stock issued | $ 10.7 | ||||
Subsidiary percent owned (as a percent) | 90.05% | ||||
Noncontrolling interest owned (as a percent) | 9.95% | ||||
KTT CORE, LLC | KTT CORE, LLC | Common Stock | |||||
Noncontrolling Interest [Line Items] | |||||
Number of shares issued (in shares) | 828,128 | ||||
Florida Turbine Technologies, Inc. | |||||
Noncontrolling Interest [Line Items] | |||||
Percentage of voting interests acquired | 80.10% | ||||
Aggregate purchase price | $ 6.4 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Apr. 28, 2023 | Feb. 18, 2022 | Dec. 31, 2023 | Dec. 25, 2022 | |
SOFR | ||||
Derivatives, Fair Value [Line Items] | ||||
Basis spread on variable rate (percent) | 1% | |||
Foreign exchange contract | Designated as hedging instrument | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative notional amount | $ 9.3 | $ 10.2 | ||
Derivative asset | 0.3 | 0.1 | ||
Derivative liability | 0.1 | 0.3 | ||
Derivative gain (loss) | (1.3) | $ (0.2) | ||
Interest Rate Swap | Designated as hedging instrument | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative notional amount | $ 195 | |||
Derivative gain (loss) | $ 2 | |||
Interest Rate Swap | Designated as hedging instrument | SOFR | ||||
Derivatives, Fair Value [Line Items] | ||||
Basis spread on variable rate (percent) | 3.721% |
Derivative Financial Instrume_4
Derivative Financial Instruments - Interest Rate Swap Contracts Designated as Cash Flow Hedge (Details) - Interest Rate Swap - Designated as hedging instrument - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 25, 2022 |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional Value | $ 192.5 | $ 0 |
Fair Value | $ 0.7 | $ 0 |