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Photo: U.S. Navy https://www.navy.mil/Press-Office/News-Stories/display-news/Article/4575192/us-allies-partners-executed-pacific-dragon-2026-exercise/

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/fbcb4b4c-7855-4d5e-a594-3a8e193cab9b

SAN DIEGO, Sept. 09, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a technology company in defense, national security, and global markets, today announced the successful mission of its Aegis Readiness Assessment Vehicle Type B (ARAV-B) ballistic missile target from the Pacific Missile Range Facility in Hawaii. The vehicle was fired on August 6 during Pacific Dragon 2026, a premier multinational ballistic missile defense (BMD) exercise led by the U.S. 3rd Fleet.

Photo: U.S. Navy https://www.dvidshub.net/image/9880612/arav-b-launch-during-pacific-dragon-2026

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/e2c17ce8-d415-4f9b-95a6-a9f92ed3f8b7

The biennial exercise, which took place in the waters around the Hawaiian Islands from August 6-15, was designed to improve the ability of allied and partner forces to track and intercept ballistic missiles together. The multi-mission event combined coordinated missile defense operations with tactical data-link information sharing across forces from the United States, Australia, Chile, Italy, Japan, the Republic of Korea, and Spain, in conjunction with the U.S. Missile Defense Agency.

Kratos’ ARAV-B is part of the broader ARAV family of configurable short- and medium-range ballistic missile targets that can accurately emulate diverse and evolving threats. The ARAV Type B is a two-stage, spin-stabilized target featuring Kratos’ commercial Oriole rocket motor as the upper stage. The ARAV-B has now flown 43 successful target missions supporting the Naval Surface Warfare Center, Port Hueneme Division, White Sands Detachment and the Missile Defense Agency. Kratos’ commercially developed Oriole rocket motor, along with the larger Zeus family of rockets and the Erinyes hypersonic testbed vehicle demonstrate Kratos’ continuing commitment to investing in technologies and capabilities to serve the warfighter today.

Dave Carter, President of the Kratos Defense & Rocket Support Services (DRSS) Division, said, "Kratos is proud to support the U.S. 3rd Fleet and our allied partners in this critical demonstration of integrated air and missile defense capabilities. The successful launch of our ARAV-B target during Pacific Dragon 2026 highlights our team's ability to rapidly develop and field affordable, threat-representative systems. By providing highly reliable target solutions, we ensure that advanced combat systems, such as the Baseline 10 and AN/SPY-6 radar on the USS Jack H. Lucas, are tested against the most realistic and demanding scenarios possible."

The Kratos Ballistic Missile Defense target family includes multiple configurations beyond the Type B, such as the two-stage Type C vehicle and the three-stage Type TTO (Terrier-Terrier-Oriole). With their built-in modularity, these flight-proven Kratos systems can be rapidly reconfigured to support a range of missions including low-apogee, long duration hypersonic testing at speeds exceeding Mach 10.

Eric DeMarco, President and CEO of Kratos, said, "At Kratos, we are focused on delivering real, mission-relevant products and systems to our customers, not PowerPoints or concepts. We fundamentally believe that affordability is a technology, and we utilize our internal investments to bring national security relevant hardware to the field faster. By integrating existing assets and proven technologies, Kratos is first to market with cost-effective solutions that save our government customers and the U.S. taxpayer significant time and money. Our successful participation in Pacific Dragon 2026 is another testament to Kratos’ ability to execute on our strategy and deliver mission-critical solutions for global security."

About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter UAS, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

Notice Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 29, 2025, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.

Press Contact: 
Claire Cantrell
[email protected]

Investor Relations: 
877-934-4687
[email protected]

Kratos Defense and Security Solutions (KTOS -1.63%) and Northrop Grumman (NOC +0.47%) present two distinct options for capitalizing on growing demand for military drones. Kratos is a high-growth pure-play drone maker, while Northrop Grumman is a large military contractor with significant exposure to drones and other franchise programs.

Both defense stocks are down so far this year, though. Northrop Grumman's tight margins, partly due to fixed-price contracts, have helped push its shares down by more than 6% so far this year. Kratos, after a huge run-up early this year, has fallen back to Earth, with its shares down by more than 35%, as rising costs play a big role.

Let's see which drone stock is better right now.

Image source: Getty Images.

Kratos offers more revenue growth The San Diego company is a favorite of growth-oriented investors seeking pure-play exposure to cheap, autonomous combat drones and target systems. A significant portion of Kratos's business is directly tied to uncrewed aerial systems (UAS) and target drones, such as the BQM-177 and the XQ-58A Valkyrie, which uses some Northrop Grumman technology.

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The company focuses on high-performance, low-cost jet drones that are mass-produced and used in swarms in combat. Over the past five years, the company has increased revenue by more than 65%, compared with just more than 17% for Northrop Grumman. In the second quarter, Kratos reported 30.5% growth year over year in revenue at $458.8 million, and the company's defense rocket systems had 50.2% sales growth compared to the same period last year. Despite the rising revenue, earnings per share (EPS) were flat at $0.02.

Kratos increased its annual revenue guidance to $1.75 billion to $1.81 billion, representing a 32.2% increase at the midpoint.

Northrop Grumman has a better product balance Northrop Grumman stands to benefit particularly from surging demand for military drones, where it serves as a primary contractor for high-altitude, long-range intelligence, surveillance, and reconnaissance (ISR) aircraft.

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Its uncrewed lineup includes the MQ-4C Triton for 24-hour maritime reconnaissance, the RQ-4 Global Hawk, which offers more than 30 hours of continuous surveillance, and the autonomous MQ-8B Fire Scout helicopter. Northrop also builds the NATO Alliance Ground Surveillance system and highly adaptable Bat drones, which can be configured with specialized fuel tanks and sensors for targeting, communications, or reconnaissance.

Beyond its autonomous capabilities, Northrop Grumman secures major strategic modernization efforts through multidecade prime contracts, including the B-21 Raider stealth bomber and the LGM-35A Sentinel ICBM system.

These foundational franchise programs supply predictable, multibillion-dollar revenue streams that help insulate the business from macroeconomic shifts.

Northrop Grumman is more profitable with a better valuation Supported by strong U.S. Department of Defense and international allied demand, the company ended the second quarter with a record $105 billion backlog.

It reported revenue of $10.9 billion, up 5%, year over year, but EPS fell 6% over the same period in 2025, to $7.68.

The company raised its yearly revenue guidance, saying it expected revenue between $43.75 billion and $44.25 billion, up from $43.5 billion to $44 billion and a jump from the $42 billion it reported in 2025. It also increased its yearly market-to-market (MTM) adjusted EPS estimates. Initially, the company had predicted MTM adjusted EPS to be between $27.40 and $27.90, but now says it should be between $28.60 and $29.10.

Northrop, considering its big backlog and steady growth, is underpriced compared to Kratos and to its closest peers of Lockheed Martin (LMT -0.18%), L3Harris (LHX -0.46%), General Dynamics (GD -0.26%), and RTX (RTX +0.20%). It trades at less than 17 times trailing earnings.

Northrop Grumman's dividend stands out Northrop's capital distribution is designed to return at least 85% of free cash flow to shareholders through dividends and share buybacks. Northrop Grumman's most recent quarterly buyback was $62.79 million as of March 31, following a $388.87 million buyback in December 2025 and $206.57 million in September 2025.

The company has increased its quarterly dividend for 22 consecutive years, including a 6.8% raise this year to $2.47, equaling a yield of 1.79% at its current share price. That's more than the S&P 500 (^GSPC +0.53%) average of 1.04%. Kratos does not offer a dividend.

A relatively easy choice Unless your only concern is revenue growth, Northrop Grumman appears to be the better drone stock of the two. It has other programs beyond drones that generate revenue, and the company has the size and scope to drive growth through acquisitions.

The other main advantage for Northrop is that its shares are undervalued relative to peers, and certainly relative to Kratos.

However, Kratos may be a good long-term stock for investors who are not risk-averse, particularly now after its shares have tumbled significantly. With its high double-digit revenue growth, it could be a solid long-term hold.

SAN DIEGO, Sept. 01, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a technology company in defense, national security and global markets, announced today that it has been awarded a contract valued at more than $20 million to deliver mobile satellite communication (SATCOM) gateways for a defense customer in Asia.

Around the world, fixed communications infrastructure is becoming increasingly vulnerable to emerging threats. Recent conflicts and contested environments have shown that stationary SATCOM facilities can be easily targeted or disrupted, and modern operations often face denied spectrum and damaged public networks. These conditions highlight a critical need for defense organizations to deploy mobile SATCOM gateways that can maintain secure, reliable connectivity when traditional systems fail. With this capability, warfighters gain access to real‑time situational awareness and mission‑critical data where and when it matters most.

As part of the system, Kratos will deliver its rapid‑deployable, truck‑mounted Trifold® transportable antennas that can be deployed without any special tools and ready to discretely transport at a moment’s notice. These Trifold® antennas are integrated into the mobile SATCOM hub that provides high‑throughput, dependable communications in dynamic field environments.

The turnkey system also incorporates a shelter containing baseband platforms and advanced monitoring software, including Kratos’ Compass® product for complete monitor‑and‑control (M&C) of mission‑critical networks, and Kratos’ Monics® product for spectrum monitoring and interference detection, forming a cohesive and resilient mobile gateway tailored for defense operations.

This award strengthens Kratos’ position as a leader in transportable antennas and ground system technologies. The program also expands Kratos’ presence in the Asia-Pacific region and reinforces the company’s role as a trusted provider of advanced, resilient communications systems for defense applications worldwide.

“This capability is ultimately about giving operators on the ground what they need most: dependable communications they can count on in the middle of fast-moving missions,” said John Chay, Vice President of Business Development in Asia, at Kratos. “When fixed infrastructure is compromised, this mobile gateway lets warfighters stay connected, aware, and supported wherever the mission takes them.”

About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, products, system and software company addressing defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for command & control and telemetry, tracking and control, 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 unmanned aircraft systems, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

Notice Regarding Forward-Looking Statements
Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether because of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 28, 2025, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the Security and Exchange Commission by Kratos.

Press Contact: 
Claire Cantrell
[email protected]

Investor Relations: 
877-934-4687
[email protected]

Kratos Recently Ordered Long-lead Components for Spartan Engines  | Source: Kratos Defense & Security Solutions, Inc.

SAN DIEGO, Aug. 24, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a technology company in defense, national security, and global markets, today announced an allocation of its expanded Spartan engine production capacity to support Boeing’s Joint Direct Attack Munition Long Range production program with TDI-J85 (J85) engines.

This month, the U.S. Air Force awarded Boeing a $75 million Undefinitized Contract Action (UCA) to acquire the BSU-111/B Payload Delivery Unit (PDU) Joint Direct Attack Munition Long Range (JDAM LR), a precision-guided munition that can travel over 300 nautical miles with a 500-pound class (226-kilogram) payload. The Kratos J85 engine has been selected as the engine source to power the munition, enhancing the affordable precision-strike capability with our high-volume, low-cost, military-grade propulsion systems for the U.S. military and allied partners.

“National security priorities demand affordable mass and resilient, domestic supply chains,” said Steve Fendley, President of Kratos Unmanned Systems. “Kratos’ internally funded and proactive supply-chain investments ensure we are not just preparing for future demand, and we are actively manufacturing the high-volume propulsion systems our customers require today.”

The J85 engines are produced in Kratos’ advanced 22,500-square-foot Propulsion Manufacturing Facility in Auburn Hills, Michigan, which is fully operational and optimized to sustain full-rate production.

To bolster and stabilize the defense industrial base supply chain, Kratos has initiated procurement of long-lead components for Spartan engines to support a large production run for a number of customers and applications in 2027, Boeing JDAM LR being key as the engine was originally designed to support this application. The large run enables economies of scale for cost and to address the published need by the Department of War to expand the U.S. industrial base and especially key technologies such as jet engines. Kratos is also executing a three-phase manufacturing infrastructure plan designed to expand production capacity, enabling rapid responsiveness to emerging customer requirements.

“The operational readiness of our Auburn Hills facility marks a pivotal transition from engineering development to high-rate tactical manufacturing,” said Joseph Kovasity, Senior Vice President of Kratos TDI. “Integrating the Spartan turbojet family into Boeing’s JDAM LR program provides a reliable, scalable, domestically sourced propulsion solution that meets urgent national defense needs.”

About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS) is a technology, products, system and software company addressing the defense, national security, and global markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers' mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding-edge approaches, with Kratos' approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos' primary business areas include virtualized ground systems for satellites and space vehicles; jet-powered unmanned aerial drone systems; advanced vehicles and rocket systems; propulsion systems for drones, missiles, loitering munitions, supersonic systems, spacecraft, 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 and augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

Notice Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 29, 2025, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.

Press Contact: 
Claire Cantrell
[email protected]

Investor Relations: 
877-934-4687
[email protected]

Engine selected as a second-source propulsion system for the Joint Air-to-Surface Standoff Missile (JASSM), advancing the program to deliver small, low-cost, high-performance engines for missiles and uncrewed platforms  | Source: Kratos Defense & Security Solutions, Inc.

SAN DIEGO, Aug. 17, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS), a Technology Company in the Defense, National Security and Global Markets, and GE Aerospace (NYSE: GE) today announced that the GEK800 engine, which received the U.S. Military Engine Type Designation F143-ZZ-100, has been awarded a contract with the United States Air Force for the Engineering, Manufacturing and Development (EMD) of the turbofan as a second-source propulsion system for the Joint Air-to-Surface Standoff Missile (JASSM).

The designation and contract mark advancement of the program designed to provide small, low-cost, high-performance engines for use in cruise missiles, collaborative combat-type aircraft, and other uncrewed aerial vehicles.

“The F143-ZZ-100 designation and EMD award are a testament to the strong performance and capability of the GEK800 engine and the strength of our partnership with Kratos. This reflects years of disciplined engineering to deliver propulsion systems that meet the evolving, mission-critical requirements of our military customers,” said Amy Gowder, President and CEO of GE Aerospace Defense & Systems.

“Kratos has been working with our outstanding partner GE Aerospace and the United States Air Force to support the Department of War in reindustrializing U.S. manufacturing capacity and capability in the area of low cost, rapidly manufacturable, in large quantities, jet engines for drones, cruise missiles and other systems. Kratos and GE Aerospace are making significant investments with our government partners, to support U.S. National Security priorities,” said Eric DeMarco, President and CEO of Kratos.

The GEK800, now designated the F143, is an 800-lb thrust turbofan engine designed to power long-range missiles and other uncrewed applications. With a combination of internal investment plus support and funding from the Air Force Research Laboratory (AFRL), Kratos and GE Aerospace began working together in 2023 to complete a Technology Maturation and Risk Reduction (TMRR) phase including testing of the engine. The joint team has completed more than 50 engine starts in ground testing at Kratos and GE Aerospace testing facilities, and in 2025 successfully completed altitude testing at Purdue University’s Maurice J. Zucrow Laboratories.

About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for C2 and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter UAS, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

About GE Aerospace
GE Aerospace is a global aerospace propulsion, services, and systems leader with an installed base of approximately 49,000 commercial and 29,000 military aircraft engines. With a global team of approximately 53,000 employees building on more than a century of innovation and learning, GE Aerospace is committed to inventing the future of flight, lifting people up, and bringing them home safely. Learn more about how GE Aerospace and its partners are defining flight for today, tomorrow, and the future at www.geaerospace.com.

Notice Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 28, 2025, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.

Kratos Press Contact:
Claire Cantrell
[email protected]

Kratos Investor Information:
877-934-4687
[email protected]

GE Aerospace Press Contact:
Deb Case
[email protected]

Key Takeaways KTOS raised full-year revenue guidance to $1.75B-$1.81B as Q2 revenues hit $458.8M with 19.1% organic growth.KTOS sees hypersonics revenues near $400M in 2026 and at least $700M in 2027 as new capacity comes online.KTOS ordered parts for 3,000 Spartan turbojets for 2027, plans 5,000 more for 2028, at about $50,000 each. Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) used its second-quarter call to emphasize faster production growth in hypersonics, jet engines and unmanned systems, backed by new capacity and program funding.

President and CEO Eric DeMarco tied expansion projects to identified demand, while CFO Deanna Lund highlighted currency pressure and heavy investment as the main offsets to margin gains.

KTOS Raises the Second-Half Growth BarSecond-quarter adjusted earnings of $0.21 per share topped the Zacks Consensus Estimate of $0.13. Revenues came in at $458.8 million, which beat the $411.7 million consensus mark.

CFO Deanna Lund guided third-quarter revenues to $460-$480 million. Kratos also raised full-year revenue guidance to $1.75-$1.81 billion, with third-quarter organic growth projected at 19% to 25%.

President and CEO Eric DeMarco cited $1.99 billion of trailing-12-month bookings, a 1.3 book-to-bill ratio and a $15 billion bid-and-proposal pipeline as support for stronger second-half momentum.

Kratos Hypersonics Moves Into a Higher GearCEO DeMarco said hypersonics is tracking toward $400 million of 2026 revenues after about $200 million in 2025, with at least $700 million targeted for 2027.

A Jefferies analyst asked about the ramp-up. CFO Deanna Lund said third-quarter hypersonics revenues should rise $20 million to $25 million from the second quarter, with the fourth quarter up $20 million to as much as $30 million from second-quarter levels.

DeMarco said the Indiana integration facility is operational and the first of 120 previously ordered solid rocket motors should arrive in the third quarter. He also cited roughly $400 million of recent hypersonic and related funding.

KTOS Builds Ahead of the Jet Engine Ramp-UpDeMarco said Kratos has ordered components for 3,000 Spartan turbojets for 2027 and plans another 5,000 engines for 2028. The average selling price is about $50,000.

A JPMorgan analyst asked about timing. DeMarco said turbojets drive the 2027 step-up, while the 50-50 GE turbofan partnership is expected to enter low-rate initial production in 2028 after the Oklahoma BladeWorks facility opens in summer 2027.

A NOBLE Capital analyst pressed on supply-chain risk. DeMarco said Kratos is qualifying suppliers and backups, with redundancy and quality control central to meeting planned volumes.

Kratos Expands Valkyrie and Drone CapacityDeMarco said Kratos expects another Marine Corps Valkyrie order by year-end. The 2026 outlook includes about 10% organic growth for Unmanned Systems, supported by recent awards including Valkyrie.

A Baird analyst asked about Taiwan and capacity. DeMarco said Mighty Hornet customer flights could support production in the first half of 2027 if milestones are met, while Valkyrie output should average 1.5 aircraft per month during 2027.

DeMarco said longer-term Valkyrie capacity should reach 35 to 40 aircraft annually depending on configuration. To a Clear Street analyst, he put domestic Valkyrie EBITDA margins at 10% to 15% and international margins at 15% to 20%.

KTOS’ Margins Face Shekel and Investment DragCFO Lund called the Israeli shekel the largest margin headwind. She said it reduced second-quarter adjusted EBITDA by about $2.5 million and is expected to create a $5 million to $7 million full-year headwind.

Even so, Lund said Kratos still expects its 2026 adjusted EBITDA margin to improve about 100 basis points from 2025. Full-year adjusted EBITDA guidance is $173 million to $176 million.

Kratos forecasts $250 million to $275 million of 2026 investments, including $125 million to $135 million of capital expenditures. Free cash flow use is projected at $85 million to $105 million.

Kratos Keeps Focus on Funded Scale-UpDeMarco repeatedly emphasized that new facilities are tied to programs, partners, contracts or committed funding rather than speculative demand.

Management’s tone remained confident on hypersonics, engines, drones and space, while execution priorities centered on supplier readiness, production rates and converting funded opportunities into revenues.

KTOS’ Zacks Rank and Style Scores Signal CautionKTOS carries a Zacks Rank #4 (Sell), with a Value Score of F, Growth Score of D, Momentum Score of C and VGM Score of F. Zacks associates a poor Rank with declining earnings-estimate revisions and favors A or B Style Scores with a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The current combination sits outside that more favorable Rank-and-Style profile. The Zacks Rank can change as earnings estimates are revised after the just-reported results, so the reading remains a point-in-time signal.

Second Quarter 2026 Revenues of $458.8 Million Reflect 19.1 Percent Organic Growth and 30.5 Percent Growth Over Second Quarter 2025 Revenues of $351.5 Million

Kratos Government Solutions Second Quarter 2026 Revenues of $379.7 Million Reflect 22.0 Percent Organic Growth and 36.4 Percent Growth Over Second Quarter 2025 Revenues of $278.3 Million

Unmanned Systems Second Quarter 2026 Revenues of $79.1 Million Reflect 8.1 Percent Organic Growth Over Second Quarter 2025 Revenues of $73.2 Million

Second Quarter 2026 Consolidated Book to Bill Ratio of 1.1 to 1 and Bookings of $492.2 Million

Last Twelve Months Ended June 28, 2026, Consolidated Book to Bill Ratio of 1.3 to 1 and Bookings of $1.990 Billion

Increases Full Year 2026 Revenue Guidance to $1.750 to $1.810 Billion, With Forecasted Organic Revenue Growth of Approximately 18 Percent to 23 Percent as Compared to Full Year 2025

SAN DIEGO,Calif., Aug. 04, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS), a leader in defense, national security and global markets, today reported its second quarter 2026 financial results, including Revenues of $458.8 million, Operating Loss of $1.6 million, Net Income of $4.4 million, Adjusted EBITDA of $38.2 million and a consolidated book to bill ratio of 1.1 to 1.0.

Second quarter 2026 Net Income and Operating Income includes non-cash stock compensation expense of $16.3 million, Company-funded Research and Development (R&D) expense of $13.6 million, including efforts in our Space, Satellite, Unmanned Systems and Microwave Electronic businesses, and non-cash amortization expense of $12.5 million.

Kratos reported in the second quarter 2026 GAAP Net Income of $4.4 million and GAAP Net Income per share of $0.02, compared to GAAP Net Income of $2.9 million and GAAP Net Income per share of $0.02, for the second quarter of 2025. Adjusted earnings per share (EPS) were $0.21 for the second quarter of 2026, compared to $0.11 for the second quarter of 2025.

Second quarter 2026 Revenues of $458.8 million increased $107.3 million, reflecting 30.5 percent growth and 19.1 percent organic growth from second quarter 2025 Revenues of $351.5 million. Organic revenue growth was reported in our Unmanned Systems (KUS) segment of 8.1 percent and in our Government Solutions (KGS) segment of 22.0 percent. The most notable growth in our KGS Segment was in our Defense Rocket Systems, Turbine Technologies, Microwave Products and Space, Training and Cyber businesses, with organic revenue growth rates of 50.2 percent, 43.3 percent, 29.5 percent and 8.7 percent, respectively, compared to the second quarter of 2025.

Second quarter 2026 Cash Flow Used in Operations was $11.0 million, primarily reflecting the working capital requirements related to the 30.5 percent revenue growth impacting our receivables, and also including increases in inventory balances related to ramps in production and investments we are making related to certain development initiatives. Free Cash Flow Used in Operations for the second quarter of 2026 was $18.9 million after funding $17.2 million of capital expenditures, and net of cash received of $9.3 million for the sale of company-owned Valkyries.

For the second quarter of 2026, KUS generated Revenues of $79.1 million, compared to $73.2 million in the second quarter of 2025, with the increase primarily driven by Valkyrie-related activity. KUS’s Operating Income was $1.2 million in the second quarter of 2026, compared to an Operating Loss of $0.3 million in the second quarter of 2025. KUS’s Adjusted EBITDA for the second quarter of 2026 was $5.1 million, compared to $3.6 million for the second quarter of 2025, reflecting the impact of the revenue volume and mix. KUS’s book-to-bill ratio for the second quarter of 2026 was 1.0 to 1.0 and 1.1 to 1.0 for the twelve months ended June 28, 2026, with bookings of $78.4 million for the three months ended June 28, 2026, and bookings of $354.4 million for the twelve months ended June 28, 2026. Total backlog for KUS at the end of the second quarter of 2026 was $374.6 million, compared to $375.4 million at the end of the first quarter of 2026.

For the second quarter of 2026, our KGS segment Revenues of $379.7 million increased from Revenues of $278.3 million in the second quarter of 2025, reflecting a 36.4 percent increase and a 22.0 percent organic growth rate, excluding the impact of the Nomad Global Communication Solutions (Nomad) and Orbit Technologies Ltd (Orbit) acquisitions. The increased Revenues includes organic revenue growth across our Defense and Rocket Support business, Turbine Technologies, Microwave Products and Space, Training and Cyber businesses, with organic revenue growth rates of 50.2 percent, 43.3 percent, 29.5 percent and 8.7 percent, respectively, over the second quarter of 2025.

KGS reported Operating Income of $14.3 million in the second quarter of 2026 compared to $12.6 million in the second quarter of 2025, primarily reflecting increased volume and mix in revenues. Second quarter 2026 KGS Adjusted EBITDA was $33.1 million, compared to second quarter 2025 KGS Adjusted EBITDA of $24.7 million, primarily reflecting the volume and mix in revenues and resources.

KGS reported a book-to-bill ratio of 1.1 to 1.0 for the second quarter of 2026, a book-to-bill ratio of 1.4 to 1.0 for the last twelve months ended June 28, 2026, and bookings of $413.8 million and $1.636 billion for the three and last twelve months ended June 28, 2026, respectively. KGS’s total backlog was $1.710 billion at the end of the second quarter of 2026, compared to $1.676 billion at the end of the first quarter of 2026.

Kratos reported consolidated bookings of $492.2 million and a book-to-bill ratio of 1.1 to 1.0 for the second quarter of 2026, and consolidated bookings of $1.990 billion and a book-to-bill ratio of 1.3 to 1.0 for the last twelve months ended June 28, 2026. Consolidated backlog was $2.084 billion on June 28, 2026, as compared to $2.051 billion on March 29, 2026. Kratos’ bid and proposal pipeline was $15.0 billion at June 28, 2026, as compared to $14.3 billion on March 29, 2026. Backlog on June 28, 2026, included funded backlog of $1.572 billion and unfunded backlog of $512.7 million.

Eric DeMarco, Kratos’ President and CEO, said, “Kratos’ second quarter results are reflective of the execution of the Kratos team and that our strategy, including making internally funded investments to be first-to-market with relevant hardware and software, that is engineered up front for affordable mass production, at scale, is aligned with the Department of War’s priorities. Representative of this alignment is Kratos’ last 12 month book-to-bill ratio of 1.3 to 1.0, the number of opportunities for Kratos continuing to increase as evidenced in our bid and proposal pipeline of $15 billion, and our business momentum expected to accelerate in the second half of 2026 and into 2027.”

Mr. DeMarco continued, “Kratos’ second quarter year over year organic growth rate was 19.1 percent, we are now forecasting third quarter organic growth of approximately 19 percent to 25 percent, and for fourth quarter organic growth of approximately 19 percent to 31 percent.   As a result, we have increased our full year 2026 organic revenue growth forecast up to approximately 18 percent to 23 percent as compared to full year 2025, which now also includes an expectation of approximately 10 percent organic growth for our Unmanned Systems business based upon recent contract awards, including Valkyrie.”

Mr. DeMarco concluded, “Kratos’ EBITDA margins are also increasing, and are forecast to continue to increase in the second half of 2026 and into 2027, as the business scales, production increases and we realize financial leverage on our fixed cost infrastructure. We are generating and forecasting for increased margins irrespective of increased costs as we pursue large new opportunities with the Department of War and the strength of the Shekel adversely impacting our Israel operations profitability, where we now have over 700 personnel. Expected future growth areas for Kratos include; hypersonic and rocket systems, missiles, jet engines, space and satellite communications.”

Financial Guidance

We are providing our initial third quarter guidance and increasing our full year 2026 Revenue guidance and tightening our Adjusted EBITDA guidance, and our assumptions, including as related to: current forecasted business mix, expected employee sourcing, hiring and retention; potential manufacturing, production and supply chain disruptions; potential parts shortages and related continued significant cost and price increases in each of these areas, which are impacting the industry and Kratos. We continue to make significant investments in bid, proposal and other new program opportunity areas, and increasing staffing to enable us to ramp production levels, all of which is currently adversely impacting our profit margins and free cash flow generation. We are also making significant investments in inventory, property, plant, equipment and facilities, consistent with the Department of War’s National Security Strategy and its stated expectations of U.S. National Security government contractors. These investments are expected to continue at least into Kratos’ fiscal year 2027, as our opportunity pipeline continues to increase.

Kratos’ revised cash flow guidance also assumes certain investments in our Rocket Systems and Unmanned Systems businesses, related to the procurement of rocket motors and related systems, and has been updated to include the working capital requirements related to the procurement of the materials and equipment in the third and fourth quarters to ramp our production of jet engines to 3,000 in 2027 to address the demand for engines for small cruise missiles, and our plan to begin producing approximately 40 Valkyries annually beginning by the beginning of 2028, as well as the completion of certain of our unmanned systems and related derivatives and vehicles. Additional forecasted investments in 2026 include our funding of the Prometheus joint venture, our Anaconda radar program, our Helios hypersonic and arc chamber program, our Indiana hypersonic integration facility, our Birmingham advanced manufacturing facility for hypersonic systems, expansion and new microwave electronics facilities in Israel and the U.S., our GEK and BladeWorks engine facilities, the continued build of our second lot of 12 Valkyrie aircraft, certain manufacturing and production related equipment for our recently acquired Nomad acquisition, certain drone-related investments, and our Vulcan, Kraken, Elysium, Nemesis, Hermes and other initiatives. The revised forecast for our estimated FY26 capital expenditure spend includes the shift in timing of construction and procurement of related machinery and equipment, to remove certain expenditures which are now funded under customer contract, and a shift in classification of investments for various drone opportunities which will be classified as a use of working capital in our Operating Cash Flow as work in process rather than capital expenditures when incurred. In summary, Kratos continues to make the required investments to support the rebuild of the U.S. defense industrial base and related infrastructure consistent with the Department of War’s direction, take advantage of the ongoing generational recapitalization of strategic and other weapon and National Security related systems, and generate value for all Kratos stakeholders, including the warfighter and Kratos shareholders.

   $MQ326FY26   Revenues$460 - $480$1,750 - $1,810R&D$13 - $15$50 - $53Operating Income$1 - $4$16 - $22Depreciation$11 - $12$48 - $50Amortization$12 - $13$43 - $46Stock Based Compensation$16 - $17$60 - $64Adjusted EBITDA$40 - $45$173 - $176   Operating Cash Flow $30 - $50Capital Expenditures $125 - $135Free Cash Flow Use ($85 - $105)    FY26 Forecasted Investments for New Program and Opportunities ($M)Capital ExpendituresEstimated Spend Program/Opportunity      Advanced Manufacturing Facility for Hypersonics/Engines & Test Cell$4-$5 Various Customer OpportunitiesPayload Integration Facility$4-$5 MACH-TB and OtherNomad Plant Improvements and Machinery$8 $9 Various Customer OpportunitiesC5ISR Facility and Machinery$3-$5 Various Air Defense ProgramsBladeWorks Turbo Fan Facility and Test Cells and New Designs$18-$19 Various Engine OpportunitiesMicrowave Products New/Expanded Facilities and Machinery$14-$15 Various Customer OpportunitiesSpace and Satellite Additional Secure Facility Build-Out$7-$8 Various Confidential ProgramsValkyrie Second Production Lot 12 Build$23-$24 Various Customer Opportunities $81-$90  Normal Maintenance Capital Expenditures$44-$45  Total FY26 Forecasted Capital Expenditures$125-$135        Other Investments included in Working Capital (Operating Cash Flow)     Rocket System Inventory Build - Zeus/Oriole$40 $45 Various including MACH-TBMaterials and Hardware$13 $14 Various Drone OpportunitiesInventory Purchases for Small Jet Engine Production$19 $21 Various Jet Engine Cruise Missile Opportunities     to enable production of 3,000 Jet Engines in 2027Unmanned Systems Initiative/Enhancements3 5 Various Customer Opportunities $75 $85  Estimated Funding for Investments     Funding Investment in Prometheus$50 $55  Total FY26 Forecasted Total Investments$250 $275               We expect our second half of fiscal 2026 will have significantly higher Revenue than the first half, as we expect to begin to receive in the second half of 2026 certain long-lead time items related to existing customer funded programs, including solid rocket motors and other hardware related to certain hypersonic and other programs, hardware and components related to jet engine and propulsion system development and production, and hardware related to air defense, missile, radar and other National Security system production. We expect our third quarter Revenues to grow organically 19 to 25 percent from third quarter 2025, with forecasted margin expansion in the third quarter tempered somewhat by increased business development and proposal costs to support the forecasted revenue growth, as well as continued negative foreign currency impacts on our Microwave Products Israeli business, which is adversely impacted by the strength of the Israeli Shekel vs. the US Dollar.

We expect Kratos’ second half of fiscal 2026 Adjusted EBITDA to be greater than our first half as our Revenue increases and Adjusted EBITDA margins expand and are impacted by both expected increased scale and product mix, and customer contract funding is expected to increase coming off of the late 2025 and early 2026 U.S. Government shutdown and extended Continuing Resolution. We continue to expect Kratos’ full year 2026 Adjusted EBITDA margin rates to be approximately 100 bps greater than our reported 2025 Adjusted EBITDA margin rates.

We expect to provide our initial full year 2027 financial guidance when we report our third quarter of fiscal 2026 later this year. We continue to expect our 2027 Adjusted EBITDA margin rates to increase an additional 100 bps above forecast 2026 Adjusted EBITDA margin rates, when we provide full year 2027 guidance later this year.

Management will discuss the Company’s financial results at a conference call beginning at 2:00 p.m. Pacific (5:00 p.m. Eastern) today. The call will be available at www.kratosdefense.com. Participants may register for the call using this On-line Form. Upon registration, all telephone participants will receive the dial-in number along with a unique PIN that can be used to access the call. For those who cannot access the live broadcast, a replay will be available on Kratos’ website.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, hardware, 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 relevant solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as 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 our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe our probability of win is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of 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, command, control, communication, computing, combat, intelligence surveillance and reconnaissance (C5ISR) and microwave electronic products for missile, radar, air defense, missile defense, space, satellite, counter unmanned aircraft systems (CUAS), directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

Notice Regarding Forward-Looking Statements
This news release contains certain forward-looking statements that involve risks and uncertainties, including, without limitation, express or implied statements concerning the Company’s expectations regarding its future financial performance, including the Company’s expectations for its third quarter, second half, and full year 2026 revenues, R&D, operating income, depreciation, amortization, stock based compensation expense, and Adjusted EBITDA, and full year 2026 operating cash flow, capital expenditures, investments, and free cash flow, forecasted company and business unit organic revenue growth, estimated revenue and organic revenue growth for 2026 and 2027, Adjusted EBITDA margins in 2026 and 2027, future initiation of higher margin programs and negotiation of lower margin contracts which are expected to be renewed in the future, expected future investments in property, plant, facilities, and equipment (including expected investments in the Prometheus joint venture and other programs, opportunities, and initiatives), expected future production of Valkyries, the ability of the Company’s customers to respond to industry and market conditions, the impact of acquired companies and businesses on the Company’s operations and financial condition, the Company’s bid and proposal pipeline and backlog, including the Company’s ability to timely execute on its backlog, demand for its products and services, including the Company’s alignment with today’s National Security requirements and the positioning of its C5ISR and other businesses, ability to successfully compete and expected new customer awards, the impact of federal government shutdowns on the Company’s operations and financial condition, the availability and timing of government funding for the Company’s offerings, availability of an experienced skilled workforce, inflation and increased costs, risks related to potential cybersecurity events or disruptions of our information technology systems, and delays in our financial projections, industry, business and operations, including projected growth. Such statements are only predictions, and the Company’s actual results may differ materially from the results expressed or implied by these statements. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Factors that may cause the Company’s results to differ include, but are not limited to: risks to our business and financial results related to the reductions and other spending constraints imposed on the U.S. Government and our other customers, including as a result of sequestration and extended continuing resolutions, the Federal budget deficit and Federal government shut-downs; risks of adverse regulatory action or litigation; risks associated with debt leverage; risks that our cost-cutting initiatives will not provide the anticipated benefits; risks that changes, cutbacks or delays in spending by the DoW may occur, which could cause delays or cancellations of key government contracts; risks of delays to or the cancellation of our projects as a result of protest actions submitted by our competitors; risks that changes may occur in Federal government (or other applicable) procurement laws, regulations, policies and budgets; risks of the availability of government funding for the Company's products and services due to performance, cost growth, or other factors, changes in government and customer priorities and requirements (including cost-cutting initiatives, the potential deferral of awards, terminations or reduction of expenditures to respond to the priorities of Congress and the Administration, or budgetary cuts resulting from Congressional committee recommendations or automatic sequestration under the Budget Control Act of 2011, as amended); risks related to tariffs or import duties which could affect the Company’s supply chain and customer affordability; risks related to Executive Orders issued by the Trump Administration and resultant changes to the DoW procurement policies and Federal Acquisition Regulations; risks related to DoW reorganization and DOGE; risks that the unmanned aerial systems and unmanned ground sensor markets do not experience significant growth; risks that products we have developed or will develop will not become programs of record; risks that we cannot expand our customer base or that our products do not achieve broad acceptance which could impact our ability to achieve our anticipated level of growth; risks of increases in the Federal government initiatives related to in-sourcing; risks related to security breaches, including cyber security attacks and threats or other significant disruptions of our information systems, facilities and infrastructures; risks related to our compliance with applicable contracting and procurement laws, regulations and standards; risks related to the new DoW Cybersecurity Maturity Model Certification; risks relating to the ongoing conflict in Ukraine and the Israeli-Palestinian military conflict; risks to our business in Israel including our expanded operations in Israel following the Orbit acquisition; risks related to contract performance; risks related to failure of our products or services; risks associated with our subcontractors’ or suppliers’ failure to perform their contractual obligations, including the appearance of counterfeit or corrupt parts in our products; changes in the competitive environment (including as a result of bid protests); failure to successfully integrate acquired operations and compete in the marketplace, which could reduce revenues and profit margins; risks that potential future goodwill impairments will adversely affect our operating results; risks that anticipated tax benefits will not be realized in accordance with our expectations; risks that a change in ownership of our stock could cause further limitation to the future utilization of our net operating losses; risks that we may be required to record valuation allowances on our net operating losses which could adversely impact our profitability and financial condition; risks that the current economic environment will adversely impact our business, including with respect to our ability to recruit and retain sufficient numbers of qualified personnel to execute on our programs and contracts, as well as expected contract awards and risks related to increasing interest rates; currently unforeseen risks associated with any public health crisis, and risks related to natural disasters or severe weather. These and other risk factors are more fully discussed in the Company’s Annual Report on Form 10-K for the period ended December 28, 2025, and in our other filings made with the Securities and Exchange Commission.

Note Regarding Use of Non-GAAP Financial Measures and Other Performance Metrics
This news release contains non-GAAP financial measures, including organic revenue growth rates computed as the revenue growth rate excluding the current year impact of the contribution from acquisitions, Adjusted EPS (computed using income before income taxes, excluding depreciation, amortization of intangible assets, amortization of capitalized contract and development costs, stock-based compensation expense, acquisition and restructuring related items and other, which includes, but is not limited to, legal related items, non-recoverable rates and costs, and foreign transaction gains and losses, less the estimated impact of current and deferred income taxes) and Adjusted EBITDA (which excludes, among other things, acquisition and restructuring related items, stock compensation expense, foreign transaction gains and losses, and the associated margin rates). Additional non-GAAP financial measures include Free Cash Flow from Operations computed as Cash Flow from Operations less Capital Expenditures plus proceeds from sale of assets and Adjusted EBITDA related to our KUS and KGS businesses. Kratos believes this information is useful to investors because it provides a basis for measuring the Company’s available capital resources, the actual and forecasted operating performance of the Company’s business and the Company’s cash flow, excluding non-recurring items and non-cash items that would normally be included in the most directly comparable measures calculated and presented in accordance with GAAP. The Company’s management uses these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating the Company’s actual and forecasted operating performance, capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and investors should carefully evaluate the Company’s financial results calculated in accordance with GAAP and reconciliations to those financial results. In addition, non-GAAP financial measures as reported by the Company may not be comparable to similarly titled amounts reported by other companies. As appropriate, the most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the Company’s financial results prepared in accordance with GAAP are included in this news release.

Another Performance Metric the Company believes is a key performance indicator in our industry is our Book to Bill Ratio as it provides investors with a measure of the amount of bookings or contract awards as compared to the amount of revenues that have been recorded during the period and provides an indicator of how much of the Company’s backlog is being burned or utilized in a certain period. The Book to Bill Ratio is computed as the number of bookings or contract awards in the period divided by the revenues recorded for the same period. The Company believes that the rolling or last twelve months’ Book to Bill Ratio is meaningful since the timing of quarter-to-quarter bookings can vary.

Press Contact:
Claire Cantrell
[email protected]

Investor Information:
877-934-4687
[email protected]

        Kratos Defense & Security Solutions, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in millions, except per share data)         Three Months Ended
 Six Months Ended
 June 28,  June 29,  June 28,  June 29,  2026  2025  2026  2025 Service revenues$169.7  $134.9  $303.7  $237.3 Product sales289.1  216.6  526.1  416.8 Total revenues458.8  351.5  829.8  654.1 Cost of service revenues131.6  107.2  230.9  182.9 Cost of product sales227.1  170.5  409.2  323.8 Total costs358.7  277.7  640.1  506.7 Gross profit - service revenues38.1  27.7  72.8  54.4 Gross profit - product sales62.0  46.1  116.9  93.0 Total gross profit100.1  73.8  189.7  147.4             Selling, general and administrative expenses73.3  54.1  136.0  106.4 Merger and acquisition expenses0.8  -  2.7  - Research and development expenses13.6  10.2  24.3  20.2 Depreciation3.9  3.0  7.7  5.6 Amortization of intangible assets10.1  2.8  15.9  4.9 Operating income (loss)(1.6) 3.7  3.1  10.3 Interest income (expense), net10.2  (1.2) 14.7  (2.1)Other income (loss), net(1.6) 2.1  (1.0) 1.8 Income before income taxes7.0  4.6  16.8  10.0 Provision for income taxes2.6  1.7  0.5  2.6 Net Income$4.4  $2.9  $16.3  $7.4             Basic income per common share$0.02  $0.02  $0.09  $0.05 Diluted income per common share$0.02  $0.02  $0.09  $0.05             Weighted average common shares outstanding:           Basic188.6  155.7  182.7  154.9 Diluted190.1  157.4  184.8  156.9             Adjusted EBITDA (1)$38.2  $28.3  $76.9  $55.0                          Unaudited Reconciliation of GAAP to Non-GAAP Measures

Note: (1) Adjusted EBITDA is a non-GAAP measure defined as GAAP net income adjusted for net interest income (expense), provision for income taxes, depreciation and amortization expense of intangible assets, amortization of capitalized contract and development costs, stock-based compensation, acquisition and restructuring related items and other, and foreign transaction (gain) loss.

Adjusted EBITDA as calculated by us may be calculated differently than Adjusted EBITDA for other companies. We have provided Adjusted EBITDA because we believe it is a commonly used measure of financial performance in comparable companies and is provided to help investors evaluate companies on a consistent basis, as well as to enhance understanding of our operating results. Adjusted EBITDA should not be construed as either an alternative to net income (loss) or as an indicator of our operating performance or an alternative to cash flows as a measure of liquidity.  The adjustments to calculate this non-GAAP financial measure and the basis for such adjustments are outlined below.  Please refer to the following table below that reconciles GAAP net income (loss) to Adjusted EBITDA.

The adjustments to calculate this non-GAAP financial measure, and the basis for such adjustments, are outlined below:

Interest income and interest expense, net. The Company receives interest income on investments and incurs interest expense on loans, capital leases and other financing arrangements, including the amortization of issue discounts and deferred financing costs. These amounts may vary from period to period due to changes in cash and debt balances.

Income taxes. The Company's tax expense can fluctuate materially from period to period due to tax adjustments that may not be directly related to underlying operating performance or to the current period of operations and may not necessarily reflect the impact of utilization of our NOLs.

Depreciation. The Company incurs depreciation expense (recorded in cost of revenues and in operating expenses) related to capital assets purchased, leased or constructed to support the ongoing operations of the business. The assets are recorded at cost or fair value and are depreciated over the estimated useful lives of individual assets.

Amortization of intangible assets. The Company incurs amortization of intangible expense related to acquisitions it has made. These intangible assets are valued at the time of acquisition and are amortized over the estimated useful lives.

Amortization of capitalized contract and development costs. The Company incurs amortization of previously capitalized software development and non-recurring engineering or design costs related to certain products or offerings in its Unmanned Systems, rocket support and services, and space and satellite businesses as related units are sold or over the estimated useful life, as applicable.

Stock-based compensation expense. The Company incurs expense related to stock-based compensation included in its GAAP presentation of selling, general and administrative expense. Although stock-based compensation is an expense of the Company and viewed as a form of compensation, these expenses vary in amount from period to period, and are affected by market forces that are difficult to predict and are not within the control of management, such as the market price and volatility of the Company's shares, risk-free interest rates and the expected term and forefeiture rates of the awards. Management believes that exclusion of these expenses allows comparison of operating results to those of other companies that disclose non-GAAP financial measures that exclude stock-based compensation.

Foreign transaction (gain) loss. The Company incurs transaction gains and losses which are not hedged related to transactions with foreign customers in currencies other than the U.S. dollar. In addition, certain intercompany transactions can give rise to realized and unrealized foreign currency gains and losses.

Acquisition and transaction related items. The Company incurs transaction related costs, such as legal and accounting fees and other expenses, related to acquisitions and divestiture activities. Management believes these items are outside the normal operations of the Company's business and are not indicative of ongoing operating results.

Restructuring costs. The Company incurs restructuring costs for cost reduction actions which include employee termination costs, facility shut-down related costs and lease commitment costs for unused, excess or exited facilities.  Management believes that these costs are not indicative of ongoing operating results as they are either non-recurring and/or not expected when full capacity and volumes are achieved.

Legal related items. The Company incurs costs related to pending legal settlements and other legal related matters. Management believes these items are outside the normal operations of the Company's business and are not indicative of ongoing operating results.

Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. The Company expects to continue to incur expenses similar to the Adjusted EBITDA financial adjustments described above, and investors should not infer from the Company's presentation of this non-GAAP financial measure that these costs are unusual, infrequent, or non-recurring. 

Reconciliation of Net Income to Adjusted EBITDA is as follows:

         Three Months Ended
 Six Months Ended
 June 28,  June 29,  June 28,  June 29,  2026  2025  2026  2025             Net income$                     4.4  $                     2.9  $                   16.3  $                     7.4 Interest (income) expense, net(10.2) 1.2  (14.7) 2.1 Provision for income taxes2.6  1.7  0.5  2.6 Depreciation (including cost of service revenues and product sales)12.0  9.0  23.0  17.3 Stock-based compensation16.3  8.6  31.3  17.3 Foreign transaction (gain) loss(0.2) 0.3  (0.3) 0.7 Amortization of intangible assets10.1  2.8  15.9  4.9 Amortization of capitalized contract and development costs2.4  0.9  4.2  1.8 Acquisition and restructuring related items and other0.8  -  2.7  - Reversal of contingent acquisition consideration-  -  (2.0) - Resolution of previously recorded contingent liability-  (1.1) -  (1.1)Litigation fees and legal related items-  2.0  -  2.0 Adjusted EBITDA$                   38.2  $                   28.3  $                   76.9  $                   55.0              Kratos Defense & Security Solutions, Inc.
Unaudited Segment Data
(in millions)     Three Months Ended
 Six Months Ended
 June 28,  June 29,  June 28,  June 29,  2026  2025  2026  2025 Revenues:           Unmanned Systems$79.1  $73.2  $161.7  $136.3 Kratos Government Solutions379.7  278.3  668.1  517.8 Total revenues$458.8  $351.5  $829.8  $654.1             Operating income           Unmanned Systems$1.2  $(0.2) $2.5  $(1.9)Kratos Government Solutions14.3  12.5  34.6  29.5 Unallocated corporate expense, net(17.1) (8.6) (34.0) (17.3)Total operating income (loss)$(1.6) $3.7  $3.1  $10.3             Note: Unallocated corporate expense, net includes costs for certain stock-based compensation programs (including stock-based compensation costs for the employee stock purchase plan and restricted stock units), the effects of items not considered part of management’s evaluation of segment operating performance, and acquisition and restructuring related items, corporate costs not allocated to the segments, legal related items, and other miscellaneous corporate activities.
  Reconciliation of Segment Operating Income (Loss) to Adjusted EBITDA is as follows:

 Three Months Ended
 Six Months Ended
 June 28,  June 29,  June 28,  June 29,  2026  2025  2026  2025 Unmanned Systems           Operating income (loss)$                     1.1  $                   (0.2) $                     2.5  $                   (1.9)Other income-  -  0.1  0.1 Depreciation2.9  2.7  5.7  5.0 Amortization of intangible assets1.0  1.0  1.9  2.0 Amortization of capitalized contract and development costs0.1  -  0.1  - Resolution of Previously Recorded Contingent Liability-  (0.3) -  (0.3)Litigation Fees and Legal Related Items-  0.5  -  0.5 Adjusted EBITDA$                     5.1  $                     3.7  $                   10.3  $                     5.4 % of revenue6.4% 5.1% 6.4% 4.0%            Kratos Government Solutions           Operating income$                   14.3  $                   12.5  $                   34.6  $                   29.5 Other income(1.7) 2.4  (1.4) 2.4 Depreciation9.1  6.3  17.3  12.3 Amortization of intangible assets9.1  1.8  14.0  2.9 Amortization of capitalized contract and development costs2.3  0.9  4.1  1.8 Reversal of contingent acquisition consideration-  -  (2.0) - Resolution of Previously Recorded Contingent Liability-  (0.8) -  (0.8)Litigation Fees and Legal Related Items-  1.5  -  1.5 Adjusted EBITDA$                   33.1  $                   24.6  $                   66.6  $                   49.6 % of revenue8.7% 8.8% 10.0% 9.6%            Total Adjusted EBITDA$                   38.2  $                   28.3  $                   76.9  $                   55.0 % of revenue8.3% 8.1% 9.3% 8.4%             Kratos Defense & Security Solutions, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in millions)
           June 28,  December 28,
 2026  2025 Assets     Current assets:     Cash and cash equivalents$1,437.6  $560.6 Accounts receivable, net171.3  165.0 Unbilled receivables, net405.4  292.4 Inventoried costs, net235.9  188.2 Prepaid expenses24.1  12.9 Other current assets82.2  43.8 Total current assets2,356.5  1,262.9 Property, plant and equipment, net419.4  361.9 Operating lease right-of-use assets50.6  43.4 Goodwill871.2  595.7 Intangible assets, net220.8  53.9 Other assets159.4  144.4 Investment in joint venture11.9  5.0 Total assets$4,089.8  $2,467.2 Liabilities and Stockholders’ Equity     Current liabilities:     Accounts payable$104.8  $69.6 Accrued expenses95.9  60.5 Accrued compensation92.2  82.3 Billings in excess of costs and earnings on uncompleted contracts93.6  73.4 Current portion of operating lease liabilities13.8  12.8 Current portion of finance lease liabilities5.1  3.4 Other current liabilities19.9  9.0 Total current liabilities425.3  311.0 Operating lease liabilities, net of current portion39.9  33.8 Finance lease liabilities, net of current portion134.8  95.8 Other long-term liabilities63.0  30.3 Total liabilities663.0  470.9 Commitments and contingencies     Stockholders’ equity:     Common stock0.2  0.2 Additional paid-in capital4,051.6  2,635.9 Accumulated other comprehensive income (loss)0.6  2.1 Accumulated deficit(625.6) (641.9)Total equity3,426.8  1,996.3 Total liabilities and stockholders’ equity$4,089.8  $2,467.2        Kratos Defense & Security Solutions, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in millions)
       Six Months Ended
 June 28,  June 29,  2026  2025 Operating activities:     Net income$16.3  $7.4 Adjustments to reconcile net income to net cash provided by (used in) operating activities:     Depreciation and amortization38.9  22.2 Amortization of lease right-of-use assets6.9  6.0 Deferred income taxes2.1  - Stock-based compensation31.3  17.3 Amortization of deferred financing costs0.2  0.3 Provision for doubtful accounts0.1  - Changes in assets and liabilities, net of acquisitions:     Accounts receivable16.7  (23.1)Unbilled receivables(104.3) (49.9)Inventoried costs(24.8) (7.3)Prepaid expenses and other assets(36.6) (27.3)Operating lease liabilities(7.5) (5.7)Accounts payable23.0  17.5 Accrued expenses20.6  9.1 Accrued compensation(3.2) - Billings in excess of costs and earnings on uncompleted contracts(10.7) (5.1)Income tax receivable and payable(3.9) (0.9)Other liabilities(3.5) (1.4)Net cash used in operating activities(38.4) (40.9)Investing activities:     Cash paid for acquisitions, net of cash acquired(346.8) - Proceeds from sale of assets13.5  - Investment in joint venture(6.9) - Capital expenditures(37.1) (43.1)Proceeds from state grant for capital construction2.0  - Net cash used in investing activities(375.3) (43.1)Financing activities:     Repayment under credit facility and term loan-  (5.0)Proceeds from the issuance of common stock, net of issuance costs1,348.4  555.9 Debt issuance costs(1.4) - Payment under finance leases(2.0) (0.9)Payments of employee taxes withheld from share-based awards(59.1) (18.3)Proceeds from shares issued under equity plans5.3  4.6 Net cash provided by financing activities1,291.2  536.3 Net cash flows877.5  452.3 Effect of exchange rate changes on cash and cash equivalents(0.5) 2.0 Net increase in cash and cash equivalents877.0  454.3 Cash and cash equivalents at beginning of period560.6  329.3 Cash and cash equivalents at end of period$1,437.6  $783.6        Kratos Defense & Security Solutions, Inc.
Unaudited Non-GAAP Measures
Computation of Adjusted Earnings Per Share
(in millions, except per share data)
       Adjusted income and adjusted income per diluted common share (Adjusted EPS) are non-GAAP measures for reporting financial performance and exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. Management believes that exclusion of these items assists in providing a more complete understanding of the Company's underlying results and trends and allows for comparability with our peer company index and industry. The Company uses these measures along with the corresponding GAAP financial measures to manage the Company's business and to evaluate its performance compared to prior periods and the marketplace. The Company defines adjusted income before amortization of intangible assets and capitalized contract and development costs, depreciation, stock based compensation, foreign transaction gain/loss, and acquisition and restructuring related items and other. The estimated impact to income taxes excludes the impact to the expenses and release of valuation alloweffective tax rate, current tax provision and deferred tax provision, and excludes the impact of discrete items, including transaction related expenses and release of valuation allowance, or benefit related to the add-backs.*     
Adjusted EPS reflects adjusted income on a per share basis using weighted average diluted shares outstanding.

The following table reconciles the most directly comparable GAAP financial measures to the non-GAAP financial measures.

 Three Months Ended
 Six Months Ended
 June 28,  June 29,  June 28,  June 29,  2026  2025  2026  2025 Net income$4.4  $2.9  $16.3  $7.4 Less: GAAP provision for income taxes2.6  1.7  0.5  2.6 Income before taxes7.0  4.6  16.8  10.0 Add: Amortization of intangible assets10.1  2.8  15.9  4.9 Add: Amortization of capitalized contract and development costs2.4  0.9  4.2  1.8 Add: Depreciation12.0  9.0  23.0  17.3 Add: Stock-based compensation16.3  8.6  31.3  17.3 Add: Foreign transaction (gain) loss(0.2) 0.3  (0.3) 0.7 Add: Acquisition and restructuring related items and other0.8  -  2.7  - Less: Reversal of contingent acquisition consideration-     (2.0)   Non-GAAP Adjusted income from consolidated operations before income taxes48.4  26.2  91.6  52.0 Income taxes on Non-GAAP measure Adjusted income*9.0  9.1  17.5  16.0 Non-GAAP Adjusted net income$39.4  $17.1  $74.1  $36.0                         Diluted earnings per common share$0.02  $0.02  $0.09  $0.05 Less: GAAP provision for income taxes0.01  0.01  -  0.02 Add: Amortization of intangible assets0.06  0.02  0.09  0.03 Add: Amortization of capitalized contract and development costs0.01  0.01  0.02  0.01 Add: Depreciation0.07  0.06  0.13  0.11 Add: Stock-based compensation0.09  0.05  0.16  0.11 Add: Foreign transaction loss-  -  -  - Add: Acquisition and restructuring related items and other-  -  0.01  - Less: Reversal of contingent acquisition consideration      (0.01) - Income taxes on Non-GAAP measure Adjusted income*(0.05) (0.06) (0.09) (0.10)Adjusted income per diluted common share$0.21  $0.11  $0.40  $0.23             Weighted average diluted common shares outstanding190.1  157.4  184.8  156.9              *The impact to income taxes is calculated by recasting income before income taxes to include the add-backs involved in determining Adjusted Income before income taxes and recalculating the income tax provision, including current and deferred income taxes, using the Adjusted Income before income taxes.The recalculation also adjusts for any discrete tax expense, including transaction related expenses and the release of valuation allowance, or benefit related to the add-backs. 

Key Takeaways Kratos Defense's record backlog and expanding pipeline provide strong revenue visibility.KTOS may benefit from target drone demand, Spartan engine expansion and the Orbit Technologies acquisition.KTOS expects softer sequential results due to shipment timing, higher overhead and bid-related spending. Kratos Defense & Security Solutions (KTOS - Free Report) is expected to report second-quarter 2026 results on Aug. 4, after market close.

The Zacks Consensus Estimate for earnings is pegged at 13 cents per share, indicating year-over-year growth of 18.18%. The Zacks Consensus Estimate for revenues is pinned at $411.7 million, indicating growth of 17.1% from the year-ago reported figure.

Image Source: Zacks Investment Research

KTOS’ Earnings Surprise HistoryThe company beat on earnings in each of the trailing four quarters, delivering an average surprise of 22.64%.

Image Source: Zacks Investment Research

What Our Quantitative Model PredictsOur proven model does not predict an earnings beat for Kratos Defense this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat, which is not the case here, as you will see below.

Earnings ESP: The company’s Earnings ESP is +11.70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Kratos Defense carries a Zacks Rank #4 (Sell).

You can see the complete list of today's Zacks #1 Rank stocks here.

Stocks Worth a LookSome stocks in the same industry that have the combination of factors indicating an earnings beat are Curtiss-Wright (CW - Free Report) and ATI INC (ATI - Free Report) . Curtiss-Wright and ATI have an Earnings ESP of +0.36% and +1.32%, respectively. ATI holds a Zacks Rank #2 and Curtiss-Wright carries a Zacks Rank #3 at present.

Factors That Might Have Impacted KTOS’ Q2 PerformanceIn June 2026, Kratos Defense announced the expansion of Spartan turbojet engine production. This could have served as a positive catalyst in the second quarter, as it reinforces growing demand for the company's propulsion systems used in missiles and loitering munitions.

One of the biggest positives during the quarter was Kratos Defense's record backlog and expanding opportunity pipeline. The company finished the first quarter with a record $2 billion backlog, a 1.6X consolidated book-to-bill ratio, and an opportunity pipeline exceeding $14 billion. Management also highlighted an impressive 3:1 book-to-bill ratio within its satellite business, reflecting exceptionally strong demand for space-related programs. These metrics provide strong revenue visibility and suggest that demand across KTOS' core defense markets may continue to accelerate.

The successful integration and flight testing of KTOS’ J85-powered Firejet drone validate the company's vertically integrated drone and propulsion strategy while demonstrating the performance of its domestically produced J85 engine. The upgraded Firejet offers greater speed, range, endurance and climb performance, expanding its appeal for both target and tactical missions, while reducing supply-chain risk through U.S.-made engines.

Solid revenue growth from increased target drone production activity is likely to have bolstered the top line of the Unmanned Systems business segment in the second quarter.

The recent acquisition of Orbit Technologies is expected to have strengthened Kratos Defense's competitive position. It expands the company's satellite communications portfolio and enhances its relationships with key Israeli defense contractors.

Despite the strong outlook, the second quarter is likely to have been weaker sequentially, according to management. Guidance calls for revenues of $400-$410 million, implying slower organic growth than the first quarter. Management attributed the softer outlook primarily to the timing of unmanned systems shipments, less favorable revenue mix, higher manufacturing overhead, administrative expenses, and bid-and-proposal spending that are being incurred ahead of anticipated second-half growth.

KTOS Stock Price PerformanceIn the past month, the stock has lost 13.5% compared with the industry’s decline of 10.6%.

Image Source: Zacks Investment Research

KTOS Stock Trading at a DiscountKratos Defense is currently trading at a discount compared to its industry on a forward 12-month P/S basis.

Image Source: Zacks Investment Research

KTOS Stock’s Poor ROICThe image below shows that the stock’s trailing 12-month return on invested capital (ROIC) lags the peer group’s average return. This suggests that the company's investments are not yielding sufficient returns to cover its expenses.

Image Source: Zacks Investment Research

Investment ThesisKratos Defense is one of the leading providers of unmanned aerial target drones for U.S. and allied militaries, with its strong reputation and proven technology driving consistent contract wins, strategic partnerships, global expansion and long-term competitiveness.

Labor availability also remains challenging. Although hiring conditions have improved over the past year, management noted ongoing shortages of highly specialized engineering talent, particularly propulsion engineers with security clearances. These workforce constraints could slow production ramp-ups and limit Kratos' ability to capitalize fully on growing defense demand.

End NoteKratos Defense's leadership in unmanned aerial target drones continues to drive contract wins, strategic partnerships and global expansion, supporting its long-term growth prospects. However, ongoing shortages of highly specialized engineers, particularly propulsion experts with security clearances, could limit production ramp-ups and the company's ability to fully capitalize on rising defense demand.

Given its lower price performance and poor ROIC, investors must consider avoiding the stock at present.

Wall Street expects a year-over-year increase in earnings on higher revenues when Kratos (KTOS - Free Report) reports results for the quarter ended June 2026. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.

The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on August 4. On the other hand, if they miss, the stock may move lower.

While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise.

Zacks Consensus EstimateThis military contractor is expected to post quarterly earnings of $0.13 per share in its upcoming report, which represents a year-over-year change of +18.2%.

Revenues are expected to be $411.69 million, up 17.1% from the year-ago quarter.

Estimate Revisions TrendThe consensus EPS estimate for the quarter has been revised 5.88% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change.

Price, Consensus and EPS Surprise

Earnings WhisperEstimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.

A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.

Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How Have the Numbers Shaped Up for Kratos?For Kratos, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become bullish on the company's earnings prospects. This has resulted in an Earnings ESP of +11.70%.

On the other hand, the stock currently carries a Zacks Rank of #4.

So, this combination makes it difficult to conclusively predict that Kratos will beat the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.

For the last reported quarter, it was expected that Kratos would post earnings of $0.13 per share when it actually produced earnings of $0.16, delivering a surprise of +23.08%.

Over the last four quarters, the company has beaten consensus EPS estimates four times.

Bottom LineAn earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.

That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

Kratos doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

An Industry Player's Expected ResultsAnother stock from the Zacks Aerospace - Defense Equipment industry, Voyager Technologies, Inc. (VOYG - Free Report) , is soon expected to post loss of $0.95 per share for the quarter ended June 2026. This estimate indicates a year-over-year change of -58.3%. Revenues for the quarter are expected to be $48.43 million, up 6% from the year-ago quarter.

Over the last 30 days, the consensus EPS estimate for Voyager Technologies, Inc. has remained unchanged. Nevertheless, the company now has an Earnings ESP of +6.32%, reflecting a higher Most Accurate Estimate.

When combined with a Zacks Rank of #3 (Hold), this Earnings ESP indicates that Voyager Technologies, Inc. will most likely beat the consensus EPS estimate. Over the last four quarters, the company surpassed consensus EPS estimates two times.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Kratos to provide Mobile Counter-Unmanned Aircraft System (C-UAS) Platforms Designed to Support Critical National Security Mission July 21, 2026 08:00 ET  | Source: Kratos Defense & Security Solutions, Inc.

SAN DIEGO, July 21, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a technology company in the defense, national security and global markets, today announced it has been awarded a sole-source, single award Indefinite Delivery/Indefinite Quantity (IDIQ) contract for approximately $156 million, by the U.S. Department of Energy's National Nuclear Security Administration (NNSA) Office of Secure Transportation (OST), in support of Project Solar Shield.

Under this new contract award, Kratos will provide mobile Counter-Unmanned Aircraft System (C-UAS) platforms designed to support OST's critical National Security mission. The Office of Secure Transportation is responsible for the safe and secure ground and air transportation of nuclear weapons, weapon components, and special nuclear materials, as well as other missions supporting U.S. national security.

To address emerging threats to these operations, OST requires a mission-ready mobile platform capable of detecting, tracking, identifying, and responding to potentially hostile unmanned aircraft systems in real time. Unlike traditional fixed-site defense infrastructure, Project Solar Shield is designed to provide a dynamic mobile C-UAS capability that can support mission requirements wherever OST operations occur. The program will leverage commercial and government best-in-class C-UAS technologies, to provide a layered defense posture supporting OST personnel and mission requirements.

Kratos was selected following a rigorous technical evaluation and was identified as the provider capable of meeting OST's technical, cost, schedule, operational, safety, redundancy, integration, and long-term sustainment requirements. Kratos’ engineer-to-order approach combines C-UAS system, mobile platform design, command-and-control, and advanced power management technologies into a fully integrated solution, built for demanding threat and mission environments.

“Project Solar Shield represents a significant milestone for Kratos and the broader government C-UAS market,” said Dave Carter, President of Kratos’ Defense & Rocket Support Services Division. “As the first large scale government production contract of its kind built around this integrated approach, the program demonstrates the value of combining C-UAS, mobile platform design, command-and-control capabilities, and resilient power management into a single mission-ready solution. The resulting platform provides OST with a highly modular and scalable mobile C-UAS capability, designed to support evolving mission requirements across the continental United States.”

Eric DeMarco, President and CEO of Kratos, said, “We believe that Kratos’ technology, system and integration capabilities in the C-UAS mission area are industry leading, and also our ability to mass produce large quantities of relevant systems at an affordable cost. Our entire organization is proud to have received this program award to protect and secure critical United States assets and infrastructure.”

Work under this new program award will be performed at secure Kratos facilities. Due to security-related and other considerations, no additional information will be provided related to this contract award. Work under the contract is expected to begin immediately.

About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter UAS, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

Notice Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 28, 2025, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.

Press Contact:
Claire Cantrell
[email protected]

Kratos Investor Information:
877-934-4687
[email protected]

Kratos’ Pennsylvania Operations Engineer, Manufacture and Test Mission-Critical, Military-Grade Hardware Supporting Certain of the Nation's Highest-Priority Hypersonic, Air Defense, Missile, Radar and Counter-Unmanned Aircraft System (C-UAS) Programs

Kratos’ Expanded Pennsylvania Operations Accelerate Development and Large-Scale Mass Production of Mil-Spec Hardware to Strengthen National Security

SAN DIEGO, July 15, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a technology company specializing in defense, national security and global markets, today announced the opening of a 167,000-square-foot advanced manufacturing facility in York, Pennsylvania. The plant expands Kratos' existing Pennsylvania operations, which now span three facilities and employ more than 440 people, supporting a growing portfolio of critical national security programs. Additionally, Kratos announced plans to purchase new state-of-the-art equipment, totaling over $7 Million, to further expand production capability.

The new facility and planned investments in manufacturing equipment significantly increase Kratos' production capacity to meet accelerating customer demand for advanced defense systems while reinforcing the company's commitment to strengthening the U.S. defense industrial base through rapid innovation and mission-speed production.

Kratos’ Pennsylvania operations engineer, manufacture and test mission-critical, military-grade hardware supporting certain of the nation's highest-priority air defense, missile, radar and counter-unmanned aircraft system (C-UAS) initiatives. Including the new facility, Kratos' Pennsylvania operations actively support C-UAS initiatives by delivering complex equipment for directed energy weapons, missile transporters, mobile missile launcher systems, hypersonic systems and strategic system radar platforms.

Tom Mills, President of Kratos C5ISR Division, said, “Leveraging proven manufacturing methodologies and advanced production technologies, Kratos’ Pennsylvania operations recently completed delivery of highly engineered solutions for both High Power Microwave (HPM) and High Energy Laser (HEL) programs. These efforts included the design, manufacture and testing of specialty structures and components that enhance system mobility and survivability, along with system integration involving custom mechanical assemblies, actuators, thermal management and electrical subsystems. This new Kratos facility and investment will both expand and accelerate our capabilities in additional mission critical national security programs, including strategic systems”.

“Kratos is committed to building the Arsenal of Freedom by investing in the people, facilities and manufacturing capabilities needed to deliver critical systems, at scale, to our customers faster than ever before,” said Eric DeMarco, President and CEO of Kratos. “This expansion marks another important milestone in continuing to grow Kratos’ capability to provide mil-spec hardware for national defense and mission critical programs. Pennsylvania has proven to be an exceptional manufacturing hub, including a highly skilled workforce, and this investment positions Kratos to continue delivering affordable, high-performance, leading technology systems that address our nation's most pressing security challenges. Kratos' ability to manufacture highly complex hardware at production scale—where quality, precision and reliability are mission-critical—continues to differentiate our Company as a trusted partner to the U.S. Department of War and allied customers.”

The new facility and related manufacturing equipment provides expanded space and capabilities for advanced manufacturing, systems integration and testing, enabling Kratos to scale production while meeting increasing customer requirements for speed, affordability and performance.

Kratos’ expansion in Pennsylvania represents the company’s continued investment in American manufacturing and its commitment to delivering warfighter-ready capabilities that outpace evolving threats while strengthening the nation's defense industrial base.

About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter UAS, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

Notice Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 28, 2025, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.

Press Contact:
Claire Cantrell
[email protected]

Kratos Investor Information:
877-934-4687
[email protected]

SAN DIEGO, July 14, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a technology company specializing in defense, national security, and global markets, today announced that it has recently received approximately $400 million in funding from the Department of War (DoW) related to certain hypersonic system and other National Security related programs. Kratos is an industry leader in the engineering, development, production and integration of hypersonic systems, flight vehicles, solid rocket motors and other high-speed systems and vehicles. 

Dave Carter, President of Kratos’ Defense and Rocket Support Services Division, said, “Kratos is a leader in high-speed National Security Systems, including ballistic missile targets, flight test vehicles and recently, tactical systems, where Kratos’ rapid design, engineering, development, flight and fielding capabilities of systems that can be mass produced at low-cost points are clear differentiators for our Company. Kratos’ new Nemesis and Kraken initiatives are recent examples of Kratos’ industry leading vision in the high speed systems area, and we are expecting additional important hypersonic related awards in the coming months.”

Eric DeMarco, President and CEO of Kratos, said, “Beginning in June and both increasing and accelerating into July, Kratos is seeing significant funding from the DoW, which is expected to accelerate our organic growth rate, increase our operating cash receipts, while reducing our customer receivables, inventory and assets where Kratos had previously “leaned forward” to ensure we met or exceeded our customers schedule related and other expectations. Kratos is an industry leading defense technology company, focused on fielding affordable, relevant systems for the Department of War, while generating organic growth, increased margins and an acceptable rate of return on our investments, with a target of significant future cash flow generation.” 

Kratos remains at the forefront of hypersonic and advanced technology development and testing, providing affordable, high-performance solutions to meet the needs of the U.S. military and allied nations. Kratos is the only company delivering both propulsion and flyer systems, which includes Kratos’ low cost Erinyes Hypersonic Flyer, Dark Fury, Zeus and Oriole Solid Rocket Motors, along with other Kratos systems and technologies. Kratos provides unmatched innovation, disruptive capabilities, mission responsiveness and affordability to our customers across our portfolio of systems.

Work under the hypersonic system programs will be performed at secure Kratos facilities and government locations. Due to security, competitive and other considerations, no additional information will be provided related to these programs. 

For more information on Kratos and its hypersonic programs, visit www.kratosdefense.com.

About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing which is a value add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, advanced vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter UAS, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

Notice Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 28, 2025, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.

Press Contact:
Claire Cantrell
[email protected]

Kratos Investor Information:
877-934-4687
[email protected]

Ground Based Modular System Recently Demonstrated Mission Effectiveness July 13, 2026 08:00 ET  | Source: Kratos Defense & Security Solutions, Inc.

SAN DIEGO, July 13, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS), a Technology Company in the Defense, National Security and Global Markets, today announced that the company has recently received an approximate $100 million sole source prime contract award for the production of a ground-based modular space domain awareness system. Kratos is an industry leader in space domain awareness, directed energy and other relevant national security systems. Work under this new program award will be performed at secure Kratos production and integration facilities.

Mike Johns, Kratos Senior Vice President, said, “Kratos is proud to have developed, tested and demonstrated this true technology-leading space domain awareness system, which will now be entering production. Our entire organization is extremely proud to have the confidence with our customer to move forward with this mission critical national security system. Based on customer feedback, we believe that this program could in the future become one of the most important for our DRSS business.”

Eric Demarco, Kratos’ President and CEO, said, “We believe that across our company, Kratos has the right, relevant products, at the right time, at the right cost points—products which can be rapidly mass produced and fielded now. There is a generational rebuild and recapitalization of the U.S. defense industrial base under way, including for strategic space systems, to deter and defeat our enemies, and Kratos is committed to supporting the Department of War and the success of its mission.”

Due to security related, competitive and other considerations, no additional information will be provided.

About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter UAS, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

Notice Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 28, 2025, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.

Press Contact:
Claire Cantrell
[email protected]

Kratos Investor Information:
877-934-4687
[email protected]

Key Takeaways Kratos Defense is expanding unmanned systems and air defense through new contracts and production investments.KTOS grew first-quarter 2026 Unmanned Systems revenues, driven primarily by XQ-58A Valkyrie activity.KTOS faces supply-chain and cost pressures, though 2026 and 2027 EPS estimates project strong growth. Kratos Defense & Security Solutions, Inc.’s (KTOS - Free Report) shares have risen 23.6% over the past year compared with the Zacks Aerospace-Defense Equipment industry’s growth of 22.6%. The company continues to hold a leading position as the U.S. Army's principal supplier of unmanned target drones, with long-term demand supported by consistent U.S. defense budget allocations.
 

Image Source: Zacks Investment Research

Other defense equipment stocks have shown mixed performance over the past year. While Curtiss-Wright (CW - Free Report) has gained 54.7%, AeroVironment (AVAV - Free Report) declined 20.7%. Curtiss-Wright and AeroVironment are specialized defense technology companies that benefit from U.S. military modernization and rising defense spending, rather than being prime defense contractors.

Considering Kratos Defense’s outperformance, investors might be left wondering if this is a good time to add KTOS stock to their portfolio. Let's examine the factors that contributed to the share price gain and assess the stock's investment prospects to make an informed decision.

Tailwinds for KTOS StockKratos Defense is the primary unmanned aerial target drone system provider for the U.S. Air Force, Navy, Army and several allied defense agencies. This position has led to multiple recent contracts and partnerships that are expanding its presence in the global UAS market, including a Counter-UAS award in March 2026 and teaming activity tied to the XQ-58A Valkyrie. In first-quarter 2026, Unmanned Systems revenues increased to $82.6 million from $63.1 million a year earlier, driven primarily by Valkyrie-related activity.

In July 2026, Kratos Defense received an approximate $36 million sole-source contract award for a new air defense missile system. The sole-source nature of the award indicates that Kratos Defense possesses specialized capabilities that the customer considered difficult to replace through competitive bidding, strengthening its reputation as a trusted supplier for sensitive national security programs. The contract also supports higher utilization of the manufacturing capacity that the company has been expanding in recent years, potentially improving operating leverage as production scales.

In June 2026, Kratos Defense announced its plans to significantly increase production capacity for its Spartan line of turbojet engines to support growing demand across missile and loitering munition programs. By increasing annual production capacity to 3,000 engines and investing ahead of demand through internally funded procurement of long-lead materials and supply-chain enhancements, Kratos Defense is improving its ability to deliver at scale while shortening lead times for customers.

Headwinds for KTOSKratos Defense continues to cite supply-chain disruptions and parts availability as industry issues that can delay material receipts and deliveries. Management’s 2026 outlook explicitly assumes potential manufacturing and supply-chain disruptions, parts shortages and continued cost increases. Inventoried costs increased to $225.7 million as of March 29, 2026, from $188.2 million as of 2025-end, consistent with larger lot purchases and long-lead items. Persistently higher input costs or further supply friction could pressure margins and keep cash conversion below investor expectations.

Estimates for KTOS StockThe Zacks Consensus Estimate for 2026 and 2027 earnings per share (EPS) indicates an increase of 30.91% and 42.34%, respectively, year over year. 
 

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Curtiss-Wright’s 2026 and 2027 EPS implies an increase of 14.7% and 11.7%, respectively, year over year. The consensus estimate for AeroVironment’s fiscal 2027 EPS indicates an increase of 4.5% year over year.  

KTOS’ Earnings Surprise HistoryThe company beat on earnings in each of the trailing four quarters, delivering an average surprise of 22.64%.

Image Source: Zacks Investment Research

KTOS’ Return on Equity Lower Than IndustryThe company’s trailing 12-month return on equity of 4.3% is lower than the industry average of 12.47%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.

Image Source: Zacks Investment Research

KTOS Stock Trades at a DiscountIn terms of valuation, KTOS’ forward 12-month price/sales (P/S) is 5.33X, a discount to the industry’s average of 14.62X.

Image Source: Zacks Investment Research

What Should an Investor Do Now?Kratos Defense continues to strengthen its leadership in unmanned systems and air defense through new contract awards, strategic partnerships, and growing demand for its advanced autonomous and missile technologies. The company is also expanding its propulsion manufacturing capabilities, positioning itself to capture rising opportunities in missile, loitering munition, and next-generation defense programs.

Investors who already own this Zacks Rank #3 (Hold) stock may consider retaining their position, considering its price performance and strong earnings growth. Given its poor ROE, new investors may wait and look for a better entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SAN DIEGO, July 02, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a technology company in the defense, national security and global markets, today announced that it has recently received an approximate $36 million sole-source contract award for a new air defense missile system. Kratos is a recognized industry leader in the rapid engineering, development and production at scale of affordable military-grade hardware, products and systems, including for hypersonic, missile, radar, air defense, directed energy, high-powered microwave, counter unmanned aerial system (C-UAS), chemical, biological, radiological, and nuclear (CBRN), unmanned aerial drone, strategic, and other systems. 

Tom Mills, President of Kratos’ C5ISR Division, said, “Building military-grade hardware on schedule and on budget, hardware that must work every time, is hard, and is also a clear differentiating capability of Kratos. The entire C5ISR team is proud to have been selected for this critical national security program.”

Eric DeMarco, President and CEO of Kratos, said, “Kratos’ air defense related hardware, products, and systems business, both in the United States and internationally, is currently seeing increased demand from numerous customers for multiple systems, platforms and technologies. Over the past several years, Kratos has made significant investments in property, plant, equipment and facilities, which we are continuing as we are laser focused on supporting the United States Department of War and the rebuild and recapitalization of our nation’s defense industrial base.”

Work under this contract award will be performed at a secure Kratos manufacturing facility. Due to security related, competitive and other considerations, no additional information related to this program will be provided.

About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter UAS, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

Notice Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 28, 2025, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.

Press Contact:
Claire Cantrell
[email protected]

Kratos Investor Information:
877-934-4687
[email protected]