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Kratos Defense & Security Solutions Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 4, 2011 02:51PM

Kratos Defense & Security Solutions Inc. (KTOS) filed Quarterly Report for the period ended 2011-09-25. Kratos Defense & Security Solutions Inc. has a market cap of $214.6 million; its shares were traded at around $6.23 with a P/E ratio of 207.7 and P/S ratio of 0.5.



Highlight of Business Operations:

The amounts of revenue and operating income of Gichner included in the Company’s condensed consolidated statements of operations for the three and nine months ended September 25, 2011 are $31.7 million and $1.3 million, and $97.4 million and $4.1 million, respectively. For the three and nine months ended September 26, 2010, the amounts of revenue and operating income included in the condensed consolidated statements of operations were $3.7 million and $2.1 million, and $57.7 million and $4.5 million, respectively.

Gross margin increased from 20.4% for the three months ended September 26, 2010 to 28.5% for the three months ended September 25, 2011. Margins on services increased for the three months ended September 26, 2010 as compared to September 25, 2011, from 20.8% to 26.4%, respectively, due primarily to the acquisitions of HBE and Integral. Margins on products increased for the three months ended September 26, 2010 as compared to September 25, 2011 from 19.5% to 30.3%, respectively, as a result of the Integral, Herley, DEI, and SCT acquisitions. Margins in the KGS segment increased from 20.6% for the three months ended September 26, 2010 to 28.3% for the three months ended September 25, 2011 primarily as a result of the higher gross margins from our Integral, Herley, and DEI acquisitions. Margins in the PSS segment decreased from 30.9% for the three months ended September 26, 2010 to 29.6% for the three months ended September 25, 2011 as a result of the mix of revenue.

Selling, General and Administrative Expenses. Selling, general and administrative expenses (“SG&A”) increased $26.7 million from $16.5 million for the three months ended September 26, 2010 to $43.2 million for the three months ended September 25, 2011. The increase was primarily a result of the acquisitions of Integral, Herley, DEI, SCT, and HBE. As a percentage of revenues, SG&A increased from 13.8% to 20.5%. Excluding amortization of intangibles of $2.9 million for the three months ended September 26, 2010 and amortization of intangibles of $11.9 million for the three months ended September 25, 2011, SG&A increased as a percentage of revenues from 11.3% to 14.8% for the three months ended September 26, 2010 and September 25, 2011, respectively, reflecting the SG&A of our acquisitions of Integral, Herley and HBE which have higher SG&A as a percentage of revenues and corresponding higher gross margin percentages.

Gross margin increased from 20.7% for the nine months ended September 26, 2010 to 26.3% for the nine months ended September 25, 2011. Margins on services increased for the nine months ended September 26, 2010 as compared to September 25, 2011, from 21.4% to 24.8%, respectively, due primarily to the acquisitions of Integral and HBE. Margins on products increased for the nine months ended September 26, 2010 as compared to September 25, 2011 from 18.8% to 27.9%, respectively, as a result of the Integral, Herley, DEI, and SCT acquisitions. Margins in the KGS segment increased from 21.2% for the nine months ended September 26, 2010 to 25.8% for the nine months ended September 25, 2011 primarily as a result of the higher gross margins from our Integral, Herley, and DEI acquisitions. Margins in the PSS segment decreased from 32.8% for the nine months ended September 26, 2010 to 28.8% for the nine months ended September 25, 2011 as a result of the mix of revenue.

Selling, General and Administrative Expenses. SG&A increased $55.1 million from $41.3 million for the nine months ended September 26, 2010 to $96.5 million for the nine months ended September 25, 2011. The increase was primarily a result of the acquisitions of Integral, Herley, HBE, DEI, and SCT. As a percentage of revenues, SG&A increased from 14.4% to 19.1%. Excluding amortization of intangibles of $6.2 million for the nine months ended September 26, 2010 and amortization of intangibles of $24.5 million for the nine months ended September 25, 2011, SG&A increased as a percentage of revenues from 12.2% to 14.3% for the nine months ended September 26, 2010 and September 25, 2011, respectively, reflecting the SG&A of our acquisitions of Integral, Herley, HBE and DEI which have higher SG&A as a percentage of revenues and corresponding higher gross margin percentages.

Read the The complete Report



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