Kratos Defense & Security Solutions (KTOS) investor relations material

Executive summary

• Q2 2026 revenue reached $458.8 million, up 30.5% year-over-year, with 19.1% organic growth, exceeding guidance.

• Net income for Q2 2026 was $4.4 million, up from $2.9 million in Q2 2025; adjusted EBITDA was $38.2 million, up from $28.3 million.

• Major acquisitions of Orbit Technologies and Nomad Global Communication Solutions contributed to revenue and backlog growth.

• Backlog reached $2.084 billion, with 35% expected to convert to revenue in 2026.

• Strong momentum in hypersonics, engine, and space businesses, with significant new program awards and production ramping.

Financial highlights

• Q2 2026 adjusted EBITDA was $38.2 million, above guidance; gross margin was 21.8%, up from 21.0% YoY.

• Q2 2026 net income was $4.4 million; EPS was $0.02 (basic and diluted); six-month net income was $16.3 million.

• Cash and equivalents at June 28, 2026, were $1.44 billion, up from $560.6 million at year-end 2025.

• Cash flow used in operations was $11 million; free cash flow used was $18.9 million, reflecting working capital needs and investments.

• Days Sales Outstanding improved to 114 days from 130 sequentially and 124 at year-end 2025.

Outlook and guidance

• Full-year 2026 organic revenue growth forecast raised to 18–23%; revenue guidance increased to $1.75–$1.81 billion.

• Q3 2026 revenue guidance is $460–$480 million, with 19–25% organic growth expected.

• Adjusted EBITDA margin expected to improve by ~100 basis points over 2025, with further improvement in 2027.

• 35% of $2.084 billion backlog expected to be recognized as revenue in 2026, another 35% in 2027.

• Full-year EBITDA negatively impacted by $5–$7 million due to Israeli shekel strength.