Segment Information

3 Months Ended

Mar. 30, 2025

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company operates in two reportable segments. The KGS reportable segment is comprised of an aggregation of KGS operating segments, including DRSS, ME, ST&C, MS, and KTT. The US reportable segment consists of the Company’s unmanned aerial, unmanned ground, unmanned seaborne and command, control and communications system products. The KGS and US segments provide products, solutions and services for mission critical National Security programs. KGS and US customers primarily include National Security related agencies, the DoD, intelligence agencies and classified agencies, and to a lesser degree, international government agencies and domestic and international commercial customers.

There were not any significant intersegment sales, cost of sales and profit for the three month periods ended March 30, 2025 and March 31, 2024.

The Company’s chief operating decision maker is the President and Chief Executive Officer. The chief operating decision maker uses segment operating income (loss) predominantly in the annual budget and forecasting process. The chief operating decision maker considers budget-to-actual variances on a quarterly basis when making decisions about the allocation of operating and capital resources to each segment. The chief operating decision maker also uses segment operating income (loss) to assess the performance of each segment by comparing the results of each segment with one another and in determining the compensation of certain employees.

(a)    Summary Operating Results

The tables below provide information about the Company’s reportable segments. In these tables total segment operating income (loss) of the reportable business segments is reconciled to the corresponding consolidated amount. “Unallocated amounts” includes costs for merger and acquisition expenses, stock-based compensation expenses, interest expense (net), and other income (expense) items not considered part of management’s evaluation of segment operating income (loss). See Note 3 (Revenue Recognition) to these condensed consolidated financial statements for segment revenues disaggregated by contract type, customer and geographic region. The summary operating results for the Company’s reportable segments for the three month periods ended March 30, 2025 and March 31, 2024, are as follows (in millions):

Quarter Ended March 30, 2025	Kratos Government Solutions		Unmanned Systems		Totals
Service revenues	$	100.7	$	1.7	$	102.4
Product sales	138.8		61.4		200.2
Total revenues	239.5		63.1		302.6
Cost of service revenue	74.5		1.2		75.7
Cost of product sales	101.4		51.9		153.3
Total cost of sales	175.9		53.1		229.0
Selling, general & administrative expenses	37.0		11.3		48.3
Research & development expenses	9.6		0.4		10.0
Total segment operating income	17.0		(1.7)		15.3
Reconciliation of segment operating income
Unallocated amounts:
Stock compensation expense					(8.7)
Interest expense, (net)					(0.9)
Other expense, net					(0.3)
Income before income taxes					$	5.4

Revenues from foreign customers were approximately $61.1 million or 20% of total revenue for the three months ended March 30, 2025. Revenues from any one foreign country did not exceed 10% of total revenues.

Quarter Ended March 31, 2024	Kratos Government Solutions		Unmanned Systems		Totals
Service revenues	$	104.6	$	1.9	$	106.5
Product sales	113.2		57.5		170.7
Total revenues	217.8		59.4		277.2
Cost of service revenue	77.8		1.4		79.2
Cost of product sales	80.6		46.4		127.0
Total cost of sales	158.4		47.8		206.2
Selling, general & administrative expenses	34.5		10.7		45.2
Research & development expenses	8.3		1.3		9.6
Restructuring expenses and other	—		—		—
Total segment operating income	16.6		(0.4)		16.2
Reconciliation of segment operating income
Unallocated amounts:
Stock compensation expense					(9.2)
Interest expense, (net)					(2.8)
Other expense, net					(0.2)
Income before income taxes					$	4.0

Revenues from foreign customers were approximately $53.1 million or 19% of total revenue for the three months ended March 31, 2024. Revenues from any one foreign country did not exceed 10% of total revenues.

(b)    Capital Expenditures (in millions):	Quarter Ended
	March 30, 2025		March 31, 2024
Kratos Government Solutions	$	13.6	$	9.5
Unmanned Systems	9.0		7.1
Total reportable segment capital expenditures	22.6		16.6
Corporate capital expenditures	—		—
Total capital expenditures	$	22.6	$	16.6

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(c)     Depreciation and Amortization (in millions):	Quarter Ended
	March 30, 2025		March 31, 2024
Kratos Government Solutions	$	7.1	$	6.1
Unmanned Systems	3.3		3.2
Total depreciation and amortization	$	10.4	$	9.3

d)    Reportable Segment Assets are as follows (in millions):	March 30, 2025		December 29, 2024
Kratos Government Solutions	$	1,348.0	$	1,250.4
Unmanned Systems	399.8		385.7
Total reportable segment assets	1,747.8		1,636.1
Corporate assets(1)	257.1		314.8
Total assets	$	2,004.9	$	1,950.9

(1)Corporate assets primarily include cash and cash equivalents, deferred income tax assets, and property, plant and equipment used in our corporate operations.

Assets of foreign subsidiaries in the KGS segment were $230.7 million and $193.6 million as of March 30, 2025 and March 31, 2024, respectively. Assets from any one foreign country did not exceed 10% of total assets.