Kratos (KTOS) 2Q26 First Take Solid quarter, full year guidance raised

Equity Research 4 August 2026 | 9:08PM EDT

Kratos (KTOS): 2Q26 First Take: Solid quarter, full year guidance raised

Bottom line: KTOS reported 2Q26 revenue, EBITDA, and EPS ahead of consensus, Noah Poponak, CFA | with margins slightly below. KTOS raised 2026 guidance for revenue and EBITDA, Goldman Sachs & Co. LLC while reducing CFO and CapEx and reiterating free cash. Connor Dessert | Details: 2Q26 revenue of $459mn is 12% above our model (up 19.1% yoy Goldman Sachs & Co. LLC organically). Adjusted EBITDA of $38mn is 6% above our estimate, on an 8.3% Nizar Mesani EBITDA margin - KGS in-line and KUS 310bps below. Total reported book to bill is | 1.1X in the quarter and 1.3X on a TTM basis. Free cash flow is $(28.2)mn, from Goldman Sachs India SPL $(32.2)mn a year ago. Amanda Fenenbock, CFA | The company updated 2026 guidance; including revenue of $1,750-$1,810mn Goldman Sachs & Co. LLC ($1,700-$1,760mn prior, compared to FactSet consensus at $1,743mn), adj. EBITDA Tomas Russo | of $173-$176mn ($170-$176mn prior, compared to consensus at $177.5mn), Goldman Sachs & Co. LLC operating cash flow of $30-$50mn ($60-$70mn prior, compared to consensus at $66mn), and FCF of $(105)-(85)mn (unchanged, compared to consensus at $(103)mn) on capex of $125-$135mn ($155-$165mn prior, compared to consensus at $159mn).

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Exhibit 1: KTOS 2Q26 adjusted variance $mn, except EPS

YoY change Adjusted Actual GS Estimate $ Variance % Variance EPS Impact 2Q25 Growth REVENUE Unmanned Systems % ($0.00) 73.2 8.1% Kratos Government Solutions % $ % Total sales % $ %

Adjusted EBITDA Unmanned Systems % ($0.01) 3.7 37.8% Kratos Government Solutions % $ % Segment EBITDA (adjusted) % $ % Unallocated corporate expense, net - - 0.0 - $0.00 - - Total EBITDA (adjusted) % $ %

MARGIN Unmanned Systems 6.4% 9.5% -310 bp 5.1% 130 bp Kratos Government Solutions 8.7% 8.7% 0 bp 8.8% -10 bp Adjusted Segment EBITDA Margin 8.3% 8.8% -50 bp 8.1% 20 bp Adjusted EBITDA Margin 8.3% 8.8% -50 bp 8.1% 20 bp

Interest expense, net % $ % Minority Interest, other 0.0 0.0 0.0 - $0.00 - 0.0% Other, net % $ % EBT % 26.2 84.7% Federal and foreign income taxes ( % $0.00 (9.1) -1.1% Effective income tax rate 18.6% 20.0% -140 bp 34.7% -1610 bp Net income continuing ops % 17.1 130.4% Adjusted Diluted EPS $0.21 $0.17 $0.04 20.7% $0.04 $0.11 90.8% Diluted Shares % ($ %

Source: Company data, Goldman Sachs Global Investment Research.

Exhibit 2: KTOS 2026 outlook $mn, except EPS 2026 Outlook Feb May August

Revenue $1,595 - $1,675 $1,700 - $1,760 $1,750 - $1,810 Adj EBITDA $157 - $167 $170 - $176 $173 - $176 Op Cash Flow $50 - $60 $60 - $70 $30 - $50 Capex $135 - $145 $155 - $165 $125 - $135 Free Cash Flow $(95) - $(85) $(105) - $(85) --

Our 12-month price target of $89 is derived from 7.0X CY27 EV/Sales. Key risks include: DoD spending priorities, funded contract timing, and operational execution.