v3.26.1
Segment Information
 6 Months Ended
Jun. 28, 2026
Segment Reporting [Abstract]  
Segment Information Segment Information
 
The Company operates in two reportable segments, KGS and US. The KGS reportable segment is comprised of an aggregation of KGS operating segments, including our microwave electronics products, space, satellite and cyber, training solutions, C5ISR/modular systems, turbine technologies, and defense and rocket support services operating segments. 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 reportable segments provide products, solutions and services for mission critical National Security programs. KGS and US customers primarily include National Security related agencies, the DoW, 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 and six month periods ended June 28, 2026 and June 29, 2025.

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 income (expense), net, and other income (expense), net, items not considered part of management’s evaluation of segment operating income. 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 and six month periods ended June 28, 2026 and June 29, 2025, are as follows (in millions):
Three Months Ended June 28, 2026
KGSUSTotals
Service revenues$167.2 $2.5 $169.7 
Product sales212.5 76.6 289.1 
Total revenues379.7 79.1 458.8 
Cost of service revenue129.7 1.9 131.6 
Cost of product sales163.1 64.0 227.1 
Total cost of sales292.8 65.9 358.7 
Selling, general & administrative expenses59.9 11.1 71.0 
Research & development expenses12.7 0.9 13.6 
Total segment operating income
14.3 1.2 15.5 
Reconciliation of segment operating income
Unallocated amounts:
Merger and acquisition related expenses
$(0.8)
Stock compensation expense(16.3)
Interest income (expense), net
10.2 
Other income (expense), net
(1.6)
Income before income taxes$7.0 

Revenues from foreign customers were approximately $89.9 million or 20% of total revenue for the three months ended June 28, 2026. Revenues from any one foreign country did not exceed 10% of total revenues.
Six Months Ended June 28, 2026
KGSUSTotals
Service revenues$298.5 $5.2 $303.7 
Product sales369.6 156.5 526.1 
Total revenues668.1 161.7 829.8 
Cost of service revenue226.9 4.0 230.9 
Cost of product sales278.8 130.4 409.2 
Total cost of sales505.7 134.4 640.1 
Selling, general & administrative expenses105.2 23.1 128.3 
Research & development expenses22.6 1.7 24.3 
Total segment operating income34.6 2.5 37.1 
Reconciliation of segment operating income
Unallocated amounts:
Merger and acquisition related expenses$(2.7)
Stock compensation expense(31.3)
Interest income (expense), net
14.7 
Other income (expense), net
(1.0)
Income before income taxes$16.8 

Revenues from foreign customers were approximately $166.3 million or 20% of total revenue for the six months ended June 28, 2026. Revenues from any one foreign country did not exceed 10% of total revenues.
Three Months Ended June 29, 2025
KGSUSTotals
Service revenues$133.0 $1.9 $134.9 
Product sales145.3 71.3 216.6
Total revenues278.373.2351.5
Cost of service revenue105.4 1.8 107.2 
Cost of product sales110.7 59.8 170.5 
Total cost of sales216.1 61.6 277.7 
Selling, general & administrative expenses40.0 11.3 51.3 
Research & development expenses9.6 0.6 10.2 
Total segment operating income (loss)
12.6 (0.3)12.3 
Reconciliation of segment operating income
Unallocated amounts:
Merger and acquisition related expenses$— 
Stock compensation expense(8.6)
Interest income (expense), net (1.2)
Other income (expense), net
2.1 
Income before income taxes$4.6 

Revenues from foreign customers were approximately $61.2 million or 17% of total revenue for the three months ended June 29, 2025. Revenues from any one foreign country did not exceed 10% of total revenues.
Six Months Ended June 29, 2025
KGSUSTotals
Service revenues$233.7 $3.6 237.3
Product sales284.1 132.7 416.8
Total revenues517.8136.3654.1
Cost of service revenue179.9 3.0 182.9
Cost of product sales212.1 111.7 323.8
Total cost of sales392.0 114.7 506.7
Selling, general & administrative expenses77.0 22.6 99.6 
Research & development expenses19.2 1.0 20.2
Total segment operating income29.6 (2.0)27.6 
Reconciliation of segment operating income
Unallocated amounts:
Merger and acquisition related expenses$— 
Stock compensation expense(17.3)
Interest income (expense), net(2.1)
Other income (expense), net
1.8 
Income before income taxes$10.0 

Revenues from foreign customers were approximately $122.3 million or 19% of total revenue for the six months ended June 29, 2025. Revenues from any one foreign country did not exceed 10% of total revenues.
(b) Capital Expenditures (in millions):
Three Months Ended
Six Months Ended
June 28, 2026June 29, 2025June 28, 2026June 29, 2025
Kratos Government Solutions$12.9 $12.6 $25.4 $26.2 
Unmanned Systems4.27.810.916.8
Total reportable segment capital expenditures17.1 20.4 36.3 43.0 
Corporate capital expenditures0.10.10.80.1
Total capital expenditures$17.2 $20.5 $37.1 $43.1 
(c) Depreciation and Amortization (in millions):
Three Months EndedSix Months Ended
June 28, 2026June 29, 2025June 28, 2026June 29, 2025
Kratos Government Solutions$18.2 $8.2 $31.2 $15.3 
Unmanned Systems3.93.67.76.9
Total depreciation and amortization$22.1 $11.8 $38.9 $22.2 
(d) Reportable Segment Assets (in millions):
June 28, 2026December 28, 2025
Kratos Government Solutions$2,256.8 $1,472.9 
Unmanned Systems451.5438.7
Total reportable segment assets2,708.3 1,911.6 
Corporate assets(1)
1,381.5555.6
Total assets$4,089.8 $2,467.2 
(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 $705.1 million and $300.5 million as of June 28, 2026 and December 28, 2025, respectively. As of June 28, 2026, long-lived assets located in Israel totaled $75.2 million, represented approximately 16% of our total consolidated long-lived assets. With the exception of Israel, no single foreign country accounted for more than 10% of the Company’s total long-lived assets. For purposes of this disclosure, long-lived assets consist of property and equipment, net and operating lease right-of-use assets, and exclude cash, receivables, goodwill, and intangible assets.