S&P shifts Kratos view to stable

S&P said it revised Kratos Defense & Security Solutions Inc.’s outlook to stable from negative and affirmed the B+ issuer rating.

“Proceeds from stock issuance lessens the need for the company to rely on operating cash flows to fund investments. By tapping the equity market, the company netted over $240 million cash that was added to the balance sheet. We expect the company to use this cash for increased capital spending and other investments needed to win and start new programs in its unmanned systems and satellite segments,” S&P said in a press release.

The outlook reflects an expectation Kratos' cash balance will be adequate to fund costs associated with new programs and result in a modest improvement in earnings such that debt to EBITDA will be 4x-4.4x in 2021 and 3.8x-4.2x in 2022, the agency said.

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