Kratos CEO ‘very comfortable’ with balance sheet; debt refi planned

By Devika Patel

Knoxville, Tenn., Aug. 9 – Kratos Defense & Security Solutions, Inc. is looking to refinance its long-term bonds due 2019 within the next year, but the company’s top executive is “very comfortable” with the balance sheet as it stands and believes revenues coming in as the company enters its production phase will help Kratos de-lever naturally from just over 5x leverage.

“Our debt is bonds and we put long-term bonds into place purposely because we knew we’d be executing the strategy of investing in new areas,” president and chief executive officer Eric DeMarco said at the Canaccord Genuity Growth Conference in Boston on Wednesday.

“The bonds come due in May or June of 2019 so we are starting to look at refinancing the debt and our plan right now is to refinance the debt sometime in the next year.

“We’re fortunate that we’re ending this development phase, we’re entering the production phase and our revenue and our profitability is going to start to increase which is naturally going to help us de-lever as we’re entering this refinancing page on the debt,” he said.

DeMarco said that the company’s leadership is “comfortable” with its current balance sheet.

“From a capital structure, debt refinance, financing the growth, we’re looking at that all together, but right now we’re very comfortable with the balance sheet.

“I think at the end of the last quarter we had $60 to $70 million in cash.

“I think our net debt was under $300 million with just over 5x, so I’m very comfortable where we are today,” he said.

Kratos is a national security solutions provider based in San Diego.

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