Kratos Defense & Security Solutions (KTOS)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 25.28% | 25.90% | 25.16% | 27.74% | 27.18% |
| Operating profit margin | 2.55% | 3.00% | 0.61% | 3.44% | 3.92% |
| Pretax margin | 2.33% | 1.07% | -3.64% | 0.54% | 0.91% |
| Net profit margin | 1.43% | -0.86% | -3.80% | 0.06% | 10.65% |
The analysis of Kratos Defense & Security Solutions’ profitability ratios over the period from December 31, 2020, to December 31, 2024, reveals several notable trends.
Starting with the gross profit margin, the company maintained a relatively stable position, operating within the range of approximately 25.16% to 27.74%. A slight increase from 27.18% in 2020 to 27.74% in 2021 indicates marginal improvements in core profitability, although the margin declined to 25.16% in 2022 before rebounding to 25.90% in 2023 and slightly decreasing again to 25.28% in 2024. These fluctuations suggest the company has faced some pressures on cost efficiency or changes in revenue mix but generally maintained a consistent gross profit level relative to sales.
The operating profit margin experienced more pronounced variability. It declined from 3.92% in 2020 to 3.44% in 2021, followed by a significant drop to 0.61% in 2022. This downturn reflects increased operating expenses or margin compression at the operating level. However, there was a partial recovery to 3.00% in 2023, but the margin decreased again to 2.55% in 2024, indicating ongoing challenges in managing operating costs or revenue generation at the operational level.
Pre-tax profit margin exhibited similar volatility. It decreased from 0.91% in 2020 to 0.54% in 2021 but then shifted into negative territory at -3.64% in 2022, highlighting a period of operational or non-operational losses impacting profitability before taxes. The margin improved to 1.07% in 2023 and further to 2.33% in 2024, reflecting a recovery in pre-tax profitability and an easing of prior challenges.
The net profit margin demonstrates the culmination of the company’s profitability performance. It was notably high in 2020 at 10.65%, but it then plunged to a negligible 0.06% in 2021 and shifted into negative territory at -3.80% in 2022, indicating that after accounting for all expenses, taxes, and non-operating costs, the company barely broke even or incurred losses. The net margin slightly improved to -0.86% in 2023 and turned positive at 1.43% in 2024, signaling a recovery in bottom-line performance.
Overall, the profitability ratios suggest that Kratos experienced significant operational and net income pressures around 2022, but has shown signs of stabilization and improvement in subsequent years, especially by 2024. The fluctuations highlight challenges in maintaining consistent profit margins but also demonstrate resilience and a potential return to profitability fundamentals.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 1.49% | 1.91% | 0.35% | 1.76% | 1.87% |
| Return on assets (ROA) | 0.84% | -0.55% | -2.20% | 0.03% | 5.09% |
| Return on total capital | 3.29% | 3.57% | -1.54% | 2.97% | 3.29% |
| Return on equity (ROE) | 1.20% | -0.91% | -3.64% | 0.05% | 8.60% |
The profitability ratios for Kratos Defense & Security Solutions over the specified period reflect notable fluctuations and trends. The Operating Return on Assets (Operating ROA) exhibited relative stability within the range of approximately 1.76% to 1.91%, with a slight decline noted in 2022 to 0.35% before rebounding to 1.91% in 2023 and settling at 1.49% in 2024. This indicates that the company's core operating efficiency in generating returns from its assets remained relatively steady, with minimal volatility, and demonstrated resilience with a rebound in 2023.
The Return on Assets (ROA), which accounts for overall profitability including non-operating factors, showed a more volatile pattern. The ROA fell sharply from 5.09% in 2020 to near zero levels in 2021, turning negative in 2022 with a -2.20% figure. Although the negative trend persisted into 2023 with a -0.55%, there was a partial recovery in 2024, with the ROA increasing to 0.84%. This progression suggests an improvement in overall asset utilization and profitability, albeit remaining modest.
The Return on Total Capital mirrored similar fluctuations, beginning at 3.29% in 2020, declining to negative territory at -1.54% in 2022, and then rebounding to 3.57% in 2023 before returning to 3.29% in 2024. The negative turn in 2022 indicates periods of unprofitable capital utilization, possibly due to increased costs, operational challenges, or external factors affecting profitability. The subsequent recovery implies an adjustment or improvement in capital efficiency.
Return on Equity (ROE) demonstrated more pronounced volatility, starting at 8.60% in 2020, then sharply declining to near-zero at 0.05% in 2021, and transitioning into negative territory at -3.64% in 2022. This negative trend persisted into 2023 with a -0.91%, but showed signs of improvement in 2024, reaching 1.20%. The fluctuation reflects varying levels of profitability attributable to shareholders’ equity, with the recent uptick indicating a possible stabilization or recovery phase.
Overall, the company's profitability ratios highlight significant periods of decline around 2021 and 2022, potentially due to market, operational, or other external pressures. The subsequent improvements in 2023 and 2024 suggest attempts at operational adjustment and a gradual recovery in profitability metrics, though some ratios remain relatively subdued, indicating ongoing challenges in consistently generating robust profits relative to assets, capital, and shareholders' equity.