Segment Information

12 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company operates in two reportable segments. The KGS reportable segment is comprised of an aggregation of KGS operating segments, including DRSS, ME, ST&C, MS, and KTT. 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 segments provide products, solutions and services for mission critical National Security programs. KGS and US customers primarily include National Security related agencies, the DoD, intelligence agencies and classified agencies, and to a lesser degree, international government agencies and domestic and international commercial customers.

The Company organizes its reportable segments based on the nature of the products, solutions and services offered. Transactions between segments are generally negotiated and accounted for under terms and conditions similar to other government and commercial contracts. In the following table total operating income (loss) from continuing operations of the reportable business segments is reconciled to the corresponding consolidated amount. “Corporate activities” includes costs for certain stock-based compensation programs (including stock-based compensation costs for stock options, employee stock purchase plan and restricted stock units), the effects of items not considered part of management’s evaluation of segment operating performance, merger and acquisition expenses, corporate costs not allocated to the segments, and other miscellaneous corporate activities.

Revenues, operating income (loss) and assets disclosed below provided by the Company’s reportable segments for the years ended December 31, 2023, December 25, 2022, and December 26, 2021, are as follows (in millions):

	2023		2022		2021
Revenues:
Kratos Government Solutions
Service revenues	$	395.9	$	320.0	$	214.5
Product sales	429.0		356.6		365.1
Total Kratos Government Solutions	824.9		676.6		579.6
Unmanned Systems
Service revenues	6.7		5.2		4.9
Product sales	205.5		216.5		227.0
Total Unmanned Systems	212.2		221.7		231.9
Total revenues	$	1,037.1	$	898.3	$	811.5
Depreciation and amortization:
Kratos Government Solutions	$	24.1	$	22.7	$	17.4
Unmanned Systems	9.1		7.8		8.3
Total depreciation and amortization	$	33.2	$	30.5	$	25.7
Operating income (loss):
Kratos Government Solutions	$	52.7	$	27.2	$	42.3
Unmanned Systems	4.2		(2.8)		13.2
Corporate activities	(25.8)		(27.0)		(27.6)
Total operating income (loss)	$	31.1	$	(2.6)	$	27.9

The US operating loss for the year ended December 25, 2022 included a $5.5 million litigation settlement charge related to the resolution of a dispute with an international customer, for which the contractual arrangement was entered into in March 2011, prior to Kratos’ acquisition of Composite Engineering Inc. The KGS operating income for the year ended December 25, 2022 includes $6.4 million of expenses related to certain non-recoverable costs, including rate and cost growth items, resulting from the inability to hire the required planned direct labor base both internally and by the Company’s subcontractors to execute on its backlog, due to the continued challenges in both hiring and retaining skilled manufacturing personnel, including approximately $3.4 million in expenses in the Company’s C5ISR business, and non-recoverable indirect cost rate growth resulting from a smaller than planned direct labor base due to delays in customer program execution and awards in the Company’s Training Solutions business of approximately $3.0 million. Revenues from foreign customers were approximately $202.0 million or 19%, $173.1 million or 19% and $169.8 million or 21% of total revenue for the years ended December 31, 2023, December 25, 2022, and December 26, 2021, respectively.

    Reportable segment assets are as follows (in millions):

	December 31, 2023		December 25, 2022		December 26, 2021
Assets:
Kratos Government Solutions	$	1,190.2	$	1,105.1	$	907.6
Unmanned Systems	378.6		349.7		327.1
Corporate activities	63.7		96.7		354.8
Total assets	$	1,632.5	$	1,551.5	$	1,589.5

Assets of foreign subsidiaries in the KGS segment were $204.6 million, $178.3 million and $166.2 million as of December 31, 2023, December 25, 2022 and December 26, 2021, respectively.