Kratos Defense & Security Solutions, Inc. · NASDAQ:KTOS
Kratos Defense & Security Solutions — IPO Roadshow (May 2012)
15 slides from Kratos Defense & Security Solutions's IPO roadshow presentation, May 9, 2012
Slide 1: Kratos Acquisition of Composite Engineering, Inc. (CEI)
Kratos Acquisition of Composite Engineering, Inc. (CEI)
Slide 2: Investment Summary of Transaction
Kratos Acquisition of CEI Investment Summary of Transaction: Very unique Composite Aerial Targets and Aerial Drone manufacturer Business, Customers, Products, and Market that Kratos is intimately familiar with CEI owns significant amount of IP and Data Rights for its products Extremely High Barriers
Slide 3: Investment Summary of Transaction
Kratos Acquisition of CEI Investment Summary of Transaction: Very limited number of competitors in this market CEI Major Contracts/Programs currently in multi-year Full Rate Production phase, with several additional recent new contract awards entering Full Rate Production over the next two years Sig
Slide 4: Investment Summary of Transaction
Kratos Acquisition of CEI Investment Summary of Transaction: Kratos Shareholder and Board Member Oak Investment Partners investing $55 Million in Straight Common Kratos Equity to Facilitate and Execute the Transaction Acquisition of CEI and Transaction is expected to be: Accretive to Kratos’ EPS and
Slide 5: CEI is a private company specializing in unmanned aerial drone systems and aerial targets
Kratos Acquisition of CEI CEI is a private company that specializes in the design manufacture, test and operation of unmanned aerial drone systems, and aerial targets Kratos currently manufactures and provides to CEI electronics and avionics that are on board CEI aircraft, and Kratos currently manuf
Slide 6: CEI is a leading provider of aerial targets
Kratos Acquisition of CEI CEI is a leading provider of aerial targets which represent the most lethal aerial threats facing this nation’s warfighters and strategic assets All CEI aircraft are jet powered with advanced flight and performance characteristics CEI aircraft have subsonic and supersonic a
Slide 7: Certain CEI programs that can be discussed publicly
Kratos Acquisition of CEI Certain CEI programs that can be discussed publicly include: U.S. Air Force AFSAT U.S. Navy SSAT Multi-Stage Supersonic Target Miniature Air Launched Decoy (MALD)
Slide 8: CEI aircraft produced in state of the art, secure manufacturing facility
Kratos Acquisition of CEI CEI aircraft and composite products are produced in a state of the art, secure manufacturing facility
Slide 9: Similar to Kratos' Aegis Readiness Assessment Vehicles and BMD Targets business
Kratos Acquisition of CEI Similar to Kratos’ Aegis Readiness Assessment Vehicles (ARAV) and BMD Targets business, which is growing organically for Kratos greater than 30 percent annually: The majority of CEI’s contracts are Sole Source CEI owns significant amounts of technical data associated with i
Slide 10: CEI is a complete vertically integrated business
Kratos Acquisition of CEI CEI is a complete vertically integrated Business, possessing all of the engineering, manufacturing and resource capabilities required for the design, prototyping, testing, production, maintenance and operational support for a comprehensive family of Aerial Targets and Aeria
Slide 11: CEI is a unique and scarce asset
Kratos Acquisition of CEI CEI is a unique and scarce asset: CEI is the sole source subscale Aerial Target provider to the U.S. Air Force and U.S. Navy CEI has a near 100% win rate on Aerial Target opportunities CEI’s flagship aircraft was designed specifically for the U.S. Air Force to replicate adv
Slide 12: Recent CEI Historical Financial Data
Kratos Acquisition of CEI Recent CEI Historical Financial Data: 2010 2011 Revenue $73.6M $94.1M Adjusted EBITDA $5.5M $15.9M CEI grew organically over 20 percent from 2010 to 2011, which is expected to continue in the future Current CEI backlog is ~$160M Current CEI Bid and Proposal Pipeline for 201
Slide 13: Purchase Price and Tax Benefit
Kratos Acquisition of CEI Purchase Price $155 Million Cash Component $135 Million KTOS Stock Component to CEI Owners $ 20 Million Tax Benefit to Kratos from 338(h)(10) Election ~ $130 million Approximately $8.5 million per year for each of next 15 years in tax “shield” Benefit against CEI pre-tax ea
Slide 14: Equity Raised and Share Issuance
Kratos Acquisition of CEI Estimated New Kratos Equity Raised $100 Million Estimated KTOS Share Issue Price $5.00 Estimated New KTOS Shares Issued 20 Million Estimated Kratos Cash Utilized $35 Million Total Cash Component of Purchase Price $135 Million KTOS Stock Component of Purchase Price $20 Milli
Slide 15: Acquisition Structure
Kratos Acquisition of CEI Acquisition Structure Transaction expected to be: Accretive to Kratos EPS* and Pro Forma EPS* in 2013 and future years Delevering To Kratos Increase Kratos Free Cash Flow Increase Kratos’ Organic Growth Rates Increase Kratos’ Margin Rates Accelerate delevering of Kratos in
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