Kratos wins $175 million contract for Navy radar sustainment

SAN DIEGO - Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) has been awarded Phase 1 of a contract to develop an organic sustainment capability for the U.S. Navy’s AN/SPY-1 radar systems, according to a press release statement issued Monday.

The single-award agreement, dubbed "Project Anaconda" internally, has an initial projected ceiling of $175 million across multiple phases. The contract will support the Navy’s AN/SPY-1 radar systems, which are deployed on Aegis-equipped cruisers and destroyers and expected to remain in service through 2065. InvestingPro data shows Kratos maintains a strong financial position with a healthy current ratio of 4.43, indicating robust ability to fund long-term projects.

Central to Kratos’ solution is the development of the Indiana Radar Integration Complex (IRIC), a 155,000-square-foot facility strategically located within 1.5 miles of Naval Surface Warfare Center Crane. The facility is expected to be operational in 2027.

Under Phase 1, Kratos will establish the foundation for the IRIC, develop repair and modernization processes for radar subsystems, advance digital engineering technologies, and coordinate with Navy stakeholders to align with fleet sustainment priorities.

"The AN/SPY-1 program and our new IRIC represent the intersection of Kratos’ core philosophies: rapidly developing affordable, real-world solutions for critical defense needs," said Eric DeMarco, President and CEO of Kratos.

The contract will be executed in multiple phases, with additional work authorized as milestones are achieved. This approach allows for risk mitigation and capability acceleration to meet long-term fleet requirements.

The AN/SPY-1 radar enables ballistic missile defense, integrated air and missile warfare, and maritime domain awareness for the Navy’s surface fleet. The service has prioritized building long-term, organic sustainment capacity to ensure uninterrupted fleet readiness for these critical systems. Investors tracking this development can access comprehensive analysis and 20+ additional ProTips through InvestingPro, which also offers detailed Pro Research Reports covering Kratos’s financial health, market position, and growth prospects.

In other recent news, Kratos Defense & Security Solutions has completed the Preliminary Design Review for the Space Development Agency’s Advanced Fire Control Ground Integration system without any outstanding issues. This milestone allows the program to advance on an accelerated timeline, aligning with projected launch milestones. Additionally, Kratos has been selected as the exclusive U.S. manufacturing partner for Elroy Air’s Chaparral autonomous cargo drone under a new five-year strategic agreement. This partnership aims to accelerate the high-volume production of the hybrid-electric vertical takeoff-and-landing cargo drone.

In another development, Kratos announced the appointment of Brian Shepard as Chief Information Officer. Shepard, who has been with the company since 2006, will oversee all information technology operations. Furthermore, Kratos will be added to the S&P MidCap 400 Index, moving up from the S&P SmallCap 600 Index, reflecting its growth in key areas. On the analyst front, Citizens JMP analyst Trevor Walsh raised the price target for Kratos to $105 from $70, maintaining a Market Outperform rating.

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