Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is government consultant specializing in information technology and engineering solutions. Kratos divides its services between government solutions and its public safety services. Much like other businesses that compete for security government contracts, Kratos faces two principal trends: on the one hand, there have been high levels of government investment in defense and intelligence following the September 11 terrorist attacks; on the other hand, high levels of debt and a stalling economic recovery threaten to cut spending on defense which has grown by hundreds of billions of dollars since 9/11.
Kratos has posted consistent growth over the last five years, increasing its revenue from $153.1 million in 2006 to $408.5 million in 2010. In 2010, Kratos increased its revenues primarily through the acquisition of Gichner Systems Group, Inc. and Southside Container & Trailer LLC.
In the aftermath of the September 11, 2001 terrorist attacks, the U.S. defense and intelligence services grew dramatically. As of 2010, the U.S. defense budget nears one trillion dollars, nearly doubling its decade-ago figures. As such, ManTech enjoys the reliability of government spending on defense issues and counterterrorism efforts.
Almost all of ManTech's revenue come from contracts with the U.S. government, especially in defense and intelligence. As U.S. economic concerns continue, lawmakers may be inclined to cut into the near trillion dollar U.S. defense budget. Such cuts would have second and third order effects in the private consulting industry, especially on companies such as ManTech that are reliant upon contracts for their revenues.
Kratos competes in a largely saturated, private industry that provides consultation services for the U.S. government. Kratos' main competitors include Booz Allen Hamilton (BAH), SAIC (SAI), Lockheed Martin (LMT), and Raytheon Company (RTN).