Eric M. DeMarco is President and CEO of Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS). In his extensive interview with the Wall Street Transcript, Mr. DeMarco details the operations of “our primary offerings, our core businesses, if you will, are unmanned aerial aircraft that are jet-powered, that are very, very high performance, that have been designed to perform their mission in contested environments.”
The large sales to several US allies will contribute to near term profitability growth, according to Eric DeMarco: “One of our primary customers is Israel and Israel Aerospace Industries — IAI — which is, my term, the Lockheed Martin (NYSE: LMT) of Israel and is owned by the Israeli government. We sell microwave electronic products to IAI, which is used in their radar systems and their associated missile systems and their electronic warfare systems.”
Eric DeMarco identifies one of Kratos’ top products: “…we have been very fortunate and very successful in winning a number of what I would call tactical UAV programs or contracts, where our UAVs, which again are jet-powered, very high performance and are designed to perform their mission in contested environments, we are delivering those to U.S. customers.”
The challenge for the rapidly growing defense supplier is in human resource: “…our greatest competition in recruiting people, and for the best and the brightest talent out there is the Silicon Valley companies and the high-flying companies. They’re very exciting and very technical, and they’re growing rapidly. And so we try to match them, not in name brand but in the interesting work that we do relative to our UAVs or our satellite business or our microwave electronics business.”
The CEO promises a strong return for current investors as the “…Secretary of Defense is pushing the rapid innovation. He has said publicly he’s a very large supporter of the innovation offices in the DIUx. So I believe all that, which previous Secretary of Defense Ash Carter set up and started, which I think was very insightful, I think innovation is going to at least be maintained if not accelerated under Mattis.”
To obtain all the details on where the rapid growth in cash flow is from for Kratos Defense and Security Solutions, read the entire interview in the Wall Street Transcript.
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