Post merger, Kratos execs outline goals for 2011

Off-site meetings, sales kick-off take place in Palm Springs starting today
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Monday, January 10, 2011

PALM SPRINGS, Calif.—With the official close of the Kratos/Henry Brothers deal on Dec. 15, the integration of Henry Brothers is underway and Jim Henry, former owner of Henry Brothers, will attend the Kratos’ annual management off-site meeting which kicks off here today.

“This is a meeting hosted by Eric DeMarco, our CEO, which brings in the senior management of the company to discuss strategy, synergies between operating units and financial planning and projections,” Ben Goodwin, president, Public Safety & Security Solutions segment (PSS) of Kratos Defense & Security Solutions told Security Systems News.

“As EVP of our Public Safety and Security Segment Jim [Henry] is a key part of our team and we have been working very closely since the transaction closed on Dec. 15 to ensure a smooth integration of the operations,” Goodwin added. Goodwin called Henry an “icon” and said Henry will be instrumental in “helping to guide us to the next plateau of growth and success with Kratos.”

Following this meeting and later this week Kratos will hold its annual sales kick-off meeting for PSS. That meeting will bring the sales force of the merged operations “together for briefings on the combined company and laying out our new branding and objectives for 2011,” Goodwin explained.

“It has been a very busy time since Dec. 15 with lots of excitement as we start this new phase of our journey,” he added.

A Dec. 16 Kratos statement said the transaction is expected to “immediately increase Kratos’ earnings per share, cash flow, and cash flow per share, in addition to increasing Kratos’ EBITDA margin rates. Additionally, Kratos has revised its 2011 financial guidance up to approximately $550 (million) to $560 million in revenue, and up to $60 (million) to $62 million in EBITDA.”

DeMarco said in a statement that the newly combined business will contribute to organic growth. “Kratos’ financial strength, critical mass and the combined past performance qualifications of the business will enable us to pursue large security system integration programs HBE could not have previously pursued.”

Goodwin told Security Systems News that, in addition to organic growth, there are cross-selling opportunities that the two companies will begin to take advantage of immediately.

“We are most focused on the cross selling of our NeuralStar and dopplerVue product line which comes from our Information Technology Division. These are network management products which allow customers to manage diverse enterprise networks and provides support for network design and implementation,” he said. “These tools will be valuable in the implementation of the sophisticated security systems being planned and implemented today,” he added.

The PSS group is also now working more closely with the Kratos Government Solutions (KGS) Group, “pursuing large DOD opportunities which involve physical security systems and where the customer is already aware and in many cases working with our sister divisions.”

Goodwin said the primary goal is to ensure that our customers “view this merger as positive and seamless for them ... Behind the realization of this goal of course, is taking care of our employees who remain our greatest asset, so we intend to pay close attention to their needs and motivation as well.”