Global Defense Spending and Industry Inflection Point
Eric DeMarco highlighted that 2024 global defense and national security expenditure was approximately $2.5 trillion, with US spending expected to exceed $1 trillion in 2025.
He emphasized a worldwide recapitalization of weapon systems and infrastructure, positioning Kratos to capitalize on this industry inflection point.
Recent US executive orders and legislation (FORGED Act, SPEED Act) aim to streamline defense procurement, benefiting companies like Kratos.
Kratos is experiencing organic revenue growth of 15% in Q2, a record bid pipeline of $13 billion, and a forecasted 13-15% organic growth through 2026.
Record Defense Orders and International Market Expansion
Raytheon booked over $5 billion in integrated air and missile defense awards, including the largest order in program history of $1.1 billion.
International demand is strong, with NATO allies increasing defense spending to 3.5% of GDP over the next decade, and Raytheon expanding regional partnerships such as the agreement with Spain for Patriot production.
Demand for core defense products is driven by increased global focus on air dominance, with significant growth in programs like Gem-T, Coyote, and AMRAAM, supported by $150 billion in U.S. defense budget legislation.
Dafinchi