{ "docId": "019dd923-622c-750b-8b98-64474d65435b", "docSlug": "68bd393edc75", "documentTitle": "Kratos Defense & Security Solutions (KTOS)", "authorId": "54_Spruce_Point_Capital", "authorName": "Ben Axler", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2018-03-16 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 29, "pageCount": 49, "prevPage": 28, "nextPage": 30, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 4, "notes": "Uses direct quotes from CEO earnings calls to highlight a shift in narrative.", "elementsJson": [ "headline_text", "paragraph", "quote_block", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-64474d65435b/29", "deckHref": "/decks/019dd923-622c-750b-8b98-64474d65435b", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-64474d65435b.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-64474d65435b#slide-29", "components": [ { "bbox": null, "kind": "callout", "text": "Kratos has a history of touting great opportunities with large “potential” markets. This time around, it has been promoting the Gremlin opportunity, which is still experimental in nature.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-0935-737e-8dc2-8d52906e66c1", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.3, "x": 0.05, "y": 0.31 }, "kind": "list", "text": "CEO Hyping The Gremlin Opportunity:", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "73e64d07-e919-4787-a2fd-55d4e9f15c99", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.25, "x": 0.05, "y": 0.68 }, "kind": "list", "text": "Only To Go Silent On It Later:", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "819523b1-47a7-422e-b3e6-2fdf0c0fc4c6", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.9, "x": 0.05, "y": 0.73 }, "kind": "paragraph", "text": "Sheila Kahyaoglu on Q2'17 Call : “And then last question, just on Gremlins, where are we there? Is it just in -- just the past days right now with the 12 months or any update on that would be appropriate I guess.”", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0f0152a2-d5be-433f-b8e1-84e015311fe1", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.52 }, "kind": "paragraph", "text": "CEO Demarco Q4'16: “However, as you know, we believe that a key reason Kratos was selected as one of the four Gremlin prime Phase 1 contract awardees was due to Kratos' industry leading position... And today, I'm truly more confident than ever that Kratos will be producing a UAV for the Gremlin's program.”", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1598a176-a736-4063-b462-9eece6fa28a5", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.17 }, "kind": "paragraph", "text": "Kratos has a history of touting great opportunities with large “potential” markets. This time around, it has been promoting the Gremlin opportunity, which is still experimental in nature. Kratos is just the subcontractor on the program to Dynetics, which is competing with General Atomics, ranked the 33rd largest federal contractor (1,2). Who do you think wins?", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1cc44b9f-5998-4931-adfa-93fc1eb33e67", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.9, "x": 0.05, "y": 0.78 }, "kind": "paragraph", "text": "CEO Eric DeMarco: “It is very competitive, I am sorry, I did not talk about it in the script and I am not talking about it anymore. It's focus time. So, I apologize.”", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a1a8f0ea-fed2-4f50-9a6e-a93211002154", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.9, "x": 0.05, "y": 0.36 }, "kind": "paragraph", "text": "CEO Demarco Q3'16: “A second new UAV contract that Kratos received is the Defense Advanced Research Project Agency or DARPA Gremlins program... At these estimated production levels, we believe the potential market opportunity for Gremlin type aircraft is in the high several hundreds of millions of dollars up into billions of dollars”", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "fe4edae5-ac72-496b-8c62-1a3d8bdfcc34", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "CEO Demarco Q3'16: “At these estimated production levels, we believe the potential market opportunity for Gremlin type aircraft is in the high several hundreds of millions of dollars up into billions of dollars” — Eric DeMarco. CEO Eric DeMarco: “It is very competitive, I am sorry, I did not talk about it in the script and I am not talking about it anymore. It's focus time. So, I apologize.” — Eric DeMarco.", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-0935-737e-8dc2-903c644f938d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.6, "x": 0.05, "y": 0.93 }, "kind": "source-note", "text": "1) General Atomics – DARPA contracts the company for Phase 2 of the Gremlins Program – March 2017\n2) GSA Top 100 Contractors, 2016 (note: Kratos did not make the top 100 list)", "attrs": { "numbered": true }, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2c6f6e78-9685-4215-a92a-f1b47559769f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.36, "x": 0.318, "y": 0.05 }, "kind": "title", "text": "Gremlin Opportunity Hype", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "185607e6-6f56-4782-889a-06d848209a7c", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "ceo-quote-contradiction", "slug": null, "matchId": "70aff44b-0912-4fb2-ad74-8071ad1af0aa", "evidence": "Contrasting past optimistic quotes with later refusal to comment.", "confidence": 0.9 } ], "arcBeats": [ { "to": 31, "from": 15, "beatId": "d2657ee3-5da5-4b6a-bc86-c3bb2e7a8906", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Agitate", "beatSlug": "problem-agitate-solution-agitate-make-it-worse", "evidence": "The deck highlights Kratos' management problems, overhyped business segments, and poor valuation.", "position": 1, "confidence": 0.8, "parentBeatName": "Development", "parentBeatSlug": "development" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }