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  "docSlug": "68bd393edc75",
  "documentTitle": "Kratos Defense & Security Solutions (KTOS)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2018-03-16 00:00:00",
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  "density": "overcrowded",
  "nDataPoints": 30,
  "notes": "The slide uses a 'worst of breed' framing to argue against Kratos' market valuation.",
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      "kind": "callout",
      "text": "Kratos' premium valuation of earnings and EBITDA does not reconcile with its below average financial performance and mix of revenue quality",
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      "text": "LTM Free Cash Flow Margin",
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      "text": "2018E EBITDA Margin",
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      "text": "Revenues % From Fixed-Price Contracts",
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      "text": "Kratos' premium valuation of earnings and EBITDA does not reconcile with its below average financial performance and mix of revenue quality. The Company has the highest % of revenues from fixed-price contracts, which are the riskiest contracts that expose Kratos to cost overruns. Not surprisingly, the Company has often failed to generate cash flow and has below industry margins – reflective of its inability to execute. The Company and sell-side analysts have bought into Kratos' dream that it can expand EBITDA margins to 10%, but this remains entirely a “show me” story",
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      "text": "EBITDA margin: 88%",
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      "text": "Free Cash Flow defined as Operating Cash Flow - Gross Capital Expenditures",
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      "kind": "source-note",
      "text": "Source: Company financials. Note: Excludes Parrot S.A. as a result of it being an extreme negative outlier",
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      "kind": "title",
      "text": "Kratos = Worst of Breed, Not Deserving A Premium Industry Valuation",
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      "evidence": "Comparing Kratos against industry peers across three key financial metrics to justify a 'worst of breed' thesis.",
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      "evidence": "The deck presents Spruce Point's solution, a strong sell rating with 40-70% downside risk.",
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