Kratos & RAFAEL USA Establish "Prometheus, Propulsion & Explosive Systems"

Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a technology company in the defense, national security and global markets, and RAFAEL Advanced Defense Systems Ltd., today announced an approximate 50/50 partnership for the establishment of a U.S.-based merchant supplier of solid rocket motors (SRMs) and other energetics. Named Prometheus, Propulsion & Explosive Systems, the new joint venture is set to be headquartered on an approximate 500-acre site near the United States Navy and Army facility in Crane, Indiana.

Kratos and RAFAEL (through its U.S. based subsidiary RAFAEL USA) have jointly committed up to $175 million in capital for the establishment of Prometheus, Propulsion & Explosive Systems and required property, plant, equipment and personnel needed for the new, state-of-the-art energetics manufacturing campus and facilities. After construction of the plant and once RAFAEL’s technology transfer is completed and certified for operations, Prometheus, Propulsion & Explosive Systems is projected to begin production in 2027 of SRMs.

RAFAEL is the developer and manufacturer of unique, world-renowned systems such as the Iron Dome and the TROPHY APS which are in service in the Israeli Defense Forces as well as the David’s Sling in cooperation with Raytheon which provides the middle layer of air defense for the state of Israel. The company, originally established as the IDF Science Corps, has developed groundbreaking technologies like high energy laser solutions like the Iron Beam which are expected to be operational by the end of 2025. The company functions through a vertical integration structure that enables a unique ability to meet the demands and overcome the challenges of the global market and supply chain. RAFAEL offers a diverse portfolio from new space to the ground battlespace with battle-proven technologies.

Kratos is a leader in hypersonic or advanced systems, strategic systems, ballistic missile targets, sub-orbital research vehicles, sounding rockets, and solid rocket motors. Kratos has served the U.S. advanced systems and missile defense communities for decades, delivering numerous novel systems and vehicle flight tests. Kratos is the only company today delivering both propulsion and advanced flight systems, with Kratos Advanced systems including the low-cost Erinyes Glide Vehicle, Dark Fury, Zeus and Oriole Solid Rocket Motors, and other Kratos systems and technologies. Kratos provides unmatched innovation, disruptive capabilities, mission responsiveness and affordability to our customers across our portfolio of systems.

Dave Carter, President of Kratos Defense and Rocket Support Services Division, said, “Kratos is honored to partner with RAFAEL and be the trusted agent to introduce their energetics technology and implement their proven manufacturing processes and procedures in the U.S. market. Kratos has decades of experience advancing innovation, developing disruptive technologies and rocket motor specifications to enhance warfighter capabilities.”[DT1] 

Eric DeMarco, President and CEO of Kratos Defense, said, “Prometheus, Propulsion & Explosive Systems, once up and running at full rate production, will be a step function catalyst in value creation for Kratos’ stakeholders and the U.S. Defense Industrial Base, similar to Kratos’ recent MACH-TB contract award—the largest single-award contract in Kratos history. Like other major Kratos investments such as Oriole, Zeus, and Erinyes, Prometheus responds to a critical need to strengthen the U.S. Industrial Base and will also provide tens of thousands of SRMs and casted warheads supporting both America’s most reliable partner in the Middle East and United States national security related demand from a true SRM and energetics merchant supplier.”

Kratos will reflect Prometheus, Propulsion & Explosive Systems in its consolidated financial statements on the Equity Method of Accounting, under which Kratos will record approximately 50 percent of Prometheus, Propulsion & Explosive Systems Net Income on a single line “Net Income from Prometheus” in its income statement, and Kratos will annually receive approximately 50 percent of the Free Cash Flow generated from Prometheus. Kratos intends to continue to report Kratos Operating Income, Net Income, Adjusted EBITDA and other financial matrices separate from the Prometheus, Propulsion & Explosive Systems results, in order for all Kratos stakeholders to be able to follow the progress of each Company, the investment made in

Prometheus, Propulsion & Explosive Systems, and the future return on Kratos’ investment in Prometheus.