Kratos Defense & Security Solutions opened a 22,500‑square‑foot engine manufacturing plant in Auburn Hills, Michigan, on November 13, 2025. The new facility, strategically located in the Detroit‑area industrial corridor, is designed to produce all four Spartan turbojet engines—ranging from 30 to over 200 lb of thrust—at a combined annual capacity of more than 50,000 units.
The Spartan family powers a growing portfolio of unmanned aerial systems and tactical missiles. By consolidating production, assembly, and testing under one roof, Kratos can achieve higher throughput, tighter inventory control, and lower per‑unit costs. The plant’s shared inspection and test stations allow the company to ramp up production quickly while maintaining rigorous quality standards.
Kratos’ Q3 2025 results reflected the benefits of this scale. Revenue rose 23.7% to $347.6 million, driven by a 35.8% increase in the Unmanned Systems segment and a 20.0% rise in Government Solutions. Adjusted EPS of $0.14 beat the consensus of $0.13 by $0.01, a 7.7% lift, largely due to disciplined cost management and a favorable mix of high‑margin contracts. Operating income reached $30.8 million, exceeding the $28.3 million forecast, as the company leveraged its expanded production capacity to spread fixed costs over a larger volume.
Steve Fendley, president of Kratos Unmanned Systems, said the company’s ‘production‑first mindset’ has been key to delivering reliable, military‑grade engines at affordable prices and high rates. The Auburn Hills plant underscores Kratos’ commitment to expanding infrastructure that accelerates propulsion inventory levels and supports the U.S. defense industrial base. Management also highlighted that working‑capital requirements and supplier price increases have pressured margins in recent quarters, but the new facility is expected to offset those headwinds through economies of scale.
Investors reacted cautiously to the earnings release, citing guidance concerns that temper enthusiasm for the company’s growth trajectory. While the firm raised its revenue outlook for 2025 and 2026, analysts noted that short‑term challenges—such as working‑capital needs and sole‑source supplier price hikes—could dampen near‑term profitability. Nonetheless, the new facility positions Kratos to capture rising demand from U.S. and allied customers, strengthen its competitive stance in the defense propulsion market, and drive higher revenue and margin growth in the coming quarters.
With the Auburn Hills plant now operational, Kratos is poised to accelerate time‑to‑delivery for Spartan engines, support rapid, large‑quantity, low‑cost hardware fielding, and reinforce its role as a key supplier for unmanned and missile platforms. The facility’s ability to scale production will help the company meet the growing demand for military propulsion systems while maintaining cost efficiencies that underpin its long‑term profitability.
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