Top contracting executives noted this week the current period -- with surging COVID-19 cases, a continuing resolution and an upcoming election -- is uncertain, but said so far they have been able to maintain sales and profit.
During a call with analysts Thursday, Eric DeMarco, the chief executive of Kratos Defense & Security Solutions, said the pandemic has "clearly adversely impacted" the company.
It has made an impact on "our commercial turbine, our commercial satcom and rocket launch business areas and also importantly, in our tactical drone business, where virtually every Kratos program and opportunity has now been delayed or pushed significantly to the right as a result of COVID-related DOD and contractor work-at-home, travel, social distancing and other restrictions, including -- very importantly -- the impact on range operations and related missions."
He said the company is now watching multiple areas of uncertainty.
"Obviously, we're in the [continuing resolution] that goes to December. . . . We have an election coming. We don't know what's going to happen with that. That has brought in that if things don't go according to some people's plan, maybe there's going to be a government shutdown. We don't know that, alright?" DeMarco said.
Speaking to analysts Friday morning, Booz Allen Hamilton's chief executive also acknowledged that "macro variables are major sources of uncertainty."
Horacio Rozanski pointed to the surge in COVID-19 cases, the potential for funding disruption and the outcome and implications of next week's presidential election as the top factors.
Still, Kratos said sales in the most recent quarter reached $202 million, up almost 10% from the same three-month period a year earlier. The contractor's quarterly profit totaled $2.4 million, essentially flat from the year before.
At Booz Allen, quarterly sales hit $2 billion, up 11% from the prior year. Quarterly profit reached $136 million, up 19% from a year earlier.
Meanwhile, DeMarco said the pandemic is providing some hiring opportunities for Kratos.
"Recently, some very large companies have either announced or they are laying off thousands of people in the aerospace industry, including -- even though they don't highlight it -- in their defense businesses," he said. "This is providing us a significant opportunity pool of guys and gals that are outstanding, that have experience, particularly in our drone area and in our system development area and system design area."
"That is helping us and we're being able to help people that are getting ripped because of other companies' issues," DeMarco added.
However, Rozanski said Booz Allen is still seeing a "challenging labor market."
"We saw some decreases in attrition as a result of the environment," he said. But "the talent that we look for, especially the technology talent, is still in very high demand."