Good day, and welcome to the Kratos Defense & Security Solutions annual meeting of stockholders. I would now like to turn the conference over to Eric DeMarco. Please go ahead.
Thank you. Good day, everyone. I'd like to call the meeting to order. Welcome to the annual meeting of stockholders of Kratos Defense & Security Solutions Inc. I'm Eric DeMarco, President, Chief Executive Officer, and one of the Directors of the company. It is my pleasure to welcome all of you to our annual meeting. I hope this meeting finds you and your families safe and healthy as we all continue to work to address the many issues brought on by the global COVID-19 crisis. As a corporation, I can assure you that Kratos continues to be focused on taking the necessary steps to keep our employees safe while remaining committed to delivering our systems, products, and solutions to our customers to address their critical national security mission and requirements.
Kratos has and will continue to implement protective measures consistent with CDC state and local guidance, including encouraging our employees, where possible, to work from home, distancing our office and manufacturing personnel, including with split shifts and modifications to the workspace, providing and supporting the use of protective equipment by our employees, and enhanced cleaning of all of our facilities. We have been reaching out and communicating and working very closely with our supply chain and vendor base as well, including, where possible, procuring additional inventory for our key programs and other actions. We will continue to take such actions to comply with applicable rules and regulations until further notice. This year's annual shareholder meeting, being virtual, is also consistent with these practices we are following.
It is now approximately 11:02 A.M. Central Time, and in accordance with the notice of the annual meeting, I hereby call this annual meeting of stockholders of Kratos Defense & Security Solutions to order. The rules of conduct and the agenda for the annual meeting were made available to you through the virtual meeting portal. It is our intention to conduct this annual meeting in accordance with these rules of conduct and the agenda. Please note that there will be an opportunity for stockholders who have logged into the meeting with a control number to ask questions after the formal business of the meeting has been conducted and after I've completed my business update on the company. In order for a question to be addressed, stockholders must identify themselves and their institutional or other affiliation within the question box in the virtual meeting portal.
All questions submitted should be relevant to the matters properly addressed during this meeting. Any question submitted that is not relevant or appropriate will not be addressed. Introductions: Kratos' Directors. Joining us today from our Board of Directors are Scott Anderson. Mr. Anderson has been one of our Directors since 1997 and serves as the Chairman of our Audit Committee and is a member of our nominating and corporate governance committee.
Mr. Anderson serves as president and CEO of NE Wireless Networks, a wireless telecommunications provider, and is a principal of Cedar Growth Partners LLC, an investment and consulting advisory partnership. Mr. William Hoglund. Mr. Hoglund has been one of our Directors since 2001, and he is Chairman of our Board. Mr. Hoglund is a member of our nominating and corporate governance, audit, and compensation committees. Mr. Hoglund is a member of SAFE Boats International, a leading manufacturer of vessels for military, law enforcement, and commercial purposes.
Mr. Scot Jarvis. Mr. Jarvis has been one of our Directors since 1997. Mr. Jarvis serves as Chairman of our compensation committee and is also a member of our audit and nominating and corporate governance committees. Mr. Jarvis co-founded Cedar Growth Partners LLC, an investment and consulting advisory partnership. Ms. Jane Judd. Jane Judd has been one of our Directors since 2011, serves as our designated financial expert, and is a member of our Audit Committee and the compensation committees.
Ms. Judd previously served as a senior financial executive at the Titan Corporation and Telisimo International. Mr. Samuel Liberatore. Mr. Liberatore has been one of our Directors since 2009 and is a member of our nominating and corporate governance committee. Mr. Liberatore served in the United States Army for 30 years, retiring with the rank of colonel, after which he had a successful civilian career. He was chief operating officer of Madison Research Corporation, which was acquired by Kratos in 2006.
Mr. Liberatore retired in December 2008 as president of our then-Madison Research Weapons Systems Division. Amy Zegart. Ms. Zegart joined our Board in 2014 and is the chair of our nominating and corporate governance committee. Amy is the Davis Family Senior Fellow at the Hoover Institution and the Senior Fellow at the Center for International Security and Cooperation, Freeman Spogli Institute for International Studies, Stanford University. Joining me today as well are the following officers of Kratos: Deanna Lund, our Executive Vice President, our Chief Financial Officer; Marie Mendoza, our Vice President, General Counsel, and Secretary. Now for the introduction of the inspector of the elections.
Marie Mendoza has been selected by our Board of Directors to serve as inspector of elections for this annual meeting. Ms. Mendoza has taken and subscribed to the customary oath of office to execute her duties with strict impartiality. Her oath will be filed with the records of this annual meeting. Her function is to decide upon the qualification of voters, accept their votes, and when balloting on all matters is completed, to tally the final votes. The mailing of notice and confirmation of shares present. Pursuant to the bylaws of the company and Delaware law, notices of internet availability of proxy materials were mailed on or about April 24, 2020, to all stockholders of record as of April 6, 2020.
A list of stockholders entitled to vote at this annual meeting has been available at the company's principal office for the past 10 days and is available through the virtual stockholder meeting website for examination by any stockholder that is logged into the system with a valid control number. All documents concerning the annual meeting and notice of the annual meeting will be filed with the records of the annual meeting. Tabulation of proxies was performed by Broadridge Financial Solutions. The count of shares at the close of business on June 3, 2020, indicated that no less than 96,118,510 shares of the company's voting capital stock are present by proxy. These shares represent no less than 89.86% of the outstanding voting stock of the company. Therefore, I hereby declare that a quorum is present at this annual meeting.
On behalf of the Board of Directors of the company, I would like to express my appreciation to all stockholders who return their proxies. The opening of the polls. The time now is approximately 11:08 A.M. Central Time on June 4, 2020, and the polls are now open for voting on all matters to be presented. The polls will be closed to voting after we go through the matters to be voted on. The matters for stockholder consideration. There are four proposals to be considered by the stockholders at this meeting. The first item of formal business to be acted upon by the stockholders is the election of seven Directors to serve until the 2021 annual meeting of stockholders or until their successors are duly elected.
Scott Anderson, Eric DeMarco, William Hoglund, Scot Jarvis, Jane Judd, Samuel Liberatore, and Amy Zegart were all nominated for election by our nominating and corporate governance committee. The nominees were duly nominated pursuant to the bylaws of the company. The company has not received notice of any other nominations by a stockholder as required under the company's bylaws. Therefore, the nominations are closed. The Board of Directors recommends a vote for each nominee. The second item of formal business to be acted upon by the stockholders today is the ratification of Deloitte & Touche, LLP as our independent registered public accounting firm for the fiscal year ending December 27, 2020. Deloitte has been our independent registered public accounting firm since July 2013.
The Board of Directors, acting on the recommendation of our Audit Committee, has unanimously approved the appointment of Deloitte & Touche, LLP for our fiscal year ending December 27, 2020, and recommends a vote for approval of this proposal. The third item of formal business to be acted upon by the stockholders today is to approve an amendment to the company's 2014 Equity Incentive Plan to increase the aggregate number of shares that may be issued under this plan by 4,700,000 shares. The Board of Directors, acting on the recommendation of our compensation committee, has unanimously approved the amendment to the company's 2014 Equity Incentive Plan to increase the aggregate number of shares that may be issued under the plan by 4,700,000 shares and recommends a vote for approval of this proposal.
The fourth item of formal business to be acted upon by the stockholders today is the advisory vote to approve the compensation of our named executive officers as presented in the proxy statement. The Board of Directors, acting on the recommendation of our compensation committee, recommends a vote for approval of this proposal. Online voting. Only stockholders who own stock as of our April 6, 2020, record date have the right to vote at this annual meeting. Each share of common stock is entitled to one vote. At this time, any stockholders who are logged onto the virtual meeting web portal with a valid control number and who have not yet voted or wish to change their vote may do so now by clicking on the voting button on the web portal and following the instructions there.
Stockholders who have sent in proxies or voted via telephone or internet and do not want to change their vote do not need to take any further action. I will pause now to allow any web portal modifications. Time is now approximately 11:13 A.M. Central Time, and the polls are now closed for voting. Ms. Mendoza will now report on the preliminary voting results. Marie?
Thank you. The proposal to elect Scott Anderson, Eric DeMarco, William Hoglund, Scot Jarvis, Jane Judd, Samuel Liberatore, and Amy Zegart as Directors of the company is carried. The Board's selection of Deloitte & Touche, LLP as the company's independent registered public accounting firm for the fiscal year ending December 27, 2020, is ratified. The proposal to approve an amendment to our 2014 Equity Incentive Plan to increase the aggregate number of shares that may be issued under the plan by 4,700,000 shares is carried.
The proposal to approve on an advisory basis the compensation of our named executive officers is carried. A full tally of the votes will be published in a current form on Form 8-K, which will be filed with the Securities and Exchange Commission within four business days from this meeting.
Thank you, Ms. Marie. The adjournment of the meeting. This concludes the formal business for our annual meeting. On behalf of all of the officers, Directors, and employees of Kratos Defense & Security Solutions, I would like to express my sincere appreciation to the stockholders who attended the annual meeting, as well as those who submitted their proxies but were not able to attend this virtual meeting. The annual meeting is now hereby adjourned. Ladies and gentlemen, I will now give you an overview of our business, markets, opportunity set, and financial position with a slide presentation.
I'm going to start today with our Board of Directors. Our Board of Directors is truly a competitive differentiator for our company. Our Board consists of entrepreneurs, investors, venture capitalists, private industry and academia leaders, and retired military. We have a very deep relationship with Silicon Valley, including very important connections that have helped us with our strategy here. Kratos' thesis is rapid development and affordability. Without this Board of Directors, we would not be successful with this strategy. The next slide is Kratos' management team. Similar to the Board, the management team is a key competitive differentiator for our company. Not only do we have government experience, we have venture capital-backed executive experience, we have entrepreneurial experience, and we have a team that's been together for a very, very long time, which helps the decision-making process as we're executing the plan.
Kratos' division presidents are like chief operating officers for our products, our systems, and our technology. At Kratos, we have a saying that low cost is the technology. It's a technology on its own. On the next slide. We believe that low cost will have even an increased importance in the future. This is directly related to the Pentagon and our allies wanting to field quantities. In order to field quantities, there has to be affordability. Affordability is the technology at Kratos. On the next slide is Kratos' locations. Our primary locations are our division headquarters. Our microwave electronic products business is headquartered in Jerusalem, Israel. Our space and satellite business is out of Colorado Springs, CO. Our unmanned systems business is out of Oklahoma City, OK and Sacramento, CA. Our C5ISR business is headquartered out of Dallastown, PA.
Our turbine business, which I'm going to spend some time on today, is headquartered out of Jupiter, FL. Our rocket support solutions business is out of Glen Burnie, MD. On the next slide is a brief overview of our products, our solutions, and our technology. On this slide, I won't go through these in detail. I'll just point out some highlights. In our unmanned systems area, we are the industry leader in aerial target systems and tactical combat drones. In satellite communications, we are the industry leader in command, control, communication, RFI detection, and mitigation products. Our rocket systems business, we are one of the industry leaders in ballistic missile targets, hypersonic, and other systems. Our microwave business, as I mentioned before, out of Israel, C5ISR systems we support.
Turbine technologies, we are the leader in technology and innovation in the advanced turbine engines in the class that we're pursuing. Down below, our C5ISR business out of Dallastown is one of the go-to providers on combat systems in the industry. On the next slide, these are just representative examples of Kratos' disruptive defense technologies. Here I've included drones, space, missile defense, hypersonics, and turbine technologies. Very importantly, Kratos has owned substantially all of the key intellectual property related in our core portfolio of products. This is also a commercial thesis for a defense company that Kratos has, where we spend the IR&D upfront with internal funds to own the IP and rapidly deliver systems to the customer. Also, take away from this slide, Kratos is a system company. Our drones are systems. Our ballistic missile and hypersonic vehicles are systems.
Our space RFI global network is a system. Our turbines are systems. We're focused on being a system company in our handful of areas. On the next slide, I routinely talk about Kratos' alignment with the United States National Security Strategy to address increasing Russia and China threats. Throughout the briefing, you're going to hear me refer to the recapitalization of strategic weapon systems to address peer threats. This recapitalization is underway by the U.S. and our allies, and we are extremely well-positioned in these areas noted below on the slide. On the next slide, we'll now spend a couple of minutes on our unmanned systems division. This is our Mako drone that you see on this slide, slide number nine. This drone flew back in for the first time in 2015. I'm going to talk a little bit more about that in a moment.
On the next slide, target drones. We are the unquestioned leader in high-performance unmanned aerial target drone systems, and this business is the key driver right now of the organic growth in this company. This is being driven by the recapitalization of strategic weapon systems, missiles, radars, other systems that need to be exercised and tested. Kratos' drones are all made in the United States. As I mentioned, this is going to be the significant organic growth driver of our company going forward. We're moving towards a quarter billion in revenue in this business in the next few years. What's driving that growth primarily are a few programs. Our Navy SSAT program is moving from low-rate initial production to full-rate production. We're expecting that award by the end of this year. We have a confidential program we're moving to full-rate production on as well.
Our Air Force program, AFSAT, we're in negotiations now for the next five years, increased production. We've just been notified that we are the winner of a large new international customer program. We're hoping to be able to announce that later this year. There's another very large program coming, the NGAT program, the next-generation aerial target program that we're targeting. Large growth opportunities under contract and ones that we're pursuing in the target drone area. On the next slide, this is a representation of part of our strategy, for example, where we utilize existing proven systems and we reapply the system and the technology to rapidly address a new need or requirement. As this slide reflects, this is just one representative example. In 2013, we took our BQM-167 Air Force target drone. We modified it, turned it into a tactical drone a few years later.
We took that expertise, that knowledge of that know-how, we created the Valkyrie. On the right-hand side are just some of the programs that we are already involved in or we will be involved in: ABMS, Skyborg, ACE, and NGAT. On tactical drones, on the next slide, once again, this is the Mako. As you can see here, the Mako is runway independent. It's launched off a rail. All of Kratos' drones to date that we can talk about are rail-launched and recovered via parachute. We believe this is a very important differentiator so we're not tied to runways or bases in certain parts of the world. The Mako is our first tactical drone. On the next slide is a clip, a picture from a video. If you haven't seen it, I encourage you to. I mentioned in 2015 the Mako first flew.
We flew several Makos in 2015 as loyal wingmen to manned aircraft. That's a manned carrier on the right. That's one of Kratos' Mako unmanned combat drones on the left. Kratos, we don't use surrogates or models or PowerPoints or virtual injections or synthetics. We show up with the flying aircraft. We work with our customers in the United States, come up with these aircraft to meet their needs or "requirements," and we deliver the plane, not a PowerPoint. On the next slide, where have we come from since 2015 with the Mako? We believe today we're the industry leader in high-performance tactical drones in this class. I can discuss with you four Kratos tactical drones that are flying today: the Valkyrie, the Gremlins with our partner Dynetics, the Mako or the UTAP-22, and our Airwolf program.
The next slide, the red line is representative of the flight envelope of a manned tactical fighter. You can see on the left, those are the drones here to port. They do not have the capability to fly in that envelope. I'll call that my contested airspace or anti-access area denied survivability envelope. Kratos' drones are designed to fly within that envelope. As I mentioned, we have multiple flying today. We have multiple additional ones on the way. This is where the demand signal is coming from our customers today. The next slide is a picture of the Valkyrie. We've completed multiple flights to date. We continue to integrate payloads and missionize the system. We are expecting multiple Valkyrie-related contract awards this year. On the next slide, the Gremlin. Again, this is with our partner, the Prime Dynetics, and they are a phenomenal partner of our company.
The initial flight is complete on the Gremlins. Additional flights, which were previously planned for Q2, have now moved to Q3, Q4. This is as a result of the impact of COVID-19 and DOD-related travel restrictions and social distancing restrictions and how that has impacted the weapons ranges. We remain highly confident that ultimately the Gremlins will transfer from DARPA, the research agency, to a service. This program has been delayed several months, approximately six now, as a result of the impacts of the virus, which I discussed on our first quarter call. The next slide, we have a classified program, Thanatos. Kratos is responsible for the vehicle. We believe the opportunity set for Thanatos is at least as large as that for the Valkyrie. We're looking at system completion in 2022. On the next slide is our Airwolf program. As a previous slide indicated, Airwolf is flying today.
The vehicle works. We are testing payloads of a Prime. We had multiple flights previously scheduled for Q2, similar to Gremlins, as a result of virus impacts. These have now been pushed to Q3, Q4. This is a very exciting program for us. We are looking very forward to getting this vehicle back in the air later this year. The next slide are some representative headlines that have occurred very, very recently that we believe are representatives of the size, the very large market that we are pursuing with our tactical drones. I'll just mention a few of them. UAV's could start replacing manned fighters in mid-2020. That's from the United States Air Force. More drones needed to fight a two-front war. That would be with peer threats.
We truly believe that this will be a very large market with multiple types and classes of jet drones, and we expect to be one of the leaders in this marketplace. On the next slide, directly related to the market and new opportunities that continue to arise, the Air Force recently announced they want to replace the Reaper. This is obviously a new and a potentially very large opportunity. The Air Force has indicated that next year the Reaper replacement program will begin. Kratos believes that we are very uniquely positioned for this based on where we are today with multiple flying drones and several other ones that we have. On the next slide, this past year, since we last were together, the Air Force Research Lab and Kratos' XQ-58A Valkyrie was awarded Aviation Week's Laureate Award for Defense Technology and Innovation.
The United States Air Force is an incredible customer of Kratos's, and we look to the U.S. Air Force as our partner. We routinely work collaboratively with the United States Air Force in the drone area, and they are just outstanding. We are committed to providing the Air Force with affordable high-performance made-in-the-United-States drones to address their needs. Kratos' tactical drone business is expected to be one of our fastest growing organically, probably beginning next year. We expect it to accelerate from there. Our target drone business, as I mentioned before, and right now is in an incredible growth spurt. We're looking for our tactical drones next year to begin its growth trajectory. On the next slide, Kratos Turbine Technologies. In addition to disrupting the drone market, we are focused also on next-generation technology-leading turbojet and turbofan engines in the class of certain missiles and drones.
The current technology is 1960's and 1970's. The production runs were in the 1980's. Extended range or extreme range, higher performance, higher power engines in this class are needed for modifications to existing platforms and new platforms that are on the way. The engine is typically the number one bill of material cost in a drone in our class or in a missile. If we can significantly drop the price of these engines that are currently out there, we're looking to be a real disruptive transformational company in this engine in the next few years. On the next slide, to give you an idea of what's going on with Kratos Turbines, the Air Force recently did a release on its Grey Wolf program, talking about a game-changing small, low-cost jet engine. This is a Kratos engine. We are involved with the Grey Wolf program.
We are also targeting, relative to this, the Golden Horde program. There are several additional weapon or drone programs we are funded on right now by customers, and we are being designed in on as we speak. On the next slide, we internally have named a program we have that's confidential, Black Dragon. This is directly related to our Florida turbine acquisition last year, which is now Kratos Turbines, which is truly one of the most technical engineering groups in this class in the world. No doubt about it. We hear it routinely from our customers. We are designed in on Black Dragon. If we stay on our current schedule, the related vehicle will be flying sometime next year, and potential first pre-production units could begin thereafter.
Over the next few years, as we get designed in on various missile and drone systems, we're looking for Kratos' engine businesses to also be one of our fastest organic growers in our company. On the next slide, Kratos' space and satellite communications business. This is our largest business. This is our most profitable business. This is our highest cash flow generation business. In addition to drones and artificial intelligence and turbines, space and satellite communications is one of the most well-funded growth areas in the defense budget. Excuse me. Once again, this is driven by the Chinese threat. On the next slide, as I mentioned in the summary of our businesses, Kratos' space business, which is a true crown jewel, is the leader in satellite communications, command, control, and space situational awareness.
We are currently used by more than 75% of the largest satellite operators in the world and by 85% of all U.S. space missions. Going forward, I'm going to talk a little bit more about this in a minute, hundreds, if not thousands, of new nanocube and small satellites are planned to be launched. They are going to need C3 communication systems, and Kratos is positioned for that. On the next slide, Kratos' owned and operated Global RF Space Domain Awareness Network is one of the most valuable and unique assets in our entire company. This is where we're monitoring beams for our customers. We're looking for anomaly detection, interference detection and geolocation, maneuver detection, custody operations, all types of things.
One of our fastest growing and most profitable businesses, and this is exactly consistent with Kratos' strategy, own a system, have it be unique, and be the dominant player in that area. On the next slide is just a recent representative example of the growth opportunities we see for our space business. As you can see in the headline here, the Pentagon plans to orbit seven new constellations and build one satellite per week. The more satellites that are going up, the more ground C3 equipment is going to be needed, the more related software is going to be needed, the more antenna systems are going to be needed. This is where Kratos is the industry leader on the ground, C3 antennas. Similarly, on the next slide, the space agency has recently indicated they're looking to launch approximately 1,000 new satellites by 2026.
I think you can see the demand signal here and why we're so excited about the growth prospects of our space business. We're looking for this growth to begin. As you know, we're going through a transition right now from monolithic hardware ground systems to software-based, probably next year with significantly increased margins. As I mentioned before, our space and satellite business is our largest. It's our most profitable. This is expected to be a solid organic growth provider for the foreseeable future for the market-driven reasons I just mentioned. On the next slide, Kratos' microwave electronics business. Let's flip one more. Next slide, 32. Our microwave business is one of the largest independent microwave businesses in the industry. We're looking for this business based on the current production programs we are on and that we're going into to generate at least 10% organic growth.
This is one of, if not our most profitable business, right up there with our space business. This is an extremely valuable business. We have headquartered in Israel. We are embedded in a significant number of Israeli weapon and radar systems and related systems. We are also a key provider to India in these systems. On the next slide, a rocket support business. Our RSS business is absolutely positioned for the increased funding that's occurring in ballistic missile defense, hypersonic systems, and we're also involved with high-power directed energy systems and laser systems in this area. All well-funded, all growing, all strategic, all needed to address a peer threat. On the next slide, just a representative example of the multiple Kratos rocket systems we have. Be sure to take a look down the left side of the slide.
These are hypersonic vehicles or hypersonic systems that are Kratos' programs that we can talk to you about. We are an established player in the hypersonic area. Here again, we own critically important intellectual property. Affordability is absolutely a critical competitive differentiator for us here, and obviously reliability. We are the go-to provider for this class of systems, the go-to provider. On the next slide, when I talk about C5ISR, the fifth C in C5ISR is combat systems. The recapitalization of strategic weapon systems or strategic combat systems is driving a significant growth curve that's happening right now in our C5ISR division. These are just representative programs Kratos is involved in. I'll point out too, CBRNE, this is directly related to the COVID-19 response. CBRNE is chemical, biological, radiation, nuclear, and high explosive detection systems.
Our systems are being utilized right now in the detection of the virus in certain areas. GBSD, the Ground-Based Strategic Deterrent. This is a, depending on what you read, a $60 billion strategic program that Northrop Grumman is expecting to receive their contract on August, September this year. Northrop has announced that Kratos is one of the key teammates for this relative to the ground transport equipment. This goes forward, this will be one of Kratos' largest and highest growth programs, probably beginning sometime next year if timing holds. On the next slide, our training systems and solutions business. As we've talked about for the last several quarters, we are experiencing some headwinds here relative to some international training contracts that are related to protests, which we have successfully won, full force options that haven't been exercised, etc. This business will probably continue to be a headwind in our company.
It is this year, probably for next year, then we'll see it turn. We've recently won some important new programs. One of them is with the United States Army. We are very hopeful on a, I can't talk too much about it because it's competitive, a very large opportunity we're hopeful to announce, hopefully in the next 60 days. On the next slide, some first quarter financial execution highlights. It seems like a long time ago, but in spite of a three-month continuing resolution at the beginning of this fiscal year, our first quarter revenue growth rate was 5.3%. Very importantly, our unmanned systems growth rate was 20% year over year. That's all organic. This ties directly into the traction that we have right now in our target drone area, which we see that being augmented by tactical drones going forward.
That second bullet, very importantly, additional development programs. We have a number of development programs we're working on, like for example, Thanatos. Development programs typically bring lower margins. This is one of the reasons our margins haven't been where some people would like them to be. The fact of the matter is we keep winning development programs that are going to give us a path to production programs, and that's what's happening here. Book-to-bill ratio in Q1 was 1.3 to 1, and our unmanned systems book-to-bill was 1.5 to 1. Our LTM book-to-bill ratio is 1.2 to 1, which would indicate 20% growth sometime in the future. Even after those incredible bookings that we've been generating recently, our qualified bid pipeline has not come down. It's remained at about $7.7 billion. That's indicative of the number of new opportunities. These are qualified opportunities that we are going after.
On the next slide, I'll just talk about one of the pie charts, the one on the upper right. Our firm fixed price percent is about 78%. This is indicative that we're a products and a systems company. We expect our firm fixed price percent, and these typically bring higher margins once you get into production, to significantly increase, to continue to increase going forward as existing production programs ramp, as LRIP programs go into full rate production, as development programs transition to production. We expect FFP percent to increase and our margins to increase. On the next slide, our growth trajectory. This is substantially all organic. As you know, we are not a very acquisitive company. We're focused organically. As I've been indicating throughout today's discussion, we're expecting our organic growth to continue and, depending on budget timing, etc., to accelerate going forward.
On the next slide, balance sheet is very strong, just under $160 million of cash on the balance sheet in our most recent report. We are very focused on having a strong balance sheet going forward. There is going to be no issues at all on some of these production programs we're expecting to get. There are some new programs we're expecting to win that we want to make sure there's no question in the customer's eyes from a competitive standpoint that we can't handle these system programs that Kratos is going after. That last bullet is very important. No major acquisitions planned. We will not do anything major here. We believe we have the best internal organic program deck there is in the industry. We will be opportunistic. We want to be positioned to be opportunistic for potential tuck-ins. These will be in our existing focus areas.
Related to being opportunistic, the major mergers that have occurred just recently, like Raytheon and UTX, Harris and L3, these may present, they are presenting some very interesting small, mid-sized for Kratos opportunities in very good areas, right in our sweet spot. We are monitoring these mergers, like I mentioned, Raytheon and UTX, L3, etc., very closely as these companies refine their portfolio to see if anything might make sense for us. However, the primary focus is to be in the financial position for these large organic growth potential opportunities that we've been talking about today. As you know, the programs that we are involved in, Skyborg, Advanced Battle Management System, I mentioned Golden Horde, GBSD, hypersonic programs, engine programs, Next Generation Interceptor, which we plan on being involved in. We want to make sure that we are very well positioned and we are positioned for these. The next slide.
Additional recent financial highlights coming out of Q1 that I want to make sure that we talk about here. I had mentioned a minute ago that Kratos has multiple development programs. They're underway, and these typically have lower margins. These are primarily right now in our drone area and our turbine area. We also currently have higher internal research and development spending going on, particularly in our space and our satellite businesses we're positioning for these new constellations. We also have several new start programs that are in low-rate initial production that I mentioned previously. Each of these programs and each of these business areas, as these mature and these transition from R&D or low-rate initial production, they go from development to production, we're looking for this to indicate significant margin lift for the company going forward.
As we transition from IR&D and development programs to production, we're looking for increased margins across the company. On the next slide, please. In summary, we believe that affordability, as I mentioned before, at the system level will continue to be a clear competitive differentiator for Kratos, and we believe affordability is going to be even more important going forward as a result of what's going on in the world today. We believe that our rapidly proven ability to develop, demonstrate, and field leading technology systems will also be in increased demand. For example, our Valkyrie went from white piece of paper to a flying aircraft in three years. Never been done before. Again, not a PowerPoint, not a model, the real aircraft. This is what Kratos does. Rapid development, rapid field.
We are doing this rapid development today with drones, engines, our rocket systems, targets, and our next-generation satellite communication equipment. We believe that we're incredibly well positioned to support the customer base, and we believe that your company is one of the go-to providers today. We want to thank Kratos' shareholders, also our most valuable asset, our employees, and all Kratos stakeholders for helping us build an incredible national security company. That, we'll see if we have any questions. Okay, there are no questions. I'm in over the portal. Thank you again for enjoying the entire team today. If any of you have any questions that come to mind later on, always you can send them electronically to our investor relations portal at the company. That concludes the briefing. That concludes the meeting. Thank you very much.
The conference is now concluded. Thank you very much for attending today's presentation. You may now disconnect.