Karman Space & Defense — Third Quarter Fiscal Year 2026 Earnings Summary

Financial Performance:

• Reported record quarterly revenue of $202 million (specifically $201.6 million), representing a 66% year-over-year increase and 25% organic growth.
• Net income reached a record $21 million for the quarter, a 174% increase year-over-year, with earnings per fully diluted share of $0.16 compared to $0.06 in the prior-year quarter.
• Adjusted EBITDA hit a record $61 million (specifically $60.5 million), up 60% year-over-year, with adjusted earnings per fully diluted share of $0.19 versus $0.10 in the prior-year quarter.
• Net cash provided by operating activities was $27 million, and free cash flow was $13 million.
• Total revenue for the nine months ended September 30, 2026, was $534.9 million, up 58.7% year-over-year from $337.0 million.
• Net income for the nine months ended September 30, 2026, was $42.7 million, compared to $9.7 million in the prior-year period.
• Adjusted EBITDA for the nine months ended September 30, 2026, was $160 million, compared to $103 million in the prior-year period.
• Adjusted EBITDA margin was 30.0% for the quarter and 29.9% for the nine-month period.

Guidance and Future Outlook:

• Raised full-year fiscal 2026 revenue guidance to a range of $755 million to $760 million.
• Raised full-year fiscal 2026 adjusted EBITDA guidance to a range of $225 million to $227 million.
• Management targets a long-term organic revenue growth rate of 20% to 25%.
• The company is focused on building backlog for 2027 and beyond.
• Management is currently negotiating two additional long-term agreements and executing the initial phases of two second-source opportunities.
• The company is actively pursuing three more long-term agreements.

Business Segments and Product Lines:

• Hypersonics and Strategic Missile Defense: Revenue was $51.1 million for the quarter, up 39.6% year-over-year, driven by increased production of key interceptor programs and a new surface-to-surface missile system.
• Space and Launch: Revenue was $37.9 million for the quarter, down 6.9% year-over-year due to customer order timing and shifting launch schedules, partially offset by increased content from liquid-fueled programs.
• Tactical Missiles and Integrated Defense Systems: Revenue was $67.6 million for the quarter, up 51.9% year-over-year, driven by core production programs including unmanned aircraft systems and counter-UAS.
• Maritime Defense Systems: Revenue was $45.0 million for the quarter, a new segment reporting legacy and next-generation submarine and surface vessel programs.
• Generated quarterly bookings of nearly $465 million across all end markets.
• Secured a significant seven-year contract with Lockheed Martin supporting the THAAD program.
• Completed the acquisition of Walker Precision Holdings Limited to expand presence in the European defense market.

Market and Competitive Landscape:

• Total backlog reached a record $1.7 billion at quarter-end, a 108% increase compared to fiscal year-end 2025.
• The company supplies capabilities to more than 150 customers across more than 150 programs.
• Management describes the environment as one of strong demand where the company is gaining market share.
• The company positions itself as a unique merchant supplier supporting high-priority defense programs and emerging commercial space opportunities.

Risks and Challenges:

• Revenue is significantly dependent on contracts with the U.S. military and U.S. defense budget spending.
• U.S. government contracts are subject to competitive bidding processes that may consume resources without generating revenue.
• Business operations expose the company to numerous legal and regulatory requirements; violations could materially adversely affect the business.
• Risks include the inability to adequately enforce intellectual property or defend against infringement assertions.
• Future performance depends on the ability to efficiently integrate acquisitions, obtain and retain contracts, and react to changes in government spending timing and amounts.
• Actual results may differ materially from forward-looking estimates due to variability in non-core operating items excluded from adjusted EBITDA.

Management Commentary and Tone:

• CEO Jon Rambeau highlighted record results, including 66% total revenue growth, 60% adjusted EBITDA growth, and a doubling of backlog.
• Management expressed confidence in the strong demand environment, stating they are "going on offense" to create shareholder value.
• The company noted that long-term agreements extend planning horizons and enable more efficient capital and resource allocation.
• Management emphasized a focus on executing strategy, expanding the global footprint, and strengthening the organization.

Other Key Points:

• The company completed the acquisition of Walker Precision Holdings Limited during the quarter.
• Cash and cash equivalents increased to $68.2 million as of September 30, 2026, from $34.0 million as of December 31, 2025.
• Long-term debt, net of current portion, increased to $851.5 million as of September 30, 2026, from $495.3 million as of December 31, 2025.
• Goodwill increased to $550.6 million as of September 30, 2026, from $352.5 million as of December 31, 2025.
• The company hosts a conference call and live webcast for investors on November 5, 2026.
• Adjusted EBITDA excludes non-cash stock-based compensation, acquisition integration costs, and other non-recurring items; management noted a quantitative reconciliation to GAAP is not available without unreasonable efforts due to the high variability of excluded items.