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

Financial Performance

• Total revenue for the three months ended June 30, 2026, reached $182.1 million, representing a 58.2% year-over-year increase from $115.1 million in the prior-year quarter; organic growth was 24.4%.
• Net income for the quarter was $14.0 million, a 106.1% increase year-over-year compared to $6.8 million, with diluted earnings per share (EPS) of $0.11 versus $0.05 in the prior year.
• Non-GAAP adjusted EBITDA for the quarter was $54.6 million, a 54.7% year-over-year increase from $35.3 million, with non-GAAP adjusted EPS of $0.14 compared to $0.10 in the prior year.
• Gross profit was $78.2 million for the quarter, up from $47.0 million in the prior-year period.
• Operating expenses totaled $43.4 million for the quarter, compared to $26.9 million in the prior year.
• Interest expense, net, was $15.3 million for the quarter, compared to $11.9 million in the prior year.
• Net income for the six months ended June 30, 2026, was $21.8 million, up from $2.0 million in the prior-year period, with diluted EPS of $0.16 versus $0.02.
• Non-GAAP adjusted EBITDA for the six months ended June 30, 2026, was $99.4 million, compared to $65.6 million in the prior-year period.
• Cash and cash equivalents were $51.7 million as of June 30, 2026, compared to $34.0 million as of December 31, 2025.
• Total liabilities were $1.02 billion as of June 30, 2026, compared to $721.4 million as of December 31, 2025, with term notes net of current portion increasing to $751.3 million from $495.3 million.
• Stockholders' equity increased to $421.1 million as of June 30, 2026, from $382.7 million as of December 31, 2025.

Guidance and Future Outlook

• The Company raised its full-year 2026 revenue outlook to a range of $730 million to $745 million.
• The Company raised its full-year 2026 non-GAAP adjusted EBITDA outlook to a range of $215.0 million to $222.5 million, excluding the impact of any future acquisitions.
• Management cited a record backlog of $1.3 billion at the end of the second quarter, up 65% compared to the end of fiscal year 2025, providing strong visibility into the fiscal year 2026 outlook.
• The Company is actively negotiating three additional long-term defense agreements with a combined potential value of more than $1 billion.
• Management indicated an intent to scale capacity to meet existing program requirements while pursuing alternative supplier positions on new programs.

Business Segments and Product Lines

• Hypersonics and Strategic Missile Defense revenue was $43.4 million for the quarter, up 24.2% year-over-year, driven by growth in key interceptor program production and a new surface-to-surface missile system.
• Space and Launch revenue was $42.1 million for the quarter, up 6.3% year-over-year, driven by content for legacy and emerging launch providers, partially offset by shifting launch schedules.
• Tactical Missiles and Integrated Defense Systems revenue was $63.0 million for the quarter, up 55.4% year-over-year, driven by core production programs including unmanned aircraft systems and counter-UAS.
• Maritime Defense Systems revenue was $33.6 million for the quarter, a new segment classification, driven by legacy and next-generation submarine programs.
• Quarterly bookings totaled nearly $500 million across all end markets, including a large, multi-year contract with a space and launch customer.
• The Company has agreements to acquire Walker Precision Engineering for approximately $94 million to expand into the European defense market.

Market and Competitive Landscape

• The demand environment is strengthening, supported by over $90 billion in recent prime contractor awards for THAAD and PAC-3 interceptors and over $76 billion for new Columbia and Virginia class submarines.
• The Company serves a diversified portfolio of more than 150 customers and programs.
• The Company is positioning itself to create long-term shareholder value in an accelerating demand environment for access to space and defense systems.

Risks and Challenges

• Significant revenue is generated from contracts with the United States military, making the business dependent on U.S. military spending and the defense budget.
• U.S. government contracts are subject to competitive bidding processes that may consume resources without generating revenue.
• The business is exposed to numerous legal and regulatory requirements, where violations could materially adversely affect operations.
• Risks include the inability to adequately enforce intellectual property or defend against infringement assertions.
• Future performance is subject to risks regarding the efficient integration of acquisitions, obtaining and retaining contracts, and reacting to changes in government spending timing or amounts.
• Forward-looking statements are subject to uncertainties regarding general economic and business conditions in the U.S. and globally.

Management Commentary and Tone

• CEO Jon Rambeau described the quarter as another of record performance, highlighting revenue of $182 million and adjusted EBITDA of $55 million.
• Rambeau stated the record backlog provides "exceptionally strong visibility" into the fiscal year 2026 outlook and positions the company to achieve goals while building momentum for 2027.
• Management expressed confidence in scaling capacity and going "on offense" by winning alternative supplier positions on new programs and in new content areas.
• The tone reflects strong confidence in the unique and accelerating demand environment.

Other Key Points

• The Company completed a debt repricing expected to reduce annual interest expense by approximately $4 million.
• The Company will host a conference call and live webcast on August 6, 2026, at 1:30 pm Pacific Time with CEO Jon Rambeau, CFO Mike Willis, COO Jonathan Beaudoin, and SVP Steven Gitlin.
• The Company's backlog includes purchase orders, long-term agreements, and contractual authorizations to proceed.
• Non-GAAP adjusted EBITDA excludes non-cash share-based compensation, transaction-related expenses, integration costs, lender fees, and other non-recurring items.
• The Company does not provide a reconciliation of forward-looking non-GAAP measures to GAAP measures due to the difficulty of projecting event-driven transactional items.