Karman Space & Defense Reports Third Quarter Fiscal Year 2025 Financial Results

Karman Space & Defense ("Karman", "Karman Holdings, Inc." or "the Company") (NYSE:KRMN), a leader in the rapid design, development and production of critical, next-generation system solutions for launch vehicle, satellite, spacecraft, missile, missile defense, hypersonic and UAS customers, today reported third quarter fiscal year 2025 financial results.

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Karman Space & Defense reports record quarterly financial results

Third Quarter 2025 and Recent Highlights

• Produced record quarterly revenue of $121.8 million , up 41.7% year over year
• Generated record net income of $7.6 million, a 78.1% year over year increase, and earnings per fully diluted share of $0.06
• Delivered record quarterly non-GAAP adjusted EBITDA of $37.7 million, a 34.4% year over year increase, and non-GAAP adjusted earnings per fully diluted share of $0.10, more than double that of the prior year
• Achieved record funded backlog of $758.2 million at the end of the third quarter of 2025, up 30.8% compared to the end of the fourth quarter of 2024
• Raising and narrowing 2025 revenue and adjusted EBITDA guidance and establishing preliminary 2026 revenue growth expectations of 20 to 25 percent
• Completed $1.2 billion non-dilutive secondary equity offering
• Acquired Five Axis Industries to expand capabilities in the commercial space industry and upsized Term Loan B by $130 million to $505 million and paid off revolving credit facility

"Our strong momentum continued into the third quarter, with record financial results and year-over-year increases of 42 percent in revenue, 34 percent in adjusted EBITDA and 31 percent in funded backlog since year-end 2024," said Tony Koblinski, chief executive officer of Karman Space & Defense. "High demand for our $1.2 billion secondary equity offering reflected confidence in our business model and market focus, and marked the effective exit of our private equity sponsor.

"Record year-to-date revenue of $337 million and funded backlog of $758 million give us the confidence to increase and narrow our expectations for the year. We now expect to achieve total revenue of $461 to $463 million and non-GAAP adjusted EBITDA of $142 to $143 million, representing year-over-year growth of 34 percent to the midpoints of those ranges.

"Looking beyond 2025, our strong performance, healthy growth in funded backlog and continued dialog with customers support our preliminary expectation for 2026 revenue growth between 20 and 25 percent, exclusive of future acquisitions, which is consistent with our annual growth rate since 2022. Strong demand signals continue to support multi-year growth potential for Karman based on our unique and differentiated solutions, our end market focus and the quality and capability of our team," Koblinski added.

The increase in total revenue reflected net organic growth across all end-markets and our diversified portfolio of more than 80 customers and more than 130 programs.

Growth in Hypersonics and Strategic Missile Defense revenue for the three and nine months ended September 30, 2025 from the comparable periods in the prior year, was primarily driven by higher production output from missile programs, such as PrSM, Standard Missile 3 and 6, and development programs. The increase also benefited from the timing of orders and was partially offset by the timing of funding for classified programs.

Growth in Space and Launch revenue for the three and nine months ended September 30, 2025 from the comparable periods in the prior year, was primarily driven by the timing of orders from both legacy and emerging launch providers. For the nine months ended September 30, 2025, this growth was partially offset by lower revenue from the Space Launch Systems ("SLS").

Growth in Tactical Missiles and Integrated Defense Systems for the three and nine months ended September 30, 2025 from the comparable periods in the prior year, was primarily driven by an increase in production rates for GMLRS, AIM-9X and UAS programs.

Funded Backlog

As of September 30, 2025, total funded backlog was $758.2 million, which represents the total invoiceable value of existing contracts, less amounts previously invoiced. Contract types include but are not limited to purchase orders, long term agreements and contractual authorization to proceed.

Business Outlook for the Full Year 2025 and Preliminary Expectations for Full Year 2026

For the full fiscal year 2025, the Company raises and narrows its expectations for total revenue to between $461 million and $463 million, and for non-GAAP Adjusted EBITDA to between $142 million and $143 million. The Company previously expected total revenue of between $452 million and $458 million, and non-GAAP Adjusted EBITDA of between $138.5 million and $141.5 million.

For the full fiscal year 2026, the Company establishes preliminary total revenue growth expectations of 20% to 25% above the midpoint of fiscal year 2025 total revenue expectations, exclusive of any future acquisitions.

Non-GAAP adjusted EBITDA is provided in the full year 2025 Outlook on a forward-looking basis. The Company does not provide a reconciliation of such forward-looking measures to the most directly comparable financial measures calculated and presented in accordance with GAAP because to do so would be potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items in any future period. The magnitude of these items, however, may be significant.

The foregoing estimates are forward-looking and reflect management's view of current and future market conditions, subject to certain risks and uncertainties, including certain assumptions with respect to our ability to efficiently and on a timely basis integrate acquisitions, obtain and retain contracts, react to changes in the timing and/or amount of government spending, changes in the demand for our products, activities of competitors, changes in the regulatory environment, and general economic and business conditions in the United States and elsewhere in the world. Investors are reminded that actual results may differ materially from these estimates and investors should review all risks related to achievement of the guidance reflected under "forward-looking statements" below and in the Company's filings with the Securities and Exchange Commission.

Conference Call and Live Webcast

In conjunction with this release, Karman Space & Defense Inc. will host a conference call and live webcast today, Thursday, November 6, 2025, at 1:30 pm Pacific Time. Hosting the call and webcast to review results for the third quarter of fiscal year 2025 will be Tony Koblinski, Chief Executive Officer; Mike Willis, Chief Financial Officer; Jonathan Beaudoin, Chief Operating Officer; and Steven Gitlin, Vice President, Investor Relations.

Investors may dial into the call using the following telephone numbers: +1 (800) 715-9871 (U.S. toll free) or +1 (646) 307-1963 (U.S. local or international) entering Conference ID: 4015462. Please allow ten minutes prior to the start time to allow for registration.

Investors with Internet access may listen to the live audio webcast via the Investor Relations page of the Karman Space & Defense website, https://investors.karman-sd.com/overview/default.aspx. Please allow ten minutes prior to the call to download and install any necessary audio software. A replay of the audio webcast will be available for one year.

A supplemental investor presentation for the fiscal third quarter fiscal year 2025 may be accessed at https://investors.karman-sd.com/News--Events/events-and-presentations/default.aspx.

Audio Replay

An audio replay of the event will be archived on the Investor Relations section of the Company's website at https://investors.karman-sd.com. The audio replay will also be available via telephone from Thursday, November 6, 2025, at approximately 7:00 p.m. Pacific Time through Thursday, November 13, 2025 at 11:59 p.m. Pacific Time. Dial toll-free +1 (800) 770-2030 or international toll +1 (609) 800-9909 and use Playback ID: 4015462.

About Karman Space & Defense

Karman Space & Defense is a leader in the rapid design, development and production of critical, next-generation system solutions for launch vehicles, satellites and spacecraft, missile, missile defense, hypersonics and UAS customers. Building on nearly 50 years of success, we deliver Payload & Protection Systems, Aerodynamic Interstage Systems, and Propulsion & Launch Systems to more than 80 prime contractors supporting more than 130 space and defense programs. Karman is headquartered in Huntington Beach, CA, with multiple facilities across the United States. For more information, visit our website, Karman-SD.com.

Non-GAAP Supplemental Information

We present in this press release certain financial information based on our Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Earnings Per Share (Adjusted EPS). We believe the non-GAAP financial measures will help investors understand our financial condition and operating results and assess our future prospects. We believe these non-GAAP financial measures, each of which is discussed in greater detail below, are important supplemental measures because they exclude unusual or non-recurring items as well as non-cash items that are unrelated to or may not be indicative of our ongoing operating results. Further, when read in conjunction with our U.S. GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as a tool to help make financial, operational and planning decisions. We may use non-GAAP financial metrics in certain management compensation plans, debt covenants, internal budgetary decision making, and other resource allocation decisions. Finally, these measures are often used by analysts and other interested parties to evaluate companies in our industry by providing more comparable measures that are less affected by factors such as capital structure.

We recognize that these non-GAAP financial measures have limitations, including that they may be calculated differently by other companies or may be used under different circumstances or for different purposes, thereby affecting their comparability from company to company. In order to compensate for these and the other limitations discussed below, management does not consider these measures in isolation from or as alternatives to the comparable financial measures determined in accordance with U.S. GAAP. Readers should review the reconciliations below and should not rely on any single financial measure to evaluate our business.

We define these non-GAAP financial measures as:

EBITDA refers to net income before income taxes, depreciation and amortization and interest expense.

Adjusted EBITDA refers to EBITDA plus, as applicable for each period, adjustments for certain items management believes are not indicative of ongoing operations. Adjusted EBITDA excludes non-cash share-based compensation expenses. Additionally, Adjusted EBITDA excludes certain nonrecurring costs that management excludes in contemplation of budget decisions and are not costs of operating the business, such as entity wide re-branding initiatives or acquisition integration costs, and lender and administrative agent fees associated with one-off amendments. Lastly, Adjusted EBITDA excludes other non-recurring costs including gains or losses from disposition of assets, non-cash impairment losses, non-recurring transaction expenses and other charges or gains that the Company believes are not part of the ongoing operations of its business. The resulting expense or benefit from these other non-recurring costs is inconsistent in amount and frequency.

Adjusted EBITDA Margin - Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by revenue. Adjusted EBITDA and Adjusted EBITDA Margin are not measures calculated in accordance with U.S. GAAP, and they should not be considered an alternative to any financial measures that were calculated under U.S. GAAP.

Adjusted EBITDA and Adjusted EBITDA Margin are used to facilitate a comparison of the ordinary, ongoing and customary course of our operations on a consistent basis from period to period and provide an additional understanding of factors and trends affecting our business. Adjusted EBITDA and Adjusted EBITDA Margin are driven by changes in volume, performance, contract mix and general and administrative expenses and investment levels. Performance, as used in this definition, refers to changes in profitability and is primarily based on adjustments to estimates at completion on individual contracts. These adjustments result from increases or decreases to the estimated value of the contract, the estimated costs to complete the contract, or both. These measures therefore assist management and our board and may be useful to investors in comparing our operating performance consistently over time as they remove the impact of our capital structure, asset base and items outside the control of the management team and expenses that do not relate to our core operations. Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similarly titled non-GAAP measures used by other companies as other companies may have calculated the measures differently.

Adjusted EPS represents GAAP net income (loss) per fully diluted share, excluding transaction related expenses, integration expenses and non-recurring costs, lender and administrative agent fees, share-based compensation and other non-recurring costs as they are not representative of our operating performance.

Forward-Looking Statements

This announcement may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as "expect," "expectation," "believe," "anticipate," "may," "could," "intend," "belief," "plan," "estimate," "target," "predict," "likely," "seek," "project," "model," "ongoing," "will," "should," "forecast," "outlook" or similar terminology. These statements are based on and reflect our current expectations, estimates, assumptions and/ or projections, our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections, including with respect to the future earnings and performance or capital structure of Karman, will prove to be correct or that any of our expectations, estimates or projections will be achieved.

Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation, that a significant portion of our revenue is generated from contracts with the United States military and U.S. military spending is dependent upon the U.S. defense budget; U.S. government contracts are subject to a competitive bidding process that can consume significant resources without generating any revenue; our business and operations expose us to numerous legal and regulatory requirements, and any violation of these requirements could materially adversely affect our business, results of operations, prospects and financial condition; our inability to adequately enforce and protect our intellectual property or defend against assertions of infringement could prevent or restrict our ability to compete; and we have in the past consummated acquisitions and intend to continue to pursue acquisitions, and our business may be adversely affected if we cannot consummate acquisitions on satisfactory terms, or if we cannot effectively integrate acquired operations. Readers and/or attendees are directed to the risk factors identified in the filings we make with the SEC from time to time, copies of which are available free of charge at the SEC's website at www.sec.govunder Karman Holdings Inc.

The forward-looking statements included in this announcement are only made as of the date of this announcement. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable law.

1. Includes depreciation of property, plant and equipment, amortization of intangible assets and right-of-use assets. Depreciation and amortization expense includes allocated depreciation and amortization from cost of goods sold of $2.8 million and $2.9 million for the three months ended September 30, 2025 and 2024, respectively, and $8.3 million and $6.9 million for the nine months ended September 30, 2025 and 2024, respectively.
2. Represents legal and due diligence fees incurred in connection with planned and completed acquisitions, which are required to be expensed as incurred. For the three months ended September 30, 2025, these expenses related to the MTI and ISP acquisitions. Additionally, the Company incurred certain professional service fees related to its IPO that did not meet the requirements to be deferred issuance costs, these costs are considered non-recurring and outside the ordinary course of business, and therefore are not indicative of ongoing operating performance, which was reflected in the nine months period ended September 30, 2025.
3. These costs include company-wide system implementation expenses, company re-branding costs and compliance efforts. This category also includes post-acquisition integration costs, and employee expenses related to acquisitions or restructuring activities.
4. Reflects non-recurring lender fees associated with one-off amendments to the Company's credit agreement, separate from ongoing administrative fees.
5. Reflects share-based compensation expenses associated with the Company's P Units and Phantom Units. These units were fully vested in connection with the completion of the Company's IPO in February 2025.
6. Other non-recurring costs for the three and nine months ended September 30, 2025 include estimated legal settlements and related professional fees that are non-recurring and do not reflect ongoing business operations.
7. Other non-recurring costs for the three months ended September 30, 2025 include (i) estimated legal settlements and related professional fees and (ii) write-off of tax refund that are non-recurring and do not reflect ongoing business operations. Other non-recurring costs for the nine months ended September 30, 2025 also include a $2.5 million write-off of unamortized debt issuance costs associated with our previous TCW term loan, which was refinanced with the new Citi Term Loan.
8. Total may not sum due to rounding.

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Investor contact:

Steven Gitlin

[email protected]

Media contact:

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