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Karman Holdings Inc. (KRMN)

CIK: 0002040127. SIC: 3728 Aircraft Parts & Auxiliary Equipment, NEC. Latest 10-K as of: 2026-04-03.

SIC breadcrumb: Manufacturing > Transportation Equipment > SIC 3728 Aircraft Parts & Auxiliary Equipment, NEC

SEC company page: https://www.sec.gov/edgar/browse/?CIK=2040127. Latest filing source: 0002040127-26-000014.

Selected Fundamentals

MetricValueUnitFYFiled
Revenue471,500,000USD20252026-04-03
Net income17,366,000USD20252026-04-03
Assets1,104,096,000USD20252026-04-03

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-03. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0002040127.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Metric2022202320242025
Revenue226,310,299280,705,000345,251,000471,500,000
Net income-14,098,6194,359,00012,701,00017,366,000
Operating income20,434,83048,494,00063,560,00072,942,000
Gross profit80,946,284105,549,000132,111,000190,026,000
Diluted EPS-0.090.030.080.13
Operating cash flow-5,892,75020,327,00026,645,000-22,119,000
Capital expenditures21,268,50416,775,00015,252,00020,336,000
Assets710,832,054773,960,0001,104,096,000
Liabilities528,372,721577,964,000721,405,000
Stockholders' equity177,596,000182,459,000195,996,000382,691,000
Cash and cash equivalents5,454,71011,530,00033,959,000
Free cash flow-27,161,2543,552,00011,393,000-42,455,000

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Metric2022202320242025
Net margin-6.23%1.55%3.68%3.68%
Operating margin9.03%17.28%18.41%15.47%
Return on equity-7.94%2.39%6.48%4.54%
Return on assets0.61%1.64%1.57%
Liabilities / equity2.902.951.89
Current ratio1.811.763.29

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-14. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0002040127.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

QuarterEnd DateRevenueNet IncomeDiluted EPSMethod
2025-Q12025-03-31100,124,000-4,798,000-0.04reported discrete quarter
2025-Q22025-03-31-4,798,000reported discrete quarter
2025-Q22025-06-30115,097,0000.05reported discrete quarter
2025-Q32025-06-306,807,000reported discrete quarter
2025-Q32025-09-30121,787,0000.06reported discrete quarter
2025-Q42025-12-31134,492,0007,713,000derived Q4 = FY annual - nine-month YTD
2026-Q12026-03-31151,210,0007,794,0000.06reported discrete quarter

Quarterly Charts

Macro Cross-References

Latest quarter (10-Q)

Latest 10-Q source: 0001193125-26-222116.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-14. Report date: 2026-03-31.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion in conjunction with our unaudited interim condensed consolidated financial statements, including the related notes thereto, contained within this Item 1 of this Quarterly Report. In addition to historical information, this discussion contains forward-looking statements that involve risks and uncertainties. You should read the sections of this Quarterly Report on Form 10-Q titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. For purposes of this section, references to the “Company,” “Karman,” “we,” “us,” and “our” refer to TCFIII Spaceco Holdings and its other subsidiaries prior to the Corporate Conversion and to Karman Holdings Inc. or Karman Holdco and its consolidated subsidiaries for all periods following the Corporate Conversion.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include all statements that are not historical facts including those that reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements are included throughout this Quarterly Report on Form 10-Q and relate to matters such as our industry, business strategy, goals, and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources, and other financial and operating information. We have used the words “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable,” the negative version of these words or similar terms and phrases to identify forward-looking statements in this Quarterly Report on Form 10-Q.

The forward-looking statements are based on management’s current expectations and are not guarantees of future performance. Our expectations and beliefs are expressed in management’s good faith, and we believe there is a reasonable basis for them, however, the forward-looking statements are subject to various known and unknown risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify. Actual results may differ materially from these expectations due to changes in global, regional, or local economic, business, competitive, market, regulatory, and other factors, many of which are beyond our control. We believe that these factors include but are not limited to the following:

•
we rely heavily on certain customers for a significant portion of our sales;

•
a significant deferment of orders by customers could have a material adverse effect on our business, results of operations, prospects, and financial condition;

•
the loss of our U.S. General Services Administration contracts or government-wide acquisition contracts could impair our ability to attract new business;

•
if we are unable to manage the increasing technological complexity of our business, or achieve or manage our expected growth, our business could be adversely affected;

•
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;

•
we depend on our executive officers, senior management team and highly trained employees and any work stoppage, difficulty hiring similar employees, or ineffective succession planning could adversely affect our business;

•
if critical components or raw materials used to manufacture our products or used in our development programs become scarce or unavailable, then we may incur delays in manufacturing and delivery of our products and in completing our development programs, which could damage our business;

•
our operations depend on our manufacturing facilities, which are subject to physical and other risks that could disrupt production;

•
our leases may be terminated or we may be unable to renew our leases on acceptable terms and if we wish to relocate, we may incur additional costs if we terminate a lease;

•
technology failures or cybersecurity breaches or other unauthorized access to or use of our information technology systems or sensitive or proprietary information could have a material adverse effect on the Company’s business and operations;

•
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;

•
we could incur substantial costs as a result of violations of or liabilities under environmental laws and regulations;

23

•
we may be subject to periodic litigation and regulatory proceedings, which may materially adversely affect our business, results of operations, prospects and financial condition;

•
our failure to comply with applicable economic and trade sanctions could materially adversely affect our reputation and results of operations;

•
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;

•
our indebtedness, which is subject to variable interest rates, could adversely affect our financial health and could harm our ability to react to changes to our business;

•
servicing our indebtedness requires a significant amount of cash. Our ability to generate cash depends on many factors, and any failure to meet our debt service obligations could materially adversely affect our business, results of operations, prospects and financial condition;

•
the increased expenses associated with being a public company;

•
our stock price may be volatile, and an investment in our common stock could suffer a decline in value;

•
the impact of escalating tariff and non-tariff trade measures imposed by the U.S. and other countries, any U.S. federal government shutdown, the COVID-19 pandemic, or a similar public health threat, or the ongoing conflicts and the potential for new or unforeseen conflicts, on global capital and financial markets, political events, general economic conditions in the United States, and our business and operations;

•
our ability to remediate the identified material weaknesses in our internal control over financial reporting; and

•
the other risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, as amended, supplemented or superceded in our other reports filed with the Security and Exchange Commission (“SEC”), including under “Risk Factors” in Item 1A of our subsequent Quarterly Reports on Form 10-Q.

Our Company

We specialize in the rapid design, development and production of mission-critical, next-generation systems solutions that align with the U.S. Department of War’s core mission priorities and the nation’s accelerating demand for access to space. We deliver payload protection, propulsion and launch, and hydro/aerodynamic interstage systems to more than 80 prime contractors supporting more than 130 space and defense programs. We estimate that no single program accounted for more than 11% of sales in the three months ended March 31, 2026 or in the three months ended March 31, 2025.

Recent Development

We completed the acquisition of Seemann Composites (“Seemann”) and MSC in February, 2026, for approximately (i) $215.9 million in cash and (ii) shares of common stock of the Company with an aggregate value equal to $17.0 million. The Company Group provides advanced composite systems and materials solutions for maritime defense applications. The Company believes the acquisition of Seemann and MSC expands and enhances our capabilities in the maritime defense end market, strengthening our portfolio of advanced composite and materials solutions for high-priority naval programs.

On February 2, 2026, we also amended our Citibank credit agreement to increase its incremental term loan to $772 million while reducing the interest rate by 75 basis points to SOFR plus 2.75%. On March 9, 2026, the Company entered into another amendment of its Citibank credit agreement to (i) increase the revolving credit commitments by $100.0 million such that the total revolving credit commitments are now $150.0 million and (ii) remove the cap on incremental revolving credit commitments, which was previously $50.0 million. For additional details, see Note 7, Debt, in the Notes to the condensed consolidated financial statements.

Components of Operations

Revenue

We generate our revenue primarily from the design, development and deployment of systems and subsystems (Propulsion Systems, Aerodynamic Interstage Systems, and Payload Protection and Deployment Systems) across four end markets (Hypersonic and Strategic Missile Defense, Missile and Integrated Defense Systems, Space and Launch and Maritime Defense Systems). We do not believe our revenue are subject to significant seasonal variations.

24

Cost of Goods Sold

Cost of goods sold consists of direct costs and allocated indirect costs. Direct costs include labor, materials, subcontracts and other costs directly related to the execution of a specific contract. Indirect costs include overhead expenses, fringe benefits and depreciation.

General and Administrative Expenses

Our general and administrative expenses (“G&A”) include salaries, fringe benefits (such as health insurance, retirement plans, vacation and sick days), and other expenses related to selling, marketing and proposal activities, certain administrative costs, operational overhead expenses, share-based compensation expenses and amortization of acquired intangible assets. Some G&A expenses relate to marketing and business development activities that support both ongoing business areas as well as new and emerging market areas. These activities can be directly associated with developing requirements for applications of capabilities created in our business development activities as well as managing human capital. G&A expenses is an important financial metric that we analyze to help us evaluate the contribution of our selling, marketing and proposal activities to revenue generation.

Results of Operations

Comparison of the Three Months Ended March 31, 2026 and 2025

The following table sets forth, for the periods presented, certain operating data of the Company, including presentation of the changes in amounts between reporting periods:

Three Months Ended March 31,

Change

2026

2025

Dollar

Percent

(in thousands, except percent)

Revenue

$

151,210

$

100,124

$

51,086

51.0

%

Cost of goods sold

87,345

60,673

26,672

44.0

%

Gross profit

63,865

39,451

24,414

61.9

%

General and administrative expenses

28,637

23,288

5,349

23.0

%

Depreciation and amortization expense

13,776

6,200

7,576

122.2

%

Total operating expenses

42,413

29,488

12,925

43.8

%

Net operating income

21,452

9,963

11,489

115.3

%

Interest expense, net

(12,646

)

(11,373

)

(1,273

)

11.2

%

Other expense

(174

)

(80

)

(94

)

117.5

%

Provision for income taxes

(838

)

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-04-03. Report date: 2025-12-31.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion in conjunction with our audited consolidated financial statements, including the related notes thereto, contained within this Item 8 of this Annual Report. In addition to historical information, this discussion contains forward-looking statements that involve risks and uncertainties. You should read the sections of this Annual Report titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. For purposes of this section, references to the “Company,” “Karman,” “we,” “us,” and “our” refer to TCFIII Spaceco Holdings and its other subsidiaries prior to the Corporate Conversion and to Karman Holdings Inc. or Karman Holdco and its consolidated subsidiaries for all periods following the Corporate Conversion.

Overview

We specialize in the upfront design, testing, manufacturing, and sale of mission-critical systems for existing and emerging missile, missile and defense, and space programs. Our integrated payload protection, propulsion, and interstage system solutions are deployed across a wide variety of existing and emerging programs supporting important Department of War (“DOW”) and space sector initiatives. We estimate that no single program accounted for more than 12% of sales in the twelve months ended December 31, 2025 or the twelve months ended December 31, 2024, with revenue from over 130 active programs supporting current production and next-generation space, missile, hypersonics, and defense applications.

We believe that our engineering expertise and track record with critical piece, part and subcomponent manufacturing positions us to successfully serve customers who rely on us to deliver the technical design and scaled manufacturing of integrated system solutions that are required to withstand extreme environments and meet stringent performance requirements. Our highly engineered solutions are organized into three key families: Payload Protection and Deployment Systems, Propulsion Systems, and Aerodynamic and Interstage Systems:

Payload Protection Systems: involves the full design and manufacturing of the top section of a booster, launch vehicle, payload, or missile system.

Aerodynamic and Interstage Systems: involves supporting metallic and composite subsystems designed to enhance aerodynamics and enable different modes of interstage separation.

Propulsion Systems: involves the integrated offering of solid rocket motors and supporting subsystems, critical subsystems for liquid fueled rocket motors, launch systems, and ablative composites.

Our solutions are deployed across three growing, core end markets including: Hypersonics and Strategic Missile Defense, Missile and Tactical Integrated Defense Systems, and Space and Launch. We currently serve a diverse customer base supported by long-term relationships and engineering partnerships and believe that our differentiated technical design, intellectual property, and track record of mission success provides us with a value proposition that proves difficult to replicate by current competitors and potential future entrants. By utilizing our vertically integrated, concept-to-production capabilities, we have created a business model aimed at creating long-term, sustainable value for our customers, the programs we support, and the warfighter.

Our business is guided by a key, overarching mission – to expand what’s possible in space and defense through the relentless pursuit of innovation, integration, and collaboration. Our business model is focused on providing innovative and reliable integrated system solutions, utilizing our concept-to-production capabilities. which include comprehensive in-house design, analysis, testing and qualification, and production services. This strategy and these capabilities, coupled with a broad and highly integrated IP portfolio, have provided what we believe to be a competitive advantage and market leading position.

We are focused on delivering innovative and customized solutions for our customers, with more than 300 multi-discipline engineers supporting our comprehensive in-house design and manufacturing capabilities. Our unique set of capabilities is supported by decades of experience across advanced material design, proprietary digital models, material science and testing, and manufacturing expertise. We believe that this collection of vertically integrated capabilities provides a strong value proposition for our customers who seek to simplify their supply chains, increase their speed to market, and reduce costs – all while benefiting from quality integrated system solutions. Our differentiated market offering is supported by significant sole- and single-source contract positions.

Our IP portfolio is enabled by our differentiated technical design expertise, which affords us the ability to work collaboratively with customers earlier in the program development cycle to develop mission-critical solutions. Such early participation quite often leads to difficult-to-replicate solutions, as Karman solutions become part of the production specification. It is our belief that once a

42

supplier has been qualified as a supplier on a particular program and delivers on the basis of quality, it is typically unlikely that a prime integrator would pursue re-qualification given a relatively lengthy and costly process. We believe this provides a strong competitive advantage for Karman, who benefits from the longevity of missile and space programs and the visible and recurring revenue streams provided. Furthermore, our key design philosophy is centered around solving for an optimal solution for the customer given a specified set of performance requirements. These optimal solutions quite often integrate our patented materials, subcomponents, and proprietary manufacturing processes that have been developed over the past 40+ years.

TCFIII Spaceco Holdings operates through its wholly owned subsidiary, Karman Space and Defense, originally formed in 2020 as a limited liability company.

Our Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations reflect estimates and assumptions made by management. Events and changes in circumstances arising after December 31, 2025, including those resulting from the continuing impacts of the current unfavorable macroeconomic climate, will be reflected in management’s estimates for future periods.

Corporate Conversion

We currently operate as a corporation under the name Karman Holdings Inc. Prior to our IPO, we converted from a Delaware limited liability company named TCFIII Spaceco Holdings LLC. In the conversion, all of our outstanding equity interests were converted into shares of common stock of Karman Holdings Inc. The purpose of the Corporate Conversion was to reorganize our structure so that the entity that offered our common stock to the public in our IPO was a corporation rather than a limited liability company and so that investors in the IPO owned our common stock rather than equity interests in a limited liability company.

Key Factors Impacting Our Performance

U.S. Government Spending and Federal Budget Uncertainty

Changes in the volume and relative mix of U.S. government spending as well as areas of spending growth could impact our business and results of operations. In particular, our results can be affected by shifts in strategies and priorities on homeland security, intelligence, defense-related programs, infrastructure and urbanization and continued increased spending on technology and innovation, including cybersecurity, artificial intelligence, connected communities and physical infrastructure. Cost-cutting and efficiency initiatives, along with current and future budget restrictions, spending cuts, and shifts in priorities, could lead our customers—those conducting significant business through U.S. government contracts—to reduce or delay funding. This may result in inconsistent or reduced investments of appropriated funds, potentially diminishing demand for our solutions and services. Furthermore, any disruption in the functioning of government agencies, including as a result of government closures and shutdowns, could have a negative impact on our operations and cause us to lose revenue or incur additional costs due to, among other things, our inability to maintain access and schedules for government testing or deploy our staff to customer locations or facilities as a result of such disruptions.

There is also uncertainty around the timing, extent, nature and effect of Congressional and other U.S. government actions to address budgetary constraints, caps on the discretionary budget for defense and non-defense departments and agencies, and the ability of Congress to determine how to allocate the available budget authority and pass appropriations bills to fund both U.S. government departments and agencies that are, and those that are not, subject to the caps. Additionally, budget deficits and the growing U.S. national debt may increase pressure on the U.S. government to reduce federal spending across all federal agencies, with uncertainty about the size and timing of those reductions. Furthermore, delays in the completion of future U.S. government budgets could in the future delay procurement of the federal government services we provide. A reduction in the amount of, or reductions, delays, or cancellations of funding for, services that we are contracted to provide to the U.S. government as a result of any of these impacts or related initiatives, legislation or otherwise could have a material adverse effect on our business and results of operations. Significant delays or reductions in appropriations for our programs and changes in U.S. government priorities and spending levels more broadly may negatively impact our business and could have a material adverse impact on our business, financial condition and results of operations.

Operational Performance on Contracts

Revenue, net income, and the timing of our cash flows depend on our ability to perform on our contracts. When agreeing to contractual terms, our management team makes assumptions and projections about future conditions and events. The accounting for our contracts and programs requires assumptions and estimates about these conditions and events. These projections and estimates assess:

•
the productivity and availability of labor;

43

•
the allocation of indirect costs to labor and material costs incurred;

•
the complexity of the work to be performed;

•
the cost and availability of materials and components; and

•
schedule requirements.

If there is a significant change in one or more of these circumstances, estimates or assumptions, or if the risks under our contracts are not managed adequately, the profitability of contracts could be adversely affected. This could affect net income and margin materially.

In particular, profitability can fluctuate predicated on the type of contract awarded. Typically fixed-price development programs on complex systems represent a higher risk profile to complete on-budget. To the extent our fixed-price development efforts create a larger portion of our revenue output, this may result in reduced operating margins given the higher risk profile.

Additionally, the timing of our cash flows is impacted by the achievement of billable milestones on contracts. For instance, delays in reaching these milestones can lead to temporary cash flow shortfalls, while early completions compared to initial estimates can result in cash flow influxes. Historically, this has resulted and could continue to result in fluctuations in working capital levels and quarterly free cash flow results.

To manage these fluctuations, we have implemented several strategies, such as maintaining a buffer of liquid assets and closely monitoring project timelines to anticipate cash flow needs. Despite these measures, the inherent variability in milestone achievements means that quarter-to-quarter comparisons of our results of operations may not necessarily be meaningful and should not be relied upon as indicators of future performance.

We expect these fluctuations to persist, particularly as we take on more complex and long-term projects. However, we believe that our proactive cash flow management strategies will help mitigate the impact of our overall financial stability.

Regulations

Increased audit, review, investigation and general scrutiny by U.S. government agencies of performance under government contracts and compliance with the terms of those contracts and applicable laws could affect our operating results. Negative publicity and increased scrutiny of government contractors in general, including us, relating to government expenditures for contractor services and incidents involving the mishandling of sensitive or classified information as well as the increasingly complex requirements of the DoW and the U.S. intelligence community, including those related to cybersecurity, could impact our ability to perform in the markets we serve.

If a government inquiry or investigation reveals improper or illegal activities, we may face civil or criminal penalties or administrative sanctions, including contract termination, fines, fee forfeiture, payment suspension, or suspension and debarment from conducting business with U.S. Government agencies. Any of these actions could materially and adversely impact our reputation, business, financial condition, results of operations, and cash flows.

Additionally, U.S. Government procurement regulations impose various operational requirements on government contractors. Non-compliance with these regulations could lead to civil or criminal penalties, which may materially adversely affect our operating results.

Acquisitions

We consider the acquisition of businesses and investments that we believe will expand or complement our current portfolio and allow access to new customers or technologies. We also may explore the divestiture of businesses that no longer meet our needs or strategy or that could perform better outside of our organization.

Industry Background

Our defense operations are affected by DoW budget and spending levels, changes in demand, changes in policy positions or priorities, the domestic and global political and economic environment, and the evolving nature of the global and national security threat environment. Changes in these budget and spending levels, policies, or priorities, which are subject to U.S. domestic and

44

foreign geopolitical risks and threats, may impact our defense businesses, including the timing of and delays in U.S. government licenses and approvals for sales, the risk of sanctions, or other restrictions.

We believe that our business is well positioned in areas that the DoW and other customers indicate are priorities for future defense spending, including those based on the 2023 National Security Strategy document, the 2024 U.S. National Security related budget and the National Defense Authorization Act (“NDAA”), and also the related Future Years Defense Program or five- year projection of the forces, resources and programs needed to support the DoW’s strategy and operations.

In addition, the One Big Beautiful Bill Act (“OBBBA”) enacted in July, 2025 provides approximately $150 billion in incremental defense funding through fiscal year 2029, supporting multiple defense programs such as Hypersonics, Missiles and Munitions. We expect these tailwinds to reinforce demand for capabilities aligned with our core offerings.

Recent Developments

On April 2, 2025 ,we completed the acquisition of Metal Technology Inc. (“MTI”), pursuant to the terms of a Securities Purchase Agreement (the “MTI Agreement”) under which a whole owned subsidiary of ours agreed to purchase MTI for $82.3 million in cash. The acquisition of MTI expands the Company’s capabilities in advanced materials and is expected to strengthen its position in the strategic missile defense market through enhanced product offerings and customer relationships.

On May 28, 2025, we completed the acquisition of Industrial Solid Propulsion (“ISP”) pursuant to a Securities Purchase Agreement (the “ISP Agreement”), under which we purchased all issued and outstanding equity interests in ISP and related real estate of ISP, for approximately $52.9 million in cash and 147,842 shares of our common stock, subject to satisfaction or waiver of certain customary closing adjustments. The ISP Agreement contains customary representations, warranties and covenants of the parties. The acquisition of ISP expands the Company’s capabilities in small-diameter solid propellant and energetic propulsion systems, strengthening its position in the UAS and missile defense markets through proprietary technologies and integrated manufacturing expertise.

On October 28, 2025, we completed the acquisition of Five Axis Industries Inc. (“Five Axis”) pursuant to a Securities Purchase Agreement (the “Five Axis Agreement”) under which a wholly-owned subsidiary of ours has agreed to purchase Five Axis, for $90.7 million in cash and 68,625 shares of common stock of the Company, subject to the satisfaction or waiver of certain customary closing adjustments. The Agreement contains customary representations, warranties and covenants of the parties. The acquisition of Five Axis expands our capabilities in the commercial space industry,

On December 31, 2025, we entered into a Securities Purchase Agreement (the “ Seemann Agreement”) under which a wholly-owned subsidiary of ours agreed to purchase Seemann Composites, LLC and Materials Sciences LLC (together, the “Company Group”), for (i) $210.0 million in cash and (ii) shares of common stock of the Company with an aggregate value equal to $10.0 million, subject to certain customary purchase price adjustments (the “ Seemann Acquisition”). This acquisition was completed on February 3, 2026, pursuant to the Agreement, and we indirectly acquired all of the outstanding capital stock of the Company Group in exchange for the consideration described above. The Agreement contains customary representations, warranties and covenants of the parties. The Seemann Acquisition expands and enhances our capabilities in the maritime defense end market, strengthening our portfolio of advanced composite and materials solutions for high-priority naval programs.

Components of Operations

Revenues

We generate our revenue primarily from the design, development and deployment of systems and subsystems (Propulsion Systems, Aerodynamic Interstage Systems, and Payload Protection and Deployment Systems) across three end markets (Hypersonics and Strategic Missile Defense, Tactical Missiles and Integrated Defense Systems, and Space and Launch). We do not believe our revenues are subject to significant seasonal variations.

Cost of Goods Sold

Cost of goods sold consists of direct costs and allocated indirect costs. Direct costs include labor, materials, subcontracts and other costs directly related to the execution of a specific contract. Indirect costs include overhead expenses, fringe benefits and depreciation.

45

General and Administrative Expenses

Our general and administrative expenses (“G&A”) include salaries, fringe benefits (such as health insurance, retirement plans, vacation and sick days), and other expenses related to selling, marketing and proposal activities, certain administrative costs, operational overhead expenses, share-based compensation expenses and amortization of acquired intangible assets. Some G&A expenses relate to marketing and business development activities that support both ongoing business areas as well as new and emerging market areas. These activities can be directly associated with developing requirements for applications of capabilities created in our business development activities as well as managing human capital. G&A is an important financial metric that we analyze to help us evaluate the contribution of our selling, marketing and proposal activities to revenue generation.

Results of Operations

Comparison of the Years Ended December 31, 2025 and 2024

The following table sets forth, for the years ended December 31, 2025 and 2024, certain operating data of the Company, including presentation of the changes in amounts between reporting periods:

Years Ended December, 31

Change

2025

2024

Dollar

Percent

(in thousands, except percent)

Revenue

$

471,500

$

345,251

$

126,249

36.6

%

Cost of goods sold

281,474

213,140

68,334

32.1

%

Gross profit

190,026

132,111

57,915

43.8

%

General and administrative expenses

85,656

44,421

41,235

92.8

%

Depreciation and amortization expense

31,428

24,130

7,298

30.2

%

Total operating expenses

117,084

68,551

48,533

70.8

%

Net operating income

72,942

63,560

9,382

14.8

%

Interest expense, net

(44,567

)

(50,733

)

6,166

(12.2

%)

Other income

4,147

1,502

2,645

176.1

%

Provision for income taxes

(15,156

)

(1,628

)

(13,528

)

831.0

%

Net income

17,366

12,701

4,665

36.7

%

Other comprehensive income (loss)

-

(1

)

1

(100.0

%)

Comprehensive income (loss)

$

17,366

$

12,700

$

4,666

36.7

%

Net Income Margin

3.7

%

3.7

%

0.0

%

Operating Margin

15.5

%

18.4

%

(2.9

%)

Gross Profit Margin

40.3

%

38.3

%

2.0

%

Revenue

Revenue for the year ended December 31, 2025 increased $126.2 million, or 36.6%, to $471.5 million as compared to $345.3 million for the year ended December 31, 2024.

The increase in revenues for the year ended December 31, 2025 as compared to the year ended December 31, 2024 was primarily attributable to growth across all end-markets, Tactical Missiles and Integrated Defense Systems, followed by Hypersonics and Strategic Missile Defense and Space and Launch and Missile.

As described in additional detail below, the results of operations include the following disaggregation of end market revenues:

Years Ended December 31,

Change

2025

2024

Dollar

Percent

(in thousands, except percent)

Hypersonics and Strategic Missile Defense

$

149,987

$

114,594

$

35,393

30.9

%

Space and Launch

149,825

115,036

34,789

30.2

%

Tactical Missiles and Integrated Defense Systems

171,688

115,621

56,067

48.5

%

Total Revenue

$

471,500

$

345,251

$

126,249

36.6

%

Growth in Hypersonics and Strategic Missile Defense revenue for the year ended December 31, 2025 from the comparable periods in the prior year, was primarily driven by expanded strategic missile programs, continued progress on NGI through

46

qualification phases, higher volumes on classified programs, and increased activities supporting hypersonic test beds, partially offset by reduction in certain programs due to award timing and program phase transitions.

Growth in Space and Launch revenue for the year ended December 31, 2025 from the comparable periods in the prior year, was primarily driven by the timing of orders for critical content supporting both legacy and emerging launch providers, including content for liquid fueled rocket engines, partially offset by a decline in the cadence of crewed missions, and lower revenue from the Space Launch System (“SLS”).

Growth in Tactical Missiles and Integrated Defense Systems for the year ended December 31, 2025 from the comparable periods in the prior year, was primarily driven by demand associated with the continued proliferation of advanced drone and loitering munitions technologies and an increase in production rates for GMLRS.

Cost of Goods Sold and Gross Profit

Cost of goods sold increased to $281.5 million for the year ended December 31, 2025, from $213.1 million for the year ended December 31, 2024. The $68.3 million, or 32.1%, increase in cost of goods sold was primarily a result of increased spending on materials and labor to support production growth.

Years Ended December 31,

Change

2025

2024

Dollar

Percent

(in thousands, except percent)

Labor

$

115,060

$

95,404

$

19,656

20.6

%

Materials

133,518

91,808

41,710

45.4

%

Overhead

21,587

17,100

4,487

26.2

%

Depreciation

11,309

8,828

2,481

28.1

%

Total cost of goods sold

$

281,474

$

213,140

$

68,334

32.1

%

Gross margin increased 2.0% to 40.3% for the year ended December 31, 2025, compared to 38.3% for the year ended December 31, 2024. The increase was primarily driven by operating leverage and improved operating efficiency.

Operating Expenses:

General and Administrative Expenses

General and administrative expenses increased to $85.7 million for the year ended December 31, 2025 from $44.4 million for the year ended December 31, 2024. General and administrative expenses and the related percentage changes for the year ended December 31, 2025 and 2024 were as follows:

Year Ended December 31,

Change

2025

2024

Dollar

Percent

(in thousands, except percent)

Payroll

$

34,110

$

21,971

$

12,139

55.3

%

Professional fees

21,797

8,154

13,643

167.3

%

Marketing

679

575

104

18.1

%

Computers & Software

4,493

2,715

1,778

65.5

%

Share-based compensation

8,084

994

7,090

713.3

%

Other

16,493

10,012

6,481

64.7

%

Total general and administrative expenses

$

85,656

$

44,421

$

41,235

92.8

%

The 92.8% increase in general and administrative expenses between the year ended December 31, 2025 and 2024 was primarily driven by higher share-based compensation from P units (which were Profit Interest Units (PIUs) in the form of Class P LLC Membership Units (“P Units”) in Karman LLC prior to the Corporate Conversion) and Phantom Units that fully vested in connection with the completion of the Company’s IPO in February 2025. The increase was also attributed to higher compensation and benefits costs as we strengthen our team and expand our operational capabilities to support ongoing business growth. Additionally, we incurred higher professional fees for tax, accounting, and consulting services, primarily related to operating as a public company and in connection with planned and completed acquisitions.

47

Depreciation and Amortization

Depreciation and amortization expense increased to $31.4 million for the year ended December 31, 2025 compared to $24.1 million for the year ended December 31, 2024. The increase was primarily attributable to the current period amortization of $100.1 million of newly acquired intangible assets from the acquisition of Metal Technology Inc. (“MTI”) on April 2, 2025, the acquisition of Industrial Solid Propulsion (“ISP”) on May 28, 2025 and the acquisition of Five Axis Industries, Inc. (“Five Axis”) on October 28, 2025. The acquired MTI, ISP and Five Axis intangible assets will be amortized over a weighted average period of 11.0, 10.7 and 13.0 years respectively. Depreciation of fixed assets used in the production of goods sold is included in cost of goods sold.

Interest Expense, net

Interest expense, net for the year ended December 31, 2025 decreased by $6.2 million, or 12.2%, to $44.6 million compared to $50.7 million during the year ended December 31, 2024. Both the Revolving Credit Facility and Term Note payable are variable interest rate loans with an applicable spread. The decrease was primarily driven by a lower year-over-year interest rate, partially offset by the $2.5 million write-off of unamortized issuance costs related to the extinguishment of the TCW Term Note in the second quarter of 2025. For additional information related to debt, see Note 6, Debt, in the Notes to the Consolidated Financial Statements.

Other Income

Other income for the year ended December 31, 2025 and 2024 was $4.1 million and $1.5 million, respectively. The difference between periods was attributable to the write-off of a contingent consideration liability during the year ended December 31, 2025.

(Provision for) and Benefit From Income Taxes

The provision for income taxes was $15.2 million and $1.6 million for the year ended December 31, 2025 and 2024, respectively. The increase in provision for income taxes was attributable to substantially larger pre-tax book income during the year ended December 31, 2025 and other discrete items, including the change in entity classification, non-deductible officers’ compensation, and interest and penalties related to prior year tax returns and uncertain tax positions. For additional information regarding provisions for taxes, see Note 13, Provision for Income Taxes, in the Notes to the Consolidated Financial Statements.

Key Financial and Non-GAAP Operating Measures

We measure our business using both key financial and operating data including key performance indicators (“KPIs”) and non-GAAP financial measures and use the following metrics to manage our business, monitor results of operations and ensure proper allocation of capital: (i) Revenue, (ii) Backlog, (iii) EBITDA, (iv) Adjusted EBITDA and (v) Adjusted EBITDA Margin. We believe that these financial performance metrics represent the primary drivers of value enhancement, balancing both short and long-term indicators of increased stockholder value. These are the metrics we use to measure our results and evaluate our business and related contract performance.

Financial and Operating Data

Year Ended December 31,

(in thousands, except percent)

2025

2024

2023

Revenue

$

471,500

$

345,251

$

280,705

Backlog1

801,056

579,787

428,719

Net income

17,366

12,701

4,359

EBITDA2

119,826

98,020

76,236

Adjusted EBITDA2

$

145,302

$

106,144

$

81,862

Net income margin

3.7

%

3.7

%

1.6

%

Adjusted EBITDA Margin2

30.8

%

30.7

%

29.2

%

1.
Backlog - Represents the total value or current estimated 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. (Backlog was previously referred to as funded backlog. No change to the historical dollar amount presented to the table above.)

2.
Note on non-GAAP financial measures: Throughout the discussion of our results of operations we use non-GAAP financial measures EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, as measures of our overall performance. Definitions and reconciliations of these measures to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP are included below.

48

Non-GAAP Financial Measures

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 discrete 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 and share-based compensation as they are not representative of our operating performance.

The reconciliation of GAAP to non-GAAP financial measures is provided below.

49

EBITDA and Adjusted EBITDA Reconciliation:

Year Ended December 31,

(in thousands, except percent)

2025

2024

2023

Net income

$

17,366

$

12,701

$

4,359

Income tax provision

15,156

1,628

(3,169

)

Depreciation and amortization1

42,737

32,958

27,179

Interest expense, net

44,567

50,733

47,867

EBITDA

119,826

98,020

76,236

Transaction related expenses2

12,741

4,776

356

Integration expenses and non-recurring restructuring costs3

2,279

2,255

2,740

Lender and administrative agent fees4

1,572

100

500

Share-based Compensation5

8,084

993

1,291

Other non-recurring costs6

800

—

739

Adjusted EBITDA

$

145,302

$

106,144

$

81,862

Revenue

$

471,500

$

345,251

$

280,705

Net income margin

3.7

%

3.7

%

1.6

%

Adjusted EBITDA Margin

30.8

%

30.7

%

29.2

%

Year Ended December 31,

2025

2024

2023

GAAP net income per share and unit, respectively

$

0.13

$

0.08

$

0.03

Transaction-related expenses2

0.10

0.03

-

Integration expenses and non-recurring restructuring costs3

0.02

0.01

0.02

Lender and administrative agent fees4

0.01

—

-

Share-based compensation5

0.06

0.01

0.01

Other non-recurring costs7

0.05

—

-

Adjusted EPS8

$

0.37

$

0.13

$

0.06

1.
Depreciation and amortization expense includes $11.3 million, $8.8 million and $6.7 million of allocated depreciation and amortization from cost of goods sold for the years ended December 31, 2025, 2024 and 2023, 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 year ended December 31, 2025, these expenses related to the MTI, ISP, Five Axis, Seemann Composites and MSC acquisitions. Additionally, the Company incurred certain professional service fees related to its IPO and secondary offering 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.

3.
Includes 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 discrete amendments to the Company’s credit agreement, separate from ongoing administrative fees and are not indicative of ongoing business operations.

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 year ended December 31, 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 year ended December 31, 2025 includes (i) estimated legal settlements and related professional fees, (ii) write-off of a tax refund that are non-recurring and do not reflect ongoing business operations, (iii) a one-time $1.5 million tax expenses due to change in entity tax status and (iv) 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.

Although we use EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin as measures to assess the performance of our business and for the other purposes set forth above, the use of non-GAAP financial measures as analytical tools has limitations, and you should not consider any of them in isolation, or as a substitute for analysis of our results of operations as reported in accordance with U.S. GAAP. Some of these limitations are:

•
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin do not reflect the significant interest expense, or the cash requirements, necessary to service interest payments on our indebtedness;

50

•
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and the cash requirements for such replacements are not reflected in EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin;

•
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin exclude the cash expense we have incurred to integrate acquired businesses into our operations, which is a necessary element of certain of our acquisitions;

•
the omission of the substantial amortization expense associated with our intangible assets further limits the usefulness of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin; and

•
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin do not include the payment of taxes, which is a necessary element of our operations.

Because of these limitations, EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin should not be considered as measures of cash available to us to invest in the growth of our business. Management compensates for these limitations by not viewing EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin in isolation and specifically by using other U.S. GAAP measures, such as net sales and operating profit, to measure our operating performance. EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are not measurements of financial performance under U.S. GAAP, and they should not be considered as alternatives to net income/(loss) or cash flow from operations determined in accordance with U.S. GAAP. Our calculations of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin may not be comparable to the calculations of similarly titled measures reported by other companies.

Critical Accounting Estimates

Our discussion and analysis of financial condition and results of operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. When we prepare these consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Some of our accounting policies require that we make subjective judgments, including estimates that involve matters that are inherently uncertain. Our most critical estimates include those related to revenue recognition, intangible assets acquired in a business combination and goodwill. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

Significant management judgments and estimates must be made and used in connection with the recognition of revenue in any accounting period. Material differences in the amount of revenue in any given period may result if these judgments or estimates prove to be incorrect or if management’s estimates change on the basis of development of the business or market conditions. Management judgments and estimates have been applied consistently and have been reliable historically.

The majority of our revenue is generated pursuant to written contractual arrangements to design, develop, manufacture and/or modify complex products, and to provide related engineering, technical and other services according to customer specifications. In most cases, goods or services provided under the Company’s contracts are accounted for as a single performance obligation due to the complex and integrated nature of its products and services. These contracts generally require significant integration of a group of goods and services to deliver a combined output. These contracts may be cost-plus, fixed price or time and materials. Revenue is recognized over time using the input method, by tracking costs incurred, which measures progress toward completion and control is transferred as the Company performs its contractual obligations due to the performance having no alternative use and the Company’s enforceable right to payment.

The Company estimates profit on these contracts as the difference between total estimated revenues and total estimated costs at completion (EAC) and recognizes profit as costs are incurred. Significant judgment is used to estimate total costs at completion. EAC’s are estimated using historical actual margins as a percentage of revenue, applied to open jobs. Unforeseen events and circumstances can alter the estimate of the costs and potential benefits associated with a particular contract.Changes in job performance, job conditions, estimated profitability, and final contract settlements may result in revisions to costs and income. The Company recognizes changes in contract estimates on a cumulative “catch-up” basis in the period in which the changes are identified. Such changes in contract estimates can result in the recognition of revenue in a current period for performance obligations which were

51

satisfied or partially satisfied in a prior period. Changes in contract estimates may also result in the reversal of previously recognized revenue if the current estimate differs from the previous estimate.

Goodwill and Intangible Assets

Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets. We test goodwill for impairment annually as of October 1 of our fiscal year, or when events or circumstances indicates goodwill might be impaired. For purpose of testing goodwill for impairment, we operate as a single reporting unit, which is consistent with our single operating segment. In performing the impairment test, we first assess qualitative factors, including macroeconomic conditions, industry and market considerations, triggering events,cost factors, and overall financial performance, to determine whether it is necessary to perform a quantitative goodwill impairment test. Alternatively, we may bypass the qualitative assessment for some or all of our reporting unit and apply the quantitative impairment test. If determined to be necessary, the quantitative impairment test shall be used to identify goodwill impairment and measure the amount of a goodwill impairment loss to be recognized (if any). For the quantitative impairment test, we estimate the fair value by weighting the results of the income approach and the market approach. These valuation approaches consider a number of factors that include, but are not limited to, prospective financial information, growth rates, terminal value, discount rates, and comparable multiples from publicly traded companies in our industry and require us to make certain assumptions and estimates regarding industry economic factors and future profitability of our business. Based upon the annual goodwill impairment testing performed in the fourth quarter of each fiscal year, we determined that there was no impairment of our goodwill during the years ended December 31, 2025, 2024, or 2023.

Acquired intangible assets include: customer relationships, customer production backlog, patents and know-how. Finite-lived intangible assets are amortized over their estimated useful lives using the straight-line method which approximates the pattern in which the economic benefits of such assets are consumed. We assess amortized intangible assets for impairment when events or circumstances suggest that the carrying values may not be recoverable. This assessment involves comparing the carrying value of the assets to their undiscounted expected future cash flows. If the total undiscounted future cash flows are less than the carrying amount, we recognize an impairment loss equal to the difference between the carrying amount and the fair value of the assets. Determining fair value requires management to make estimates and judgments based on various factors, including projected revenues and associated earnings. We did not recognize any impairment losses in the year ended December 31, 2025, 2024 or 2023.

Business Combinations

We allocate the purchase price of acquired entities to the underlying tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values, with any excess recorded as goodwill. The valuations of the acquired assets and liabilities will impact the determination of future operating results. Determining the fair value of assets we acquire and liabilities we assume requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. We determine the fair values of intangible assets acquired generally in consultation with third-party valuation advisors. Fair value adjustments to the assets and liabilities are recognized and the results of operations of the acquired business are included in our consolidated financial statements from the effective date of the acquisition.

Deferred tax liability and assets are recognized for the deferred tax consequences of differences between the tax bases and the recognized values of assets acquired and liabilities assumed in a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 740-10.

52

Liquidity and Capital Resources

The following table summarizes our capitalization:

As of December 31,

2025

2024

(in thousands except ratio)

Cash and cash equivalents

$

33,959

$

11,530

Debt:

Finance lease liabilities (including current portion)

81,396

81,937

Revolving credit facility

—

25,000

Notes Payable, including current portion, net of debt issuance costs

499,148

334,060

Total debt

580,544

440,997

Stockholders' equity and members' equity, respectively

382,691

195,996

Total capitalization (debt plus equity)

$

963,235

$

636,993

Total debt to total capitalization

1.52

2.25

Our principal historical liquidity requirements have been for organic growth, acquisitions, capital expenditures, servicing indebtedness, including finance lease liability payments, and working capital needs. We do not expect there to be substantial changes in our future capital requirements. We anticipate that over the next 12 months, we will meet our liquidity needs, including debt servicing, through cash generated from operations, available cash balances, and, if necessary, sales of accounts receivable and borrowings from our revolving credit facility. We fund our investing activities primarily from cash provided by our operating and financing activities.

On April 1, 2025, the Company entered into a new Credit Agreement (as amended from time to time, the “Citi Credit Agreement”) by and among Karman, the lenders from time to time party thereto and Citibank, N.A. (“Citi”), as the administrative agent for the lenders, and, substantially contemporaneously therewith, certain direct and indirect subsidiaries of Karman terminated all outstanding commitments and repaid all outstanding obligations under the TCW Credit Agreement and the Citi Credit Agreement provided for the issuance of a new $300.0 million term loan and $50.0 million revolving line of credit. The new term loan will mature on April 1, 2032 and the new revolving line of credit will mature on April 30, 2030.

The Citi Credit Agreement contains a springing financial covenant that is tested on the last day of any testing fiscal quarter if and when the outstanding principal amount of revolving credit loans exceeds an applicable threshold. If the financial covenant is then in effect, we are required to maintain a Consolidated First Lien Net Leverage Ratio of less than or equal to 6.50 to 1.00. The financial covenant is also conditioned upon our requirement to deliver quarterly financial statements to the lender under the Citi Credit Agreement, which obligation commences with the fiscal quarter ending September 30, 2025. As there was no amount of revolving credit outstanding as of December 31, 2025, the springing financial covenant was not required. The we were in compliance with other debt covenant as of December 31, 2025.

On May 27, 2025, we entered into the first amendment to the Citi Credit Agreement (the “First Amendment”). The First Amendment provides for an incremental borrowing of $75 million to fund the acquisition of ISP. All other terms and conditions of the Citi Credit Agreement remain unchanged.

On July 23, 2025, we priced the underwritten public offering (the “Secondary Offering”) of our common stock, par value $0.001 per share (the “Common Stock”), at a public offering price of $49.00 per share (the “Secondary Offering Price”), pursuant to our registration statement on Form S-1 (File No. 333-288809),as amended (the “Registration Statement”). On July 23, 2025, in connection with the pricing of the Secondary Offering, certain of our existing stockholders (the“Selling Stockholders”) agreed to sell 21,000,000 shares of their Common Stock, in each case at the Secondary Offering Price, less underwriting discounts and commissions. The Underwriters were granted a 30-day option to purchase up to an additional 3,150,000 shares of Common Stock from a certain Selling Stockholder, which was fully exercised on July 24, 2025. The Secondary Offering and the shares were delivered on July 25, 2025. The Secondary Offering was non-dilutive and increased the public float of our common stock. We did not sell any shares or receive proceeds, and the Secondary Offering had no impact on our capital structure or operations.

On October 24, 2025, we entered into a second amendment to the Citi Credit Agreement (the “Second Amendment”). The Second Amendment provides for an incremental term loan in the aggregate original principal amount of $130.0 million (the “Incremental Term Loan”). The proceeds of the Incremental Term Loan were used to repay outstanding revolving credit loans under the Citi Credit Agreement, the acquisition of Five Axis, and for the payment of any fees, commissions and expenses associated therewith.

53

On February 2, 2026, we entered into a Third Amendment to our Credit Agreement. Under the terms of the Third Amendment, we (i) refinanced our existing term loans in an aggregate principal amount of $502.8 million to reduce the interest rate applicable thereto by 75 basis points to SOFR plus 2.75% and (ii) reduced the interest rate applicable to our revolving credit facility by 75 basis points for each level of our leverage-based pricing grid, the highest of such levels being set at SOFR plus 2.50%. In addition, following the refinancing of the existing term loans, we increased the principal amount of our term loans by $265.0 million, for a total principal amount of $767.8 million. We used the proceeds from the increase in the term loans to fund the acquisition of the Company Group, as well as to provide additional working capital and liquidity to us and to pay related fees, commissions and expenses associated with the Third Amendment.

On March 9, 2026, we entered into a Fourth Amendment to our Credit Agreement. Under the terms of the Fourth Amendment, we (i) increased the revolving credit commitments by $100.0 million such that the total revolving credit commitments are now $150.0 million and (ii) removed the cap on incremental revolving credit commitments, which was previously $50.0 million.

We believe that our cash and cash equivalents as of December 31, 2025, together with available borrowings under the Citi Credit Agreement and expected net cash provided by operating activities will be sufficient to fund our cash requirements for at least the next twelve months. As we continue to grow our business, including by any acquisitions we may make, we may in the future require additional working capital.

Summary of Statement of Cash Flows

The following table summarizes the primary sources and uses of our cash flow:

For the year ended December 31,

2025

2024

(in thousands)

Net cash provided by (used in):

Operating activities

$

(22,119

)

$

26,645

Investing activities

(238,271

)

(46,236

)

Financing activities

282,819

25,666

Net increase in cash and cash equivalents

$

22,429

$

6,075

Operating Activities

Net cash used in operating activities for the year ended December 31, 2025 was $22.1 million, primarily consisting of net income of $17.4 million, non-cash items of $53.8 million and a net change in our operating assets and liabilities of $93.3 million. Changes in our operating assets and liabilities was primarily driven by an increase in contract assets of $49.1 million, a decrease in contract liabilities of $7.1 million, which was mainly due to initial and subsequent measurement of contracts with customers, changes in business volume, and progress of existing contracts. Change in our operating assets and liabilities was also driven by a decrease in accounts payable, accruals and income tax payable of $16.9 million, which was mainly driven by payment of $11.7 million acquisition-related expenses and timing of other payments.

Net cash provided by operating activities for the year ended December 31, 2024 was $26.6 million, primarily consisting of net income of $12.7 million, non-cash items of $23.9 million and a net change in our operating assets and liabilities of $10.0 million. Change in our operating assets and liabilities was primarily driven by an increase in contract assets of $18.0 million, a decrease in contract liabilities of $6.2 million, which was mainly due to initial and subsequent measurement of contracts with customers, changes in business volume, and progress of existing contracts. Change in our operating assets and liabilities was also driven by a increase in prepaids and other current assets of $14.8 million, which was due to favorable timing of cash payments to vendors.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2025 was $238.3 million, as a result of MTI, ISP and Five Axis acquisitions of $211.9 million in total, investment in a convertible note of $6.0 million and purchases of property and equipment.

Net cash used in investing activities for the year ended December 31, 2024 was $46.2 million, which was principally attributable to the RMS acquisition and purchase of property and equipment.

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Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025 was $282.8 million, which was primarily driven by net proceeds from our IPO of $154.8 million, proceeds from our new Citi credit facilities of $496.6 million (net of payment of debt issuance costs), partially offset by repayment of our old TCW credit facilities of $351.7 million.

Net cash provided by financing activities for the year ended December 31, 2024 was $25.7 million, which was primarily driven by net proceeds from increasing our TCW Term Note by $34.0 million (net of payment of debt issuance costs), partially offset by repayment of TCW Term Note of $9.5 million.

Other Obligations and Commitments

See Note 6 through Note 8, of the Notes to the Consolidated Financial Statements for information regarding our other obligations and commitments.

Leases

See Note 8, Leases, of the Notes to the Consolidated Financial Statements for information regarding our operating and finance lease obligations.

Recent Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies—Recent Accounting Pronouncements, of the Notes to the Consolidated Financial Statements for additional information.

JOBS Act Election

In 2026, we expect to no longer qualify as an ‘emerging growth company’ as defined in the JOBS Act. Until that time, we have elected to use the extended transition period for adopting new or revised accounting standards, which permits us to delay adoption until the dates applicable to private companies. Once we cease to qualify as an emerging growth company, we will be required to adopt all new or revised accounting standards as of their applicable public‑company effective dates. As a result, our financial statements may not be comparable to those of companies that have already adopted such standards in accordance with public‑company reporting requirements.

Internal Controls and Procedures

We are not currently required to comply with the SEC’s rules implementing Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Since becoming a public company, we are required to comply with the SEC’s rules implementing Section 302 of the Sarbanes-Oxley Act, which require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. Though we are required to disclose material changes made to our internal controls and procedures on a quarterly basis, we are not required to make our first assessment of the effectiveness of our internal control over financial reporting under Section 404 until our second annual report on Form 10-K after becoming a public company.

Further, our independent registered public accounting firm is not yet required to formally attest to the effectiveness of our internal controls over financial reporting and will not be required to do so for as long as we are an “emerging growth company” pursuant to the provisions of the JOBS Act. See “Summary—JOBS Act Election.”

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