0001193125-26-222116
SEC filingRevenue surged 51% YoY to $151.2M driven by Seemann acquisition and broad-based growth across all end markets.
Revenue for Q1 2026 increased 51.0% to $151.2 million, compared to $100.1 million in Q1 2025, driven by the Seemann acquisition and growth across all end markets. Gross profit rose 61.9% to $63.9 million, with gross margin expanding 280 basis points to 42.2% due to operating leverage and improved efficiency. Net operating income more than doubled to $21.5 million, representing a 115.3% increase. Net income turned positive at $7.8 million versus a net loss of $4.8 million in the prior year, benefiting from revenue growth and a significant reduction in share-based compensation (from $8.1 million to $0). Adjusted EBITDA increased 47.7% to $44.8 million, though Adjusted EBITDA margin dipped slightly to 29.6% from 30.3%, as acquisition-related costs offset some operating leverage.
All four end markets posted solid growth. Hypersonics and Strategic Missile Defense revenue grew 18.7% to $35.7 million, driven by strategic programs. Space and Launch revenue rose 29.5% to $43.9 million, benefiting from orders supporting both legacy and emerging launch providers. Tactical Missiles and Integrated Defense Systems revenue increased 25.0% to $45.3 million, supported by demand for advanced drones and GMLRS production. Maritime Defense Systems, a new segment from the Seemann acquisition, contributed $26.4 million, reflecting strong initial traction in submarine and LCAC programs. The acquisition also added $125.5 million in intangible assets, resulting in a 122.2% increase in depreciation and amortization expense.
Management highlighted a robust backlog of $1.03 billion, up 61.4% from $636.4 million a year ago, indicating strong future demand. They expect to meet liquidity needs over the next 12 months through cash from operations, available cash, and borrowings under the amended credit facility. No specific numeric guidance for fiscal 2026 was provided, but the company’s focus on strategic acquisitions and end-market diversification suggests continued momentum. The reduction in share-based compensation and non-recurring costs is expected to improve GAAP profitability going forward.
As of March 31, 2026, Karman held $73.8M in cash and equivalents, up from $34.0M at December 31, 2025, primarily driven by $265M in new term loan borrowings. Total debt stood at $757.8M, including $765.8M in term notes net of $12.1M issuance costs and $4.0M in other notes. The company's shareholders' equity was $405.7M, compared to $382.7M at year-end 2025, reflecting net income of $7.8M and $15.2M in stock issued for the Seemann acquisition. Inventory increased to $16.1M from $10.7M, largely due to the acquisition.
The company reported $723.3M in remaining performance obligations (RPO) as of March 31, 2026, of which 42% is expected to be recognized as revenue in the remainder of 2026, 24% in 2027, and 34% thereafter. No material purchase commitments or other contractual obligations were disclosed beyond lease obligations and debt.
During the quarter, Karman raised $265M in new term debt (net $263.1M after repayments) primarily to fund the Seemann acquisition. Capital expenditures totaled $7.4M, or 4.9% of revenue. No share repurchases or dividends were declared or paid. The company refinanced its term loan, reducing the interest rate by 75 basis points to SOFR+2.75%.
Note 13 confirms the company operates as a single reportable segment, with the CEO serving as CODM reviewing performance at a consolidated level. No additional segment or geographic breakdown is provided.
The provided document excerpt does not contain the full statement of cash flows. Only net income and income tax provision are mentioned. Net income improved significantly from a loss of $4.8M to a profit of $7.8M year-over-year. However, without operating cash flow data, it is impossible to assess cash flow quality relative to net income. Capital expenditures are referenced as managed at the enterprise level but no amount is given. Therefore, no further analysis of cash flow quality, capex intensity, or free cash flow can be performed.
The income tax provision decreased from $3.3M to $0.8M despite the swing from loss to profit. The effective tax rate was 9.7% due to a favorable discrete tax benefit. This could impact cash taxes paid, but no cash flow details are available.