KRMN 10-Q Quarterly Report June 30, 2025

TCFIII SPACECO HOLDINGS LLC

10-Ks and 10-Qs

10-Q	Quarter ended Sept. 30, 2025
10-Q	Quarter ended June 30, 2025
10-Q	Quarter ended March 31, 2025
10-K	Fiscal year ended Dec. 31, 2024

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30 , 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission File Number : 001-42520

KARMAN HOLDINGS INC.

(Exact name of Registrant as specified in Charter)


Delaware		85-2660232
(State or jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5351 Argosy Avenue , Huntington Beach , CA		92649
(Address of principal executive offices)		(Zip Code)

( 714 ) 898-9951

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

      
         Title of each class
        
         Trading
        
         Symbol(s)
        
         Name of each exchange on which registered

      
           Common Stock, $0.001 Par Value
          
           KRMN
          
           New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ NO ☒

Number of shares of registrant’s common shares outstanding as of August 1, 2025 was 132,322,435 .

Karman Holdings Inc.

Table of Contents


		Page
	PART I: FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	39
Item 4.	Controls and Procedures	39
	PART II: OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits, Financial Statement Schedules	42
Signature		43

PART I. FINAN CIAL INFORMATION

Item 1. Fin ancial Statements

Karman Holdings Inc.

Condensed Consolidat ed Balance Sheets

(in thousands, except par value and share data)

(unaudited)


	June 30,			December 31,
	2025			2024
ASSETS
Current assets
Cash and cash equivalents	$	27,438		$	11,530
Accounts receivable, net		57,902			55,220
Contract assets		133,590			107,222
Inventory		14,740			9,883
Prepaid and other current assets		8,382			17,856
Total current assets		242,052			201,711
Property, plant and equipment		112,025			87,832
Less accumulated depreciation		( 32,753	)		( 26,952	)
Net property, plant and equipment		79,272			60,880
Other assets
Goodwill		301,840			225,146
Intangible assets, net		251,144			208,952
Operating lease right-of-use assets		6,697			6,071
Finance lease right-of-use assets		66,144			70,013
Other assets		6,780			1,187
Total other assets		632,605			511,369
Total assets	$	953,929		$	773,960
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	28,056		$	28,296
Accrued payroll and related expenses		10,677			11,249
Contract liabilities		19,897			29,868
Short term operating lease liabilities		1,641			1,533
Short term finance lease liabilities		4,165			3,980
Short term notes payable, net of debt issuance costs		2,816			7,140
Income taxes payable		15,104			20,054
Other current liabilities		5,803			12,487
Total current liabilities		88,159			114,607
Long-term liabilities
Revolving line of credit		30,000			25,000
Long-term notes payable, net of current portion and net of debt issuance costs		365,847			326,920
Noncurrent operating lease liabilities, net of current portion		5,838			5,338
Noncurrent finance lease liabilities, net of current portion		75,477			77,957
Other liabilities		2,479			2,772
Deferred tax liabilities		24,652			25,370
Total long-term liabilities		504,293			463,357
Total liabilities		592,452			577,964
Equity:
Preferred stock, $ 0.001 par value; authorized — 100,000,000 shares; issued and outstanding — none		—			—
Common stock; $ 0.001 par value; authorized — 1,000,000,000 shares; issued and outstanding — 132,322,435 and none , respectively		132			—
Additional paid in capital		367,598			204,258
Accumulated other comprehensive income		75			75
Accumulated deficit		( 6,328	)		( 8,337	)
Stockholders' equity and members' equity, respectively		361,477			195,996
Total liabilities and equity	$	953,929		$	773,960

The accompanying notes are an integral part of the condensed consolidated financial statements

Karman Holdings Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share and per unit amounts)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Revenue	$	115,097		$	85,039		$	215,221		$	168,045
Cost of goods sold		68,076			50,445			128,749			104,451
Gross profit		47,021			34,594			86,472			63,594
Operating expenses
General and administrative expenses		19,430			9,993			42,718			20,082
Depreciation and amortization expense		7,487			6,320			13,687			11,732
Operating expenses		26,917			16,313			56,405			31,814
Net operating income		20,104			18,281			30,067			31,780
Interest expense, net		( 11,893	)		( 13,401	)		( 23,266	)		( 25,461	)
Other income		380			36			300			806
Income before provision for income taxes		8,591			4,916			7,101			7,125
Provision for income taxes		( 1,784	)		( 312	)		( 5,092	)		( 399	)
Net income		6,807			4,604			2,009			6,726
Net income per common share and unit, basic and diluted, respectively	$	0.05		$	0.03		$	0.02		$	0.04
Weighted-average common share and units outstanding, basic and diluted, respectively		132,322			166,737			132,322			166,737

The accompanying notes are an integral part of the condensed consolidated financial statements

Karman Holdings Inc.

Condensed Consolidated Statements of Equity

(in thousands)

(unaudited)


	Common Stock
	Shares		Amount		Additional Paid-In Capital		Members' Equity			Accumulated Deficit			Accumulated Other Comprehensive Income		Total
Balance, January 1, 2025		—	$	—	$	—	$	204,258		$	( 8,337	)	$	75	$	195,996
Share-based compensation		—		—		—		1,410			—			—		1,410
Contributions		—		—		—		1,474			—			—		1,474
Conversion of member's equity into common stock in initial public offering		123,754		124		207,018		( 207,142	)		—			—		—
Issuance of common stock in initial public offering, net		8,421		8		154,828		—			—			—		154,836
Net loss		—		—		—		—			( 4,798	)		—		( 4,798	)
Balance, March 31, 2025	$	132,175	$	132	$	361,846	$	—		$	( 13,135	)	$	75	$	348,918
Share-based compensation		—		—		—		—			—			—		—
Contributions		—		—		—		—			—			—		—
Issuance of common stock upon acquisition of Industrial Solid Propulsion		147		—		5,752		—			—			—		5,752
Net income		—		—		—		—			6,807			—		6,807
Balance, June 30, 2025	$	132,322	$	132	$	367,598	$	—		$	( 6,328	)	$	75	$	361,477

TCFIII Spaceco Holdings LLC

Condensed Consolidated Statements of Equity

(in thousands)

(unaudited)


	Common Stock
	Shares		Amount		Additional Paid-In Capital		Members' Equity			Accumulated Deficit			Accumulated Other Comprehensive Income			Total
Balance, January 1, 2024		—	$	—	$	—	$	203,422		$	( 21,038	)	$	76		$	182,460
Distributions		—		—		—		( 37	)		—			—			( 37	)
Net income		—		—		—		—			2,122			—			2,122
Share-based compensation		—		—		—		251			—			—			251
Balance, March 31, 2024		—		—		—	$	203,636		$	( 18,916	)	$	76		$	184,796
Distributions		—		—		—		( 38	)		—			—			( 38	)
Share-based compensation		—		—		—		246			—			—			246
Net income		—		—		—		—			4,604			—			4,604
Other Comprehensive loss		—		—		—		—			—			( 1	)		( 1	)
Balance, June 30, 2024	$	—	$	—	$	—	$	203,844		$	( 14,312	)	$	75		$	189,607

The accompanying notes are an integral part of the condensed consolidated financial statements

Karman Holdings Inc.

Condensed Consolidated Sta tements of Cash Flows


	For the six months ended June 30,
	2025			2024
Cash flows from operating activities
Net income	$	2,009		$	6,726
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation and amortization		19,176			15,656
Amortization of debt issuance costs		789			1,128
Non-cash interest expense and other non-cash adjustments		2,651			( 332	)
Deferred income taxes		( 718	)		( 5,251	)
Share-based compensation expenses		1,410			497
Changes in operating assets and liabilities
Change in accounts receivable		936			3,373
Change in contract assets		( 26,369	)		( 11,390	)
Change in inventory		( 397	)		5,839
Change in prepaids and other assets		10,148			( 190	)
Change in contract liabilities		( 10,066	)		( 5,502	)
Change in accounts payable, accruals and income taxes payable		( 18,865	)		( 1,108	)
Change in acquisition related accrued expenses		( 11,651	)		—
Net change in ROU assets and lease liabilities		( 8	)		( 233	)
Net cash provided by (used in) operating activities		( 30,955	)		9,213
Cash flows from investing activities
Purchases of property and equipment		( 8,669	)		( 6,703	)
Investment in convertible note		( 6,000	)		—
Acquisitions of businesses, net of cash acquired		( 126,279	)		( 30,687	)
Net cash flows used in investing activities		( 140,948	)		( 37,390	)
Cash flows from financing activities
Net proceeds from issuance of common stock in initial public offering		153,808			—
Finance lease payments		( 1,896	)		( 1,098	)
Proceeds from notes payable		375,000			35,000
Repayments of notes payable		( 337,115	)		( 4,984	)
Payments of debt issuance costs		( 6,541	)		( 962	)
Proceeds from revolving line of credit		30,000			17,000
Repayments of revolving line of credit		( 25,000	)		( 17,500	)
Repayment of debt assumed in ISP acquisition		( 1,919	)		—
Cash contributed from (distribution to) members		1,474			( 76	)
Net cash provided by financing activities		187,811			27,380
Net increase in cash and cash equivalents		15,908			( 797	)
Cash and cash equivalents, beginning		11,530			5,455
Cash and cash equivalents, ending		27,438			4,658
Supplemental Disclosures
Cash paid during the period for interest	$	20,103		$	23,898
Cash paid during the period for income taxes, net of refunds	$	10,360		$	—
Supplemental Non-Cash Investing and Financing Activities
Non-cash acquisition of finance lease right-of-use assets	$	—		$	4,087
Non-cash acquisition of operating lease right-of-use assets	$	1,342		$	—
Offering expenses included in liabilities	$	1,028		$	—
Acquisition of business included in liabilities	$	3,899		$	—
Common stock issued in acquisition of business	$	5,752		$	—
Acquisitions of property and equipment included in liabilities	$	854		$	1,010
Payment-in-kind interest expense	$	—		$	333

The accompanying notes are an integral part of the condensed consolidated financial statements

Karman Holdings Inc.

NOTES TO CONDENSED CONSOLIDATED FI NANCIAL STATEMENTS

(unaudited)

Formation and N ature of Business Operations

Karman Holdings Inc. (the “Company”) conducts business as Karman Space and Defense (“Karman”). Karman’s predecessor, TCFIII Spaceco Holdings LLC, was formed in August 2020 and, in connection with the Company’s initial public offering, converted into a Delaware corporation as Karman Holdings Inc. Karman is headquartered in Huntington Beach, California. It currently operates seven subsidiaries in Brea, California, El Monte, California, Huntington Beach, California, Mukilteo, Washington, Wilsonville Oregon, Albany, Oregon, Ogden, Utah and Cedar City, Utah.

Karman specializes in the rapid design, development and production of critical, next-generation system solutions for launch vehicle, satellite, spacecraft, missile defense, hypersonic and Unmanned Aircraft Systems (“UAS”) customers . Karman’s integrated payload protection, propulsion, and interstage system solutions are deployed across a wide variety of existing and emerging programs supporting important Department of Defense (“DoD”) and space sector initiatives.

As of June 30, 2025, Karman’s seven wholly-owned subsidiaries are:

Aerospace Engineering, LLC (“AEC”), a limited liability company, purchased August 28, 2020

AMRO Fabricating Corporation (“AMRO”), a C-corporation, purchased October 28, 2020

American Automated Engineering, Inc. (“AAE”), a C-corporation, purchased December 21, 2020

Systima Technologies, Inc. (“Systima”), a C-corporation, purchased September 14, 2021

Rapid Machine Solutions – Wolcott Design Services, LLC (“RMS”), a limited liability company, purchased February 16, 2024

Metal Technology Inc. (“MTI”), a limited liability company, purchased April 2, 2025

Industrial Solid Propulsion (“ISP”), an S-corporation, purchased May 28, 2025

Initial Public Offering

On February 12, 2025 the Company’s Registration Statement on Form S-1 for its initial public offering (the “IPO”) was declared effective. Prior to the effectiveness of the IPO, the Company was a Delaware limited liability company named TCFIII Spaceco Holdings LLC. On February 12, 2025, the Company converted into a Delaware corporation and changed the name to Karman Holdings Inc. Pursuant to the conversion, all outstanding equity interests and all outstanding P Units were converted into an aggregate of 123.8 million shares of common stock of Karman Holdings Inc.

On February 14, 2025, the Company completed the IPO of 26.5 million shares of its common stock at a public offering price of $ 22.00 per share, of which, 8.4 million shares were sold by the Company. The aggregate net proceeds from the offering, after deducting underwriting discounts and commissions, payments to Phantom Unit holders and other offering expenses, were approximately $ 147.3 million. See Note 9 and Note 10 for details.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented.

These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, include all adjustments of a normal recurring nature necessary to present fairly, in all material respects, the Company’s financial position, results of operations and cash flows. These unaudited condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Operating results for the three-month periods presented are not necessarily indicative of the results to be expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Management periodically evaluates estimates used in the preparation of the financial statements for continued reasonableness. Appropriate adjustments, if any, to estimates are made prospectively based upon such periodic evaluations. It is reasonably possible that changes may occur in the near term that would affect managements’ estimates with respect to revenue recognition, estimates of cost to complete contracts, allowance for credit losses, share-based payments, accrued expenses, inventory, deferred taxes, property and equipment and valuation of net assets acquired in business combinations, and the impairment assessment of goodwill and intangible assets.

Revenue and Costs Recognition

The Company recognizes revenue for each separately identifiable performance obligation in a contract representing a promise to transfer a distinct good to a customer. In most cases, goods provided under the Company’s contracts are accounted for as a single performance obligation due to the complex and integrated nature of its products. These contracts generally require significant integration of a group of goods to deliver a combined output. Warranties are provided on certain contracts, but do not typically provide for services beyond standard assurances and are therefore not considered to be a separate performance obligation. Assets recognized from costs to obtain or fulfill a contract are not material. Payment terms are typically forty-five days, but may vary.

The Company generates revenue under a range of contract types including fixed-price, time and material and cost-plus fixed fee contracts. Substantially all revenue is recognized as control is transferred to the customer over time based on an input measure of progress based on costs incurred compared to estimated total costs at completion. In general, the Company’s contracts contain termination clauses that entitle the Company to payment for work performed to-date for goods that do not have an alternative use. Amounts recoverable in the event of terminations include reasonable profit margins. Control is effectively transferred as the Company performs its contractual obligations.

The Company generally recognizes revenues over time using the input method, measured by the percentage of total costs incurred to-date to estimated total anticipated costs for each contract. This method is used because the Company considers total costs to be the best available measure of satisfaction of its performance obligations. Use of the input method requires the Company to make reasonable estimates regarding the revenue and costs associated with the design, manufacture, and delivery of its products. 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.

The nature of Company’s business can give rise to significant contract modifications, which can impact performance obligations and transaction price. A contract modification exists when the parties to a contract agree to a change in the scope and/or price of a contract. Contracts are often modified for changes in contract specifications or requirements. Most of the Company’s contract modifications are for goods that are not distinct in the context of the contract and are therefore accounted for as part of the original performance obligation through a cumulative catch-up adjustment.

Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as payroll taxes, employee benefits, equipment rental, indirect labor, rent, workers’ compensation insurance, utilities, and shop supplies. General operating, selling, and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, estimated profitability, and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined.

As of June 30, 2025, the Company had $ 513.7 million of remaining performance obligations. The Company expects to recognize approximately 38.6 % of the remaining performance obligations as revenue in 2025 , 34.0 % in 2026 , and 27.4 % thereafter .

The timing of Company billings is generally dependent upon agreed-upon contractual terms, milestone billings based on the completion of certain phases of the work, or when products are provided. Billing can occur prior to revenue recognition, resulting in deferred revenue or subsequent to revenue recognition, resulting in unbilled revenue. The asset, “contract assets” represents revenues recognized in excess of amounts billed. These contract assets are not considered a significant financing component of the Company’s contracts as the payment terms are intended to protect the customer in the event the Company does not fulfill its obligations under the contract. The liability, “contract liabilities” represents amounts billed in excess of revenues recognized. Contract liabilities are not a

significant financing component as they are generally utilized to pay for contract costs within a one-year period or are used to ensure the customer meets contractual requirements.

The following table summarizes our contract assets and liabilities:


	June 30, 2025		December 31, 2024
	(in thousands)
Accounts receivable	$	57,902	$	55,220
Contract assets	$	133,590	$	107,222
Contract liabilities	$	19,897	$	29,868

Changes in contract assets and contract liabilities are primarily due to the timing of payments from customers and the Company satisfying performance obligations during the normal course of business. The amount of revenue recognized from changes in the transaction price associated with performance obligations satisfied in prior year during the period ended June 30, 2025 and December 31, 2024 was not material. The following table summarizes the changes in contract assets and contract liabilities for the periods ended June 30, 2025 and December 31, 2024:



	June 30, 2025			December 31, 2024
	(in thousands)
Contract assets, beginning of period	$	107,222		$	89,184
Contract assets recorded during the period		100,777			96,433
Reclassified to accounts receivable during the period		( 74,409	)		( 78,395	)
Contract assets, end of period	$	133,590		$	107,222



	June 30, 2025			December 31, 2024
	(in thousands)
Contract liabilities, beginning of period	$	29,868		$	36,074
Customer advances received or billed		14,505			19,914
Recognition of unearned revenue		( 24,476	)		( 26,120	)
Contract liabilities, end of period	$	19,897		$	29,868

The Company’s contracts with customers relate to the design, manufacturing and delivery of its products in the following markets:

•

Hypersonic and Strategic Missile Defense – Hypersonic missiles, large diameter missile deterrent technologies and intercontinental strategic missile defense systems

•

Space and Launch – Traditional and new space launch rocket systems, space capsules, vehicles and payloads

•

Tactical Missiles and Integrated Defense Systems – Precision guided missiles, small diameter rocket and missile technologies and integrated defense systems

Substantially all of the Company’s customers are government or commercial enterprises based in the United States.

The following table presents our disaggregated revenue and revenue growth by end-markets for the three and six months ended June 30, 2025 and 2024, respectively:


	Three Months Ended June 30,
	2025		% of Revenue			2024		% of Revenue			% Change
	(in thousands, except percent)
Hypersonics & Strategic Missile Defense	$	34,960		30.4	%	$	28,741		33.8	%		21.6	%
Space & Launch		39,597		34.4	%		28,512		33.5	%		38.9	%
Tactical Missiles & Integrated Defense Systems		40,540		35.2	%		27,786		32.7	%		45.9	%
Total Revenue	$	115,097		100.0	%	$	85,039		100.0	%		35.3	%


	Six Months Ended June 30,
	2025		% of Revenue			2024		% of Revenue			% Change
	(in thousands, except percent)
Hypersonics & Strategic Missile Defense	$	65,016		30.2	%	$	53,563		31.9	%		21.4	%
Space & Launch		73,468		34.1	%		58,768		35.0	%		25.0	%
Tactical Missiles & Integrated Defense Systems		76,737		35.7	%		55,714		33.2	%		37.7	%
Total Revenue	$	215,221		100.0	%	$	168,045		100.0	%		28.1	%

Contract Estimates

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 that were 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. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes the total loss in the condensed consolidated statements of operations in the period in which it is identified. During the period ended June 30 , 2025 and 2024, changes in accounting estimates on revenue recognition was immaterial.

Inventory

The Company determines the cost basis for inventory using the lower of cost or net realizable value. Cost is determined by using the weighted average method. As of June 30, 2025, the balance of raw materials and work in progress was $ 11.5 million and $ 2.5 million , respectively, and as of December 31, 2024, the balance of raw materials and work in progress was $ 9.5 million and $ 0.4 million , respectively.

Prepaid and other current assets

Within prepaid and other current assets, the Company recognizes prepaid expenses for prepayments for goods that are expected to be consumed within 12 months.

The following table summarizes our prepaid and other current assets:




	June 30, 2025		December 31, 2024
	(in thousands)
Deferred offering costs	$	—	$	12,202
Other prepaid and current assets		8,382		5,654
Prepaid and other current assets	$	8,382	$	17,856

Accounts Receivable and Credit Loss Reserves

Accounts receivable comprise unsecured amounts due from customers and presented net of any allowance for credit losses. The Company recognizes its estimate of expected losses on accounts receivable within the scope of the current expected credit losses (“CECL”) model under ASC 326. All accounts receivable balances 180 days beyond the contractual due date will be reserved at 50 % and balances one year beyond the contractual due date will be reserved at 100 %. For contract assets, the Company establishes a reserve for contract assets when a job exceeds a certain length of inactivity unless there is persuasive evidence the balance will still be

recoverable. The following table summarizes the allowance for credit losses for the periods ended June 30, 2025 and December 31, 2024:


	June 30, 2025			December 31, 2024
	(in thousands)
Allowance for credit losses, beginning balance	$	( 712	)	$	( 1,039	)
Credit loss recoveries (expenses)		( 10	)		( 268	)
Write-offs		46			595
Allowance for credit losses, ending balance	$	( 676	)	$	( 712	)

Other Current Liabilities

Within other current liabilities, the Company recognizes certain accrued expenses and liabilities due within 12 months. The following table summarizes our other current liabilities:




	June 30, 2025		December 31, 2024
	(in thousands)
Accrued offering costs	$	1,028	$	11,720
Earnout liability		3,899		—
Other accrued expenses and current liabilities		876		767
Other current liabilities	$	5,803	$	12,487

Concentration of Credit Risk

Revenue from a few customers will typically represent a significant portion of the Company’s total revenue in any given fiscal year.

For the six months ended June 30, 2025 , the Company had three customers with greater than 10 % of the Company’s revenues, these customers comprised 23.2 %, 12.6 % and 11.7 % of the Company’s total revenues during the year.

For the six months ended June 30, 2024 , the Company had two customers with greater than 10 % of the Company’s revenues, these customers comprised 28.4 % and 11.6 % of the Company’s total revenues during the year.

As of June 30, 2025 , these three customers accounted for 45.9 % of accounts receivable. As of December 31, 2024 , these three customers accounted for 58.7 % of accounts receivable.

No single supplier accounted more than 10% of accounts payable as of June 30, 2025. One supplier accounted for approximately 19.6 % of accounts payable as of December 31, 2024 .

Share-Based Compensation

The Company accounts for share-based compensation under the fair value recognition provisions of ASC 718, Compensation - Stock Compensation. Under the fair value provisions, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite vesting period.

Net Income (Loss) Per Common Share or Common Unit

The Company uses the two-class method in calculating earnings per unit when it issues securities other than common units that contractually entitle the holder to participate in distributions and earnings of the Company. The Company historically issued Profit Interest Units (PIUs) in the form of Class P LLC Membership Units (“P Units”) that, once vested, participate in its distributions and earnings after the common units receive their return of capital plus a specified threshold amount. For the six months ended June 30, 2024, because the Company’s undistributed or distributed earnings did not exceeded the P Units’ thresholds, no earnings were allocated to the P Units in the computation of basic and diluted earnings per unit.

The Company presents both basic and diluted earnings per share and per unit amounts. Basic earnings per share and per unit is computed by dividing the net income attributable to common shares or common units by the weighted-average number of shares or units outstanding during the period.

Diluted earnings per share or per unit represents net income divided by the weighted-average number of shares or units outstanding, inclusive of the effect of dilutive units and contingently issuable shares or units. For the six months ended June 30, 2025 and 2024 , the Company had no potentially dilutive securities.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements Adopted

In March 2024, the FASB issued ASU 2024-01, Compensation-Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards. This update clarifies the scope of “Profit Interest” and similar awards and adds an illustrative example to the existing ASC 718 standard that includes four fact patterns to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether a profits interest award should be accounted for in accordance with Topic 718. The amendments in this ASU are effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for interim and annual financial statements not yet issued or made available for issuance. The amendments in this ASU should be applied either (1) retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or (2) modified on or after the date at which the entity first applies the amendments. On January 1, 2025 , the Company retrospectively adopted ASU 2024-01. The standard did not have any material impact on the Company’s financial position, results of operations or cash flows.

Investments and Fair Value Measurements

The Company applies the provisions under ASC 820, Fair Value Measurements, for financial assets and liabilities that are remeasured and reported at fair value each reporting period, and for nonfinancial assets and liabilities that are remeasured and reported at fair value on a nonrecurring basis. ASC 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. Where quoted market prices for identical assets and liabilities are available in active markets, securities are classified in Level 1 of the valuation hierarchy. Level 1 securities include exchange traded securities and mutual funds for which there are quoted prices in active markets. If quoted market prices are not available for the specific security, but are based on other observable inputs, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows and would generally be classified within Level 2 of the valuation hierarchy. Level 3 securities are securities where the inputs to the valuation methodology are unobservable inputs based on best estimates of inputs market participants that would be used in pricing the asset or liability as of the measurement date, including assumptions about risk. There were no transfers between Level 1, Level 2, or Level 3 for the six months ended June 30, 2025 or 2024.

On February 27, 2025, the Company invested $ 6.0 million in an unrelated party (the “Issuer”) in the form of a convertible promissory note (the “Note”). The Note will mature on the fifth anniversary of the Note’s issuance, bears no interest and is convertible into the Issuer’s shares prior to the maturity date at the Company’s discretion or upon the occurrence of certain future events. The Note was accounted for as available-for-sale debt instrument measured at fair value and recorded in Other assets . The fair value of this Note is classified within level 3 of the fair value hierarchy. As of June 30 , 2025, the fair value of the Note approximates its carrying amount.

Property and Equipment

Property and equipment consisted of the following as of June 30, 2025 and December 31, 2024:


	June 30, 2025			December 31, 2024
	(in thousands)
Land and buildings	$	6,611		$	—
Machinery and equipment ( 7 - 10 year assets)		74,568			59,669
Vehicles ( 5 year assets)		162			48
Office furniture and equipment ( 5 - 7 year assets)		1,316			1,253
Computer systems ( 3 year assets)		2,766			2,532
Leasehold improvements (life tied to lease duration)		17,402			14,201
Construction in process		9,200			10,129
Total property and equipment		112,025			87,832
Less accumulated depreciation		( 32,753	)		( 26,952	)
Property and equipment, net	$	79,272		$	60,880

Depreciation expense for the three months ended June 30, 2025 and 2024 was $ 3.0 million and $ 2.3 million , respectively, of which, $ 2.8 million and $ 2.0 million was recorded in cost of goods sold, respectively, and the remainder in operating expenses in the accompanying unaudited condensed consolidated statements of operations.

Depreciation expense for the six months ended June 30, 2025 and 2024 was $ 5.8 million and $ 4.4 million , respectively, of which, $ 5.5 million and $ 3.9 million was recorded in cost of goods sold, respectively, and the remainder in operating expenses in the accompanying unaudited condensed consolidated statements of operations.

Business Combination

RMS acquisition

On February 16, 2024 (the “RMS Acquisition Date”), the Company acquired 100 % of the equity interests of Rapid Machining Solutions - Wolcott Design Services (RMS) pursuant to the terms of a Securities Purchase Agreement (the “RMS Agreement”) in exchange for cash consideration (the “RMS Acquisition”). The primary purpose of the business combination was to create synergies based on RMS’s expertise in Aviation and Aerospace industry and expand the Company’s design and manufacturing capabilities.

The RMS Acquisition was accounted for as a business combination under ASC 805 using the acquisition method of accounting. The assets and liabilities acquired, affected for adjustments to reflect fair values assigned to assets purchased and liabilities assumed, and results of operations, are included in the Company’s condensed consolidated financial statements from the RMS Acquisition Date. The Company recorded the acquired tangible and identifiable intangible assets and assumed liabilities based on their estimated fair values at the acquisition date as required under ASC 805. As of February 15, 2025, the valuation of the acquired assets and assumed liabilities has been completed.

To fund the RMS Acquisition, the Company increased its TCW Term Note by $ 35.0 million. The fair value of the total purchase consideration transferred was $ 31.3 million in cash. The RMS Acquisition does not have any contingent consideration arrangements.

The Company also incurred $ 1.6 million of direct acquisitio n-related expenses, recognized as general, and administrative expenses on the accompanying unaudited condensed consolidated statements of operations for the six months ended June 30, 2024.

The following table sets forth the estimated fair values of the assets acquired, and liabilities assumed in connection with the RMS Acquisition:


	Total Amount
Assets Acquired	(in thousands)
Cash and cash equivalents	$	44
Accounts receivable		2,312
Prepaid expenses		5
Inventory		828
Property plant and equipment		2,987
Customer backlogs		5,300
Customer relationships		13,000
Right of use lease assets		348
Total assets acquired	$	24,824

Accounts payable	$	857
Accrued liabilities		157
Lease liabilities, current		12
Lease liabilities, non-current		336
Total liabilities assumed	$	1,362

Goodwill	$	7,872
Fair Value of Consideration	$	31,334

The excess of the purchase price over the fair value of the net identifiable tangible and intangible assets was recorded as goodwill and is fully deductible for tax purposes. The components of goodwill do not qualify as a separately recognized intangible asset.

Below is a summary of the intangible assets acquired in the RMS Acquisition:


	Acquisition Date Fair Value		Estimated Life
Intangible Asset	(in thousands)		(in years)
Customer Backlog	$	5,300		2.5
Customer Relationships	$	13,000		16.0

The fair value for both the customer backlog and the customer relationships were determined using the multi-period excess earnings method (“MPEEM”). This method reflects the present value of the operating cash flows generated by the intangible assets after considering the cost to realize the revenue, and an appropriate discount rate to reflect the time value and risk associated with the invested capital. In total, the intangible assets acquired subject to amortization have a weighted average life of 12.1 years.

MTI acquisition

On April 2, 2025 (the “MTI Acquisition Date”), the Company, through its indirect wholly-owned subsidiary Karman Parent LLC (“Karman Parent”), acquired all the issued and outstanding membership interests and other equity interests of MTI Metal Technology Inc., pursuant to the terms of a Securities Purchase Agreement (the “MTI Agreement”) in exchange for cash consideration (the “ MTI Acquisition”). 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.

The MTI Acquisition met the requirements to be considered a business combination under ASC 805. The assets and liabilities acquired, affected for adjustments to reflect fair values assigned to assets purchased and liabilities assumed, and results of operations, are included in the Company’s condensed consolidated financial statements from the MTI Acquisition Date. The Company recorded the acquired tangible and identifiable intangible assets and assumed liabilities based on their estimated fair values at the acquisition date as required under ASC 805.

The MTI Acquisition was funded by the Company’s new Citi credit facilities and was a ccounted for using the acquisition method of accounting. The fair value of the total purchase consideration transferred was $ 82.3 million. The MTI Acquisition does not have any contingent consideration arrangements.

The Company also incurred $ 1.4 million of direct acquisition-related expenses, recognized as general, and administrative expenses on the condensed consolidated statements of operations for the three and six months ended June 30, 2025.

The following table sets forth the preliminary allocation, as of June 30, 2025, of the fair value of the assets acquired and liabilities assumed in connection with the MTI Acquisition:


	Total Amount
Assets Acquired	(in thousands)
Cash and cash equivalents	$	2,230
Accounts receivable, net		2,734
Inventory		3,258
Prepaid and other current assets		173
Property, plant and equipment		10,672
Intangible assets, net		30,700
Right of use lease assets		715
Total assets acquired	$	50,482

Accounts payable		374
Accrued payroll and related expenses		10,815
Lease liabilities, current		113
Lease liabilities, non-current		602
Other current liabilities		461
Total liabilities assumed	$	12,365

Goodwill	$	44,196
Fair Value of Consideration	$	82,313

Below is a summary of the intangible assets acquired in the MTI Acquisition:


Intangible Asset	Acquisition Date Fair Value (in thousands)		Estimated Life (Years)
Customer Relationships	$	19,700		14.0
Backlog		3,600		2.7
Know-How	$	7,400		7.0
Total Intangible Assets Acquired	$	30,700

The fair value for trade name and developed technology was determined using the relief from royalty method and the fair values of customer relationships and backlog was determined using the multi-period excess earnings method. In total, the intangible assets acquired subject to amortization have a weighted average useful life of 11.0 years.

Net revenue and net income from this acquisition has been included in the Consolidated Statements of Operations from the acquisition date through the end of the three months ended June 30, 2025, and the impact of the acquisition to the ongoing operations on the Company’s net revenue and net income was not significant. Supplemental pro forma results of operations have not been presented because they were not material to the condensed consolidated results of operations.

ISP acquisition

On May 28, 2025 (the “ISP Acquisition Date”), the Company completed its acquisition of Industrial Solid Propulsion (“ISP”) pursuant to a Securities Purchase Agreement (the “ISP Agreement”), under which the Company purchased all issued and outstanding equity interests in ISP and related real estate of ISP, for approximately $ 50 million in cash and 147,842 shares of common stock of the Company and a $ 5.0 million potential earnout (the “Earnout”), 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.

The ISP Acquisition met the requirements to be considered a business combination under ASC 805. The assets and liabilities acquired, affected for adjustments to reflect fair values assigned to assets purchased and liabilities assumed, and results of operations, are included in the Company’s condensed consolidated financial statements from the ISP Acquisition Date. The Company recorded the acquired tangible and identifiable intangible assets and assumed liabilities based on their estimated fair values at the acquisition date as required under ASC 805.

The ISP Acquisition was funded by increasing the Company’s term note and was accounted for using the acquisition method of accounting. The fair value of the total purchase consideration transferred was $ 58.6 million, of which $ 52.9 million represents cash consideration, $ 5.7 million represents the fair value of the equity consideration as of the ISP Acquisition Date. Of the $ 52.9 million cash consideration, $ 3.9 million represents the fair value of the Earnout, which was recorded in other current liabilities on the unaudited condensed balance sheets. The earnout liability was estimated using a Monte Carlo simulation under a risk-neutral framework, based on the average present value of the simulated earnout payments. The Earnout provides for a cash payment equal to $ 5.0 million to the seller of ISP, contingent upon the achievement of specified Adjusted EBITDA threshold for the twelve months ended December 31, 2025, as defined in the ISP Agreement. If the Adjusted EBITDA threshold is achieved, the Earnout is expected to be paid in 2026.

The Company also incurred $ 1.2 million of direct acquisitio n-related expenses, recognized as general, and administrative expenses on the condensed consolidated statements of operations for the three and six months ended June 30, 2025.

The following table sets forth the preliminary allocation, as of June 30, 2025, of the fair value of the assets acquired and liabilities assumed in connection with the ISP Acquisition:


	Total Amount
Assets Acquired	(in thousands)
Cash and cash equivalents	$	2,791
Accounts receivable, net		883
Inventory		1,202
Prepaid and other current assets		39
Property, plant and equipment		4,239
Intangible assets, net		21,400
Total assets acquired	$	30,554

Accounts payable		279
Accrued payroll and related expenses		2,122
Contract liabilities		95
Long-term notes payable, net of current portion and net of debt issuance costs		1,919
Total liabilities assumed	$	4,415

Goodwill	$	32,498
Fair Value of Consideration	$	58,637

Below is a summary of the intangible assets acquired in the ISP Acquisition:


Intangible Asset	Acquisition Date Fair Value (in thousands)		Estimated Life (Years)
Customer Relationships	$	13,500		10.0
Backlog		1,900		1.6
Know-How	$	6,000		15.0
Total Intangible Assets Acquired	$	21,400

The fair value for developed technology was determined using the relief from royalty method and the fair values of customer relationships and backlog was determined using the multi-period excess earnings method. In total, the intangible assets acquired subject to amortization have a weighted average useful life of 10.7 years.

Goodwill and Intangibles

The table below summarizes the changes in the Company’s goodwill balances:


	Total Goodwill
	(in thousands)
Balance at January 1, 2024	$	217,274
Acquisitions		7,872
Impairments		—
Balance at December 31, 2024		225,146
Acquisitions		76,694
Impairments		—
Balance at June 30, 2025	$	301,840

The table below summarizes the carrying amounts of the Company’s identifiable intangible assets as of June 30, 2025 and December 31, 2024, respectively:


		As of June 30, 2025
	Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(in years)	(in thousands)
Patents ( 9 years)	9.0	$	2,722	$	( 926	)	$	1,796
Know-How ( 7.0 - 15.0 years)	10.5		15,686		( 998	)		14,688
Customer Backlogs ( 1.0 - 7.5 years)	2.4		44,250		( 36,794	)		7,456
Customer Relationships ( 10 - 19 years)	17		288,800		( 61,596	)		227,204
Total Intangible Assets		$	351,458	$	( 100,314	)	$	251,144


		As of December 31, 2024
	Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(in years)	(in thousands)
Patents ( 9 years)	9.0	$	2,722	$	( 774	)	$	1,948
Know-How ( 10 years)	10.0		2,286		( 585	)		1,701
Customer Backlogs ( 0.6 - 2.5 years)	2.4		38,750		( 35,302	)		3,448
Customer Relationships ( 13 - 19 years)	17.6		255,600		( 53,745	)		201,855
Total Intangible Assets		$	299,358	$	( 90,406	)	$	208,952

Amortization expense was $ 5.5 million and $ 4.4 million for the three months ended June 30, 2025 and 2024, respectively, which was recorded in general and administrative expenses in the accompanying unaudited condensed consolidated statement of operations.

Amortization expense was $ 9.9 million and $ 8.3 million for the six months ended June 30, 2025 and 2024 , respectively, which was recorded in general and administrative expenses in the accompanying unaudited condensed consolidated statement of operations.

Debt

Notes Payable

On April 1, 2025, the Company entered into a new Credit Agreement (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 previous TCW Credit Agreement. This transaction resulted in the extinguishment of the previous TCW Term Note and facilities under the TCW Credit Agreement and 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 1, 2030 .

On May 27, 2025, the Company increased its Citi Term Note by $ 75 million to fund the acquisition of ISP. All other terms and conditions of the Citi Credit Agreement remain unchanged.

The Company’s notes payable consisted of the following as of June 30, 2025 and December 31, 2024:



	June 30,			December 31,
	2025			2024
	(in thousands)
Term Note	$	375,000		$	326,662
Seller Note		—			10,452
Total notes payable		375,000			337,114
Issuance costs		( 6,337	)		( 3,054	)
Subtotal		368,663			334,060
Less: current portion of notes payable		( 2,816	)		( 7,140	)
Long-term notes payable		365,847			326,920

The Citi Term Note carries variable interest payments based on specified benchmark reference rates. Interest rates were 8.65 % and 11.01 % as of June 30, 2025 and December 31, 2024, respectively.

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, the Company is 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 the Company’s 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 a result, the financial covenant is not tested as of June 30, 2025.

The Company held a note payable to one of the sellers (the “Seller Note”) from a prior acquisition for $ 6.6 million. The note bears interest at 7.5 % and is capitalized annually on the anniversary date of the acquisition. The Seller Note plus all capitalized interest amounts is due and payable March 22, 2026. In April 2025, the Company repaid outstanding principal and interest balance of $ 10.6 million. No principal and interest balance was outstanding as of June 30, 2025. The outstanding principal and interest balance as of December 31, 2024 was $ 10.5 million.

Revolving Line of Credit

The Company has a $ 50 million revolving line of credit under the Citi Credit Agreement to provide for working capital needs. On April 2, 2025, the Company drew $ 30.0 million from this revolving line of credit to fund the acquisition of MTI. Amount outstanding under the Citi revolving line of credit was $ 30.0 million as of June 30, 2025. As of December 31, 2024, amounts outstanding on the $ 25.0 million revolving line of credit under the TCW Credit Agreement was $ 25.0 million. The maturity date of the revolving line of credit under the TCW Credit Agreement was April 15, 2026 .

The Company’s revolving line of credit carries variable interest payments based on specified benchmark reference rates. Borrowings under the line of credit bear interest based on the Secured Overnight Financing Rate (SOFR) and the Company’s leverage ratio. Interest rates were 8.65 % and 11.01 % as of June 30, 2025 and December 31, 2024, respectively.

Total interest expense related to the revolving line of credit, finance leases (Note 7) and notes payable amounted to $ 11.9 million and $ 13.4 million for the three months ended June 30, 2025 and 2024, respectively. Total interest expense was $ 23.7 million and $ 25.5 million for the six months ended June 30, 2025 and 2024, respectively. Through June 30, 2025 , debt origination fees related to the Citi Term Note was $ 6.5 million, which are being amortized over the life of the loan using the straight-line method, as the difference between use of the effective interest and straight-line method is not material. Amortization of debt issuance cost related to the Citi Term Note of $ 0.2 million was recorded as part of interest expense for the three and six months ended June 30, 2025. Additionally, as a result of extinguishment of the TCW Term Note, the associated unamortized debt issuance cost of $ 2.5 million was written off and recorded as interest expense on the condensed consolidated statement of operations for the three and six months ended June 30, 2025.

Amortization of debt origination fees, related to the TCW Term Note, of $ 0.5 million and $ 1.1 million were recorded as part of interest expense for the three and six months ended June 30 2024, respectively.

No accrued interest was recorded under the Citi Credit Agreement or the TCW Credit Agreement as of June 30, 2025 and December 31, 2024 .

Lease Obligations

The Company has certain property leases, with former owners and members for facilities of the Company’s subsidiaries. Most of these leases are accounted for as finance leases except for facilities leased by AEC and a plane hangar leased by Systima, which are

accounted for as operating leases. Total lease payments amounted to $ 2.2 million and $ 2.9 million for the three months ended June 30, 2025 and 2024, respectively. Total lease payments amounted to $ 6.4 million and $ 5.3 million for the six months ended June 30, 2025 and 2024, respectively.

Consolidated Lease Summary

On a consolidated basis, lease activity for the three and six months ended June 30, 2025 and 2024 were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(in thousands)
Finance lease expense
Amortization of ROU assets	$	1,131	$	1,611	$	3,424	$	3,124
Interest on lease liabilities		1,095		1,671		3,363		3,305
Operating lease expense		386		422		1,065		844
Total	$	2,612	$	3,704	$	7,852	$	7,273

Amortization of ROU assets are included in the depreciation and amortization expense line of the accompanying unaudited condensed consolidated statements of operations.

On a consolidated basis, supplemental cash flow information for the six months ended June 30, 2025 and 2024 were as follows:


	Six Months Ended June 30,
	2025			2024
Cash paid for amounts included in the measurement of lease liabilities	(in thousands except percent and year)
Operating cash flows from finance leases	$	3,371		$	3,305
Financing cash flows from finance leases	$	1,896		$	1,098
Operating cash flows from operating leases	$	1,083		$	867
ROU assets obtained in exchange for new finance lease liabilities	$	—		$	4,087
ROU assets obtained in exchange for new operating lease liabilities	$	1,342		$	—
Weighted-average remaining lease term in years for finance leases		13.47		n/a
Weighted-average remaining lease term in years for operating leases		5.64		n/a
Weighted-average discount rate for finance leases		8.37	%	n/a
Weighted-average discount rate for operating leases		9.60	%	n/a

Retirement Plans

Employee Benefit Plan

The Company maintains 401(k) Plans for all employees who have completed three months of service and have reached age 18. Qualified employees may contribute up to 90 % of their pre-tax annual compensation to this plan, not to exceed the dollar limit set by law. The Company may make discretionary matching contributions and discretionary non-elective contributions to this plan. There were contributions of $ 0.8 million and $ 0.6 million made to the plans during the three months ended June 30, 2025 and 2024 respectively. Retirement plan contribution expense is included within either Cost of Goods Sold or General and Administrative expenses on the condensed consolidated statement of operations, depending on the nature of the employee’s work.

Membership Units

Prior to the IPO, the Company issued membership units both in conjunction with purchases of subsidiaries and to reflect further investment in the Company’s operations. The Company issued Class A, Class B, and Class C units with substantially identical rights, privileges and liquidation preferences. No member shall be liable for the debts, liabilities or obligations of the Company beyond the member’s contributions. Pursuant to the Third Amended and Restated Limited Liability Company Agreement of TCFIII Spaceco Holdings LLC, such membership units entitled unitholders to share in the proceeds from capital transactions, including a sale of the Company, and granted them voting rights on matters requiring the consent of the members. As of December 31, 2024, a total of 166,737,325 shares of membership units were outstanding. In connection with the IPO in February 2025, all of the outstanding membership units were converted on a 0.68 -for-1 basis into 112,566,039 shares of common stock of the Company.

10.

Share-Based Compensation

The Company historically, through Spaceco Management Equity LLC (the “Management Company”) under the Spaceco Management Equity LLC Equity Incentive Plan (the “Equity Incentive Plan”), granted P Units to certain employees of the Company and its subsidiaries, in exchange for their services to the Company. Management Company has an economic interest in the Company, but no other interests or business operations other than issuing P Units directly to management employees on behalf of the Company.

The accounting for grants of P Units by the Company to Management Company and Management Company’s contemporaneous issuance of P Units to individual Company employees represents a distribution from the Company immediately followed by a contribution from Management Company, which together would have no financial statement impact. As a result, the Company refers to P Units issued to Management Company as though the Company had issued P Units directly to the employee.

The P Units entitle the holder to receive cash distributions from the Company, including, but not limited to upon a sale or change in control of the Company, provided that the proceeds received exceed the defined threshold value in the individual award agreements. Vesting is dependent on service-based and performance-based vesting conditions, as discussed in further detail below.

The P Units are subject to time-based vesting conditions (Time-Based Units). The Time-Based Units generally vest over 5 years with 20 % vesting at each annual vesting date. In some cases, the Company recognizes expense as of the grant date for the portion of an award that is legally vested on the grant date as a result of years of service performed prior to the grant date. Time-Based Units are also subject to an accelerated vesting upon a change of control event, which includes an initial public offering. A corporate conversion will cause all P Units to be converted into new shares of the Company based upon the fair market value of the P Units immediately prior to such conversion.

The Company records compensation cost for Time-Based Units over the requisite service period using the straight-line method.

The following table summarizes P Units activities:


	P Units			Weighted Average Grant- Date Fair Value
Nonvested units at January 1, 2024		8,892,655		$	0.31
Granted		—			—
Vested		( 3,797,905	)	$	0.28
Forfeited		—			—
Nonvested units at December 31, 2024		5,094,750		$	0.32
Granted		—			—
Vested		( 5,094,750	)	$	0.32
Forfeited		—			—
Nonvested units at June 30, 2025		—			—

In February 2025, in connection with the IPO, all 18,063,207 P Units outstanding were converted into 11,187,501 shares of the Company’s common stock on a 0.62 -for-1 basis. All unvested P Units vested immediately. The Company recognized share-based compensation expense of $ 0.0 million and $ 0.3 million for the three months ended June 30, 2025 and 2024, respectively, and $ 1.4 million and $ 0.7 million for the six months ended June 30, 2025 and 2024, respectively. These expenses were included in general and administrative expenses in all periods presented in the condensed consolidated statement of operations. As of June 30 , 2025, there are no P Units outstanding.

Phantom Plan

On September 23, 2024 the Company adopted a Transaction Bonuses plan (the “Phantom Plan”), pursuant to which the Company granted Phantom Units through Management Company to select employees providing services to the Company and/or its subsidiaries.

The Phantom Units are subject to service and performance-based vesting conditions. The Phantom Units are entitled to payment if the recipient is employed in the period in which a distribution event to P Unit holders, such as a change in control, initial public offering or liquidation event is consummated. The Phantom Units are not entitled to any payments until a distribution to the Company’s unitholders in excess of the $ 470.2 million threshold value occurs. The Company does not recognize any compensation cost for Phantom Units as these events are not considered probable, until the event actually occurs.

The following table summarizes Phantom Units activities:


	Phantom Units			Weighted Average Grant-Date Fair Value
Nonvested units as of January 1, 2024		—			—
Granted		463,162		$	3.04
Vested		—			—
Forfeited		—			—
Nonvested units at December 31, 2024		463,162		$	3.04
Granted		—			—
Vested		( 463,162	)	$	3.04
Forfeited		—			—
Nonvested units at June 30, 2025		—		$	—

In connection with the IPO in February 2025, the Phantom Units were settled for $ 6.6 million in cash, which was recognized as share-based compensation expense in general and administrative expenses in the condensed consolidated statements of operations.

11.

Net Income (Loss) Per Common Share and Common Unit

Net income (loss) per common share and common unit was computed as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(in thousands except per share data)
Net income	$	6,807	$	4,604	$	2,009	$	6,726
Weighted average common share and unit outstanding - basic, respectively		132,322		166,737		132,322		166,737
Effect of dilutive common shares and unit, respectively		—		—		—		—
Weighted average common share and unit outstanding - diluted, respectively		132,322		166,737		132,322		166,737
Net income per common share and unit - basic, respectively	$	0.05	$	0.03	$	0.02	$	0.04
Net income per common share and unit - diluted, respectively	$	0.05	$	0.03	$	0.02	$	0.04

The Company had no potentially dilutive securities in any period presented.

12.

Segment Reporting

ASC Subtopic 280-10, “Segment Reporting,” establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available. This information is regularly evaluated by the chief operating decision maker (“CODM”) to allocate resources and assess performance. The Company’s Chief Executive Officer serves as the CODM , and reviews financial information on an operating segment basis to make operational decisions and assess financial performance. The Company operates as one segment. The accounting policies of the Company’s segment are the same as those described in the summary of significant accounting policies.

The CODM assesses performance at a consolidated level and decides how to allocate resources based on consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets.

The following table summarizes the Company’s revenue, net income and significant expenses:


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
	(in thousands)
Revenue	$	115,097		$	85,039		$	215,221		$	168,045
Expenses and other items:
Cost of goods sold:
Labor		( 28,463	)		( 25,346	)		( 56,140	)		( 47,721	)
Materials		( 31,741	)		( 19,163	)		( 57,977	)		( 44,716	)
Overhead		( 5,052	)		( 3,950	)		( 9,143	)		( 8,090	)
Depreciation and amortization		( 2,820	)		( 1,986	)		( 5,489	)		( 3,924	)
Total cost of goods sold		( 68,076	)		( 50,445	)		( 128,749	)		( 104,451	)
General and administrative expenses		( 19,430	)		( 9,993	)		( 42,718	)		( 20,082	)
Depreciation and amortization not included in cost of goods sold		( 7,487	)		( 6,320	)		( 13,687	)		( 11,732	)
Other income		380			36			300			806
Interest expense, net		( 11,893	)		( 13,401	)		( 23,266	)		( 25,461	)
Income tax provision		( 1,784	)		( 312	)		( 5,092	)		( 399	)
Net income	$	6,807		$	4,604		$	2,009		$	6,726

General and administrative expenses include employee compensation and benefits of $ 7.8 million and $ 5.5 million for the three months ended June 30 , 2025 and 2024, respectively, and $ 14.4 million and $ 10.4 million for the six months ended June 30, 2025 and 2024, respectively.

Other income for the six months ended June 30 , 2024 was $ 0.8 million, which was primarily attributable to the gain from the settlement of a shareholder note in the three months ended March 2024. Other income for other periods presented was immaterial.

Capital expenditures, which include purchases of property, plant, and equipment, are assessed and managed at the enterprise level. Refer to “Investing Activities” in the condensed consolidated statement of cash flows for the amount of cash paid for capital expenditures.

Interest income during the periods presented is insignificant.

13.

Provision for Income Tax

The following table summarizes the Company’s income tax expense and effective tax rate for the three and six months ended June 30, 2025 and 2024:


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
	(in thousands, except percent)
Income before provision for income taxes	$	8,591		$	4,916		$	7,101		$	7,125
Provision for income taxes		1,784			312			5,092			399
Effective tax rate		20.8	%		6.3	%		71.7	%		5.6	%

The increase in the effective income tax rates for the three and six months ended June 30, 2025, as compared to the same periods prior year, respectively, was primarily driven by change in entity classification, non-deductible profit interests, non-deductible officer compensation, and interest and penalties from prior year tax returns and uncertain tax positions.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including modifications to capitalization of research and development expenses, limitation on deductions for interest expense and accelerated depreciation on fixed asset additions. The Company is currently evaluating the impact of OBBBA to its consolidated financial statements.

14.

Commitments and Contingencies

In the course of doing business, the Company enters into various agreements. These agreements typically include commitments and indemnifications, which could create a liability for the Company in the event of damages or injuries related to providing these services. Management believes the Company is adequately insured. However, future claims related to these agreements could significantly affect the Company’s financial results if a loss is incurred as a result of these agreements.

The Company accrues a liability for legal contingencies when it is both probable that a liability has been incurred and the amount of loss is reasonably estimable. The Company reviews these accruals and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel, and other relevant information. To the extent new information is obtained and our views on the probable outcomes of claims, suits, assessments, investigations, or legal proceedings change, changes in our accrued liabilities would be recorded in the period in which such determination is made. For certain matters, the liability is not probable, or the amount cannot be reasonably estimated, and therefore, accruals have not been made. In addition, in accordance with the relevant authoritative guidance, for any matters in which the likelihood of a material loss is at least reasonably possible, the Company will provide disclosure of the possible loss or range of loss. If a reasonable estimate cannot be made, however, the Company will provide disclosure to that effect. As of June 30, 2025 and December 31, 2024 , the Company has no material reserves for legal contingencies and does not believe it is subject to material litigation risk. Legal fees are expensed as incurred.

15.

Subsequent Events

On July 23, 2025, the Company priced the underwritten public offering (the “Offering”) of its common stock, par value $ 0.001 per share (the “Common Stock”), at a public offering price of $ 49.00 per share (the “Offering Price”), pursuant to the Company’s 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 Offering, certain of the Company’s existing stockholders (the “Selling Stockholders”) agreed to sell 21,000,000 shares of their Common Stock, in each case at the 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 Offering and the shares were delivered on July 25, 2025. No shares were sold by the Company in the Offering and the Company did no t receive any proceeds from the Offering.

ITEM 2. MANAG EMENT’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 prospectus 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 rapid design, development and production of critical, next-generation system solutions for launch vehicle, satellite, spacecraft, missile defense, hypersonic and Unmanned Aircraft Systems (“UAS”) customers. Our integrated payload protection, propulsion, and interstage system solutions are deployed across a wide variety of existing and emerging programs supporting important Department of Defense (“DoD”) and space sector initiatives. We estimate that no single program accounted for more than 11% of sales in the six months ended June 30, 2025 or the six months ended June 30, 2024, with revenue from over 100 active programs supporting current production and next-generation space, missile, hypersonic, 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.

Propulsion Systems : involves the integrated offering of solid rocket motor subsystems, launch systems, and ablative composites.

Aerodynamic and Interstage Systems : involves supporting metallic and composite subsystems designed for aerodynamics and interstage separation.

Our solutions are deployed across three growing, core end markets including: Hypersonics and Strategic Missile Defense, Tactical Missiles and 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 200 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 benefitting 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 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.

Our Condensed 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 June 30, 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 initial public offering (the “IPO”), we converted from a Delaware limited liability company named TCFIII Spaceco Holdings LLC. In the conversion, all of our outstanding equity interests and all outstanding P Units were converted into 123.8 million shares of common stock of Karman Holdings Inc.

On February 14, 2025, we completed the IPO of 26.5 million shares of its common stock at a public offering price of $22.00 per share, of which, 8.4 million shares were sold by the Company. The aggregate net proceeds from the offering, after deducting underwriting discounts and commissions, payments to phantom unit holders and other offering expenses, were approximately $147.3 million.

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;

•

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 DoD and the United States 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 acquisitions 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 U.S. Department of Defense (“DoD”) 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 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 DoD 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 DoD’s strategy and operations.

In addition, the recently enacted One Big Beautiful Bill Act (“OBBBA”) provides approximately $150 billion in incremental defense funding through FY 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.

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 (Hypersonic and Strategic Missile Defense, Missile 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.

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 Three and Six Months Ended June 30, 2025 and 2024

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 June 30,						Change
	2025			2024			Dollar			Percent
	(in thousands, except percent)
Revenue	$	115,097		$	85,039			30,058			35.3	%
Cost of goods sold		68,076			50,445			17,631			35.0	%
Gross profit		47,021			34,594			12,427			35.9	%
General and administrative expenses		19,430			9,993			9,437			94.4	%
Depreciation and amortization expense		7,487			6,320			1,167			18.5	%
Total operating expenses		26,917			16,313			10,604			65.0	%
Net operating income		20,104			18,281			1,823			10.0	%
Interest expense, net		(11,893	)		(13,401	)		1,508			(11.3	%)
Other income		380			36			344			955.6	%
Provision for income taxes		(1,784	)		(312	)		(1,472	)		471.8	%
Net income		6,807			4,604			2,203			47.8	%
Net Income Margin		5.9	%		5.4	%					0.5	%
Operating Margin		17.5	%		21.5	%					(4.0	%)
Gross Profit Margin		40.9	%		40.7	%					0.2	%


	Six Months Ended June 30,						Change
	2025			2024			Dollar			Percent
	(in thousands, except percent)
Revenue	$	215,221		$	168,045			47,176			28.1	%
Cost of goods sold		128,749			104,451			24,298			23.3	%
Gross profit		86,472			63,594			22,878			36.0	%
General and administrative expenses		42,718			20,082			22,636			112.7	%
Depreciation and amortization expense		13,687			11,732			1,955			16.7	%
Total operating expenses		56,405			31,814			24,591			77.3	%
Net operating income		30,067			31,780			(1,713	)		(5.4	%)
Interest expense, net		(23,266	)		(25,461	)		2,195			(8.6	%)
Other income		300			806			(506	)		(62.8	%)
Provision for income taxes		(5,092	)		(399	)		(4,693	)		1,176.2	%
Net income		2,009			6,726			(4,717	)		(70.1	%)
Net Income Margin		0.9	%		4.0	%					(3.1	%)
Operating Margin		14.0	%		18.9	%					(4.9	%)
Gross Profit Margin		40.2	%		37.8	%					2.3	%

Revenue

Revenue for the three months ended June 30, 2025 increased $30.1 million or 35.3% to $115.1 million as compared to $85.0 million for the three months ended June 30, 2024. Revenue for the six months ended June 30, 2025 increased $47.2 million, or 28.1%, to $215.2 million as compared to $168.0 million for the same period last year.

The increase in revenue for the three months and six months ended June 30, 2025 as compared to the same periods in the prior year, was primarily attributable to organic growth across all end-markets, Tactical Missiles and Integrated Defense Systems, followed by Space and Launch and Hypersonics and Strategic Missile Defense.

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


	Three Months Ended June 30,				Change
	2025		2024		Dollar		Percent
	(in thousands, except percent)
Hypersonics and Strategic Missile Defense	$	34,960	$	28,741	$	6,219		21.6	%
Space and Launch		39,597		28,512		11,085		38.9	%
Tactical Missiles and Integrated Defense Systems		40,540		27,786		12,754		45.9	%
Total Revenue	$	115,097	$	85,039	$	30,058		35.3	%


	Six Months Ended June 30,				Change
	2025		2024		Dollar		Percent
	(in thousands, except percent)
Hypersonics and Strategic Missile Defense	$	65,016	$	53,563	$	11,453		21.4	%
Space and Launch		73,468		58,768		14,700		25.0	%
Tactical Missiles and Integrated Defense Systems		76,737		55,714		21,023		37.7	%
Total Revenue	$	215,221	$	168,045	$	47,176		28.1	%

Growth in Hypersonics and Strategic Missile Defense revenue for the three and six months ended June 30, 2025 from the comparable periods in the prior year, was driven by a net increase in funded development and production programs, primarily on the Next Generation Interceptor (“NGI”) program and classified programs, partially offset by a decrease in revenue from another development program due to the timing of program funding.

Growth in Space and Launch revenue for the three and six months ended June 30, 2025 from the comparable periods in the prior year, was primarily driven by higher planned U.S. space launch cadence from commercial and defense missions and lead times associated with critical subsystems that we supply. For the Six months ended June 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 six months ended June 30, 2025 from the comparable periods in the prior year, was primarily driven by a net increase in production in UAS and non-UAS programs. This market’s growth continues to be supported by successful system deployments, increasing adoption and continued investment in next-generation capabilities.

Cost of Goods Sold and Gross Profit

Cost of goods sold increased by $17.6 million, or 35.0%, and $24.3 million, or 23.3%, for the three and six months ended June 30, 2025 from the comparable periods in the prior year, respectively, which was primarily driven by increased spending on materials and labor to support production growth.


	Three Months Ended June 30,				Change
	2025		2024		Dollar		Percent
	(in thousands, except percent)
Labor	$	28,463	$	25,346	$	3,117		12.3	%
Materials		31,741		19,163		12,578		65.6	%
Overhead		5,052		3,950		1,102		27.9	%
Depreciation		2,820		1,986		834		42.0	%
Total cost of goods sold	$	68,076	$	50,445	$	17,631		35.0	%


	Six Months Ended June 30,				Change
	2025		2024		Dollar		Percent
	(in thousands, except percent)
Labor	$	56,140	$	47,721	$	8,419		17.6	%
Materials		57,977		44,716		13,261		29.7	%
Overhead		9,143		8,090		1,053		13.0	%
Depreciation		5,489		3,924		1,565		39.9	%
Total cost of goods sold	$	128,749	$	104,451	$	24,298		23.3	%

Gross margin was relatively flat for the three months ended June 30, 2025 compared to the same period last year. Gross margin increased 2.3% for the six months ended June 30, 2025 compared to the same period last year, which was primarily driven by operating leverage and improved operating efficiency.

Operating Expenses:

General and Administrative Expenses

General and administrative expenses and the related percentage changes for the three and six months ended June 30, 2025 and 2024 were as follows:


	Three Months Ended June 30,				Change
	2025		2024		Dollar			Percent
	(in thousands, except percent)
Payroll	$	7,822	$	5,515	$	2,307			41.8	%
Professional fees		6,148		1,063		5,085			478.4	%
Marketing		142		209		(67	)		(32.1	)%
Computers & Software		1,098		476		622			130.7	%
Share-based compensation		-		246		(246	)		(100.0	)%
Other		4,220		2,484		1,736			69.9	%
Total general and administrative expenses	$	19,430	$	9,993	$	9,437			94.4	%


	Six Months Ended June 30,				Change
	2025		2024		Dollar			Percent
	(in thousands, except percent)
Payroll	$	14,426	$	10,392	$	4,034			38.8	%
Professional fees		10,534		3,137		7,397			235.8	%
Marketing		254		292		(38	)		(13.0	)%
Computers & Software		2,082		932		1,150			123.4	%
Share-based compensation		8,084		497		7,587			1,526.6	%
Other		7,338		4,832		2,506			51.9	%
Total general and administrative expenses	$	42,718	$	20,082	$	22,636			112.7	%

General and administrative expenses increased by $9.4 million, or 94.4%, and $22.6 million, or 112.7% , for the three and six months ended June 30, 2025 from the comparative periods of the prior year, respectively. The increase was primarily driven by higher compensation and benefits as we strengthen our team and expand our operational capabilities to support ongoing business growth.

Additionally, the increase was attributed to higher professional fees for tax, accounting, and consulting services primarily related to operating as a public company following the IPO in February 2025, as well as costs related to the integration of newly established regional campuses and acquisitions.

Depreciation and Amortization

Depreciation and amortization expense increased by $1.2 million, or 18.5%, for the three months ended June 30, 2025 from the comparative period of the prior year, which was primarily attributable to the amortization expense on a total of $52.1 million intangible assets acquired in the MTI and ISP acquisitions in the second quarter of 2025.

Depreciation and amortization expense increased by and $2.0 million, or 16.7% for the six months ended June 30, 2025 from the comparative period of the prior year, which was primarily attributable to the amortization of aforementioned intangible assets acquired in the MTI and ISP acquisitions in the second quarter of 2025, as well as a full six months of amortization in 2025 related to assets acquired in RMS acquisition, compared to partial period in the prior year.

Interest Expense, net

Interest expense, net decreased by $1.5 million, or 11.3%, and $2.2 million, or 8.6%, for the three and six months ended June 30, 2025 from the comparative period of the prior year. 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 Condensed Consolidated Financial Statements.

Other Income

Other income for each of the three months ended June 30, 2025 and 2024 was immaterial. Other income for the six months ended June 30, 2025 and 2024 was $0.3 million and $0.8 million, respectively. The difference between periods was primarily attributable to the gain from a settlement of a shareholder note in the six months ended June 30, 2024.

Provision for Income Taxes

The provision for income taxes was $1.8 million and $0.3 million for the three months ended June 30, 2025 and 2024, respectively. The provision for income taxes was $5.1 million and $0.4 million for the six months ended June 30, 2025 and 2024, respectively. The increase in the provision for income taxes for the three months and six months ended June 30, 2025 from the comparative periods of the prior year was attributable to 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 Condensed 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) Funded 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 shareholder value. These are the metrics we use to measure our results and evaluate our business and related contract performance.

Financial and Operating Data


	For the three months ended June 30,						For the six months ended June 30,
(unaudited, in thousands, except percent)	2025			2024			2025			2024
Revenue	$	115,097		$	85,039		$	215,221		$	168,045
Funded Backlog 1	$	719,300		$	528,008		$	719,300		$	528,008
Net income	$	6,807		$	4,604		$	2,009		$	6,726
EBITDA 2	$	30,791		$	26,623		$	49,543		$	48,242
Adjusted EBITDA 2	$	35,281		$	27,424		$	65,600		$	51,967
Net income margin		5.9	%		5.4	%		0.9	%		4.0	%
Adjusted EBITDA Margin 2		30.7	%		32.2	%		30.5	%		30.9	%

Funded Backlog - Represents the total 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.

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.

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 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 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.

Reconciliation of GAAP to Non-GAAP Financial Measures:


	For the three months ended June 30,						For the six months ended June 30,
(unaudited, in thousands, except percent)	2025			2024			2025			2024
Net income	$	6,807		$	4,604		$	2,009		$	6,726
Income tax provision		1,784			312			5,092			399
Depreciation and amortization 1		10,307			8,306			19,176			15,656
Interest expense, net		11,893			13,401			23,266			25,461
EBITDA		30,791			26,623			49,543			48,242
Transaction related expenses 2		3,904			79			5,866			2,090
Integration expenses and non-recurring restructuring costs 3		380			476			641			892
Lender and administrative agent fees 4		206			—			1,466			—
Share-based Compensation 5		—			246			8,084			743
Adjusted EBITDA	$	35,281		$	27,424		$	65,600		$	51,967
Revenue	$	115,097		$	85,039		$	215,221		$	168,045
Net income margin		5.9	%		5.4	%		0.9	%		4.0	%
Adjusted EBITDA Margin		30.7	%		32.2	%		30.5	%		30.9	%


	For the three months ended June 30,				For the six months ended June 30,
(unaudited)	2025		2024		2025		2024
GAAP net income per share and unit, respectively	$	0.05	$	0.03	$	0.02	$	0.04
Transaction-related expenses 2		0.03		—		0.04		0.01
Integration expenses and non-recurring restructuring costs 3		—		—		—		0.01
Lender and administrative agent fees 4		—		—		0.01		—
Share-based compensation 5		—		—		0.06		—
Other non-recurring costs 6		0.02		—		0.02		—
Adjusted EPS 7	$	0.10	$	0.03	$	0.16	$	0.06

Includes depreciation of property, plant and equipment, amortization of intangible assets and right-of-use assets. Depreciation expense includes allocated depreciation from cost of goods sold of $2.8 million and $2.0 million for the three months ended June 30, 2025 and 2024, respectively, and $5.5 million and $3.9 million for the six months ended June 30, 2025 and 2024, respectively.

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 June 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 six months ended June 30, 2025.

Includes company-wide system implementation expenses and Company re-branding costs. This category also includes post-acquisition integration costs, and employee expenses related to acquisitions or restructuring activities.

Reflects non-recurring lender fees associated with one-off amendments to the Company’s credit agreement, separate from ongoing administrative fees.

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.

Other non-recurring costs for the three and six months ended June 30, 2025 represent the write-off of unamortized debt issuance costs associated with our previous TCW term loan, which was refinanced with the new Citi Term Loan.

Total may not sum due to rounding.

Although we use EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted EPS 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;

•

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, Adjusted EBITDA Margin, and Adjusted EPS 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, Adjusted EBITDA Margin and Adjusted EPS 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, Adjusted EBITDA Margin and Adjusted EPS 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, Adjusted EBITDA Margin, and Adjusted EPS 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, Adjusted EBITDA Margin and Adjusted EPS 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 condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. When we prepare these condensed 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 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 during the fourth quarter of our fiscal year or when events or circumstances change in a manner that indicates goodwill might be impaired.

For the impairment test, we first assess qualitative factors, 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 its reporting units 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 from 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 its business. For purposes of testing goodwill for impairment, we operate as a single reporting unit. There was no impairment of our goodwill during the six months ended June 30, 2025 or 2024.

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 during the three or six months ended June 30, 2025 and 2024.

Material Weaknesses

As a privately-held company, we were not required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes- Oxley Act (“Section 404”). As a public company, we are subject to significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. In addition, we are required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting.

The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing, and possible remediation. Testing and maintaining internal controls may divert our management’s attention from other matters that are important to our business.

The SEC defines a material weakness as “a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.” As previously reported in our Form 10-K for the year ended December 31, 2024, the following entity-level material weaknesses have been identified in our internal control over financial reporting.

•

we did not fully maintain components of the COSO framework, including elements of the control environment, risk assessment, control activities, information and communication and monitoring activities components, relating to (i) sufficiency of processes related to identifying and analyzing risks to the achievement of objectives, including technology, across the entity, (ii) developing general control activities over technology to support the achievement of objectives across the entity, and (iii) sufficiency of selecting and developing control activities that contribute to the mitigation of risks to the achievement of objectives to acceptable levels.

The entity-level material weaknesses contributed to other material weaknesses within our system of internal control over financial reporting as follows:

•

we did not design and maintain effective information technology general controls for certain information systems supporting its key financial reporting processes. Specifically, we did not design and maintain sufficient change management, security, operations, and system development controls for management-identified in-scope on-premise applications and vendor-supported applications; and

•

we did not design and maintain effective process-level controls for all significant business process cycles;

We have begun the process of evaluating the material weaknesses and developing our full remediation plan. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects. Until the remediation plan is implemented, tested and deemed effective, we cannot assure that our actions will adequately remediate the material weaknesses or that additional material weaknesses in our internal controls will not be identified in the future. If we are unable to remediate the material weaknesses, our ability to record, process and report financial information accurately, and to prepare financial statements within the time periods specified by the rules and forms of the Securities and Exchange Commission could be adversely affected and could reduce the market’s confidence in our financial statements and harm our stock price. While we will work to remediate the material weaknesses as quickly and efficiently as possible, we cannot at this time provide an expected timeline in connection with any remediation plan. These remediation measures may be time consuming and costly and might place significant demands on our financial and operational resources.

As permitted under the U.S. securities laws, neither we nor our independent registered public accounting firm have performed or are yet required to perform an evaluation of the effectiveness of our internal control over financial reporting. In the future, we may identify additional material weaknesses or significant deficiencies in our internal control over financial reporting.

Our ability to comply with the annual internal control reporting requirements will depend on the effectiveness of our financial reporting and data systems and controls across our company. Any weaknesses or deficiencies or any failure to implement new or improved controls, or difficulties encountered in the implementation or operation of these controls, could harm our operating results and cause us to fail to meet our financial reporting obligations, or result in material misstatements in our condensed consolidated financial statements, which could adversely affect our business and reduce the price of our common stock.

If we are unable to conclude that we have effective internal control over financial reporting, investors could lose confidence in our reported financial information, which could have a material adverse effect on the trading price of our common stock. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital market.

Liquidity and Capital Resources

The following table summarizes our capitalization:


	As of June 30,
	2025		2024
	(in thousands except ratio)
Cash and cash equivalents	$	27,438	$	4,658
Debt:
Finance lease liabilities (including current portion)		79,642		80,264
Revolving credit facility		30,000		19,500
Notes Payable, including current portion, net of debt issuance costs		368,663		337,065
Total debt		478,305		436,829
Stockholders' equity and members' equity, respectively		361,477		189,607
Total capitalization (debt plus equity)	$	839,782	$	626,436
Total debt to total capitalization		1.32		2.30

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.

In April, 2025, we entered into a new Credit Agreement (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. This transaction resulted in the extinguishment of the aforementioned TCW Term Note and facilities under the TCW Credit Agreement and 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 1, 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 a result, the financial covenant is not tested as of June 30, 2025.

We believe that our cash and cash equivalents as of June 30, 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 in the future.

Summary of Statement of Cash Flows

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


	For the six months ended June 30,
	2025			2024
	(in thousands)
Net cash provided by (used in):
Operating activities	$	(30,955	)	$	9,213
Investing activities		(140,948	)		(37,390	)
Financing activities		187,811			27,380
Net increase (decrease) in cash and cash equivalents	$	15,908		$	(797	)

Operating Activities

Net cash used in operating activities for the six months ended June 30, 2025 was $31.0 million , primarily consisting of net income of $2.0 million, non-cash item of $23.3 million and a net change in our operating assets and liabilities, excluding $11.7 million change related to acquisitions related accrued expenses, of $37.4 million. Change in our operating assets and liabilities was primarily driven by an increase in contract assets of $26.4 million, a decrease in contract liabilities of $10.1 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 $18.9 million, which was mainly due to timing of payments.

Net cash provided by operating activities for the six months ended June 30, 2024 was $9.2 million, primarily consisting of net income of $6.7 million, non-cash items of $11.7 million and a net change in our operating assets and liabilities of $9.2 million. Change in our operating assets and liabilities was primarily driven by an increase in contract assets of $11.4 million, a decrease in contract liabilities of $5.5 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 receivable of $3.4 million,which was due to timing of invoicing and improved collection and a decrease in inventory of $5.8 million which was due to increased production activity to support higher sales volume.

Investing Activities

Net cash used in investing activities for the six months ended June 30, 2025 was $140.9 million, as a result of MTI and ISP acquisitions of $126.3 million in total and investment in convertible note of $6.0 million.

Net cash used in investing activities for the six months ended June 30, 2024 was $37.4 million, which was principally attributable to the RMS acquisition.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2025 was $187.8 million, which was primarily driven by net proceeds from our IPO of $153.8 million, proceeds from our new Citi credit facilities of $398.5 million (net of debt issuance costs), partially offset by repayment of our old TCW credit facilities of $337.1 million.

Net cash provided by financing activities for the six months ended June 30, 2024 was $27.4 million, which was primarily driven by net proceeds from increasing our TCW Term Note by $34.0 million (net of debt issuance costs), partially offset by repayment of TCW Term Note of $5.0 million.

Other Obligations and Commitments

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

Leases

We lease certain facilities and equipment under financing and operating leases that expire at various dates through 2043. See Note 7, Leases, of the Notes to the Condensed Consolidated Financial Statements for information pertaining to lease payments relating to our operating and finance lease obligations.

Under the provisions of ASC 842, the Company has both finance and operating leases. The Company has recorded both a right-of-use (“ROU”) asset for each applicable lease and an associated liability for the right to use the asset and the obligation for future lease payments. Separate ROUs and liabilities have been recorded for finance and operating leases. ROUs for both lease categories are included in lease assets on the financial statements. Liabilities for both lease categories are included in short-term lease liabilities for amounts due within one year and in noncurrent lease liabilities, net of current portion for remaining amounts due. ROU calculations include management’s assessment of the probability of exercise of lease extensions ranging from 1 to 18 years. No leases include variable lease payments.

Consolidated Lease Summary

On a consolidated basis, lease activity for the three and six months ended June 30, 2025 and 2024 were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(in thousands)
Finance lease expense
Amortization of ROU assets	$	1,131	$	1,611	$	3,424	$	3,124
Interest on lease liabilities		1,095		1,671		3,363		3,305
Operating lease expense		386		422		1,065		844
Total	$	2,612	$	3,704	$	7,852	$	7,273

On a consolidated basis, supplemental cash flow information for the six months ended June 30, 2025 and 2024 were as follows:


	Six Months Ended June 30,
	2025			2024
Cash paid for amounts included in the measurement of lease liabilities	(in thousands except percent and year)
Operating cash flows from finance leases	$	3,371		$	3,305
Financing cash flows from finance leases	$	1,896		$	1,098
Operating cash flows from operating leases	$	1,083		$	867
ROU assets obtained in exchange for new finance lease liabilities	$	—		$	4,087
ROU assets obtained in exchange for new operating lease liabilities	$	1,342		$	—
Weighted-average remaining lease term in years for finance leases		13.47		n/a
Weighted-average remaining lease term in years for operating leases		5.64		n/a
Weighted-average discount rate for finance leases		8.37	%	n/a
Weighted-average discount rate for operating leases		9.60	%	n/a

Off-Balance Sheet Arrangements

As of June 30, 2025 and 2024, we did not have any off-balance sheet arrangements, as defined in Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows.

Recent Accounting Pronouncements

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

JOBS Act Election

We are currently an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Item 3. Quan titative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

Our primary exposure to interest rate risk results from outstanding borrowings under the Revolving Credit Facility and Term Note, both of which have a floating interest rate component. We estimate that a 1% increase in interest rates for the six months ended June 30, 2025 and 2024 would have resulted in approximately a $1.9 million and $1.7 million increase in interest expense, respectively.

We had cash of $27.4 million and $11.5 million as of June 30, 2025 and December 31, 2024, respectively, which is held for working capital and general corporate purposes. We do not have significant amount of cash equivalents or restricted cash and we do not enter into investments for trading or speculative purposes. Our cash holdings in interest bearing accounts are exposed to market risk due to fluctuations in interest rates, which may affect our interest income.

We will continue to monitor market risk due to fluctuations in interest rates and potential impacts to the fair value of our holdings and operating cash flows.

Inflation Risk

We have generally experienced increases in our costs of labor, materials and services consistent with overall rates of inflation, but we do not believe that inflation has had a material effect on our business, results of operations, or financial condition. We expect the impact of such increases will be mitigated by efforts to lower costs through manufacturing efficiencies, look for alternative sourcing and reevaluate pricing, as we did in the prior periods. However, continued cost inflation and supply chain disruptions during 2025 may continue to require similar efforts to mitigate the impact of continued cost inflation and supply chain disruptions on our results of operations. Our inability or failure to offset cost increases could adversely affect our business, results of operations, or financial condition.

Item 4. Con trols and Procedures

Evaluation of Disclosure Controls

Our principal executive officer and principal financial officer evaluated the effectiveness of our “disclosure controls and procedures” as of June 30, 2025, the end of the period covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, due to the material weaknesses in internal control over financial reporting described below, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are not effective at a reasonable assurance level as of the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is accumulated and communicated to a company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no

evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Material Weaknesses

As previously reported in our Form 10-K for the year ended December 31, 2024, the following entity-level material weaknesses have been identified:

•

The entity-level material weaknesses contributed to other material weaknesses within our system of internal control over financial reporting as follows:

•

we did not design and maintain effective process-level controls for all significant business process cycles;

Karman Holdings Inc.

PART II: OT HER INFORMATION

Item 1. Leg al Proceedings

We are subject to various claims and legal actions that arise in the ordinary course of our business, including claims resulting from employment-related matters. We do not believe that the ultimate resolution of any existing claim would have a material effect on our business, financial condition, results of operations or cash flows.

However, a significant increase in the number of these claims or an increase in amounts owing under successful claims could materially and adversely affect our business, financial condition, results of operations, or cash flows.

ITEM 1A. RI SK FACTORS

We have described under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 risks and uncertainties that could cause our actual results of operations and financial condition to vary materially from past, or from anticipated future, results of operations and financial condition. These risks and uncertainties are not the only risks facing us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also adversely affect our business, financial condition, results of operations or the market price of our common stock. There have been no material changes to the risk factors previously described in our 2024 Annual Report on Form 10-K.

ITEM 2. Unreg istered Sales of Equity Securities and Use of Proceeds

Not applicable.

ITEM 3. Defa ults Upon Senior Securities

Item 4. Mi ne Safety Disclosures

Not applicable.

Item 5. Ot her Information

During the quarter ended June 30, 2025 , none of our directors or executive officers adopted , modified or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” as such terms are defined under Rule 408 of Regulation S-K.

ITEM 6. EXHIBITS, FIN ANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this report:

(1)

Financial Statement Schedules:

All financial statement schedules have been omitted because they are not applicable, not required or the information required is shown in the condensed consolidated financial statements or the notes thereto.

(b) Exhibits

The following documents are included as exhibits to this report.


Exhibit No.		Title of Document
2.1		Plan of Conversion of TCFIII Spaceco Holdings LLC (d/b/a Karman Space and Defense, LLC) (Incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 10, 2025)
3.1		Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 10, 2025)
3.2		Bylaws (Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 10, 2025)
4.1		Stockholder Rights Agreement among Karman Holdings Inc. and certain investors (Incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed with the SEC on February 19, 2025)
4.2		Registration Rights Agreement among Karman Holdings Inc. and certain investors (Incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K filed with the SEC on February 19, 2025)
10.1+		Karman Holdings, Inc. 2025 Stock Incentive Plan (Incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 filed with the SEC on February 13, 2025)
10.2		Credit Agreement, dated as of April 1, 2025, by and among Karman, the lenders from time to time party thereto and Citibank, N.A., as the administrative agent for the lenders (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on April 7, 2025)
10.3		First Amendment to Credit Agreement, dated as of May 27, 2025, by and among the Company, CitiBank, N.A. and the parties thereto (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on June 2, 2025)
31.1*		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
32.2*		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104*		Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

+ Management contract or compensatory plan or arrangement.

SI GNATURES

Pursuant to the requirements the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.


		KARMAN HOLDINGS INC.

	By:	/s/ Mike Willis
		Mike Willis
Date: August 7, 2025		Chief Financial Officer (Principal Financial and Principal Accounting Officer)

Date: August 7, 2025	By:	/s/ Tony Koblinski
		Tony Koblinski
		Chief Executive Officer (Principal Executive Officer)

TABLE OF CONTENTS

Part I. Finan Item 1. Financial Statements Item 1. Fin Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 2. Manag Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 3. Quan Item 4. Controls and Procedures Item 4. Con Part Ii: Other Information Part Ii: Ot Item 1. Legal Proceedings Item 1. Leg Item 1A. Risk Factors Item 1A. Ri Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 2. Unreg Item 3. Defaults Upon Senior Securities Item 3. Defa Item 4. Mine Safety Disclosures Item 4. Mi Item 5. Other Information Item 5. Ot Item 6. Exhibits, Financial Statement Schedules Item 6. Exhibits, Fin

Exhibits

KRMN 10-Q Quarter ended June 30, 2025

Exhibits