10-Q · May 13, 2026
Karman Holdings Inc. achieved a remarkable 51% increase in revenue year-over-year, reaching $151.2 million for Q1 2026 compared to $100.1 million in Q1 2025, with a reported EPS of $0.11, matching expectations. The…
Earnings analysis · 10-Q
KRMN earnings analysis
Filed August 10, 2026 · Our reading of the company's report
The latest report
Karman delivered strong second-quarter growth, with revenue up 58.2% year over year to $182.063 million, gross margin expanding to 43.0% and operating margin increasing to 19.1%. Tactical defense, hypersonics and…
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Karman delivered strong second-quarter growth, with revenue up 58.2% year over year to $182.063 million, gross margin expanding to 43.0% and operating margin increasing to 19.1%. Tactical defense, hypersonics and maritime programs were the primary growth drivers, while backlog reached $1.322 billion. The principal offsets are negative operating cash flow, elevated leverage following acquisitions and continuing material weaknesses in internal controls; the filing states that there were no material changes to the risk factors from the 2025 10-K.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
Reported figures
- Earnings per share
- $0.11
What stood out
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Revenue Accelerated to $182.1M
Second-quarter revenue was $182.063 million, up 58.2% from $115.097 million a year earlier and approximately 20.5% sequentially from $151 million in Q1 2026. Growth was reported across all four end markets.
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Gross Margin Expanded
Gross margin increased to 43.0% from 40.9% year over year and 42.2% in Q1 2026. Management attributed the improvement to operating leverage and improved operating efficiency.
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Operating Profitability Improved
Operating margin rose to 19.1% from 17.5% year over year and 14.2% in Q1 2026, while net operating income increased 73.2% year over year to $34.829 million from $20.104 million.
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EPS Beat on Adjusted Basis
GAAP diluted EPS was $0.11 versus $0.05 in the prior-year quarter and $0.06 in Q1 2026. Adjusted EPS was $0.14, compared with the reported earnings estimate of $0.13.
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Defense End Markets Drove Growth
Tactical Missiles and Integrated Defense Systems revenue rose 55.4% to $63.012 million, driven by core production programs including unmanned aircraft systems and counter-UAS. Maritime Defense Systems contributed $33.562 million, primarily from submarine programs acquired through Seemann.
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Backlog Supports Visibility
Backlog increased to $1.322 billion from $719.3 million a year earlier, and remaining performance obligations were $703.9 million as of June 30, 2026. Management expects approximately 49.6% of those obligations to convert to revenue in the remainder of 2026.
What to watch
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Higher Leverage and Interest Burden
Total notes payable increased to $768.478 million from $506.767 million at December 31, 2025, including a $764.0 million term-note principal balance. Net interest expense increased 28.5% year over year to $15.284 million despite lower borrowing rates.
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Cash Conversion Remains Weak
Operating cash flow remained negative at $2.975 million for the six months ended June 30, 2026, while capital expenditures were $21.865 million and acquisition spending was $210.0 million. The company therefore relied on $252.235 million of financing cash flow to fund investing and liquidity needs.
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Material Weaknesses Persist
Disclosure controls were not effective as of June 30, 2026 because of continuing material weaknesses in internal control over financial reporting. The company reported immaterial adjustments in the interim period ended June 30, 2026 and stated that remediation is not complete until controls operate for a sufficient period and are tested.
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Customer Concentration Risk
Customer concentration remains material: two customers accounted for 29.7% of accounts receivable as of June 30, 2026, compared with 40.7% at December 31, 2025. The company also states that it relies heavily on certain customers for a significant portion of sales.
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Additional Acquisition Commitment
The company agreed to acquire Walker Precision Engineering for approximately $94.0 million, with closing expected in the third quarter of 2026. Additional acquisition spending and integration could add to leverage and operating expenses after a $210.0 million cash acquisition in the first half.
Management's outlook
The 10-Q provides no explicit numeric revenue or EPS guidance. Management expects liquidity needs for at least the next 12 months to be funded by operating cash generation, cash balances and, if necessary, receivables sales or revolving-credit borrowings. Remaining performance obligations were $703.9 million, with approximately 49.6% expected to be recognized as revenue during the remainder of 2026.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.