KRMN earnings analysis
What we found in KRMN's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
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.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- 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.
- 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.
- 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.
- 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.
- 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.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.11
- Gross margin
- 43.0%
- Operating margin
- 19.1%
- Segment
- Hypersonics and Strategic Missile Defense: $43.417 million, up 24.2% year over year from $34.960 million.
- Segment
- Space and Launch: $42.072 million, up 6.3% year over year from $39.597 million.
- Segment
- Tactical Missiles and Integrated Defense Systems: $63.012 million, up 55.4% year over year from $40.540 million.
- Segment
- Maritime Defense Systems: $33.562 million; prior-year comparable revenue was $0 because it was previously included within other end markets.
What they said about what is next.
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.
The filing reads better than the one before it.
What came before.
- 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…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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