Third Quarter Fiscal Year 2026
Filed Nov 5, 2026Record quarterly revenue of $202 million and record quarterly adjusted EBITDA of $61 million, with fiscal 2026 revenue outlook raised to $755 million to $760 million and adjusted EBITDA outlook raised to $225 million to $227 million.
Third-quarter revenue increased 65.6% year over year, net income increased 174% year over year, adjusted EBITDA increased 60% year over year, backlog reached $1.7 billion, and the company raised its fiscal 2026 revenue and adjusted EBITDA outlook.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenue, three months ended September 30, 2026GAAP | $201.6M | – | up 65.6% |
| Revenue, nine months ended September 30, 2026GAAP | $534.9M | – | up 58.7% |
| Cost of goods sold, three months ended September 30, 2026GAAP | 115.5M | – | – |
| Cost of goods sold, nine months ended September 30, 2026GAAP | 306.6M | – | – |
| Gross profit, three months ended September 30, 2026GAAP | 86.16M | – | – |
| Gross profit, nine months ended September 30, 2026GAAP | 228.3M | – | – |
| General and administrative expenses, three months ended September 30, 2026GAAP | 41.52M | – | – |
| General and administrative expenses, nine months ended September 30, 2026GAAP | 101.5M | – | – |
| Depreciation and amortization expense, three months ended September 30, 2026GAAP | 12.89M | – | – |
| Depreciation and amortization expense, nine months ended September 30, 2026GAAP | 38.73M | – | – |
| Operating expenses, three months ended September 30, 2026GAAP | 54.41M | – | – |
| Operating expenses, nine months ended September 30, 2026GAAP | 140.2M | – | – |
| Net operating income, three months ended September 30, 2026GAAP | 31.75M | – | – |
| Net operating income, nine months ended September 30, 2026GAAP | 88.03M | – | – |
| Interest expense, net, three months ended September 30, 2026GAAP | −18.00M | – | – |
| Interest expense, net, nine months ended September 30, 2026GAAP | −45.92M | – | – |
| Income before provision for income taxes, three months ended September 30, 2026GAAP | 13.30M | – | – |
| Income before provision for income taxes, nine months ended September 30, 2026GAAP | 41.20M | – | – |
| Income tax expense (benefit), three months ended September 30, 2026GAAP | −7.60M | – | – |
| Income tax expense (benefit), nine months ended September 30, 2026GAAP | −1.53M | – | – |
| Net income, three months ended September 30, 2026GAAP | $20.91M | – | an increase of 174% year over year |
| Net income, nine months ended September 30, 2026GAAP | $42.73M | – | – |
| Net income margin, three months ended September 30, 2026GAAP | 10.4% | – | – |
| Net income margin, nine months ended September 30, 2026GAAP | 8.0% | – | – |
| Basic net income per share, three months ended September 30, 2026GAAP | $0.16 | – | – |
| Diluted net income per share, three months ended September 30, 2026GAAP | $0.16 | – | – |
| Basic net income per share, nine months ended September 30, 2026GAAP | $0.32 | – | – |
| Diluted net income per share, nine months ended September 30, 2026GAAP | $0.32 | – | – |
| EBITDA, three months ended September 30, 2026non-GAAP | 47.81M | – | – |
| EBITDA, nine months ended September 30, 2026non-GAAP | 135.4M | – | – |
| Adjusted EBITDA, three months ended September 30, 2026non-GAAP | $60.51M | – | up 60% year over year |
| Adjusted EBITDA, nine months ended September 30, 2026non-GAAP | $159.9M | – | – |
| Adjusted EBITDA margin, three months ended September 30, 2026non-GAAP | 30.0% | – | – |
| Adjusted EBITDA margin, nine months ended September 30, 2026non-GAAP | 29.9% | – | – |
| Adjusted EPS, three months ended September 30, 2026non-GAAP | $0.19 | – | – |
| Adjusted EPS, nine months ended September 30, 2026non-GAAP | $0.44 | – | – |
| Net cash provided by operating activities, three months ended September 30, 2026GAAP | $26.73M | – | – |
| Net cash provided by (used in) operating activities, nine months ended September 30, 2026GAAP | $23.75M | – | – |
| Purchases of property and equipment, three months ended September 30, 2026GAAP | −$13.36M | – | – |
| Purchases of property and equipment, nine months ended September 30, 2026GAAP | −$35.23M | – | – |
| Free Cash Flow, three months ended September 30, 2026non-GAAP | $13.37M | – | – |
| Free Cash Flow, nine months ended September 30, 2026non-GAAP | −$11.47M | – | – |
| Hypersonics and Strategic Missile Defense revenue, nine months ended September 30, 2026GAAP | $130.2M | – | up 28.1% |
| Space and Launch revenue, nine months ended September 30, 2026GAAP | $123.8M | – | up 8.5% |
| Tactical Missiles and Integrated Defense Systems revenue, nine months ended September 30, 2026GAAP | $175.8M | – | up 45.1% |
| Maritime Defense Systems revenue, nine months ended September 30, 2026GAAP | $105.0M | – | – |
| Total backlog as of September 30, 2026other | $1.7B | – | – |
| Quarterly bookingsother | nearly $465 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Hypersonics and Strategic Missile DefenseGrowth was primarily driven by an increase in the production of key interceptor programs associated with Munitions Acceleration Council priorities, and increased production for a new surface-to-surface missile system. | $51.09M | – | up 39.6% |
| Space and LaunchThe decline was primarily driven by customer order timing associated with shifting launch schedules, partially offset by increased content from liquid-fueled space and launch programs. | $37.91M | – | down 6.9% |
| Tactical Missiles and Integrated Defense SystemsGrowth was primarily driven by an increase in core production programs, including unmanned aircraft systems and counter-UAS, and emerging programs transitioning to production, partially offset by a quarterly decline in a high-volume program. | $67.58M | – | up 51.9% |
| Maritime Defense SystemsRevenue was primarily driven by legacy and next-generation submarine and surface vessel programs. | $45.04M | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Full fiscal year 2026 outlook
- Revenue$755 million to $760 million
- NoteAdjusted EBITDA: $225 million to $227 million
- NoteExcluding the impact of any future acquisitions
What drove it
- Total revenue growth was driven by growth in Hypersonics and Strategic Missile Defense, Tactical Missiles and Integrated Defense Systems, and Maritime Defense Systems.
- The company reported 25% organic revenue growth and 66% total revenue growth year over year.
- Backlog reached $1.7 billion at quarter-end, increasing 108% compared to fiscal year-end 2025.
- Quarterly bookings were nearly $465 million across all end markets, including a significant seven-year contract with Lockheed Martin supporting the THAAD program.
- The company completed the acquisition of Walker Precision Holdings Limited, expanding its presence in the European defense market.
- Management stated it was negotiating two additional long-term agreements, executing the initial phases of two second-source opportunities, and actively pursuing three more.
Concerns
- Space and Launch revenue declined 6.9% in the quarter because of customer order timing associated with shifting launch schedules.
- Adjusted EBITDA margin was 30.0% for the quarter, compared with 31.0% in the prior-year quarter.
- Interest expense, net, was $(17,995) (in thousands) in the quarter, compared with $(10,002) (in thousands) in the prior-year quarter.
- Long-term debt, net of current, was $851,495 (in thousands) as of September 30, 2026.
- Nine-month Free Cash Flow was $(11,473) (in thousands), and the company stated its definition does not deduct debt service, other obligations, or payments for business acquisitions.
- The company did not provide a quantitative reconciliation of forward-looking adjusted EBITDA to the most directly comparable GAAP measure because it said the reconciliation was not available without unreasonable efforts. It stated that the magnitude of excluded items may be significant.
What to watch
- Conversion of the $1.7 billion backlog and nearly $465 million of quarterly bookings into revenue.
- Whether Space and Launch order timing and shifting launch schedules continue to affect quarterly revenue.
- Execution and integration of the Walker Precision Holdings Limited acquisition and any future acquisitions.
- Progress on two additional long-term agreements, two second-source opportunities, and three additional pursuits.
- Delivery against full-year revenue guidance of $755 million to $760 million and adjusted EBITDA guidance of $225 million to $227 million.
Balance sheet and cash flow
- Cash and cash equivalents as of September 30, 2026: $68,168 (in thousands), compared with $33,959 (in thousands) as of December 31, 2025.
- Long-term debt, net of current, as of September 30, 2026: $851,495 (in thousands), compared with $495,312 (in thousands) as of December 31, 2025.
- Current portion of term loan as of September 30, 2026: $7,312 (in thousands), compared with $3,836 (in thousands) as of December 31, 2025.
- Acquisitions of businesses, net of cash acquired, were $(94,189) (in thousands) for the three months ended September 30, 2026 and $(304,189) (in thousands) for the nine months ended September 30, 2026.
- Proceeds from term loan, net, were $230,204 (in thousands) for the three months ended September 30, 2026 and $490,334 (in thousands) for the nine months ended September 30, 2026.
- Repayments of term loan were $(129,565) (in thousands) for the three months ended September 30, 2026 and $(133,500) (in thousands) for the nine months ended September 30, 2026.
Analysis
Karman reported record third-quarter revenue of $201,623 (in thousands), up 65.6% from $121,787 (in thousands). The company also reported 25% organic revenue growth. Growth was broad across the defense portfolio: Hypersonics and Strategic Missile Defense increased 39.6%, Tactical Missiles and Integrated Defense Systems increased 51.9%, and Maritime Defense Systems contributed $45,043 (in thousands). Space and Launch was the exception, declining 6.9% as customer order timing shifted with launch schedules.
Profitability increased materially on a reported basis. Net operating income was $31,753 (in thousands), compared with $21,812 (in thousands), while net income was $20,908 (in thousands), compared with $7,644 (in thousands). The release described net income as an increase of 174% year over year. Adjusted EBITDA rose to $60,509 (in thousands) from $37,725 (in thousands), but adjusted EBITDA margin was 30.0%, compared with 31.0%. Interest expense, net, rose to $(17,995) (in thousands) from $(10,002) (in thousands), while the quarter included an income tax benefit of $(7,603) (in thousands).
Cash generation improved in the quarter, with net cash provided by operating activities of $26,728 (in thousands) and Free Cash Flow of $13,367 (in thousands), compared with $131 (in thousands) and $(6,840) (in thousands), respectively. For the nine-month period, Free Cash Flow remained negative at $(11,473) (in thousands). Acquisition spending was $(94,189) (in thousands) in the quarter and $(304,189) (in thousands) year to date. Cash and cash equivalents were $68,168 (in thousands) at September 30, 2026, while long-term debt, net of current, was $851,495 (in thousands).
Demand visibility strengthened through a $1.7 billion backlog, described as up 108% from fiscal year-end 2025, and nearly $465 million of quarterly bookings. The company cited a significant seven-year Lockheed Martin contract supporting THAAD and said it completed the Walker Precision Holdings Limited acquisition. Management raised full-year 2026 expectations to $755 million to $760 million of revenue and $225 million to $227 million of adjusted EBITDA, excluding future acquisitions. The principal execution items are conversion of backlog, recovery in Space and Launch timing, integration of acquisitions, and delivery of the raised outlook amid higher debt and interest expense.
Management, verbatim
We delivered another quarter of record results, highlighted by 66% total revenue growth, 25% organic revenue growth, 60% adjusted EBITDA growth, $13 million of free cash flow, and a doubling of backlog compared to fiscal year-end 2025.
Jon Rambeau, Chief Executive Officer of Karman Space & Defense
The award of our second long-term agreement in the quarter further extends our planning horizon and enables us to allocate capital and resources more efficiently. We are currently negotiating two additional long-term agreements, executing the initial phases of two second-source opportunities, and actively pursuing three more.
Jon Rambeau, Chief Executive Officer of Karman Space & Defense
We are excited about the opportunities ahead as we expand our team, broaden our global footprint, and continue to strengthen our organization.
Jon Rambeau, Chief Executive Officer of Karman Space & Defense
Not in the filing
stated, not guessed- Previous-release outlook was not provided; therefore, no comparison of actual results with prior guidance is available.
- Gross margin was not reported.
- No share repurchases, dividends, or other capital-return activity was disclosed.
- No prior-quarter comparative figures were reported for the key income-statement metrics.
- No quantitative forward-looking GAAP reconciliation for adjusted EBITDA was provided.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.