Karman Raises Outlook as Defense Revenue Accelerates
Backlog reached a record $1.3 billion after nearly $500 million of quarterly bookings.
Karman Holdings (KRMN), a defense and space systems supplier, posted faster second-quarter growth as acquisitions and stronger missile-defense demand lifted revenue 58.2% from a year earlier.
The quarter extended Karman’s expansion beyond its organic growth rate of 24.4%, reflecting the contribution from acquired businesses. Revenue also increased 20.4% from the first quarter, while the customer and program footprint expanded to more than 150 from more than 80 customers and over 130 programs previously.
Revenue reached $182.1 million, compared with $151.2 million in the first quarter. Net income more than doubled to $14.0 million, and diluted earnings rose to $0.11 a share from $0.06 a share sequentially and $0.05 a share a year earlier.
Tactical Missiles and Integrated Defense Systems led the established end markets, with revenue rising 55.4% to $63.0 million and accelerating from 25.0% growth in the first quarter. Hypersonics and Strategic Missile Defense revenue increased 24.2% to $43.4 million, while Maritime Defense Systems revenue climbed 27.1% sequentially to $33.6 million following the Seemann and MSC acquisitions.
Space and Launch growth slowed to 6.3% as shifting launch schedules affected order timing, and revenue declined 4.1% from the first quarter to $42.1 million. Quarterly bookings included a large, multiyear Space and Launch contract, while three defense agreements under negotiation carried more than $1 billion of potential value.
Adjusted EBITDA rose 54.7% to $54.6 million. Its margin narrowed 0.7 percentage point from a year earlier to 30.0% but improved roughly 0.4 percentage point sequentially, while gross margin expanded to about 43.0%.
Karman now expects full-year revenue of $730 million to $745 million, raising both ends of its May forecast by $10 million. Adjusted EBITDA guidance increased to $215.0 million to $222.5 million, lifting the low end by $6.5 million and the high end by $3.0 million.
The company agreed to acquire Walker Precision Engineering for about $94 million, adding exposure to European defense after its earlier maritime acquisitions. A completed debt repricing is expected to reduce annual interest expense by about $4 million.