Karman Holdings Inc.
For the period ended Mar 31, 2026. Filed May 14, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 14, 2026
KRMN$45.61+42.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-07.
0001193125-25-270338
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-14.
0001193125-26-222116
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 144 previous paragraphs and 125 current paragraphs.
53 unchanged; 32 reworded; 39 added; 58 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 15 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (39)
Current report
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include all statements that are not historical facts including those that reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements are included throughout this Quarterly Report on Form 10-Q and relate to matters such as our industry, business strategy, goals, and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources, and other financial and operating information. We have used the words “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable,” the negative version of these words or similar terms and phrases to identify forward-looking statements in this Quarterly Report on Form 10-Q.
Current report
The forward-looking statements are based on management’s current expectations and are not guarantees of future performance. Our expectations and beliefs are expressed in management’s good faith, and we believe there is a reasonable basis for them, however, the forward-looking statements are subject to various known and unknown risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify. Actual results may differ materially from these expectations due to changes in global, regional, or local economic, business, competitive, market, regulatory, and other factors, many of which are beyond our control. We believe that these factors include but are not limited to the following:
Current report
we rely heavily on certain customers for a significant portion of our sales;
Current report
a significant deferment of orders by customers could have a material adverse effect on our business, results of operations, prospects, and financial condition;
Current report
the loss of our U.S. General Services Administration contracts or government-wide acquisition contracts could impair our ability to attract new business;
Current report
if we are unable to manage the increasing technological complexity of our business, or achieve or manage our expected growth, our business could be adversely affected;
Current report
we have in the past consummated acquisitions and intend to continue to pursue acquisitions, and our business may be adversely affected if we cannot consummate acquisitions on satisfactory terms, or if we cannot effectively integrate acquired operations;
Current report
we depend on our executive officers, senior management team and highly trained employees and any work stoppage, difficulty hiring similar employees, or ineffective succession planning could adversely affect our business;
Current report
if critical components or raw materials used to manufacture our products or used in our development programs become scarce or unavailable, then we may incur delays in manufacturing and delivery of our products and in completing our development programs, which could damage our business;
Current report
our operations depend on our manufacturing facilities, which are subject to physical and other risks that could disrupt production;
Current report
our leases may be terminated or we may be unable to renew our leases on acceptable terms and if we wish to relocate, we may incur additional costs if we terminate a lease;
Current report
technology failures or cybersecurity breaches or other unauthorized access to or use of our information technology systems or sensitive or proprietary information could have a material adverse effect on the Company’s business and operations;
Current report
U.S. military spending is dependent upon the U.S. defense budget;
Current report
U.S. government contracts are subject to a competitive bidding process that can consume significant resources without generating any revenue;
Current report
we could incur substantial costs as a result of violations of or liabilities under environmental laws and regulations;
Current report
we may be subject to periodic litigation and regulatory proceedings, which may materially adversely affect our business, results of operations, prospects and financial condition;
Current report
our failure to comply with applicable economic and trade sanctions could materially adversely affect our reputation and results of operations;
Current report
our business and operations expose us to numerous legal and regulatory requirements, and any violation of these requirements could materially adversely affect our business, results of operations, prospects and financial condition;
Current report
our inability to adequately enforce and protect our intellectual property or defend against assertions of infringement could prevent or restrict our ability to compete;
Current report
our indebtedness, which is subject to variable interest rates, could adversely affect our financial health and could harm our ability to react to changes to our business;
Current report
servicing our indebtedness requires a significant amount of cash. Our ability to generate cash depends on many factors, and any failure to meet our debt service obligations could materially adversely affect our business, results of operations, prospects and financial condition;
Current report
the increased expenses associated with being a public company;
Current report
our stock price may be volatile, and an investment in our common stock could suffer a decline in value;
Current report
the impact of escalating tariff and non-tariff trade measures imposed by the U.S. and other countries, any U.S. federal government shutdown, the COVID-19 pandemic, or a similar public health threat, or the ongoing conflicts and the potential for new or unforeseen conflicts, on global capital and financial markets, political events, general economic conditions in the United States, and our business and operations;
Current report
our ability to remediate the identified material weaknesses in our internal control over financial reporting; and
Current report
the other risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, as amended, supplemented or superceded in our other reports filed with the Security and Exchange Commission (“SEC”), including under “Risk Factors” in Item 1A of our subsequent Quarterly Reports on Form 10-Q.
Current report
Our Company
Current report
We specialize in the rapid design, development and production of mission-critical, next-generation systems solutions that align with the U.S. Department of War’s core mission priorities and the nation’s accelerating demand for access to space. We deliver payload protection, propulsion and launch, and hydro/aerodynamic interstage systems to more than 80 prime contractors supporting more than 130 space and defense programs. We estimate that no single program accounted for more than 11% of sales in the three months ended March 31, 2026 or in the three months ended March 31, 2025.
Current report
Recent Development
Current report
We completed the acquisition of Seemann Composites (“Seemann”) and MSC in February, 2026, for approximately (i) $215.9 million in cash and (ii) shares of common stock of the Company with an aggregate value equal to $17.0 million. The Company Group provides advanced composite systems and materials solutions for maritime defense applications. The Company believes the acquisition of Seemann and MSC expands and enhances our capabilities in the maritime defense end market, strengthening our portfolio of advanced composite and materials solutions for high-priority naval programs.
Current report
On February 2, 2026, we also amended our Citibank credit agreement to increase its incremental term loan to $772 million while reducing the interest rate by 75 basis points to SOFR plus 2.75%. On March 9, 2026, the Company entered into another amendment of its Citibank credit agreement to (i) increase the revolving credit commitments by $100.0 million such that the total revolving credit commitments are now $150.0 million and (ii) remove the cap on incremental revolving credit commitments, which was previously $50.0 million. For additional details, see Note 7, Debt, in the Notes to the condensed consolidated financial statements.
Current report
Revenue
Current report
Revenue for the three months ended March 31, 2026 increased $51.1 million, or 51.0%, to $151.2 million, as compared to $100.1 million for the three months ended March 31, 2025.
Current report
Revenue in Maritime Defense Systems for the three months ended March 31, 2025 was previously included within other end markets.
Current report
Not a meaningful figure.
Current report
Growth in Hypersonics and Strategic Missile Defense revenue for the three months ended March 31, 2026 from the comparable period in the prior year, was primarily driven by increases in strategic programs.
Current report
Growth in Maritime Defense Systems for the three months ended March 31, 2026 from the comparable period in the prior year was primarily driven by the Seemann Acquisition and associated submarine and LCAC programs.
Current report
Other Expense
Current report
Other expense for the three months ended March 31, 2026 and 2025 was $0.2 million and $0.1 million, respectively. The difference between periods is immaterial.
Removed paragraphs (58)
Previous report
Overview
Previous report
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 nine months ended September 30, 2025 or the nine months ended September 30, 2024, with revenue from over 100 active programs supporting current production and next-generation space, missile, hypersonic, and defense applications.
Previous report
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:
Previous report
Payload Protection Systems: involves the full design and manufacturing of the top section of a booster, launch vehicle, payload, or missile system.
Previous report
Propulsion Systems: involves the integrated offering of solid rocket motor subsystems, launch systems, and ablative composites.
Previous report
Aerodynamic and Interstage Systems: involves supporting metallic and composite subsystems designed for aerodynamics and interstage separation.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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 September 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.
Previous report
Corporate Conversion
Previous report
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.
Previous report
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.
Previous report
Key Factors Impacting Our Performance
Previous report
U.S. Government Spending and Federal Budget Uncertainty
Previous report
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.
Previous report
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.
Previous report
Operational Performance on Contracts
Previous report
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:
Previous report
the productivity and availability of labor;
Previous report
the allocation of indirect costs to labor and material costs incurred;
Previous report
the complexity of the work to be performed;
Previous report
the cost and availability of materials and components; and
Previous report
schedule requirements.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
Regulations
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
Acquisitions
Previous report
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.
Previous report
Industry Background
Previous report
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.
Previous report
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.
Previous report
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.
Showing the first 40 of 58 passages. Open the source sections for the rest.
Reworded paragraphs (32)
Previous wording
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.
Current wording
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 four end markets (Hypersonic and Strategic Missile Defense, Missile and Integrated Defense Systems, Space and Launch and Maritime Defense Systems). We do not believe our revenue are subject to significant seasonal variations.
Previous wording
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.
Current wording
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 expenses is an important financial metric that we analyze to help us evaluate the contribution of our selling, marketing and proposal activities to revenue generation.
Previous wording
Comparison of the Three and Nine Months Ended September 30, 2025 and 2024
Current wording
Comparison of the Three Months Ended March 31, 2026 and 2025
Previous wording
The increase in revenue for the three months and nine months ended September 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.
Current wording
The increase in revenue for the three months ended March 31, 2026 as compared to the same period in the prior year, was primarily attributable to growth across all end-markets as additional detail below. The results of operations include the following disaggregation of revenue by end market:
Previous wording
Growth in Space and Launch revenue for the three and nine months ended September 30, 2025 from the comparable periods in the prior year, was primarily driven by the timing of orders from both legacy and emerging launch providers. For the nine months ended September 30, 2025, this growth was partially offset by lower revenue from the Space Launch Systems (“SLS”).
Current wording
Growth in Space and Launch revenue for the three months ended March 31, 2026 from the comparable periods in the prior year, was primarily driven by the timing of orders for critical content supporting both legacy and emerging launch providers and spacecraft.
Previous wording
Growth in Tactical Missiles and Integrated Defense Systems for the three and nine months ended September 30, 2025 from the comparable periods in the prior year, was primarily driven by an increase in production rates for GLMRS, AIM-9X and UAS programs.
Current wording
Growth in Tactical Missiles and Integrated Defense Systems for the three months ended March 31, 2026 from the comparable period in the prior year, was primarily driven by demand associated with the continued adoption of advanced drone and loitering munitions technologies and an increase in production output for GMLRS.
Previous wording
Cost of goods sold increased by $19.7 million, or 37.7%, and $44.0 million, or 28.1%, for the three and nine months ended September 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.
Current wording
Cost of goods sold increased by $26.7 million, or 44.0%, for the three months ended March 31, 2026, from the comparable period in the prior year, which was primarily driven by increased spending on materials and labor to support production growth.
Previous wording
Gross margin increased 1.7% and 2.1% for the three and nine months ended September 30, 2025 from the comparative period of the prior year, respectively. The increase was primarily driven by operating leverage and improved operating efficiency.
Current wording
Gross margin increased 2.8% for the three months ended March 31, 2026 from the comparative period of the prior year. The increase was primarily driven by operating leverage and improved operating efficiency.
Previous wording
General and administrative expenses and the related percentage changes for the three and nine months ended September 30, 2025 and 2024 were as follows:
Current wording
General and administrative expenses and the related percentage changes for the three months ended March 31, 2026 and 2025 were as follows:
Previous wording
General and administrative expenses increased by $31.4 million, or 100.6% , for the nine months ended September 30, 2025 compared to the prior year period. In addition to the factors contributing to the three-month period, the increase was attributed to higher share-based compensation from P units and Phantom Units that fully vested in connection with the completion of the Company’s IPO in February 2025.
Current wording
General and administrative expenses increased by $5.3 million, or 23.0% , for the three months ended March 31, 2026 from the comparative period of the prior year. The increase was primarily driven by an increase in payroll and professional fees for tax, accounting, and consulting fees primarily related to transaction expenses and integration cost, partially offset by the decrease in share-based compensation expenses from P units and Phantom Units that fully vested in connection with the completion of the Company’s IPO in February 2025.
Previous wording
Depreciation and amortization expense increased by $2.9 million, or 56.7%, and $4.9 million, or 28.9%, for the three and nine months ended September 30, 2025 from the comparative period of the prior year, respectively. The increase 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.
Current wording
Depreciation and amortization expense increased by $7.6 million, or 122.2%, for the three months ended March 31, 2026 from the comparative period of the prior year. The increase was primarily attributable to the amortization expense on a total of $125.5 million intangible assets acquired in the Seemann Acquisition completed in the first quarter of 2026, as well as a full quarter of expense from intangible assets and fixed assets acquired subsequent to the first quarter of 2025.
Previous wording
Interest expense, net decreased by $4.7 million, or 12.4%, for the nine months ended September 30, 2025 from the comparative period of the prior year. In addition to the factors contributing to the three-month period, the decrease was 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.
Current wording
Interest expense, net increased by $1.3 million, or 11.2%, for the three months ended March 31, 2026 from the comparative period of the prior year, which was primarily driven by higher principal balance, partially offset by lower interest rate. For additional information related to debt, see Note 7, Debt, in the Notes to the condensed consolidated financial statements.
Previous wording
The provision for income taxes was $4.2 million and $0.9 million for the three months ended September 30, 2025 and 2024, respectively. The provision for income taxes was $9.3 million and $1.3 million for the nine months ended September 30, 2025 and 2024, respectively. The increase in the provision for income taxes for the three and nine months ended September 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.
Current wording
The provision for income taxes was $0.8 million and $3.3 million for the three months ended March 31, 2026 and 2025, respectively. The increase in the provision for income taxes for the three months ended March 31, 2026 from the comparative period of the prior year, was attributable to higher income tax expenses due to discrete items, including the change in entity classification and non-deductible officers’ compensation. For additional information regarding provisions for taxes, see Note 14, Provision for Income Taxes, in the Notes to the condensed consolidated financial statements.
Previous wording
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.
Current wording
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) 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.
Previous wording
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.
Current wording
Backlog - Represents the total value or current estimated 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. (Backlog was previously referred to as funded backlog. No changes were made to the historical dollar amounts presented in the table above.)
Previous wording
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.
Current wording
Note on non-GAAP financial measures: Throughout the discussion of our results of operations we use non-GAAP financial measures including 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.
Previous wording
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.
Current wording
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, and readers should 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.
Previous wording
We define these non-GAAP financial measures as:
Current wording
We define these non-GAAP financial measures as follows:
Previous wording
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.
Current wording
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 discrete 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.
Previous wording
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 $2.9 million for the three months ended September 30, 2025 and 2024, respectively, and $8.3 million and $6.9 million for the nine months ended September 30, 2025 and 2024, respectively.
Current wording
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 $2.9 million and $2.7 million for the three months ended March 31, 2026 and 2025, respectively.
Previous wording
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 and nine months ended September 30, 2025, these expenses related to the Secondary Offering, 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.
Current wording
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 March 31, 2026, these expenses is primarily related to the Seemann acquisition. 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. During the three months ended March 31, 2025, the $1.9 million was mostly related to such IPO related expenses.
Previous wording
Reflects non-recurring lender fees associated with one-off amendments to the Company’s credit agreement, separate from ongoing administrative fees.
Current wording
Reflects non-recurring lender fees associated with discrete amendments to the Company’s credit agreement, separate from ongoing administrative fees.
Previous wording
Other non-recurring costs for the three and nine months ended September 30, 2025 include estimated legal settlements and related professional fees that are non-recurring and do not reflect ongoing business operations.
Current wording
Represents item management believes are not indicative of ongoing operating performance. Other non-recurring costs for the three months ended March 31, 2026 includes an estimated $1.6 million legal settlements and related professional fees, as well as and professional fees associate with other non-recurring events.
Previous wording
We believe that our cash and cash equivalents as of September 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.
Current wording
We believe that our cash and cash equivalents as of March 31, 2026, together with available borrowings under the Citibank 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.
Previous wording
Net cash used in operating activities for the nine months ended September 30, 2025 was $30.8 million , primarily consisting of net income of $9.7 million, non-cash item of $40.3 million and a net change in our operating assets and liabilities of $80.8 million. Change in our operating assets and liabilities was primarily driven by an increase in contract assets of $39.8 million, a decrease in contract liabilities of $11.2 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 $26.7 million, which was mainly driven by payment of $11.7 million acquisition-related expenses and timing of other payments.
Current wording
Net cash provided by operating activities for the three months ended March 31, 2026 was $0.2 million , primarily consisting of net income of $7.8 million, non-cash item of $15.2 million and a net change in our operating assets and liabilities of 22.8 million. Change in our operating assets and liabilities was primarily driven by an increase in contract assets of $7.1 million, a decrease in contract liabilities of $0.3 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 an increase in accounts receivable of $9.1 million , partially offset by a decrease in accounts payable, accruals and income tax payable of $2.0 million, which was mainly driven timing of other payments.
Previous wording
Net cash provided by operating activities for the nine months ended September 30, 2024 was $19.1 million, primarily consisting of net income of $11.0 million, non-cash items of $18.2 million and a net change in our operating assets and liabilities of $10.1 million. Change in our operating assets and liabilities was primarily driven by an decrease in contract assets of $12.1 million, a decrease in contract liabilities of $8.9 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 $3.6 million,which was due to timing of invoicing and improved collection.
Current wording
Net cash used in operating activities for the three months ended March 31, 2025 was $13.6 million, primarily consisting of net loss of $4.8 million, non-cash items of $13.0 million and a net change in our operating assets and liabilities of $21.8 million. Change in our operating assets and liabilities was primarily driven by an increase in contract assets of $14.9 million, a decrease in contract liabilities of $3.9 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 $20.0 million, which was mainly due to timing of payment and a decrease in accounts receivable of $7.5 million,which was due to timing of invoicing and improved collection.
Previous wording
Net cash used in investing activities for the nine months ended September 30, 2024 was $42.0 million, which was principally attributable to the RMS acquisition and purchase of property and equipment.
Current wording
Net cash used in investing activities for the three months ended March 31, 2026 was $217.5 million, which was primarily driven by the Seemann Acquisition of $210.2 million and purchase of property and equipment.
Previous wording
Net cash used in investing activities for the nine months ended September 30, 2025 was $147.9 million, as a result of MTI and ISP acquisitions of $126.3 million in total, investment in convertible note of $6.0 million and purchase of property and equipment.
Current wording
Net cash used in investing activities for the three months ended March 31, 2025 was $11.0 million, which was primarily driven by a $6.0 million investment in a convertible note and purchase of property and equipment.
Previous wording
Net cash provided by financing activities for the nine months ended September 30, 2024 was $25.1 million, which was primarily driven by net proceeds from increasing our TCW Term Note by $34.0 million (net of payment of debt issuance costs), partially offset by repayment of TCW Term Note of $6.8 million.
Current wording
Net cash provided by financing activities for the three months ended March 31, 2026 was $257.2 million, which was primarily driven by proceeds from our term note of $260.1 million (net of payment of debt issuance costs), partially offset by repayment of our Citibank credit facilities of $1.9 million.
Previous wording
Net cash provided by financing activities for the nine months ended September 30, 2025 was $185.9 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 payment of debt issuance costs), partially offset by repayment of our old TCW credit facilities of $337.1 million.
Current wording
Net cash provided by financing activities for the three months ended March 31, 2025 was $126.8 million, which was primarily driven by net proceeds from our IPO of $153.8 million, partially offset by repayment of revolving line of credit of $25.0 million and repayment of notes payable of $2.3 million.
Previous wording
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.
Current wording
See Note 8, Leases, of the Notes to the condensed consolidated financial statements for information pertaining to lease payments relating to our operating and finance lease obligations.
Previous wording
See Note 2, Summary of Significant Accounting Policies—Recent Accounting Pronouncements, of the Notes to the Condensed Consolidated Financial Statements for additional information.
Current wording
See Note 2, Summary of Accounting Policies and Recent Accounting Pronouncements, of the Notes to the condensed consolidated financial statements for additional information.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Cautionary Note Regarding Forward-Looking Statements
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
As described in additional detail below, the results of operations include the following disaggregation of end market revenue: