Karman Holdings Inc.

Previous wording

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in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, as amended, supplemented or superceded in our other reports filed with the Security and Exchange Commission (“SEC”), including under “Risk Factors” in Item 1A of our subsequent Quarterly Reports on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 wording

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in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, as amended, supplemented or superseded in our other reports filed with the Security and Exchange Commission (“SEC”), including under “Risk Factors” in Item 1A of our subsequent Quarterly Reports on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.

Previous wording

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 wording

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 150 prime contractors and programs. We estimate that no single program accounted for more than 11% of sales in the three and six months ended June 30, 2026 or in the three and six months ended June 30, 2025.

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 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.

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 is 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 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.

Current wording

Our general and administrative (“G&A”) expenses 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 are 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 Months Ended March 31, 2026 and 2025

Current wording

Comparison of the Three and Six Months Ended June 30, 2026 and 2025

Previous 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:

Current wording

The increase in revenue for the three and six months ended June 30, 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

Revenue in Maritime Defense Systems for the three months ended March 31, 2025 was previously included within other end markets.

Current wording

Revenue in Maritime Defense Systems for the three and six months ended June 30, 2025 was previously included within other end markets.

Previous wording

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 wording

Growth in Hypersonics and Strategic Missile Defense revenue for the three and six months ended June 30, 2026 from the comparable period in the prior year, was primarily driven by growth in key interceptor program production and increased production associated with a new surface-to-surface missile system.

Previous 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.

Current wording

Growth in Space and Launch revenue for the three and six months ended June 30, 2026 from the comparable periods in the prior year, was primarily driven by content supporting both legacy and emerging launch providers, partially offset by customer order timing associated with shifting launch schedules.

Previous 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.

Current wording

Growth in Tactical Missiles and Integrated Defense Systems for the three and six months ended June 30, 2026 from the comparable period in the prior year, was primarily driven by strength in core production programs, including unmanned aircraft systems and counter-UAS, and emerging programs transitioning to production.

Previous wording

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 wording

Growth in Maritime Defense Systems for the three and six months ended June 30, 2026 from the comparable period in the prior year was primarily driven by legacy and next generation submarine programs..

Previous 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.

Current wording

Cost of goods sold increased by $35.8 million or 52.5%, and $62.4 million, or 48.5%, for the three and six months ended June 30, 2026 and 2025, from the comparable period in the prior year. The increase was primarily driven by increased spending on materials and labor to support production growth.

Previous 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.

Current wording

Gross margin increased by 2.1% and 2.4% for the three and six months ended June 30, 2026 and 2025 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 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.

Current wording

General and administrative expenses increased by $17.3 million, or 40.4%, for the six months ended June 30, 2026 from the comparative period of the prior year. The increase was primarily driven by an increase in payroll of approximately $12.0 million and increased professional fees primarily related to transaction expenses and integration efforts. The increase was partially offset by the decrease of approximately $6.6 million in share-based compensation expenses resulting 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 $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.

Current wording

Depreciation and amortization expense increased by $4.6 million, or 61.2%, and $12.2 million, or 88.8%, for the three and six months ended June 30, 2026, respectively, as compared to the corresponding periods of the prior year. The increase was primarily due to amortization of intangible assets acquired in the Seemann Acquisition, completed in the first quarter of 2026, and incremental depreciation and amortization on intangible assets and fixed assets acquired in the second quarter of 2025, which resulted in a full quarter and two full quarters of additional expenses in the three months and six months ended June 30, 2026, respectively.

Previous 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.

Current wording

Interest expense, net increased by $3.4 million, or 28.5%, and $4.7 million, or 20.0%, for the three and six months ended June 30, 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 conndensed consolidated financial statements.

Previous wording

We believe the non-GAAP financial measures will help investors understand our financial condition and operating results and assess our future prospects. We believe these non-GAAP financial measures, each of which is discussed in greater detail below, are important supplemental measures because they exclude unusual or non-recurring items as well as non-cash items that are unrelated to or may not be indicative of our ongoing operating results. Further, when read in conjunction with our U.S. GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as a tool to help make financial, operational and planning decisions. We may use non-GAAP financial metrics in certain Management compensation plans, debt covenants, internal budgetary decision making, and other resource allocation decisions. Finally, these measures are often used by analysts and other interested parties to evaluate companies in our industry by providing more comparable measures that are less affected by factors such as capital structure.

Current wording

We believe the non-GAAP financial measures will help investors understand our financial condition and operating results and assess our future prospects. We believe these non-GAAP financial measures, each of which is discussed in greater detail below, are important supplemental measures because they exclude unusual or non-recurring items as well as non-cash items that are unrelated to or may not be indicative of our ongoing operating results. Further, when read in conjunction with our U.S. GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as a tool to help make financial, operational and planning decisions. We may use non-GAAP financial metrics in certain Management compensation plans, debt covenants, internal budgetary decision making, and other resource allocation decisions. These measures are often used by analysts and other interested parties to evaluate companies in our industry by providing more comparable measures that are less affected by factors such as capital structure.

Previous wording

Adjusted EPS represents GAAP net income (loss) per fully diluted share, excluding transaction related expenses, integration expenses and non-recurring costs, lender and administrative agent fees and share-based compensation as they are not representative of our operating performance.

Current wording

Adjusted EPS represents GAAP net income per fully diluted share, excluding transaction related expenses, integration expenses and non-recurring costs, lender and administrative agent fees and share-based compensation as they are not representative of our operating performance.

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 $2.9 million and $2.7 million for the three months ended March 31, 2026 and 2025, 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 $3.1 million and $2.8 million for the three months ended June 30, 2026 and 2025, respectively, and $6.0 million and $5.5 million for the six months ended June 30, 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 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.

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 and six months ended June 30, 2026, these expenses are primarily related to the Seemann acquisition. For the three and six months ended June 30, 2025, these expenses are primarily related to the 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, which was reflected in the six months ended June 30, 2025.

Previous wording

Reflects share-based compensation expenses associated with the Company’s P Units and Phantom Units. These Units were fully vested in connection with the completion of the Company’s IPO in February 2025.

Current wording

Reflects share-based compensation expenses. For the three and six months ended June 30, 2026, these expenses related to the Company’s RSUs and PSUs. For the six months ended June 30, 2025, these expenses related to the Company’s P Units and Phantom Units. These Units were fully vested in connection with the completion of the Company’s IPO in February 2025.

Previous 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.

Current wording

Represents items management believes are not indicative of ongoing operating performance, including estimated legal settlements and related professional fees, as well as professional fees associated with other non-recurring events. Other non-recurring costs for the three and six months ended June 30, 2025 represent the write-off of unamortized debt issuance costs associated with our previous refinanced term loan.

Previous 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.

Current wording

Net cash used in operating activities for the six months ended June 30, 2026 was $3.0 million , primarily consisting of net income of $21.8 million, non-cash item of $32.7 million and a net change in our operating assets and liabilities of $57.5 million. Change in our operating assets and liabilities was primarily driven by an increase in contract assets of $24.9 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 $25.5 million , partially offset by a decrease in accounts payable, accruals and income tax payable of $0.8 million, which was mainly driven by timing of other payments.

Previous 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.

Current wording

Net cash used in operating activities for the six months ended June 30, 2025 was $31.0 million, primarily consisting of net income of $2.0 million, non-cash items of $23.3 million and a net change in our operating assets and liabilities of $56.3 million. Change in our operating assets and liabilities was primarily driven by an increase in contract assets of $26.4 million, a decrease in contract liabilities of $10.1 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 $18.9 million, which was mainly due to timing of payments.

Previous 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.

Current wording

Net cash used in investing activities for the six months ended June 30, 2026 was $231.5 million, which was primarily driven by the Seemann Acquisition of $210.0 million and purchase of property and equipment.

Previous 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.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2026 was $252.2 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 $3.9 million.

Previous 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.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2025 was $187.8 million, which was primarily driven by net proceeds from our IPO of $153.8 million, proceeds from our new Citibank credit facilities of $398.5 million (net of debt issuance costs), partially offset by repayment of our old TCW credit facilities of $337.1 million.