Karman (NYSE:KRMN) Posts Quarterly Earnings Results, Beats Expectations By $0.01 EPS

Karman (NYSE:KRMN) issued its earnings results on Thursday. The company reported $0.14 EPS for the quarter, beating the consensus estimate of $0.13 by $0.01, FiscalAI reports. Karman had a net margin of 5.73% and a return on equity of 14.94%. The company had revenue of $182.06 million for the quarter. During the same quarter in the prior year, the firm posted $0.10 EPS. The firm’s revenue for the quarter was up 58.2% on a year-over-year basis.

Here are the key takeaways from Karman’s conference call:

• Record second-quarter performance: Revenue rose 58% year over year to $182 million, adjusted EBITDA increased 55% to $55 million, and backlog reached a record $1.3 billion. Bookings approached $500 million, providing management with 95% visibility to the midpoint of its 2026 revenue guidance.
• 2026 outlook raised: Karman now expects revenue of $730 million-$745 million and adjusted EBITDA of $215 million-$222.5 million, excluding the pending Walker Precision Engineering acquisition. Management reaffirmed expectations for at least 25% organic growth in 2026 and 20%-25% annual organic growth for the foreseeable future.
• Strong defense demand and growth opportunities: Demand for missiles, interceptors, munitions, unmanned systems, and submarine programs remains elevated, with some customers discussing production increases of up to 10 times current levels. Karman is also pursuing second-source positions and expects three additional contingent agreements to potentially convert into firm contracts by year-end.
• Capacity and strategic expansion: The company is building a 200,000-square-foot Salt Lake City facility, expanding production in Gulfport, and agreed to acquire Walker Precision Engineering for approximately $94 million to establish a European defense presence. Karman also repriced its term loan, lowering interest expense by about $4 million annually.
• Cash conversion and execution risks remain: Operations used $4 million of cash in the first half as receivables, contract assets, and capital expenditures rose alongside growth; management expects only $15 million-$20 million of free cash flow in the second half. Net leverage was approximately 3.7 times adjusted EBITDA, while remediation of a previously disclosed material weakness is not expected to be fully tested until early 2027.

Karman Trading Down 0.3%

Shares of NYSE KRMN traded down $0.14 during midday trading on Thursday, hitting $54.98. The stock had a trading volume of 2,954,472 shares, compared to its average volume of 3,800,576. The firm has a market cap of $7.29 billion, a P/E ratio of 131.24 and a beta of 0.55. Karman has a fifty-two week low of $43.68 and a fifty-two week high of $118.38. The company has a debt-to-equity ratio of 2.08, a current ratio of 3.53 and a quick ratio of 3.38. The company’s 50-day simple moving average is $49.84 and its 200 day simple moving average is $73.24.

Analyst Upgrades and Downgrades

Several brokerages recently issued reports on KRMN. Needham & Company LLC reissued a “buy” rating and set a $125.00 price target on shares of Karman in a report on Thursday, April 9th. Evercore set a $100.00 price objective on shares of Karman in a research note on Wednesday, May 13th. Royal Bank Of Canada dropped their price objective on shares of Karman from $100.00 to $85.00 and set an “outperform” rating for the company in a report on Friday, July 24th. Piper Sandler cut their target price on shares of Karman from $127.00 to $114.00 and set an “overweight” rating for the company in a research note on Tuesday, May 19th. Finally, Weiss Ratings downgraded Karman from a “hold (c)” rating to a “hold (c-)” rating in a report on Monday, June 29th. Two research analysts have rated the stock with a Strong Buy rating, seven have given a Buy rating, one has assigned a Hold rating and one has given a Sell rating to the company. Based on data from MarketBeat.com, the stock has a consensus rating of “Moderate Buy” and a consensus price target of $102.00.

Hedge Funds Weigh In On Karman

Several hedge funds have recently added to or reduced their stakes in KRMN. EverSource Wealth Advisors LLC lifted its position in Karman by 889.7% during the 4th quarter. EverSource Wealth Advisors LLC now owns 386 shares of the company’s stock valued at $28,000 after purchasing an additional 347 shares during the period. CX Institutional bought a new stake in shares of Karman during the second quarter worth approximately $28,000. Towarzystwo Funduszy Inwestycyjnych PZU SA acquired a new position in Karman in the third quarter valued at approximately $29,000. Huntington National Bank acquired a new position in Karman in the fourth quarter valued at approximately $32,000. Finally, Kestra Advisory Services LLC bought a new position in Karman in the fourth quarter valued at approximately $32,000.

Karman Company Profile

We specialize in the upfront design, testing, manufacturing, and sale of mission-critical systems for existing and emerging missile and defense, and space programs. 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 10% of sales for the nine months ended September 30, 2024 or the twelve months ended December 31, 2023, with revenue from over 100 active programs supporting current production and next-generation space, missile, hypersonic, and defense applications.