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Introduction & Market Context
Karman Holdings Inc. (KRMN) reported record first-quarter fiscal 2025 results on May 13, 2025, showcasing strong performance across all business segments. The company, which completed its IPO in February, has positioned itself as a leading IP-driven merchant supplier to prime contractors in three high-priority defense and space markets.
Following the earnings announcement, Karman’s stock price increased by 2.29% to $40.05 in aftermarket trading, reflecting positive investor sentiment. The stock is currently trading near its 52-week high of $40.49, having gained over 30% in the past six months according to available market data.
Quarterly Performance Highlights
Karman reported record revenue of $100.1 million for Q1 2025, representing a 21% increase year-over-year. The company achieved double-digit growth across all three of its core end markets, with particularly strong performance in the Tactical Missiles and Integrated Defense Systems segment.
As shown in the following chart of quarterly revenue growth by segment:
Gross profit reached $39.5 million, up 36% from the prior year, while adjusted EBITDA rose to $30.3 million, representing a 25% increase. The company’s adjusted earnings per share grew 67% to $0.05, compared to $0.03 in Q1 2024.
The following slide highlights these key financial achievements:
Detailed Financial Analysis
Karman’s financial performance shows significant improvement in profitability metrics, with gross margin expanding to 39.4% in Q1 2025 from 34.9% in Q1 2024. Similarly, adjusted EBITDA margin increased to 30.3% from 29.3% in the prior year period.
Despite the strong operational performance, the company reported a net loss of $4.8 million for the quarter, compared to net income of $2.1 million in Q1 2024. This loss appears to be related to transaction expenses associated with the company’s IPO and other non-recurring costs, as evidenced by the reconciliation between GAAP and non-GAAP metrics.
The comprehensive financial results are presented in the following table:
From a balance sheet perspective, Karman significantly strengthened its financial position during the quarter. Cash and cash equivalents increased to $113.7 million as of March 31, 2025, compared to $11.5 million at the end of 2024, primarily due to proceeds from the February IPO. The company also reduced its debt by paying off a $25 million revolving line of credit.
Strategic Initiatives & Market Positioning
Karman operates in three key markets: Hypersonics & Strategic Missile Defense, Tactical Missiles & Integrated Defense Systems, and Space & Launch. The company’s solutions are highly aligned with U.S. Department of Defense priorities, with minimal international sales exposure, which mitigates potential impacts from tariffs.
The following slide illustrates Karman’s market positioning and capabilities:
A key strength of Karman’s business model is its revenue diversification. The company maintains a balanced revenue distribution across its three end markets, with each segment contributing approximately one-third of total revenue. Additionally, no single program accounts for more than 11% of revenue, reducing dependency on any particular contract.
This diversification strategy is visualized in the following chart:
During the quarter, Karman completed the acquisition of MTI, which expanded the company’s capabilities, customer base, contracted revenue, and earnings potential. This acquisition aligns with Karman’s strategy of pursuing 1-2 smaller acquisitions per year to complement organic growth.
Forward-Looking Statements
Based on its strong first-quarter performance and robust backlog, Karman provided optimistic guidance for fiscal year 2025. The company expects full-year revenue between $423 million and $433 million, representing a 24% year-over-year increase at the midpoint of the range. Adjusted EBITDA is projected to be between $132 million and $137 million, a 27% increase from the previous year.
The guidance is supported by a record funded backlog of $636 million and 95% revenue visibility for the remainder of the fiscal year, as detailed in the following slide:
Looking beyond 2025, Karman outlined several strategic priorities, including leveraging its growing backlog to deliver controlled, sustained organic growth, continuing to execute on inorganic growth opportunities, investing in talent and systems, and fulfilling its vision of becoming the industry’s most sought-after partner for mission-critical systems.
CEO Tony Koblinski emphasized during the earnings call that "Karman represents a new kind of space and defense company," highlighting the company’s innovative solutions and strong alignment with market requirements. With its diversified portfolio and strong positioning in high-growth defense and space markets, Karman appears well-positioned to continue its growth trajectory through 2025 and beyond.
Full presentation:
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