Q1 2025 Karman Holdings Inc Earnings Call

Thank you for standing by and welcome to the carbon space and defense first quarter fiscal year 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone.

Operator: Thank you for standing by and welcome to the Karman Space and Defence First Quarter Fiscal Year 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again press star 1. Thank you.

Pat: Pat if you would like to withdraw your question again press Star one.

Stephen Gitlin: I'd now like to turn the call over to Stephen Gitlin, Vice President of Investor Relations. You may begin. Good afternoon. This is Stephen Gitlin, Vice President of Investor Relations for Karman.

Speaker Change: I'd now like to turn the call over to Steven Gitlin, Vice President of Investor Relations you may begin.

Speaker Change: Good afternoon. This is Steven Gitlin, Vice President of Investor Relations Department before we begin. Please note that on this call certain information presented contains forward looking statements.

Steven Gitlin: Good afternoon. This is Steven Gitlin, vice president of investor relations for Karman. Before we begin, please note that on this call, certain information presented contains forward-looking statements. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain words such as "believe," "anticipate," "expect," "estimate," "intend," "project," "plan," or words or phrases with similar meaning. Forward-looking statements are based on current expectations, forecasts, and assumptions that involve risks and uncertainties, including, but not limited to, economic, competitive, governmental, and technological factors outside of our control that may cause our business strategy or actual results to differ materially from the forward-looking statements. All forward-looking statements should be considered in conjunction with the forward-looking statements in our earnings release. Future company updates will be available via press releases.

Stephen Gitlin: Before we begin, please note that on this call, certain information presented contains forward-looking statements. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain words such as believe, anticipate, expect, estimate, intend, project, plan, or words or phrases with similar meaning. Forward-looking statements are based on current expectations, forecasts, and assumptions that involve risks and uncertainties, including, but not limited to, economic, competitive, governmental, and technological factors outside of our control that may cause our business strategy or actual results to differ materially from the forward-looking statement.

Speaker Change: These statements include without limitation any statement that may predict forecast indicate or imply future results performance or achievements and may contain words, such as believe anticipate expect estimate intend project plan or words or phrases with similar.

Speaker Change: Forward looking statements are based on current expectations forecasts and assumptions that involve risks and uncertainties, including but not limited to economic competitive governmental and technological factors outside of our control that may cause our business strategy or actual results to differ materially from the forward looking statements.

Stephen Gitlin: All forward-looking statements should be considered in conjunction with the forward-looking statements in our earnings release.

Speaker Change: All forward looking statements should be considered in conjunction with the forward looking statements in our earnings release.

Stephen Gitlin: Future company updates will be available via press. For further information on these risks, we encourage you to review the risk factors discussed in Karman's periodic reports on Form 10-K and Form 10-Q filed with the SEC and the Form 8-K filed today with the SEC along with the associated earnings release and the Safe Harbor statement contained therein. This afternoon we also filed our earnings release and posted an earnings presentation to our website at karman-sd.com in the news and events section.

Speaker Change: Future company updates will be available via press releases.

Steven Gitlin: For further information on these risks, we encourage you to review the risk factors discussed in Karman's periodic reports on Form 10-K and Form 10-Q filed with the SEC, the Form 8-K filed today with the SEC, along with the associated earnings release and the safe harbor statement contained therein. This afternoon, we also filed our earnings release and posted an earnings presentation to our website at karman-sd.com in the News & Events section. The content of this conference call contains time-sensitive information that is accurate only as of today, 13 May 2025. The company undertakes no obligation to make any revision to any forward-looking statements contained in our remarks today or to update them to reflect the events or circumstances occurring after this conference call. I'd also like to note that unless otherwise stated, all numbers we will be discussing today are GAAP.

Speaker Change: For further information on these risks we encourage you to review the risk factors discussed in cartilage periodic reports on Form 10-K, and Form 10-Q filed with the SEC and the form 8-K filed today with the SEC along with the associated earnings release, and the Safe Harbor statement contained therein.

Speaker Change: This afternoon, we also filed our earnings release and posted an earnings presentation to our website at carbon Dash SD Dot com in the news and events section.

Stephen Gitlin: The content of this conference call contains time-sensitive information that is accurate only as of today, May 13, 2025. The company undertakes no obligation to make any revision to any forward-looking statements contained in our remarks today or to update them to reflect the events or circumstances occurring after this conference call.

Speaker Change: The content of this conference call contains time sensitive information that is accurate only as of today May 13, 2025. The company undertakes no obligation to make any revision to any forward looking statements contained in our remarks today or to update them to reflect the events or circumstances occurring after this conference call.

Stephen Gitlin: I'd also like to note that, unless otherwise stated, all numbers we will be discussing today are GAAP. Our press release contains a reconciliation of any non-GAAP financial measure to the most comparable GAAP measure.

Speaker Change: I'd also like to note that unless otherwise stated all numbers, we will be discussing today are GAAP. Our press release contains a reconciliation of any non-GAAP financial measure to the most comparable GAAP measure.

Steven Gitlin: Our press release contains a reconciliation of any non-GAAP financial measure to the most comparable GAAP measure. Joining me today from Karman, our Chief Executive Officer, Mr. Tony Koblinski, Chief Financial Officer, Mr. Mike Willis, and Chief Operating Officer, Mr. Jonathan Beaudoin. I would like to turn the call over to Tony.

Tony Kablinsky: Joining me today from Karman are Chief Executive Officer, Mr. Tony Kablinsky, Chief Financial Officer, Mr. Mike Willis, and Chief Operating Officer, Mr. Jonathan Vogel. Now I would like to turn the call over to Toby. Thank you, Steve. On today's call, I will begin by summarizing our progress and strong performance in the first quarter before Mike provides an overview of our financial results. Jonathan will then provide an update on our end markets and our strong position with respect to the emerging U.S. Department of Defense budget and administration's trade policies. I will then update you on our outlook before we take your questions.

Tony <unk>: Joining me today from carbon our Chief Executive Officer, Mr. Tony <unk>, Chief Financial Officer, Mr. Mike Willis <unk>, Chief operating officer, Mr. Jonathan worldwide.

Tony: Now I would like to turn the call over to Tony.

Tony <unk>: Thank you Steve on today's call I will begin by summarizing our progress and strong performance in the first quarter before might provides an overview of our financial results.

Tony Koblinski: Thank you, Steve. On today's call, I will begin by summarizing our progress and strong performance in Q1 before Mike provides an overview of our financial results. Jonathan will then provide an update on our end markets and our strong position with respect to the emerging U.S. Department of Defense budget and the administration's trade policies. I will update you on our outlook before we take your questions. Let's begin with a quick reminder of the progress we have accomplished in a very short time, summarized on slide 4 of our earnings presentation. Only 3 months ago, we successfully completed our IPO. Since then, we reported record 2024 financial results, we refinanced our debt, and we acquired MTI, adding additional proprietary capabilities. Our strong momentum is also illustrated by our record Q1 financial results, summarized on slide 5.

Tony <unk>: Jonathan will then provide an update on our end markets and our strong position with respect to the emerging U S Department of defense budget and the administration's trade policies.

Tony <unk>: I will then update you on our outlook before we take your questions.

Tony <unk>: Let's begin with a quick reminder of the progress we have accomplished in a very short time summarized on slide four of our earnings presentation.

Tony Kablinsky: Let's begin with a quick reminder of the progress we have accomplished in a very short time, summarized on slide four of our earnings presentation. Only three months ago, we successfully completed our IPO. Since then, we reported record 2024 financial results, we refinanced our debt, and we acquired MTI adding additional proprietary capabilities. Our strong momentum is also illustrated by our record first quarter financial results summarized on slide 5. we generated record quarterly revenue of $100 million and gross profit of $39.5 million. We produce record quarterly adjusted EBITDA of $30 million and fully diluted adjusted earnings per share of $0.05.

Tony <unk>: Only three months ago, we successfully completed our IPO. Since then we reported record 2024 financial result, we refinanced our debt and we acquired MTI, adding additional proprietary capabilities.

Tony <unk>: Our strong momentum is also illustrated by our record first quarter financial results summarized on slide five.

Tony Koblinski: We generated record quarterly revenue of $100 million and gross profit of $39.5 million. We produced record quarterly adjusted EBITDA of $30 million and fully diluted adjusted earnings per share of $0.05. We achieved a record funded backlog of $636 million at the end of Q1. Since the end of Q1, we've increased our full year 2025 revenue visibility to approximately 95% as of the end of April. These strong results demonstrate continued momentum and effective execution. Our business model continues to create the basis for profitable growth and shareholder value. Now, I'll turn the call over to Mike for a review of our Q1 financial results. Mike?

Tony <unk>: We generated record quarterly revenue of $100 million and gross profit of $39 5 million.

Tony <unk>: We produced record quarterly adjusted EBITDA of $30 million and fully diluted adjusted earnings per share of <unk>.

Tony <unk>: We achieved a record funded backlog of $636 million at the end of first quarter.

Tony Kablinsky: We achieved a record funded backlog of $636 million at the end of first quarter. And since the end of first quarter, we've increased our full year 2025 revenue visibility to approximately 95% as of the end of April. These strong results demonstrate continued momentum and effective execution. Our business model continues to create the basis for profitable growth and shareholder value.

Tony <unk>: And since the end of first quarter, we've increased our full year 2025 revenue visibility to approximately 95% as of the end of April.

Tony <unk>: These strong results demonstrate continued momentum and effective execution of our business model continues to create the basis for profitable growth and shareholder value.

Mike Willis: Now I'll turn the call over to Mike for a review of our first quarter financial results. Mike? Thank you, Tony. Our strong execution in the quarter is reflected in record revenue of $100.1 million, a year-over-year increase of 20.6%. This is driven by double-digit revenue growth in all three of our end markets, shown on slide number six. Revenue in hypersonics and strategic missile defense grew from $24.8 million to $30.1 million, an increase of 21.1 percent. Tactical Missiles and Integrated Defense Systems revenue grew from $27.9 million to $36.2 million, an increase of 29.6%. And finally, space and launch revenue grew from $30.3 million to $33.8 million, an increase of 12%.

Tony <unk>: Now I'll turn the call over to Mike for a review of our first quarter financial results Mike.

Mike: Thank you Tony our strong execution in the quarter is reflected in record revenue of $100 1 million a year over year increase of 26%.

Mike Willis: Thank you, Tony. Our strong execution in the quarter is reflected in record revenue of $100.1 million, a year-over-year increase of 20.6%. This is driven by double-digit revenue growth in all three of our end markets, shown on slide 6. Revenue in hypersonics and strategic missile defense grew from $24.8 million to $30.1 million, an increase of 21.1%. Tactical missiles and integrated defense systems revenue grew from $27.9 million to $36.2 million, an increase of 29.6%. Finally, space and launch revenue grew from $30.3 million to $33.8 million, an increase of 12%. The highly diverse nature of our customer and program portfolio means that from quarter to quarter, our end markets may not grow at the same rate.

Mike: This is driven by double digit revenue growth in all three of our end markets shown on slide number six revenue and hypersonic. So strategic missile defense grew from $24 8 million to $30 1 million an increase of 21, 1%.

Mike: Tactical missiles, and integrated defense systems revenue grew from $27 9 million to $36 2 million an increase of 29, 6%.

Mike: And finally space and launch revenue grew from $30 3 million to $33 8 million an increase of 12%.

Mike Willis: The highly diverse nature of our customer and program portfolio means that from quarter to quarter, our end markets may not grow at the same rate. However, on an annual basis, we expect our commercially focused space and launch market to represent approximately one-third of our total revenue, and our two defense-oriented markets to represent the remaining two-thirds. Year over year, first quarter revenue growth resulted from growth in a certain number of our programs, such as GMLRS and NGI, partially offset by declines in others, such as SLS. Moving down to P&L, shown on slide number 7, gross margin expanded by 450 basis points year-over-year to 39.4%, driven by operating leverage and efficiency gains.

Mike: The highly diverse nature of our customer and program portfolio means that from quarter to quarter. Our end markets may not grow at the same rate. However on an annual basis, we expect our commercially focused based on launch market to represent approximately one third of our total revenue and our two defense oriented markets to represent the remaining two.

Mike Willis: However, on an annual basis, we expect our commercially focused space and launch market to represent approximately 1/3 of our total revenue and our 2 defense-oriented markets to represent the remaining 2/3. Year-over-year, Q1 revenue growth resulted from growth in a certain number of our programs, such as GMLRS and NGI, partially offset by declines in others, such as SLS. Moving down the P&L, shown on slide number 7, gross margin expanded by 450 basis points year-over-year to 39.4%, driven by operating leverage and efficiency gains. Importantly, adjusted EBITDA rose 25%, from $24.3 million to $30.3 million in Q1 2025. This represents a 30% adjusted EBITDA margin and roughly 100 basis points of margin expansion over Q1 2024. Fully diluted adjusted EPS increased 67% year-over-year from $0.03 to $0.05 in the quarter.

Mike: <unk>.

Mike: Year over year first quarter revenue growth resulted from growth in a certain number of our programs such as GM, IRS and Gi, partially offset by declines in others such as Sos.

Mike: Moving down the P&L shown on slide number seven gross margin expanded by 450 basis points year over year to 39, 4% driven by operating leverage and efficiency gains.

Mike Willis: Importantly, Adjusted EBIT arose 25% from $24.3 million to $30.3 million in the first quarter of 2025. This represents a 30% Adjusted EBIT margin and roughly 100 basis points of margin expansion over Q1 2024. Fully diluted adjusted EPS increased 67% year over year from $0.03 to $0.05 in the quarter. But for approximately $8 million in share-based compensation expense triggered by our successful February IPO, we would have produced record quarterly net income. These were for pre-IPO shares and therefore have no dilutive effect. These expenses were identified in our 10-K filing and were the primary driver of increased general and administrative expenses, decreased net operating income, and a net loss in the quarter.

Mike: Importantly, adjusted EBITDA rose, 25% from $24 3 million to $30 3 million in the first quarter of 2025. This represents a 30% adjusted EBIT margin and roughly 100 basis points of margin expansion over Q1 2024.

Mike: Fully diluted adjusted EPS increased 67% year over year from <unk> to <unk> in the quarter.

Mike: But for approximately $8 million and share based compensation expense triggered by our successful February IPO, we would've produced record quarterly net income these were pre IPO shares and therefore have no dilutive effect. These expenses were identified in our 10-K filing and were the primary driver of increased gender.

Mike Willis: For approximately $8 million in share-based compensation expense triggered by our successful February IPO, we would have produced record quarterly net income. These were for pre-IPO shares and therefore have no dilutive effect. These expenses were identified in our 10-K filing and were the primary driver of increased general and administrative expenses, decreased net operating income, and a net loss in the quarter. Healthy bookings in Q1 boosted our funded backlog to $636 million as of 31 March 2025. Q1 revenue and growth in our funded backlog increased our 2025 revenue visibility to 95% to the midpoint of our guidance range as of the end of April. That leaves roughly 5%, or about $20 million, left to book and convert to revenue this year. We expect to secure the remaining bookings from orders associated with existing programs by the end of the current quarter.

Mike: Administrative expenses decreased net operating income and a net loss in the quarter.

Healthy bookings in the first quarter boosted our funded backlog to $636 million as of March 31 2025.

Mike Willis: Healthy bookings in the first quarter boosted our funded backlog to $636 million as of March 31, 2025. First quarter revenue and growth in our funded backlog increased our 2025 revenue visibility to 95% to the midpoint of our guidance range as of the end of April. That leaves roughly 5% or about $29 million left to book and convert to revenue this year. We expect to secure the remaining bookings from orders associated with existing programs by the end of the current quarter. Turning now to the balance sheet, as of March 31st of 2025, we had $113.7 million in cash and cash equivalents, up from $11.5 million from year-end 2024.

Mike: First quarter revenue and growth in our funded backlog increased our 2025 revenue visibility to 95% to the midpoint of our guidance range as of the end of April.

Mike: Please roughly 5% or about 29 left to book and convert to revenue. This year, we expect to secure the remaining bookings from orders associated with existing programs by the end of the current quarter.

Mike Willis: Turning now to the balance sheet as of 31 March 2025, we had $113.7 million in cash and cash equivalents, up from $11.5 million from year-end 2024. Cash and cash equivalents increased as a result of the proceeds from our February 2025 IPO, a portion of which we used to pay off our previous $25 million revolving credit facility and our IPO expenses. We strengthened our balance sheet in early April by successfully refinancing our existing credit facilities with a new Term Loan B and revolving credit facility. These new facilities reduced our net interest rates and extended maturities to April 2032 and April 2030, respectively. Finally, for modeling purposes, in 2025, we continue to expect a statutory tax rate of 24%, and we expect CapEx investments to total approximately 4% of revenue.

Mike: Turning now to the balance sheet as of March 31, 2025, we had $113 7 million in cash and cash equivalents up from 11, and a half million from year end 2024.

Mike: Cash and cash equivalents increased as a result of the proceeds from our February 2025, IPO, a portion of which were used to pay off our previous $25 million revolving credit facility and our IPO expenses.

Mike Willis: Cash and cash equivalents increased as a result of the proceeds from our February 2025 IPO, a portion of which were used to pay off our previous $25 million revolving credit facility and our IPO expenses. We strengthened our balance sheet in early April by successfully refinancing our existing credit facilities with the new Term Loan B and revolving credit facility. These new facilities reduced our net interest rates and extended maturities to April 2032 and April 2030 respectively. Not only for modeling purposes, in 2025, we continue to expect a statutory tax rate of 24 percent, and we expect CapEx investments to total approximately 4 percent of revenue.

Mike: We strengthened our balance sheet in early April by successfully refinancing our existing credit facilities with a new term loan b and revolving credit facility.

Mike: These new facilities reduced our net interest rate and extended maturities to April 2032, and April 2030, respectively.

Mike: Finally for modeling purposes, and 25, we continue to expect the statutory tax rate of 24%.

Mike: And we expect Capex investments to total approximately 4% of revenue.

Mike Willis: These CapEx investments support equipment and facility improvements, such as our new clean room in Mukilteo, Washington, and our new facility in Decatur, Alabama. Investments like these expand our capacity and capabilities to drive growth and shareholder value.

Mike Willis: These CapEx investments support equipment and facility improvements, such as our new clean room in Mukilteo, Washington, and our new facility in Decatur, Alabama. Investments like these expand our capacity and capabilities to drive growth and shareholder value. Now, I'd like to turn the call over to Jonathan to discuss our end markets and our positioning relative to federal budgets and policies.

Mike: These capex investments support equipment and facility improvements such as our new clean room, and Michael to your Washington, and our new facility indicator, Alabama, the investments like these expand our capacity and capabilities to drive growth and shareholder value.

Jonathan Vogel: Now, I'd like to turn the call over to Jonathan to discuss our end markets and our positioning relative to federal budgets and policies. Thank you, Mike. The demand drivers supporting our business remain strong, and the diversity of revenue and programs shown on slide 8 support our continued growth. Commercial space activity continues to increase, while the USDOD is prioritizing solutions for homeland defense, precision strike capabilities, and space assets. In the commercial space launch market, we continue to prepare our customers for the significant increase in launch cadence expected this year and beyond. For example, we are proud to be part of the United Launch Alliance team that began deploying Kuiper satellites using the Atlas V launch vehicle on April 28th.

Mike: Now I'd like to turn the call over to Jonathan to discuss our end markets and our positioning relative to federal budgets and policies.

Jonathan: Thank you Mike the demand drivers supporting our business remains strong and the diversity of revenue and programs shown on slide eight support our continued growth commercial space activity continues to increase while the U S. Dod is prioritizing solutions for homeland defense versus and strike capabilities in space assets.

Jonathan Beaudoin: Thank you, Mike. The demand drivers supporting our business remain strong, and the diversity of revenue and programs shown on slide 8 support our continued growth.

Jonathan Beaudoin: Commercial space activity continues to increase while the US DOD is prioritizing solutions for Homeland Defense, precision strike capabilities, and space assets. In the commercial space launch market, we continue to prepare our customers for the significant increase in launch cadence expected this year and beyond. For example, we are proud to be part of the United Launch Alliance team that began deploying Kuiper satellites using the Atlas V launch vehicle on 28 April. We look forward to supporting a reported 45 combined Atlas and Vulcan launches in the next few years and as many as 30 more from other launch providers. As a reminder, we provide content on virtually every US-based launch vehicle. Our subsystems include energetic retention and release mechanisms, pyro valves, interstage separation systems, heat shields, isogrid assemblies, ablative composite thermal protection systems, and more. We continue to monitor the administration's Golden Dome initiative.

Jonathan: In the commercial space launch market, we continue to prepare our customers for the significant increase in launch cadence expected. This year and beyond for example, we are proud to be part of the United launch Alliance team that began deploying hyper satellite using Atlas five launch vehicle on April 28, we look forward.

Jonathan Vogel: We look forward to supporting a reported 45 combined Atlas and Vulcan launches in the next few years and as many as 30 more from other launch providers. As a reminder, we provide content on virtually every U.S. space launch vehicle. Our subsystems include energetic retention and release mechanisms, pyrovalves, interstage separation systems, heat shields, isogrid assemblies, ablative composite thermal protection systems, and more. We continue to monitor the administration's Golden Dome initiative. While not yet determined, we expect program details to align extremely well with our capabilities and the programs we have been supporting successfully for years, such as NGI and other missile defense programs in production.

Jonathan: To supporting and reported 45, combined Atlas and Vulcan launches in the next few years and as many as 30 more from other launch providers.

Jonathan: As a reminder, we provide content on virtually every U S space launch vehicles are sub systems include energetic retention and release mechanisms pyro valves interstates separation systems heat shields, ISO grid assemblies, ablative composite thermal protection systems and more.

Jonathan: We continue to monitor the administration's Golden Dome initiative.

Jonathan Beaudoin: While not yet determined, we expect program details to align extremely well with our capabilities and the programs we have been supporting successfully for years, such as NGI and other missile defense programs in production. This initiative also calls for significant investments in hypersonics and hypersonic test programs. The initiative also requires more assets in space for sensing and detection, which would require more launch activity, another domain that we support. In terms of the federal budget process, news of potential incremental DOD funding of $150 billion for capabilities including unmanned swarms and hypersonics appears to be very favorable to Karman. Karman has over 20 years of flight-proven heritage in hypersonics, supporting DOD hypersonic platforms and test bed programs with deployable shrouds, energetic systems, heat shields, rocket motor nozzles, and complex high-temperature metallic assemblies.

Jonathan: Not yet determined we expect program detailed you align extremely well with our capabilities and the programs. We have been supporting successfully for years, such as N Gi and other missile defense programs in production.

Jonathan: This initiative also calls for significant investments in hypersonic and hypersonic test programs in there.

Jonathan Vogel: This initiative also calls for significant investments in hypersonics and hypersonic test programs. The initiative also requires more assets in space for sensing and detection, which would require more launch activity, another domain that we support. In terms of the federal budget process, news of potential incremental DOD funding of $150 billion for capabilities including unmanned swarms and hypersonics appears to be very favorable to Karman. Karman has over 20 years of flight proven heritage in hypersonics, supporting DoD hypersonic platforms and testbed programs with deployable shrouds, energetic systems, heat shields, rocket motor nozzles, and complex high temperature metallic assemblies.

Jonathan: <unk> also requires more assets in space for sensing and detection, which would require more launch activity another domain that we support.

Jonathan: In terms of the federal budget process news of potential incremental Dod funding of 150 billion for capabilities, including unmanned swarms and hypersonic appears to be very favorable to Carmen.

Jonathan: Carmen has over 20 years of flight proven heritage and hypersonic supporting D. O D hypersonic platforms and Testbed programs with deployable shrouds energetic systems heat Shields rocket motor nozzles and complex high temperature metallic assemblies.

Jonathan: Along with Replicator, we expect initiatives like the Army has launched effects program to drive demand for Carmen launch systems, which leverage decades of successful payload integration and launch heritage.

Jonathan Vogel: Along with Replicator, we expect initiatives like the Army's Launched Effects Program to drive demand for Karman launch systems, which leverage decades of successful payload integration and launch heritage. The recent House of Representatives Armed Services Committee's budget reconciliation markup proposed $25 billion in additional funding for integrated air and missile defense. This document specifically calls out S.P.A.C.'s hypersonic and layered homeland defense initiative. The President's detailed 2026 budget request, expected later this month, will provide greater visibility into the Administration's plans for these and other defense programs and how those plans could benefit us. Once details emerge, we will be better positioned to determine the effect on our business.

Jonathan Beaudoin: Along with Replicator, we expect initiatives like the Army's Launched Effects program to drive demand for Karman launch systems, which leverage decades of successful payload integration and launch heritage. The recent House Armed Services Committee's budget reconciliation markup proposed $25 billion in additional funding for integrated air and missile defense. This document specifically calls out space, hypersonic, and layered homeland defense initiatives. The president's detailed 2026 budget request, expected later this month, will provide greater visibility into the administration's plans for these and other defense programs and how those plans could benefit us. Once details emerge, we will be better positioned to determine the effect on our business. In addition, existing programs appear to be poised to generate significant increases in demand for us.

Jonathan: The recent house of Representatives Armed services committees budget reconciliation markup proposed 25 billion in additional funding for integrated Air and missile Defense. This document specifically calls out space hypersonic and layered homeland defense initiatives.

Jonathan: The President's detailed 2026 budget request expected later this month will provide greater visibility into the administration's plans for these and other defense programs and how those plans could benefit us.

Jonathan: Once details emerge we will be better positioned to determine the effect on our business.

Jonathan: In addition existing programs appear to be poised to generate significant increases in demand for us for example, a recent sources sought notice from the U S. Army detailed plans to increase production of guided multiple launch rocket systems or G. MLR S from 10000 units per year.

Jonathan Vogel: In addition, existing programs appear to be poised to generate significant increases in demand for us. For example, a recent sources sought notice from the U.S. Army details plans to increase production of Guided Multiple Launch Rocket Systems, or GMLRS, from 10,000 units per year to 19,000 units per year starting in 2028. Similarly, we are receiving positive demand signals from an air-launched missile program, which could translate to a significant increase in production volume over the coming years. Other opportunities include hypersonics and Army-launched effects, both of which align well with the DoD's investment priorities.

Jonathan Beaudoin: For example, a recent sources sought notice from the US Army details plans to increase production of Guided Multiple Launch Rocket Systems, or GMLRS, from 10,000 units per year to 19,000 units per year starting in 2028. Similarly, we are receiving positive demand signals from an air-launched missile program, which could translate to a significant increase in production volume over the coming years. Other opportunities include hypersonics and Army-launched effects, both of which align well with the DOD's investment priorities. While demand signals are strong, it's always important to evaluate potential risks to our business. The administration's trade and government efficiency improvement initiatives have generated questions for most public companies. While many companies across the economy identified risks associated with current tariff and government efficiency policies, we believe that we are in a strong position.

Jonathan: 219000 units per year, starting in 2028.

Jonathan: Similarly, we are receiving positive demand signals from an air launched missile program, which could translate to a significant increase in production volume over the coming years. Other opportunities include hypersonic and army launched effects, both of which align well with the Dod's investment priorities.

Jonathan: While demand signals are strong it's always important to evaluate potential risks to our business.

Jonathan Vogel: While demand signals are strong, it's always important to evaluate potential risks to our business. The administration's trade and government efficiency improvement initiatives have generated questions for most public companies. While many companies across the economy identified risks associated with current tariff and government efficiency policies, we believe that we are in a strong position. That's because we conducted a thorough review of our supply chain to identify any potential impacts from tariffs and limitations on export of rare earth metals to the United States. Our review determined the following. First, we procure virtually no items subject to tariffs directly from foreign suppliers.

Jonathan: The administration's trade in government efficiency improvement initiatives have generated questions for most public companies, while many companies across the economy identified risks associated with current tariff and government efficiency policies. We believe that we are in a strong position.

Jonathan Beaudoin: That's because we've conducted a thorough review of our supply chain to identify any potential impacts from tariffs and limitations on export of rare earth metals to the United States. Our review determined the following. First, we procure virtually no items subject to tariffs directly from foreign suppliers. Second, the use of rare earths in our development, testing, and production processes is negligible. Third, we contract for the purchase of materials at the front end of production orders, which minimizes our exposure to price increases over time. Further, our fixed-price contracts typically renew on a 12-month basis, providing us with the opportunity to address cost increases for tariff-related inputs in our pricing should they occur. As a result, there is little material pricing risk associated with 95% of our 2025 revenue.

Jonathan: Because we've conducted a thorough review of our supply chain to identify any potential impacts from tariffs and limitations on export of rare Earth metals to the United States are reviewed determined the following first we procure virtually no items subject to tariffs directly from foreign suppliers.

Jonathan Vogel: Second, the use of rare earths in our development, testing, and production processes is negligible. Third, we contract for the purchase of materials at the front end of production orders, which minimizes our exposure to price increases over time. Further, our fixed-price contracts typically renew on a 12-month basis, providing us with the opportunity to address cost increases for tariff-related inputs in our pricing should they occur. As a result, there is little material pricing risk associated with 95% of our 2025 revenue. We believe that export tariffs do not represent a risk to our revenue because direct international sales represent less than 1% of our revenue.

Jonathan: The use of rare Earth, and our development testing and production processes is negligible.

Jonathan: Third we contract for the purchase of materials at the front end of production orders, which minimizes our exposure to price increases overtime further our fixed price contracts typically renew on a 12 month basis, providing us with the opportunity to address cost increases for tariff related inputs in our pricing.

Jonathan: Should they occur.

Jonathan: As a result, there was little material pricing risk associated with 95% of our 2025 revenue.

Jonathan: We believe that export tariffs do not represent a risk to our revenue because direct international sales represent less than 1% of our revenue.

Jonathan Beaudoin: We believe that export tariffs do not represent a risk to our revenue because direct international sales represent less than 1% of our revenue. In fact, increases in defense spending amongst US allies may result in increased international revenue for Karman in the future. While we cannot be certain how tariffs will affect the prices of material inputs we procure over the coming weeks and months, we are confident that we are very well positioned to manage any disruptions that may result. With respect to government efficiency programs, Karman's value proposition is to deliver advanced solutions to customers more efficiently through deep IP-enabled vertical integration. We provide design to production capabilities that shorten lead times and create value for our customers.

Jonathan Vogel: In fact, increases in defense spending amongst U.S. allies may result in increased international revenue for Karman in the future. While we cannot be certain how tariffs will affect the prices of material inputs we procure over the coming weeks and months, we are confident that we are very well positioned to manage any disruptions that may result. With respect to government efficiency programs, Karman's value proposition is to deliver advanced solutions to customers more efficiently through deep IP-enabled vertical integration. We provide design to production capabilities that shorten lead times and create value for our customers. Further, our efforts are focused on critical national security priority programs. The supply chain efficiency we deliver with our integrated solutions is highly aligned with the goals of government efficiency initiatives.

Jonathan: Increases in defense spending amongst U S. Allies May result in increased international revenue for carbon in the future.

Jonathan: While we cannot be certain how tariffs will affect the prices of material inputs, we procure over the coming weeks and months. We are confident that we are very well positioned to manage any disruptions that may result.

Jonathan: With respect to government efficiency programs Karremans value proposition is to deliver advanced solutions to customers more efficiently through deep IP enabled vertical integration, we provide design to production capabilities that shorten lead times and create value for our customers further our efforts are focused.

Jonathan Beaudoin: Further, our efforts are focused on critical national security priority programs. The supply chain efficiency we deliver with our integrated solutions is highly aligned with the goals of government efficiency initiatives. In addition to providing overall high value to our customers, more than 90% of our contracts are firm fixed price, which means it's our responsibility to price contracts appropriately and manage our operations efficiently. Our ability to deliver advanced solutions effectively is illustrated in our strong financial results. Across our end markets, we see favorable conditions that support our current year goals and position us for continued profitable growth. Our success depends almost entirely on the successful execution of our plans. To summarize, Karman is well-aligned with major space opportunities and strategic national security priorities, and we are well-positioned to support emerging and next-generation capabilities. Our business model is designed to deliver superior results under the current or any administration.

Jonathan: On critical National security priority programs, the supply chain efficiency, we deliver with our integrated solutions is highly aligned with the goals of government efficiency initiatives.

Jonathan: In addition to providing overall high value to our customers more than 90% of our contracts are firm fixed price, which means it's our responsibility to price contracts appropriately and manage our operations efficiently our ability to deliver advanced solutions effectively as illustrated in our strong financial.

Jonathan Vogel: In addition to providing overall high value to our customers, more than 90% of our contracts are firm fixed price, which means it's our responsibility to price contracts appropriately and manage our operations efficiently. Our ability to deliver advanced solutions effectively is illustrated in our strong financial results. Across our end markets, we see favorable conditions that support our current year goals and position us for continued profitable growth. Our success depends almost entirely on the successful execution of our plan. To summarize, Karman is well aligned with major space opportunities and strategic national security priorities, and we are well positioned to support emerging and next-generation capabilities.

Jonathan: Results.

Jonathan: Across our end markets, we see favorable conditions that support our current year goals and position us for continued profitable growth our success depends almost entirely on the successful execution of our plans.

Jonathan: To summarize carbon is well aligned with major space opportunities and strategic National security priority and we are well positioned to support emerging next generation capabilities. Our business model is designed to deliver superior results under the current or any administration now I will turn the call back to.

Jonathan Vogel: Our business model is designed to deliver superior results under the current or any administration.

Tony Kablinsky: Now I'll turn the call back to Tony for his closing comments. Thanks, Jonathan.

Jonathan Beaudoin: Now I'll turn the call back to Tony for his closing comments.

Tony <unk>: Tony for his closing comments.

Tony <unk>: Thanks, Jonathan.

Tony Koblinski: Thanks, Jonathan. Karman represents a new kind of space and defense company. We are a vertically integrated, technology-enabled merchant supplier to virtually every prime contractor across space, missile defense, and tactical uncrewed domains. Unlike many other companies that focus narrowly on a specific capability or domain such as machining, metal forming, composites, or energetics, we design, develop, test, and manufacture a broad range of integrated system solutions using a wide array of capabilities that we have spent decades perfecting. Our customers choose us because we do more than build or machine parts. We solve critical problems for them with an unmatched breadth of technology-driven solutions, and we do so in a manner that provides more value to them than if they were to insource these activities.

Tony Kablinsky: Karman represents a new kind of space and defense company. We are a vertically integrated, technology-enabled merchant supplier to virtually every prime contractor across space, missile, missile defense, and tactical uncrewed domains. Unlike many other companies that focus narrowly on a specific capability or domain, such as machining, metal forming, composites, or energetics, we design, develop, test, and manufacture a broad range of integrated systems solutions using a wide array of capabilities that we have spent decades perfecting. Our customers choose us because we do more than build or machine parts. We solve critical problems for them with an unmatched breadth of technology-driven solutions.

Speaker Change: <unk> represents a new kind of space and defense company. We are a vertically integrated technology enabled merchant supplier to virtually every private contractor across space missile missile defense and tactical unproved domains.

Speaker Change: Unlike many other companies that focus narrowly on a specific capability or domains, such as machining metal forming composites are energetics, we design develop test and manufacture a broad range of integrated system solutions using a wide array of capabilities that we have spent decades perfecting.

Speaker Change: Our customers choose us because we do more and to build a machine parts, we solve critical problems for them with an unmatched breadth of technology driven solutions and we do so in a manner that provides more value to them that if they were to in source. These activities.

Tony Kablinsky: And we do so in a manner that provides more value to them than if they were to insource these activities.

Speaker Change: As we said we're off to a great start in 2025 with record quarterly revenue adjusted EBITDA funded backlog and nearly full visibility into our full year revenue guidance.

Tony Kablinsky: As we've said, we're off to a great start in 2025 with record quarterly revenue, adjusted EBITDA, funded backlog, and nearly full visibility into our full-year revenue guidance. Our business remains aligned with key space and defense priorities that are poised to receive meaningful increases in government and private sector funding. We are receiving signals that indicate the potential for new sources of demand, such as for the Golden Dome and for the replenishment of existing capability. And our ongoing involvement in hypersonics programs, NGI, Replicator, and the Army's Launched Effects Program, and in fielded production programs, positions us to benefit from an anticipated growth in funding.

Tony Koblinski: As we've said, we're off to a great start in 2025, with record quarterly revenue, adjusted EBITDA, funded backlog, and nearly full visibility into our full-year revenue guidance. Our business remains aligned with key space and defense priorities that are poised to receive meaningful increases in government and private sector funding. We are receiving signals that indicate the potential for new sources of demand, such as for the Golden Dome and for the replenishment of existing capabilities. Our ongoing involvement in hypersonics programs, NGI, Replicator, and the Army's Launched Effects program, and in fielded production programs, positions us to benefit from an anticipated growth in funding. We believe that our exposure to the effects of tariffs, government efficiency initiatives, and rare earth supply constraints is minimal. Our high revenue visibility gives us confidence in our ability to achieve our full-year revenue guidance.

Speaker Change: Our business remains aligned with key space and defense priorities that are poised to receive meaningful increases in government and private sector funding.

Speaker Change: We are receiving signals that would indicate the potential for new sources of demand such as for the Golden dome and for the replenishment of existing capabilities.

Speaker Change: And our ongoing involvement and hypersonic programs and Gi replicator, and the Army's launched effects program and and fielded production programs positions us to benefit from an anticipated growth in funding, we believe that our exposure to the effects of tariffs government efficiency.

Tony Kablinsky: We believe that our exposure to the effects of tariffs, government efficiency initiatives, and rare earth supply constraints is minimal. and our high revenue visibility gives us confidence in our ability to achieve our full-year revenue guidance.

Speaker Change: <unk> and rare Earth supply constraints is minimal.

Speaker Change: And our high revenue visibility gives us confidence in our ability to achieve our full year revenue guidance.

Tony Kablinsky: And so, this leads us to our fiscal year 2025 guidance, summarized on slide 9. For 2025, we reaffirm our guidance of total revenue between $423 and $433 million and adjusted EBITDA between $132 and $137 million. This represents year-over-year revenue growth of 24 percent and adjusted EBITDA growth of 27 percent to the midpoint of these ranges. We now expect approximately 48 percent of our full-year revenue in the first half of our fiscal year based on the midpoint of our guidance range.

Tony Koblinski: This leads us to our fiscal year 2025 guidance, summarized on slide 9. For 2025, we reaffirm our guidance of total revenue between $423 to 433 million, and adjusted EBITDA between $132 to 137 million. This represents year-over-year revenue growth of 24% and adjusted EBITDA growth of 27% to the midpoint of these ranges. We now expect approximately 48% of our full-year revenue in the H1 of our fiscal year based on the midpoint of our guidance range. Our 2025 priorities have not changed and are shown on slide 10. We remain focused on delivering sustained organic growth, executing on inorganic opportunities, one or two small acquisitions per year, investing in our team's talent, and ultimately fulfilling our vision of being the industry's most sought-after partner for mission-critical systems.

Speaker Change: And so this leads us to our fiscal year 2025 guidance summarized on slide nine.

Speaker Change: For 2025, we reaffirm our guidance of total revenue between 423 and $433 million and adjusted EBITDA between 132 and <unk>.

Speaker Change: $37 million.

Speaker Change: This represents year over year revenue growth of 24% and adjusted EBITDA growth of 27% to the midpoint of these ranges.

Speaker Change: We now expect approximately 48% of our full year revenue in the first half of our fiscal year based on the midpoint of our guidance range.

Speaker Change: Our 2025 priorities have not changed and are shown on slide 10.

Tony Kablinsky: Our 2025 priorities have not changed and are shown on slide 10. We remain focused on delivering sustained organic growth, executing on inorganic opportunities, one or two small acquisitions per year, investing in our team's talent, and ultimately fulfilling our vision of being the industry's most sought after partner for mission critical systems. Our positioning has never been better aligned with market requirements and our team is fully focused on delivering results and creating customer and shareholder value.

Speaker Change: We remain focused on delivering sustained organic growth.

Speaker Change: Executing on inorganic opportunities, one or two small acquisitions per year investing in our teams talent.

Speaker Change: And ultimately fulfilling our vision of being the industry's most sought after partner for mission critical systems.

Speaker Change: Our positioning has never been better aligned with market requirements and our team is fully focused on delivering results and creating customer and shareholder value.

Tony Koblinski: Our positioning has never been better aligned with market requirements, and our team is fully focused on delivering results and creating customer and shareholder value. Thank you to our employees, our customers, and our shareholders for your continued trust and engagement. We will now take your questions.

Speaker Change: Thank you to our employees, our customers and our shareholders for your continued trust and engagement.

Tony Kablinsky: Thank you to our employees, our customers and our shareholders for your continued trust and engagement.

Operator: We will now take your questions. Thank you.

Speaker Change: We will now take your questions.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad you raise your hand and joined the queue if you'd like to withdraw your question simply press Star. One again, we ask that you. Please limit yourself to one question and one follow up at which point you may return to the queue for an additional two questions.

David Brown: Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. We ask that you please limit yourself to 1 question and 1 follow-up, at which point you may return to the queue for an additional 2 questions. Your first question today comes from the line of Amit Daryanani from Evercore ISI. Your line is open.

Operator: We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.

Operator: We ask that you please limit yourself to one question and one follow-up, at which point you may return to the queue for an additional two questions.

Michael Fisher: Your first question today comes from the line of Amit Daryanani from Evercore ISI. Your line is open.

Speaker Change: Your first question today comes from the line of admit Doug <unk> from Evercore ISI. Your line is open.

Speaker Change: Alright. Thanks, It was Michael Fisher on for Amit I, just wanted to touch quickly on the SLS dynamic you mentioned in the press release I'm wondering is this just some quarterly lumpiness or is there anything else to be aware of there with that program.

Michael Fisher: This is Michael Fisher on for Amit. I just wanted to touch quickly on the SLS dynamic. press release. Previously, the first quarter 21 SLS, it did have higher demand at that point in time than what we have today. And so it was mainly just a function of PO placement from our customer base. And really, from this point going forward, we would say that SLS is a very negligible amount of our forecast going forward. Fraction of 1% of total revenue in our go forward forecast. Appreciate it.

Michael Fisher: Great. Thanks. This is Michael Fisher on for Amit. I just wanted to touch quickly on the SLS dynamic you mentioned in the press release. I'm wondering, is this just some quarterly lumpiness, or is there anything else to be aware of there with that program?

Speaker Change: Previously the first quarter of <unk> 41 as sell less.

Jonathan Beaudoin: Previously in Q1 2021, SLS, it did have higher demand at that point in time than what we have today. It was mainly just a function of PO placement from our customer base. Really from this point going forward, we would say that SLS is a very negligible amount of our forecast going forward.

Speaker Change: It did have higher demand at that point in time than what we have today and so it was mainly just a function of apio placement from our customer base.

Speaker Change: It really from this point going forward, we would say that SLS.

Speaker Change: Very negligible amount of our forecast going forward fraction of 1% of total revenue in our go forward forecast.

Tony Koblinski: Fraction of 1% of total revenue in our go-forward forecast.

Michael Fisher: Yeah. Appreciate it.

Speaker Change: I appreciate the question.

Tony Koblinski: Good question.

Michael Fisher: Good question. And then, um...

Speaker Change: Okay, Great and then.

Michael Fisher: Yeah, great. A little bit more broadly on the space and launch business, is there any color you can provide on how your content varies across customers and programs? Is it pretty similar on each launch vehicle, or is there quite a bit of variance there?

Speaker Change: A little bit more broadly on mistaken launch business is there is there any color you can provide on how your content vary across customers and programs as it is it pretty similar on each launch vehicle areas. They are quite a bit quite a bit of variance there.

Michael Fisher: a little bit more broadly on the space and launch business. Is there any color you can provide on how your content varies across customers and programs? Is it pretty similar on each launch vehicle, or is there quite a bit of variance? There's certainly an amount of variance, you know, I kind of would point to our three product categories, you know, those categories, payload protection, aerodynamic interstage and propulsion systems, those have applications across all three of our market areas. And just given that diversification, we do see some variation between the various launch providers. So some are more oriented to aerodynamic interstages, while others may be more towards propulsion.

Speaker Change: Yeah.

Jonathan Beaudoin: There's certainly an amount of variance. I kind of would point to our 3 product categories. Those categories, payload protection, aerodynamic interstage, and propulsion systems. Those have applications across all 3 of our market areas. Just given that diversification, we do see some variation between the various launch providers. Some are more oriented to aerodynamic interstages, while others may be more towards propulsion systems.

Speaker Change: There is certainly an amount of variance.

Speaker Change: I would point to our three product categories those categories payroll protection.

Speaker Change: Aerodynamic inter stage of propulsion systems.

Speaker Change: Those applications across all three of our market areas and just given that diversification, we do see some variation between the various launch providers. So some are more oriented or genetic inner stages, while others may be more towards offshore systems.

Speaker Change: Okay.

Speaker Change: Great. Thanks for taking my questions.

David: Great, thank you, David.

Michael Fisher: Great. Thanks for taking my question.

Speaker Change: Your next question comes from a line of Peter Arment from Baird. Your line is open.

Peter Arment: Your next question comes from a line of Peter Arment from Baird. Your line is open. Yeah, good afternoon, Tony, Mike, Jonathan. Thanks. Thanks for the details and the nice results.

David Brown: Your next question comes from the line of Peter Arment from Baird. Your line is open.

Peter Arment: Yeah, good afternoon, Tony, Mike, Jonathan. Thanks for the details and the nice results. Jonathan, you mentioned the reconciliation bill, the $113 billion in spending, obviously there's going to be initial funding for Golden Dome. Do you expect any, obviously other things, missiles and hypersonic funding? Are we expecting any bookings associated with those areas this year? I know you had previously expected a pretty healthy book-to-bill anyway this year.

Speaker Change: Yes, good afternoon, Tony and Mike Johnson, Thanks, Thanks for the details.

Speaker Change: And nice results.

Jonathan Vogel: Jonathan, you mentioned the reconciliation bill, the $113 billion in spending, and obviously there's going to be initial funding for Golden Dome. Do you expect any, and obviously other things, missiles and hypersonic funding, are we expecting any bookings associated with those areas this year? I know you had previously expected a pretty healthy book-to-bill anyway this year. Yeah, I mean, I kind of would point to initially, you know, our record backlog right now, 636,095% visibility to this year's revenue. So strong with this year as that develops, you know, when that would get to find enough to actually convert to a bookings, we will have to see.

Speaker Change: Jonathan You mentioned the reconciliation build 113 billion in spending and obviously theres going to be initial funding for Golden them do you expect any and obviously other things missiles and hypersonic funding are we expecting any any bookings associated with those areas. This year. I know you had previously expected a pretty healthy book to Bill anyway. This year.

Speaker Change: Yeah, I mean, I kind of would point initially our record backlog right now.

Jonathan Beaudoin: Yeah, I kind of would point to initially our record backlog right now, $636 million, 95% visibility to this year's revenue. Strong with this year. As that develops, when that would get defined enough to actually convert to a bookings, we will have to see. Really don't know if it's this year or do we start to really recognize it next year. We'll have to kind of be watching it. Once the budget's defined, then we'll have more visibility into the timing.

Speaker Change: 636 million, 95% visibility to this year's revenue so strong with this year as that develops.

Speaker Change: When that wed get to find enough to actually convert to bookings we will have to see.

Jonathan Vogel: So really don't know if it's this year or does it do we start to really recognize it next year. So we'll have to kind of be watching it. And then once once the budget is defined, then we'll have more visibility into into time.

Speaker Change: So really don't know if it's this year or does it do we start to really recognize it.

Speaker Change: Next year, So we'll have to academy watching it and then once once the budget is defined.

Speaker Change: More visibility into the timing.

Speaker Change: Okay. That's helpful. And then just as a follow up and related to that I know you guys had kind of targeted a 4% of revenues for capex.

Peter Arment: Okay, that's helpful.

Peter Arment: Okay, that's helpful. Just as a follow-up and related to that, I know you guys had kind of targeted 4% of revenues for CapEx. Any change to that just given that Golden Dome has gotten a little more defined since the IPO and that period of time? Thanks.

Peter Arment: And then just as a follow-up and related to that, I know you guys had kind of targeted 4% of revenues for CAFX. Any change to that, just given that Golden Dome has gotten a little more defined since, you know, kind of the IPO and that period of time? Thanks. No, I'd say that that remains Peter for this year, our forecast, again, as Jonathan indicated, as the details of Golden Dome and the elements of it, in terms of the new capabilities that will be desired, you know, we'll have to readdress that as we move forward. But right now, that 4% is adequate to meet the needs of the demand in front of us.

Speaker Change: Any change to that just given that Golden dome has gotten a little more defined since you know kind of the IPO in that period of time.

Tony Koblinski: No, I'd say that that remains, Peter, for this year. Our forecast, again, as Jonathan indicated, as the details of Golden Dome and the elements of it in terms of the new capabilities that will be desired, we'll have to readdress that as we move forward. But right now, that 4% is adequate to meet the needs of the demand in front of us.

Speaker Change: I would say that that remains Peter for this year, our forecast again as Jonathan indicated as the details soon.

Speaker Change: Golden Dome and the elements of it in terms of the new capabilities that will be desired we will have to readdress that as we move forward, but right now that 4% is adequate to meet the needs of the demand in front of us.

Speaker Change: I appreciate it Tony I'll jump back in queue. Thanks.

Peter Arment: Appreciate it, Tommy. I'll jump back in queue. Thanks.

Peter Arment: Appreciate it, Tony. I'll jump back in queue. Thanks.

Speaker Change: Your next question comes from the line of Ken Herbert from RBC Capital markets. Your line is open.

Ken Herbert: Your next question comes from a line of Ken Herbert from RBC Capital Markets. Your line is open. Hi, good evening, Tony, Mike and Stephen.

David Brown: Your next question comes from the line of Ken Herbert from RBC Capital Markets. Your line is open.

Steve Strakos: Hi, good evening, Tony, Mike, and Steven. This is Steve Strakos on for Ken Herbert. I was hoping to just touch on your EBITDA guidance for the full year. It implies about a full 100 basis points step up throughout the year. Can you maybe just touch on some of the drivers there and what kind of gives you confidence in the rest of your outlook?

Steve strike: Hi, Good evening, Tony like Steven This is Steve strike goes on for Ken Herbert.

Steve Strackhouse: This is Steve Strackhouse on for Ken Humbert. I was hoping to just touch on your EBITDA guidance for the full year. It implies about a full 100 basis points to step up throughout the year. Can you maybe just touch on some of the drivers there and what kind of gives you confidence in the rest of your outlook? Yeah, sure. So, operating leverage is a portion of that expanded EBITDA margin, as well as some of the CapEx initiatives that we're taking in place right now that improves our efficiency from the shop floor. So, that's what we have laid out in front of us in terms of expansion on our EBITDA margins.

Steve strike: Hoping to just touch on your EBIT guidance for the full year it wasn't but a full 100 basis points step up throughout.

Steve strike: Throughout the year.

Steve strike: Maybe just touch on some of the drivers there and what kind of gives you confidence the rest of your outlook.

Steve strike: Yes sure.

Jonathan Beaudoin: Yeah, sure. Operating leverage is a portion of that expanded EBITDA margin, as well as some of the CapEx initiatives that we're taking in place right now that improves our efficiencies on the shop floor. That's what we have laid out in front of us in terms of expansion on our EBITDA margins. Confidence is strong. It starts with our percent books that you've heard now a couple of times, 95% bookings in hand for the year. We expect to close the last 5% here by the end of next month. That really starts with the confidence build. From there, it's in our hands for execution. I guess I'd just leave it at that in terms of confidence for that forecast.

Steve strike: So operating leverage as a portion of that expanded EBITDA margin as well as some of the capex initiatives that were taken in place right now that improves our efficiencies on the shop floor. So that's that's what we have laid.

Steve strike: Laid out in front of us in terms of expansion on our EBITDA margins.

Steve strike: <unk> is strong.

Steve Strackhouse: Confidence is strong. It starts with our percent books that you've heard now a couple of times, 95% bookings in hand for the year. We expect to close the last 5% here by the end of next month. And that really starts with the confidence build. From there, it's in our hands for execution. And so, I guess I'd just leave it at that in terms of confidence for that forecast. It sounds good. And then maybe just as a follow-up on the bookings, it looks like book-to-bill was maybe like 1.5, 1.6 in the quarter. And I know we talked about some strong booking expectations for the full year.

Steve strike: It starts with our percent books.

Steve strike: <unk> heard a couple of times, 95%.

Steve strike: Bookings in hand for the year, we expect to close the last 5% here by the end of next month and that really starts with the confidence to build from there.

Steve strike: Our hands for execution, and so that I guess I'll just leave it at that in terms of confidence for that forecast.

Steve Strakos: Yeah, sounds good. Maybe just as a follow-up on the bookings. Looks like book-to-bill was maybe 1.5, 1.6 in the quarter. I know we talked about some strong booking expectations for the full year. Has that maybe changed at all? Do you think that you can maybe be closer to 1.5x, or how should we kind of think about bookings or your backlog kind of maybe exiting the rest of the year?

Speaker Change: Sounds good and then maybe just as a follow up on the bookings it looks like book to Bill was maybe like $1 six in the quarter.

Speaker Change: And I know, we talked about some strong booking expectations for the full year because it may be changed at all do you think that you could maybe be closer to one five times or how should we think about bookings your backlog kind of maybe exited the rest of the year.

Steve Strackhouse: Has that maybe changed at all? Do you think that you can maybe be closer to one and a half times? Or how should we kind of think about bookings or your backlog kind of maybe exiting the rest of the year? Yeah, I, I don't know that I would project 1.5 for the full year, as we've talked before, bookings can in fact, be lumpy a bit, we think we've got a solid pipeline of opportunities. And again, the unknowns of what Golden Dome will ultimately lead to would have us without clear certainty of what that will be by the end of the year.

Speaker Change: Yeah.

Speaker Change: Yes.

Tony Koblinski: Yeah, I don't know that I would project 1.5 for the full year. As we've talked before, bookings can in fact be lumpy a bit. We think we've got a solid pipeline of opportunities. Again, the unknowns of what Golden Dome will ultimately lead to would have us without clear certainty of what that will be by the end of the year. Strong backlog, strong pipeline, sufficient to fund the growth that we're projecting.

Speaker Change: Alright, I don't know that I would project one five for the full year as we've talked before bookings can in fact be lumpy a bit we think we've got a solid pipeline of opportunities.

And again, the unknowns of what Golden Dome will ultimately lead to.

Speaker Change: Would have us without clear certainty of what that will be by the end of the year.

Speaker Change: Strong strong backlog strong pipeline.

Steve Strackhouse: But strong, strong backlog, strong pipeline, sufficient to fund the growth that we were projecting. Sounds good. Awesome. Bye. Thank you.

Speaker Change: Sufficient to fund the growth that we're projecting.

Speaker Change: So it's good I'll jump back in queue.

Steve Strakos: Sounds good. I'll jump back in queue.

Speaker Change: Thank you.

Tony Koblinski: Thank you.

Speaker Change: Your next question comes from the line of Bradley Esther from Citi. Your line is open.

Bradley Eister: Your next question comes from a line of Bradley Eister from City. Your line is open. Great good afternoon. Thank you for taking my questions. Just one quick question for you on the defense side of the business. So the new administration looks like it's going to try and engage in procurement reform, including a potential rewrite of the Federal Acquisition Regulation and the consolidation of much more purchased power at the GSA.

David Brown: Your next question comes from the line of Bradley Eyster from Citi. Your line is open.

Bradley Esther: Great. Good afternoon. Thanks for taking my questions. Just one quick question for you on the defense side of the business. So the new administration looks like it's going to try and gauge and procurement reform, including a potential rewrite all the federal acquisition regulation and the consolidation of much more power with the GSA.

Bradley Eyster: Great. Good afternoon. Thanks for taking my question. Just one quick question for you on the defense side of the business. The new administration looks like it's going to try and engage in procurement reform, including a potential rewrite of the Federal Acquisition Regulation and the consolidation of much more purchasing power at the GSA. Could you potentially talk a little bit about what you like about the existing procurement system and what you'd like to see changed? Can you also discuss how all this change might impact your business? Thanks.

Tony Kablinsky: Could you potentially talk a little bit about what you like about the existing procurement system and what you'd like to see changed? And then can you also discuss how all of this change might impact your business? As we've discussed, anything that drives the efficiency in the government procurement process, we're in favor of. Whether it's efficiency in decision making, getting to contract, lessening of contract requirements, those are all favorable for us. We're built to help our customers go fast, to get to solutions quicker with designs that make sense, and through integrated manufacturing, to ultimate hardware in record times.

Bradley Esther: Could you potentially talk a little bit about what you liked the existing procurement system and what you'd like to see changed.

Bradley Esther: Can you also discuss how all of this change might impact your business. Thanks.

Bradley Esther: As we've discussed anything that drives the efficiency and the government procurement process. We are in favor of whether it's efficiency and decision, making getting to contract lessening.

Tony Koblinski: As we've discussed, anything that drives the efficiency in the government procurement process, we are in favor of, whether it's efficiency in decision-making, getting to contract, lessening of contract requirements. Those are all favorable for us. We're built to help our customers go fast, to get to solutions quicker with designs that make sense and through integrated manufacturing to ultimate hardware in record times. We don't see anything negative about the proposed, but still uncertain changes ahead.

Bradley Esther: Requirements. Those are all favorable for US we are built to help our supply our customers go fast to get to solutions quicker with designs that that makes sense and through integrated manufacturing to ultimate hardware in record times and so we don't see anything negative.

Tony Kablinsky: And so we don't see anything negative about the proposed, but still, you know, uncertain changes ahead. Got it. Appreciate the color. Thank you. I'll pass it along.

Bradley Esther: About the proposed but still uncertain changes ahead.

Speaker Change: Got it appreciate the color. Thank you I'll pass it along.

Bradley Eyster: Got it. Appreciate the color. Thank you. I'll pass it along.

Speaker Change: Again, if you'd like to ask a question. Please press star one on your telephone keypad. Your next question comes from the line of Louie Dipalma from William Blair. Your line is open.

Louis de Palma: Again, if you would like to ask a question, please press star 1 in your telephone keypad. Your next question comes from a line of Louis de Palma from William Blair. Your line is open. Tony, Mike, Jonathan, and Steve, good afternoon. Hey, Louie. Hey, last week the U.S. Navy announced progress with its conventional prompt strike hypersonic missile.

David Brown: Again, if you would like to ask a question, please press star one on your telephone keypad. Your next question comes from the line of Louie DiPalma from William Blair. Your line is open.

Speaker Change: Tony and Mike Johnson, and Steve Good afternoon.

Louie DiPalma: Tony, Mike, Jonathan, and Steve, good afternoon.

Tony Koblinski: Hey, Louie.

Lloyd: Hey, Lloyd.

Lloyd: Hey last week, the U S Navy announced progress with its conventional prompt strike hypersonic missiles and in general Tony can you discuss your exposure to hypersonic and I. Thank you and X power systems previously announced the partnership.

Louie DiPalma: Hey. Last week, the US Navy announced progress with its Conventional Prompt Strike hypersonic missile. In general, Tony, can you discuss your exposure to hypersonics? I think you and Aerojet Rocketdyne previously announced a partnership with the Navy for this particular Conventional Prompt Strike, but you also have a partnership with them for the Army. Can you just discuss broadly your hypersonics exposure? Thanks.

Tony Kablinsky: In general, Tony, can you discuss your exposure to hypersonics? And I think you and X-Bow Systems previously announced a partnership with the Navy for this particular conventional prop strike, but you also have a partnership with them for the Army. So, can you just discuss broadly your hypersonics exposure? Thanks.

With the Navy for this particular conventional prompt strike, but you also have a.

Lloyd: Our partnership with them for the Army. So can you just discuss broadly.

Lloyd: Your hypersonic exposure thanks.

Lloyd: Yeah again, we were hesitant to talk specifics.

Tony Kablinsky: Yeah, again, we were hesitant to talk specific programs without the without the authority from our customers. As we've said, we're on virtually all current hypersonic development programs at this point. We have partnerships with all of the propulsion houses, both the traditional, as you think of them, and the emerging players in that space. And we continue to be well-embedded in all of the ongoing development programs, I would say, including CPS. Yeah, across our product categories, too. When we look at hypersonics, all of our product categories have application there as well.

Tony Koblinski: Yeah. Again, we're hesitant to talk specific programs without the authority from our customers. As we've said, we're on virtually all current hypersonic development programs at this point. We have partnerships with all of the propulsion houses, both the traditional, as you think of them, and the emerging players in that space. We continue to be well embedded in all of the ongoing development programs, I would say, including CPS.

Lloyd: Grams without the.

Lloyd: Without the authority from our customers as we've said we're on virtually all.

Lloyd: Hypersonic development programs at this point, we have partnerships with all of the propulsion houses both traditional as you think about the emerging players in that space and and.

Lloyd: And we continue to be well embedded in all of the ongoing development programs I would say, including CBS across our product categories too.

Jonathan Beaudoin: Yeah, across our product categories, too. When we look at hypersonics, all of our product categories have application there as well.

Lloyd: When we look at hypersonic, yeah, all of our product categories have application there as well.

Lloyd: It's probably as far as we can go up again.

Tony Kablinsky: probably as far as we can go. Yeah, no, that's, that's helpful. Um, and.

Tony Koblinski: Probably as far as we can go.

Louie DiPalma: Yeah. No, that's helpful. Following up on the strong bookings, you discussed the 95% visibility, which is definitely a positive. You also referenced the multi-year plan from the Army to potentially double GMLRS production. I was wondering, do your large customers, do they give you multi-year roadmaps, and do those multi-year roadmaps and budget trends, do they give you longer term visibility beyond the 12-month contracts that give you confidence in your long-term growth outlook?

Yeah, No that's that's helpful and.

Tony Kablinsky: Following up on the strong bookings, you discussed the 95% visibility, which is definitely a positive, but you also referenced the multi-year plan from the Army to potentially double GMLRS production. And so I was wondering, do your large customers, do they give you multi-year roadmaps? And do those multi-year roadmaps and budget trends, do they give you like longer term visibility beyond the 12 month contracts that, you know, give you confidence in your long term growth outlook. When they can, they do. And so quite regularly, as we meet with our customers, the discussion is what is the three to five year outlook so that we can plan capacity appropriately for them.

Lloyd: Following up on the strong bookings you discussed the 95% visibility.

Lloyd: <unk>.

Lloyd: Definitely a positive.

Speaker Change: You also referenced the multi year plan from the army to potentially double G. MLR as production and so I was wondering do your large customers did they give you multi year roadmaps and did those multi year roadmaps and budget trends do they.

Lloyd: Have you.

Lloyd: Like longer term visibility beyond the 12 month contracts that give you confidence in your long term growth outlook.

Lloyd: When they can they do and so quite regularly as we meet with our customers. The discussion is what is the three to five year outlook. So that we can plan capacity.

Tony Koblinski: When they can, they do. Quite regularly, as we meet with our customers, the discussion is what is the 3-to-5-year outlook so that we can plan capacity appropriately for them. Not contractual in nature many times. Sometimes yes, in terms of co-investment in that capacity need. Quite generally, we have good discussions with our customers around the 3 to 5-year time horizon.

Appropriately for them and so.

Tony Kablinsky: And so, you know, not contractual in nature many times. Sometimes, yes, in terms of co-investment in that capacity need. But quite generally, we have good discussions with our customers around the three to five year time horizon. Great, because, yeah, it would seem that, you know, if there were this unfunded backlog that, you know, you would have that visibility, given how, you know, you are embedded for some of these programs that you referenced, then it would be very difficult to swap you out. Without question, that's a true statement.

Lloyd: Not contractual in nature many times.

Lloyd: Sometimes yes in terms of co investment in that capacity need.

Lloyd: But quite generally we have good discussions with our customers around the three to five year time horizon.

Lloyd: Great because yes, it would seem that if there were unfunded backlog that you would have that visit.

Louie DiPalma: Great. Yeah, it would seem that, if there were this unfunded backlog that you would have that visibility given how you are embedded for some of these programs that you referenced, then it would be very difficult to swap you out.

Lloyd: Visibility given how you are embedded for some of these programs that you referenced then it would be very difficult to swap you out.

Lloyd: Without question that is.

Tony Koblinski: Without question. That's a true statement.

Lloyd: That's a true statement.

Lloyd: Yeah.

Louis de Palma: Great. That's it for me. Thanks, everyone.

Louie DiPalma: Great. That's it for me. Thanks, everyone.

Lloyd: Great.

Lloyd: It for me thanks, everyone.

Lloyd: Thanks Blake.

Tony Koblinski: Thanks, Louie.

Lloyd: And that concludes our question and answer session I will now turn the call back over to Steven Gitlin for closing remarks.

Stephen Gitlin: And that concludes our question and answer session.

David Brown: That concludes our question and answer session. I will now turn the call back over to Steven Gitlin for closing remarks.

Stephen Gitlin: I will now turn the call back over to Stephen Gitlin for closing remarks. Thank you, Rob, and thank you all for your attention today and for your interest in Karman.

Thank you Rob and thank you all for your attention today and for your interest in carbon and archived version of today's call all SEC filings and relevant company and industry news can be found on our website at Clermont Dash SD Dot com, we wish you a good day and we look forward to speaking with you again following next quarter's results.

Steven Gitlin: Thank you, Rob, and thank you all for your attention today and for your interest in Karman. An archived version of today's call, all SEC filings, and relevant company and industry news can be found on our website at karman-sd.com. We wish you a good day, and we look forward to speaking with you again following next quarter's results.

Stephen Gitlin: An archived version of today's call all SEC filings and relevant company and industry news can be found on our website at karman-sd.com.

Stephen Gitlin: We wish you a good day and we look forward to speaking with you again following next quarter's results.

Lloyd: This concludes today's conference call. Thank you for your participation you may now disconnect.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

David Brown: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Lloyd: [music].