Karman Holdings 2025 Q1 Earnings Mixed Results as Net Income Falls 326%

Karman Holdings (KRMN) reported its fiscal 2025 Q1 earnings on May 14th, 2025. The company reported mixed results, beating revenue expectations with a 20.6% increase to $100.1 million, but missing on net income expectations with a loss of $4.8 million. For the fiscal year 2025, guidance remains in line, with expected total revenue between $423 million and $433 million, and non-GAAP adjusted EBITDA between $132 million and $137 million. Despite the net loss, the company maintains confidence in reaching its revenue goals, supported by a strong funded backlog.

Revenue
Karman Holdings experienced a notable increase in revenue, achieving a total of $100.12 million in 2025 Q1, up from $83.01 million in the same quarter of the previous year. Revenue from the Hypersonic & Strategic Missile Defense segment reached $30.06 million. Meanwhile, the Space & Launch segment contributed $33.88 million, and the Tactical Missile & Integrated Defense Systems segment added $36.20 million. This growth reflects a solid performance across all segments.

Earnings/Net Income
Karman Holdings reported a loss of $0.04 per share in 2025 Q1 compared to a profit of $0.01 per share in 2024 Q1, marking a 500% negative change. The company recorded a net loss of $4.80 million in 2025 Q1, a steep decline from the net income of $2.12 million in 2024 Q1. The EPS performance indicates a challenging quarter for the company.

Price Action
The stock price of Karman Holdings has risen 4.43% during the latest trading day, increased 13.83% over the past week, and surged 39.77% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing KRMN stock after an earnings miss and holding for 30 days is not likely to yield long-term profits. Traditionally, stocks tend to experience negative price movements following earnings misses due to investor disappointment and reevaluation of growth prospects. Holding the stock for 30 days post-earnings miss subjects investors to market volatility, which may not allow enough time for price recovery. Strategies that seem effective in the short term often fail to provide consistent returns over the long haul, as fundamental improvements may not occur rapidly enough to support the initial price. Backtesting has shown that many strategies, including buying on earnings misses and holding for 30 days, fail to outperform the market. While short-term opportunities may exist, the strategy's long-term profitability is low, and investors should consider more robust approaches focusing on long-term perspectives and better risk management.

CEO Commentary
"Our strong momentum exiting 2024 continued into the first quarter of 2025 with record quarterly revenue, adjusted EBITDA, and funded backlog," said Tony Koblinski, Chief Executive Officer of Karman Space & Defense. "Our team delivered double-digit, year-over-year revenue growth in each of our three end markets, a 450 basis point increase in gross margin, and a 25 percent increase in adjusted EBITDA. Record first quarter revenue and growth in funded backlog improved our visibility to the midpoint of our 2025 revenue guidance range to 95 percent at the end of April, increasing our confidence in achieving our full-year revenue objective."

Guidance
For the full fiscal year 2025, the Company reaffirms its expectations for total revenue between $423 million and $433 million, and non-GAAP adjusted EBITDA between $132 million and $137 million. The Company does not provide a reconciliation of such forward-looking measures to the most directly comparable financial measures calculated in accordance with GAAP due to the complexity of projecting event-driven transactional and other non-core operating items.

Additional News
In recent weeks, Karman Holdings has made strategic moves to strengthen its market position. The company completed the acquisition of MTI, a key player in design and manufacturing, to enhance its capabilities and expand customer reach. This acquisition is expected to boost Karman's offerings and align with strategic growth initiatives. Additionally, the company successfully refinanced its debt, securing a $300 million Term Loan B and a $50 million revolving credit facility, which will reduce interest expenses and extend debt maturities. These financial maneuvers aim to solidify Karman's financial standing and support its long-term growth objectives in the competitive space and defense sectors.