You should read the following discussion in conjunction with our unaudited interim condensed consolidated financial statements, including the related notes thereto, contained within this Item 1 of this Quarterly Report. In addition to historical information, this discussion contains forward-looking statements that involve risks and uncertainties. You should read the sections of this Quarterly Report on Form 10-Q titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. For purposes of this section, references to the “Company,” “Karman,” “we,” “us,” and “our” refer to TCFIII Spaceco Holdings and its other subsidiaries prior to the Corporate Conversion and to Karman Holdings Inc. or Karman Holdco and its consolidated subsidiaries for all periods following the Corporate Conversion.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include all statements that are not historical facts including those that reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements are included throughout this Quarterly Report on Form 10-Q and relate to matters such as our industry, business strategy, goals, and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources, and other financial and operating information. We have used the words “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable,” the negative version of these words or similar terms and phrases to identify forward-looking statements in this Quarterly Report on Form 10-Q.
The forward-looking statements are based on management’s current expectations and are not guarantees of future performance. Our expectations and beliefs are expressed in management’s good faith, and we believe there is a reasonable basis for them, however, the forward-looking statements are subject to various known and unknown risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify. Actual results may differ materially from these expectations due to changes in global, regional, or local economic, business, competitive, market, regulatory, and other factors, many of which are beyond our control. We believe that these factors include but are not limited to the following:
•we rely heavily on certain customers for a significant portion of our sales;
•a significant deferment of orders by customers could have a material adverse effect on our business, results of operations, prospects, and financial condition;
•the loss of our U.S. General Services Administration contracts or government-wide acquisition contracts could impair our ability to attract new business;
•if we are unable to manage the increasing technological complexity of our business, or achieve or manage our expected growth, our business could be adversely affected;
•we have in the past consummated acquisitions and intend to continue to pursue acquisitions, and our business may be adversely affected if we cannot consummate acquisitions on satisfactory terms, or if we cannot effectively integrate acquired operations;
•we depend on our executive officers, senior management team and highly trained employees and any work stoppage, difficulty hiring similar employees, or ineffective succession planning could adversely affect our business;
•if critical components or raw materials used to manufacture our products or used in our development programs become scarce or unavailable, then we may incur delays in manufacturing and delivery of our products and in completing our development programs, which could damage our business;
•our operations depend on our manufacturing facilities, which are subject to physical and other risks that could disrupt production;
•our leases may be terminated or we may be unable to renew our leases on acceptable terms and if we wish to relocate, we may incur additional costs if we terminate a lease;
•technology failures or cybersecurity breaches or other unauthorized access to or use of our information technology systems or sensitive or proprietary information could have a material adverse effect on the Company’s business and operations;
•U.S. military spending is dependent upon the U.S. defense budget;
•U.S. government contracts are subject to a competitive bidding process that can consume significant resources without generating any revenue;
•we could incur substantial costs as a result of violations of or liabilities under environmental laws and regulations;
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•we may be subject to periodic litigation and regulatory proceedings, which may materially adversely affect our business, results of operations, prospects and financial condition;
•our failure to comply with applicable economic and trade sanctions could materially adversely affect our reputation and results of operations;
•our business and operations expose us to numerous legal and regulatory requirements, and any violation of these requirements could materially adversely affect our business, results of operations, prospects and financial condition;
•our inability to adequately enforce and protect our intellectual property or defend against assertions of infringement could prevent or restrict our ability to compete;
•our indebtedness, which is subject to variable interest rates, could adversely affect our financial health and could harm our ability to react to changes to our business;
•servicing our indebtedness requires a significant amount of cash. Our ability to generate cash depends on many factors, and any failure to meet our debt service obligations could materially adversely affect our business, results of operations, prospects and financial condition;
•the increased expenses associated with being a public company;
•our stock price may be volatile, and an investment in our common stock could suffer a decline in value;
•the impact of escalating tariff and non-tariff trade measures imposed by the U.S. and other countries, any U.S. federal government shutdown, the COVID-19 pandemic, or a similar public health threat, or the ongoing conflicts and the potential for new or unforeseen conflicts, on global capital and financial markets, political events, general economic conditions in the United States, and our business and operations;
•our ability to remediate the identified material weaknesses in our internal control over financial reporting; and
•the other risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, as amended, supplemented or superseded in our other reports filed with the Security and Exchange Commission (“SEC”), including under “Risk Factors” in Item 1A of our subsequent Quarterly Reports on Form 10-Q.
Our Company
We specialize in the rapid design, development and production of mission-critical, next-generation systems solutions that align with the U.S. Department of War’s core mission priorities and the nation’s accelerating demand for access to space. We deliver payload protection, propulsion and launch, and hydro/aerodynamic interstage systems to more than 150 prime contractors and programs. We estimate that no single program accounted for more than 11% of sales in the three and six months ended June 30, 2026 or in the three and six months ended June 30, 2025.
Recent Developments
On July 20, 2026, we entered into a definitive agreement to acquire Walker Precision Engineering (“Walker”), a Glasgow, Scotland-based manufacturer of precision engineered components and integrated manufacturing solutions supporting missile seekers, guidance systems and control systems, for aggregate consideration of approximately $94.0 million, subject to customary purchase price adjustments. The acquisition is intended to expand our manufacturing footprint into Europe and enhance our capabilities supporting European and allied defense programs through Walker’s complementary engineering and manufacturing capabilities. The transaction is expected to close during the third quarter of 2026, subject to the satisfaction of customary closing conditions, including required regulatory approvals.
On August 3, 2026, we entered into a Fifth Amendment to our Credit Agreement with Citibank, which reduced (i) the applicable interest rate on our term loan by 50 basis points from SOFR plus 2.75% to SOFR plus 2.25% and (ii) the interest rate applicable to our revolving credit facility by 50 basis points for each level of our leverage-based pricing grid, the highest of such levels being set at SOFR plus 2.00%. No other material terms of the Credit Agreement were amended.
Components of Operations
Revenue
We generate our revenue primarily from the design, development and deployment of systems and subsystems (Propulsion Systems, Aerodynamic Interstage Systems, and Payload Protection and Deployment Systems) across four end markets (Hypersonic and Strategic Missile Defense, Missile and Integrated Defense Systems, Space and Launch and Maritime Defense Systems). We do not believe our revenue is subject to significant seasonal variations.
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Cost of Goods Sold
Cost of goods sold consists of direct costs and allocated indirect costs. Direct costs include labor, materials, subcontracts and other costs directly related to the execution of a specific contract. Indirect costs include overhead expenses, fringe benefits and depreciation.
General and Administrative Expenses
Our general and administrative (“G&A”) expenses include salaries, fringe benefits (such as health insurance, retirement plans, vacation and sick days), and other expenses related to selling, marketing and proposal activities, certain administrative costs, operational overhead expenses, share-based compensation expenses and amortization of acquired intangible assets. Some G&A expenses relate to marketing and business development activities that support both ongoing business areas as well as new and emerging market areas. These activities can be directly associated with developing requirements for applications of capabilities created in our business development activities as well as managing human capital. G&A expenses are an important financial metric that we analyze to help us evaluate the contribution of our selling, marketing and proposal activities to revenue generation.
Results of Operations
Comparison of the Three and Six Months Ended June 30, 2026 and 2025
The following table sets forth, for the periods presented, certain operating data of the Company, including presentation of the changes in amounts between reporting periods:
Three Months Ended June 30, Change
2026 2025 Dollar Percent
(in thousands, except percent)
Revenue $ 182,063 $ 115,097 $ 66,966 58.2 %
Cost of goods sold 103,829 68,076 35,753 52.5 %
Gross profit 78,234 47,021 31,213 66.4 %
General and administrative expenses 31,339 19,430 11,909 61.3 %
Depreciation and amortization expense 12,066 7,487 4,579 61.2 %
Total operating expenses 43,405 26,917 16,488 61.3 %
Net operating income 34,829 20,104 14,725 73.2 %
Interest expense, net (15,284 ) (11,893 ) (3,391 ) 28.5 %
Other income (expense) (280 ) 380 (660 ) (173.7 %)
Provision for income taxes (5,233 ) (1,784 ) (3,449 ) 193.3 %
Net income 14,032 6,807 7,225 106.1 %
Net income margin 7.7 % 5.9 %
Operating margin 19.1 % 17.5 % 1.7 %
Gross profit margin 43.0 % 40.9 % 2.1 %
Six Months Ended June 30, Change
2026 2025 Dollar Percent
(in thousands, except percent)
Revenue $ 333,273 $ 215,221 $ 118,052 54.9 %
Cost of goods sold 191,174 128,749 62,425 48.5 %
Gross profit 142,099 86,472 55,627 64.3 %
General and administrative expenses 59,976 42,718 17,258 40.4 %
Depreciation and amortization expense 25,842 13,687 12,155 88.8 %
Total operating expenses 85,818 56,405 29,413 52.1 %
Net operating income 56,281 30,067 26,214 87.2 %
Interest expense, net (27,930 ) (23,266 ) (4,664 ) 20.0 %
Other income (expense) (454 ) 300 (754 ) (251.3 %)
Provision for income taxes (6,071 ) (5,092 ) (979 ) 19.2 %
Net income 21,826 2,009 19,817 986.4 %
Net income margin 6.5 % 0.9 %
Operating margin 16.9 % 14.0 % 2.9 %
Gross profit margin 42.6 % 40.2 % 2.4 %
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Revenue
Revenue for the three months ended June 30, 2026 increased $67.0 million, or 58.2%, to $182.1 million, as compared to $115.1 million for the three months ended June 30, 2025. Revenue for the six months ended June 30, 2026 increased $118.1 million, or 54.9%, to $333.3 million, as compared to$215.2 million for the six months ended June 30, 2025.
The increase in revenue for the three and six months ended June 30, 2026 as compared to the same period in the prior year, was primarily attributable to growth across all end-markets as additional detail below. The results of operations include the following disaggregation of revenue by end market:
Three Months Ended June 30, Change
2026 2025 Dollar Percent
(in thousands, except percent)
Hypersonics and Strategic Missile Defense $ 43,417 $ 34,960 $ 8,457 24.2 %
Space and Launch 42,072 39,597 2,475 6.3 %
Tactical Missiles and Integrated Defense Systems 63,012 40,540 22,472 55.4 %
Maritime Defense Systems1 33,562 — 33,562 *
Total Revenue $ 182,063 $ 115,097 $ 66,966 58.2 %
Six Months Ended June 30, Change
2026 2025 Dollar Percent
(in thousands, except percent)
Hypersonics and Strategic Missile Defense $ 79,105 $ 65,016 $ 14,089 21.7 %
Space and Launch 85,926 73,468 12,458 17.0 %
Tactical Missiles and Integrated Defense Systems 108,272 76,737 31,535 41.1 %
Maritime Defense Systems1 59,970 — 59,970 *
Total Revenue $ 333,273 $ 215,221 $ 118,052 54.9 %
1. Revenue in Maritime Defense Systems for the three and six months ended June 30, 2025 was previously included within other end markets.
* Not a meaningful figure.
Growth in Hypersonics and Strategic Missile Defense revenue for the three and six months ended June 30, 2026 from the comparable period in the prior year, was primarily driven by growth in key interceptor program production and increased production associated with a new surface-to-surface missile system.
Growth in Space and Launch revenue for the three and six months ended June 30, 2026 from the comparable periods in the prior year, was primarily driven by content supporting both legacy and emerging launch providers, partially offset by customer order timing associated with shifting launch schedules.
Growth in Tactical Missiles and Integrated Defense Systems for the three and six months ended June 30, 2026 from the comparable period in the prior year, was primarily driven by strength in core production programs, including unmanned aircraft systems and counter-UAS, and emerging programs transitioning to production.
Growth in Maritime Defense Systems for the three and six months ended June 30, 2026 from the comparable period in the prior year was primarily driven by legacy and next generation submarine programs..
Cost of Goods Sold and Gross Profit
Cost of goods sold increased by $35.8 million or 52.5%, and $62.4 million, or 48.5%, for the three and six months ended June 30, 2026 and 2025, from the comparable period in the prior year. The increase was primarily driven by increased spending on materials and labor to support production growth.
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Three Months Ended June 30, Change
2026 2025 Dollar Percent
(in thousands, except percent)
Labor $ 40,889 $ 28,463 $ 12,426 43.7 %
Materials 52,269 31,741 20,528 64.7 %
Overhead 7,561 5,052 2,509 49.7 %
Depreciation 3,110 2,820 290 10.3 %
Total cost of goods sold $ 103,829 $ 68,076 $ 35,753 52.5 %
Six Months Ended June 30, Change
2026 2025 Dollar Percent
(in thousands, except percent)
Labor $ 80,322 $ 56,140 $ 24,182 43.1 %
Materials 91,727 57,977 33,750 58.2 %
Overhead 13,159 9,143 4,016 43.9 %
Depreciation 5,966 5,489 477 8.7 %
Total cost of goods sold $ 191,174 $ 128,749 $ 62,425 48.5 %
Gross margin increased by 2.1% and 2.4% for the three and six months ended June 30, 2026 and 2025 from the comparative period of the prior year. The increase was primarily driven by operating leverage and improved operating efficiency.
Operating Expenses
General and Administrative Expenses
General and administrative expenses increased by $11.9 million, or 61.3% for the three months ended June 30, 2026 from the comparable period of the prior year, was primarily driven by higher employee compensation of approximately $7.5 million due to acquisitions and workforce expansion, as well as higher operating costs incurred to support continued growth of our business.
General and administrative expenses increased by $17.3 million, or 40.4%, for the six months ended June 30, 2026 from the comparative period of the prior year. The increase was primarily driven by an increase in payroll of approximately $12.0 million and increased professional fees primarily related to transaction expenses and integration efforts. The increase was partially offset by the decrease of approximately $6.6 million in share-based compensation expenses resulting from P units and Phantom Units that fully vested in connection with the completion of the Company’s IPO in February 2025.
Depreciation and Amortization
Depreciation and amortization expense increased by $4.6 million, or 61.2%, and $12.2 million, or 88.8%, for the three and six months ended June 30, 2026, respectively, as compared to the corresponding periods of the prior year. The increase was primarily due to amortization of intangible assets acquired in the Seemann Acquisition, completed in the first quarter of 2026, and incremental depreciation and amortization on intangible assets and fixed assets acquired in the second quarter of 2025, which resulted in a full quarter and two full quarters of additional expenses in the three months and six months ended June 30, 2026, respectively.
Interest Expense, net
Interest expense, net increased by $3.4 million, or 28.5%, and $4.7 million, or 20.0%, for the three and six months ended June 30, 2026 from the comparative period of the prior year, which was primarily driven by higher principal balance, partially offset by lower interest rate. For additional information related to debt, see Note 7, Debt, in the Notes to the conndensed consolidated financial statements.
Other (Income) Expense
Other (income) expense for each of the three and six months ended June 30, 2026 and 2025 was immaterial.
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Provision for Income Taxes
The provision for income taxes was $5.2 million and $1.8 million for the three months ended June 30, 2026 and 2025, respectively. The effective tax rate was 27.2% and 20.8% for the three months ended June 30, 2026 and 2025, respectively. The increase in effective tax rate was attributed to non-deductible executive compensation under Section 162(m) of the Internal Revenue Code, while the prior-year effective rate benefited from a change in the blended state tax rate related to the MTI and ISP acquisitions, which resulted in a remeasurement of deferred taxes.
The provision for income taxes was $6.1 million and $5.1 million for the six months ended June 30, 2026 and 2025, respectively. The effective tax rate was 21.8% and 71.7% for the six months ended June 30, 2026 and 2025, respectively. The higher effective tax rate in the prior-year period was attributable to discrete items, including the change in entity classification, non-deductible executive compensation, and interest and penalties related to prior year tax returns and uncertain tax positions.
Key Financial and Non-GAAP Operating Measures
We measure our business using both key financial and operating data including key performance indicators (“KPIs”) and non-GAAP financial measures and use the following metrics to manage our business, monitor results of operations and ensure proper allocation of capital: (i) Revenue, (ii) Backlog, (iii) EBITDA, (iv) Adjusted EBITDA and (v) Adjusted EBITDA Margin. We believe that these financial performance metrics represent the primary drivers of value enhancement, balancing both short and long-term indicators of increased shareholder value. These are the metrics we use to measure our results and evaluate our business and related contract performance.
Financial and Operating Data
Three Months Ended June 30, Six Months Ended June 30,
(unaudited, in thousands, except percent) 2026 2025 2026 2025
Revenue $ 182,063 $ 115,097 $ 333,273 $ 215,221
Backlog1 $ 1,322,124 $ 719,300 $ 1,322,124 $ 719,300
Net income $ 14,032 $ 6,807 $ 21,826 $ 2,009
EBITDA2 $ 49,725 $ 30,791 $ 87,635 $ 49,543
Adjusted EBITDA2 $ 54,580 $ 35,281 $ 99,366 $ 65,600
Net income margin 7.7 % 5.9 % 6.5 % 0.9 %
Adjusted EBITDA Margin2 30.0 % 30.7 % 29.8 % 30.5 %
1.Backlog - Represents the total value or current estimated value of existing contracts, less amounts previously invoiced. Contract types include but are not limited to purchase orders, long term agreements and contractual authorization to proceed. (Backlog was previously referred to as funded backlog. No changes were made to the historical dollar amounts presented in the table above.)
2.Note on non-GAAP financial measures: Throughout the discussion of our results of operations we use non-GAAP financial measures including EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, as measures of our overall performance. Definitions and reconciliations of these measures to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP are included below.
Non-GAAP Financial Measures
We believe the non-GAAP financial measures will help investors understand our financial condition and operating results and assess our future prospects. We believe these non-GAAP financial measures, each of which is discussed in greater detail below, are important supplemental measures because they exclude unusual or non-recurring items as well as non-cash items that are unrelated to or may not be indicative of our ongoing operating results. Further, when read in conjunction with our U.S. GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as a tool to help make financial, operational and planning decisions. We may use non-GAAP financial metrics in certain Management compensation plans, debt covenants, internal budgetary decision making, and other resource allocation decisions. These measures are often used by analysts and other interested parties to evaluate companies in our industry by providing more comparable measures that are less affected by factors such as capital structure.
We recognize that these non-GAAP financial measures have limitations, including that they may be calculated differently by other companies or may be used under different circumstances or for different purposes, thereby affecting their comparability from
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company to company. In order to compensate for these and the other limitations discussed below, management does not, and readers should not, consider these measures in isolation from or as alternatives to the comparable financial measures determined in accordance with U.S. GAAP. Readers should review the reconciliations below and should not rely on any single financial measure to evaluate our business.
We define these non-GAAP financial measures as follows:
EBITDA refers to net income before income taxes, depreciation and amortization and interest expense.
Adjusted EBITDA refers to EBITDA plus, as applicable for each period, adjustments for certain items management believes are not indicative of ongoing operations. Adjusted EBITDA excludes non-cash share-based compensation expenses. Additionally, Adjusted EBITDA excludes certain nonrecurring costs that management excludes in contemplation of budget decisions and are not costs of operating the business, such as entity wide re-branding initiatives or acquisition integration costs, and lender and administrative agent fees associated with discrete amendments. Lastly, Adjusted EBITDA excludes other non-recurring costs including gains or losses from disposition of assets, non-cash impairment losses, non-recurring transaction expenses and other charges or gains that the Company believes are not part of the ongoing operations of its business. The resulting expense or benefit from these other non-recurring costs is inconsistent in amount and frequency.
Adjusted EBITDA Margin - Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by revenue. Adjusted EBITDA and Adjusted EBITDA Margin are not measures calculated in accordance with U.S. GAAP, and they should not be considered an alternative to any financial measures that were calculated under U.S. GAAP.
Adjusted EBITDA and Adjusted EBITDA Margin are used to facilitate a comparison of the ordinary, ongoing and customary course of our operations on a consistent basis from period to period and provide an additional understanding of factors and trends affecting our business. Adjusted EBITDA and Adjusted EBITDA Margin are driven by changes in volume, performance, contract mix and general and administrative expenses and investment levels. Performance, as used in this definition, refers to changes in profitability and is primarily based on adjustments to estimates at completion on individual contracts. These adjustments result from increases or decreases to the estimated value of the contract, the estimated costs to complete the contract, or both. These measures therefore assist management and our board and may be useful to investors in comparing our operating performance consistently over time as they remove the impact of our capital structure, asset base and items outside the control of the management team and expenses that do not relate to our core operations. Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similarly titled non-GAAP measures used by other companies as other companies may have calculated the measures differently.
Adjusted EPS represents GAAP net income per fully diluted share, excluding transaction related expenses, integration expenses and non-recurring costs, lender and administrative agent fees and share-based compensation as they are not representative of our operating performance.
The reconciliation of GAAP to non-GAAP financial measures is provided below.
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Reconciliation of GAAP to Non-GAAP Financial Measures:
Three Months Ended June 30, Six Months Ended June 30,
(unaudited, in thousands, except percent) 2026 2025 2026 2025
Net income $ 14,032 $ 6,807 $ 21,826 $ 2,009
Income tax provision 5,233 1,784 6,071 5,092
Depreciation and amortization1 15,176 10,307 31,808 19,176
Interest expense, net 15,284 11,893 27,930 23,266
EBITDA 49,725 30,791 87,635 49,543
Transaction related expenses2 1,392 3,904 3,655 5,866
Integration expenses and non-recurring restructuring costs3 1,940 380 3,350 641
Lender and administrative agent fees4 45 206 780 1,466
Share-based Compensation5 1,444 — 1,444 8,084
Other non-recurring costs6 34 — 2,502 —
Adjusted EBITDA $ 54,580 $ 35,281 $ 99,366 $ 65,600
Revenue $ 182,063 $ 115,097 $ 333,273 $ 215,221
Net income margin 7.7 % 5.9 % 6.5 % 0.9 %
Adjusted EBITDA Margin 30.0 % 30.7 % 29.8 % 30.5 %
Three Months Ended June 30, Six Months Ended June 30,
(unaudited) 2026 2025 2026 2025
GAAP net income per share $ 0.11 $ 0.05 $ 0.16 $ 0.02
Transaction-related expenses2 0.01 0.03 0.03 0.04
Integration expenses and non-recurring restructuring costs3 0.01 — 0.03 —
Lender and administrative agent fees4 0.00 — 0.01 0.01
Share-based compensation5 0.01 — 0.01 0.06
Other non-recurring costs6 0.00 0.02 0.02 0.02
Adjusted EPS7 $ 0.14 $ 0.10 $ 0.25 $ 0.16
1.Includes depreciation of property, plant and equipment, amortization of intangible assets and right-of-use assets. Depreciation expense includes allocated depreciation from cost of goods sold of $3.1 million and $2.8 million for the three months ended June 30, 2026 and 2025, respectively, and $6.0 million and $5.5 million for the six months ended June 30, 2026 and 2025, respectively.
2.Represents legal and due diligence fees incurred in connection with planned and completed acquisitions, which are required to be expensed as incurred. For the three and six months ended June 30, 2026, these expenses are primarily related to the Seemann acquisition. For the three and six months ended June 30, 2025, these expenses are primarily related to the MTI and ISP acquisitions. Additionally, the Company incurred certain professional service fees related to its IPO that did not meet the requirements to be deferred issuance costs. These costs are considered non-recurring and outside the ordinary course of business, and therefore are not indicative of ongoing operating performance, which was reflected in the six months ended June 30, 2025.
3.Includes company-wide system implementation expenses company re-branding costs and compliance efforts. This category also includes post-acquisition integration costs, and employee expenses related to acquisitions or restructuring activities.
4.Reflects non-recurring lender fees associated with discrete amendments to the Company’s credit agreement, separate from ongoing administrative fees.
5.Reflects share-based compensation expenses. For the three and six months ended June 30, 2026, these expenses related to the Company’s RSUs and PSUs. For the six months ended June 30, 2025, these expenses related to the Company’s P Units and Phantom Units. These Units were fully vested in connection with the completion of the Company’s IPO in February 2025.
6.Represents items management believes are not indicative of ongoing operating performance, including estimated legal settlements and related professional fees, as well as professional fees associated with other non-recurring events. Other non-recurring costs for the three and six months ended June 30, 2025 represent the write-off of unamortized debt issuance costs associated with our previous refinanced term loan.
7.Total may not sum due to rounding.
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Although we use EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted EPS as measures to assess the performance of our business and for the other purposes set forth above, the use of non-GAAP financial measures as analytical tools has limitations, and you should not consider any of them in isolation, or as a substitute for analysis of our results of operations as reported in accordance with U.S. GAAP. Some of these limitations are:
•EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin do not reflect the significant interest expense, or the cash requirements, necessary to service interest payments on our indebtedness;
•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and the cash requirements for such replacements are not reflected in EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin;
•EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted EPS exclude the cash expense we have incurred to integrate acquired businesses into our operations, which is a necessary element of certain of our acquisitions;
•the omission of the substantial amortization expense associated with our intangible assets further limits the usefulness of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin; and
•EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin do not include the payment of taxes, which is a necessary element of our operations.
Because of these limitations, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS should not be considered as measures of cash available to us to invest in the growth of our business. Management compensates for these limitations by not viewing EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS in isolation and specifically by using other U.S. GAAP measures, such as net sales and operating profit, to measure our operating performance. EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted EPS are not measurements of financial performance under U.S. GAAP, and they should not be considered as alternatives to net income/(loss) or cash flow from operations determined in accordance with U.S. GAAP. Our calculations of EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS may not be comparable to the calculations of similarly titled measures reported by other companies.
Critical Accounting Estimates
We describe our significant accounting policies in Note 1, Summary of Significant Accounting Policies, in the notes to the consolidated financial statements presented in the Annual Report on Form 10-K for the year ended December 31, 2025. We discuss our critical accounting estimates in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in the Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes in our significant accounting policies or critical accounting estimates since the end of fiscal 2025.
Liquidity and Capital Resources
Our principal historical liquidity requirements have been for organic growth, acquisitions, capital expenditures, servicing indebtedness, including finance lease liability payments, and working capital needs. We do not expect there to be substantial changes in our future capital requirements. We anticipate that over the next 12 months, we will meet our liquidity needs, including debt servicing, through cash generated from operations, available cash balances, and, if necessary, sales of accounts receivable and borrowings from our revolving credit facility. We fund our investing activities primarily from cash provided by our operating and financing activities.
We believe that our cash and cash equivalents as of June 30, 2026, together with available borrowings under the Citibank Credit Agreement and expected net cash provided by operating activities will be sufficient to fund our cash requirements for at least the next twelve months. As we continue to grow our business, including by any acquisitions we may make, we may in the future require additional working capital.
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Summary of Statement of Cash Flows
The following table summarizes the primary sources and uses of our cash flow:
For the six months ended June 30,
2026 2025
(in thousands)
Net cash provided by (used in):
Operating activities $ (2,975 ) $ (30,955 )
Investing activities (231,478 ) (140,948 )
Financing activities 252,235 187,811
Net increase in cash and cash equivalents $ 17,782 $ 15,908
Operating Activities
Net cash used in operating activities for the six months ended June 30, 2026 was $3.0 million , primarily consisting of net income of $21.8 million, non-cash item of $32.7 million and a net change in our operating assets and liabilities of $57.5 million. Change in our operating assets and liabilities was primarily driven by an increase in contract assets of $24.9 million, a decrease in contract liabilities of $0.3 million, which was mainly due to initial and subsequent measurement of contracts with customers, changes in business volume, and progress of existing contracts. Change in our operating assets and liabilities was also driven by an increase in accounts receivable of $25.5 million , partially offset by a decrease in accounts payable, accruals and income tax payable of $0.8 million, which was mainly driven by timing of other payments.
Net cash used in operating activities for the six months ended June 30, 2025 was $31.0 million, primarily consisting of net income of $2.0 million, non-cash items of $23.3 million and a net change in our operating assets and liabilities of $56.3 million. Change in our operating assets and liabilities was primarily driven by an increase in contract assets of $26.4 million, a decrease in contract liabilities of $10.1 million, which was mainly due to initial and subsequent measurement of contracts with customers, changes in business volume, and progress of existing contracts. Change in our operating assets and liabilities was also driven by a decrease in accounts payable, accruals and income tax payable of $18.9 million, which was mainly due to timing of payments.
Investing Activities
Net cash used in investing activities for the six months ended June 30, 2026 was $231.5 million, which was primarily driven by the Seemann Acquisition of $210.0 million and purchase of property and equipment.
Net cash used in investing activities for the six months ended June 30, 2025 was $140.9 million, as a result of MTI and ISP acquisitions of $126.3 million in total and investment in convertible note of $6.0 million.
Financing Activities
Net cash provided by financing activities for the six months ended June 30, 2026 was $252.2 million, which was primarily driven by proceeds from our term note of $260.1 million (net of payment of debt issuance costs), partially offset by repayment of our Citibank credit facilities of $3.9 million.
Net cash provided by financing activities for the six months ended June 30, 2025 was $187.8 million, which was primarily driven by net proceeds from our IPO of $153.8 million, proceeds from our new Citibank credit facilities of $398.5 million (net of debt issuance costs), partially offset by repayment of our old TCW credit facilities of $337.1 million.
Other Obligations and Commitments
See Note 7 through Note 9, of the Notes to the condensed consolidated financial statements for information regarding our other obligations and commitments.
Leases
See Note 8, Leases, of the Notes to the condensed consolidated financial statements for information pertaining to lease payments relating to our operating and finance lease obligations.
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Off-Balance Sheet Arrangements
As of June 30, 2026 and 2025, we did not have any off-balance sheet arrangements, as defined in Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows.
Recent Accounting Pronouncements
See Note 2, Summary of Accounting Policies and Recent Accounting Pronouncements, of the Notes to the condensed consolidated financial statements for additional information.
JOBS Act Election
We are currently an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.