{
  "@context": "https://frontierpicks.com/schemas/dossier.v1.json",
  "ticker": "KRMN",
  "name": "Karman Holdings Inc.",
  "url": "https://frontierpicks.com/dossiers/KRMN/",
  "json_url": "https://frontierpicks.com/dossiers/KRMN.json",
  "status": "WATCHLIST",
  "current_conviction": "MEDIUM",
  "archetype": {
    "code": "a2",
    "n": 2
  },
  "current_thesis": "Karman Space & Defense's 66% revenue growth and $1.7 billion backlog make its shares, 66% below their January high, more likely than not to beat the S&P 500. The fourth-quarter report and 2027 outlook, expected around March 2027, settle the case.",
  "invalidation_trigger": "A daily close below $38, which would give back more than half of the 2026-11-06 post-report gain and return the shares toward their October range. Fiscal 2026 revenue below the $755 million low end of guidance, or a 2027 outlook under 20% organic growth, would also break the case.",
  "catalyst_date": "2026-11-17",
  "portfolio": null,
  "pick": null,
  "themes": [
    "defense-aerospace"
  ],
  "tags": [],
  "sources": [],
  "caveats": [],
  "source_links": [
    {
      "title": "Karman Holdings Inc. - Form 8-K - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0002040127/000119312526449899/krmn-ex99_1.htm",
      "date": "2026-11-05"
    },
    {
      "title": "Why Did Karman Stock Jump?",
      "url": "https://www.trefis.com/stock/krmn/articles/623717/why-did-karman-stock-jump/2026-11-09",
      "date": "2026-11-09"
    },
    {
      "title": "Karman Space & Defense to Participate in Upcoming Investor Conferences",
      "url": "https://www.01net.it/karman-space-defense-to-participate-in-upcoming-investor-conferences-3/",
      "date": "2026-11-11"
    },
    {
      "title": "Karman Holdings Inc. - Form 8-K - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0002040127/000204012726000018/krmn-ex99_1.htm",
      "date": "2026-08-06"
    },
    {
      "title": "Karman (NYSE:KRMN) Stock Gets Price Target Reduction from Needham & Company LLC",
      "url": "https://www.defenseworld.net/2026/11/09/karman-nysekrmn-stock-gets-price-target-reduction-from-needham-company-llc.html",
      "date": "2026-11-09"
    },
    {
      "title": "Karman Space & Defense Secures $218 Million Agreement to Support THAAD Production",
      "url": "https://karman-sd.com/news/karman-space-defense-secures-218-million-agreement-to-support-thaad-production/",
      "date": null
    },
    {
      "title": "Karman Secondary Offering Prices at $61; Pipeline Reaches $3 Billion",
      "url": "https://www.panabee.com/news/karman-secondary-offering-prices-at-61-pipeline-reaches-3-billion",
      "date": "2026-05-28"
    },
    {
      "title": "Major Shareholder Trive Capital Exits Karman, Triggering Complex Lock-Up Structure",
      "url": "https://www.panabee.com/news/major-shareholder-trive-capital-exits-karman-triggering-complex-lock-up-structure",
      "date": "2025-07-21"
    }
  ],
  "evidence": [
    {
      "claim": "Third-quarter fiscal 2026 revenue was $201.6 million, up 65.6% year over year, with 25% organic growth.",
      "source": "Karman 8-K earnings release, Exhibit 99.1",
      "as_of": "2026-11-05"
    },
    {
      "claim": "Backlog reached a record $1.7 billion, up 108% from fiscal year-end 2025; third-quarter bookings were nearly $465 million.",
      "source": "Karman 8-K earnings release, Exhibit 99.1",
      "as_of": "2026-09-30"
    },
    {
      "claim": "Fiscal 2026 guidance raised to $755–760 million revenue and $225–227 million adjusted EBITDA, from $730–745 million and $215.0–222.5 million.",
      "source": "Karman 8-K earnings releases of 2026-08-06 and 2026-11-05",
      "as_of": "2026-11-05"
    },
    {
      "claim": "Long-term debt net of current portion was $851.5 million and cash was $68.2 million; third-quarter free cash flow was $13.4 million.",
      "source": "Karman 8-K earnings release, Exhibit 99.1",
      "as_of": "2026-09-30"
    },
    {
      "claim": "KRMN rose 42.1% on 2026-11-06 while the S&P 500 rose 0.3%, the day after third-quarter results.",
      "source": "Trefis, 'Why Did Karman Stock Jump?', 2026-11-09",
      "as_of": "2026-11-06"
    },
    {
      "claim": "Barclays kept an overweight rating and raised its target to $80; Piper Sandler raised to $60 and Needham cut to $50 on 2026-11-06.",
      "source": "Benzinga analyst rating items, 2026-11-06 and 2026-11-09",
      "as_of": "2026-11-09"
    },
    {
      "claim": "Directors David Stinnett (27,000 shares at $37.32), Mary Petryszyn (500 at $37.44) and Stephen Twitty (275 at $36.79) bought shares in the open market.",
      "source": "SEC Form 4 filings dated 2026-09-18",
      "as_of": "2026-09-16"
    },
    {
      "claim": "Selling stockholders sold 14 million shares at $61 in a secondary offering of about $854 million; the company received no proceeds.",
      "source": "Panabee report on the 2026-05-28 offering pricing",
      "as_of": "2026-05-28"
    }
  ],
  "view_changes": [],
  "frame": null,
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    "sector": "Industrials",
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        "operating_margin": {
          "status": "ok",
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        "pretax_income": {
          "status": "ok",
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        },
        "net_income": {
          "status": "ok",
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          "four_quarters_end": "2026-09-30",
          "value_musd": 20.9,
          "four_quarters_musd": 50.4
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        "operating_cash_flow": {
          "status": "ok",
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          "value_musd": 32.5
        },
        "capital_spending": {
          "status": "ok",
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          "value_musd": 39.9
        },
        "free_cash_flow": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-06",
          "first_end": "2025-12-31",
          "value_musd": -7.5
        },
        "diluted_share_change": {
          "status": "ok",
          "end": "2026-09-30",
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          "base_end": "2025-09-30",
          "pct": 0.2
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        "cash": {
          "status": "ok",
          "end": "2026-09-30",
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          "value_musd": 68.2
        },
        "debt": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-06",
          "value_musd": 858.8,
          "composition": "non-current long-term debt plus current maturities"
        },
        "net_cash": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-06",
          "value_musd": -790.6
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        "deferred_revenue": {
          "status": "ok",
          "end": "2026-09-30",
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          "value_musd": 42.5,
          "yoy_pct": 126.2
        },
        "backlog": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-06",
          "value_musd": 1500,
          "yoy_pct": 179.7
        },
        "receivables": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-06",
          "value_musd": 122.6
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        "inventory": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-06",
          "value_musd": 32.7
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        "equity": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-06",
          "value_musd": 441.8
        },
        "market_value": {
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          "close_date": "2026-11-13",
          "basis_end": "2026-11-02",
          "basis_filed": "2026-11-06",
          "value_musd": 5388.8
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        "enterprise_value": {
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          "close_date": "2026-11-13",
          "basis_end": "2026-11-02",
          "basis_filed": "2026-11-06",
          "value_musd": 6179.5
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        "ev_sales": {
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          "close_date": "2026-11-13",
          "basis_end": "2026-11-02",
          "basis_filed": "2026-11-06",
          "multiple": 9.2
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        "ev_ebit": {
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          "close_date": "2026-11-13",
          "basis_end": "2026-11-02",
          "basis_filed": "2026-11-06",
          "multiple": 56.6
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        "pe": {
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          "close_date": "2026-11-13",
          "basis_end": "2026-11-02",
          "basis_filed": "2026-11-06",
          "multiple": 106.8
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          "multiple": 12.2
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          "pct": -0.1
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      "status": "ok",
      "settlement": "2026-10-15",
      "published": "2026-10-26",
      "short_pct_of_outstanding": 11.39,
      "days_to_cover": 5.3,
      "change_pct": -5.1
    },
    "insiders": {
      "status": "ok",
      "as_of": "2026-11-15",
      "windows": [
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          "days": 90,
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          "bought_usd": 1036477.25,
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  "body_markdown": "## Current Thesis\n\nKarman Space & Defense is more likely than not to beat the S&P 500 over the next three months. Its missile-driven growth and record backlog are well ahead of what its share price reflects. Third-quarter fiscal 2026 revenue rose 65.6%, and backlog doubled to $1.7 billion. The fourth-quarter report and first 2027 outlook, expected around March 2027, settle the case. Revenue needs to land inside the raised $755 million to $760 million guidance, and the 2027 outlook needs to hold the 20% to 25% organic growth management cites.\n\nThe market is pricing in heavy doubt. The shares closed at $40.50 on 2026-11-12, 65.8% below the 52-week intraday high of $118.38 set on 2026-01-29. Over that period the company raised its fiscal 2026 revenue guidance twice, in August and on 2026-11-05.\n\nThe rating is Medium because the business evidence is strong but the price still carries real burdens: $851.5 million of long-term debt, thin cash conversion and former owners who have sold heavily. The 2026-11-12 close of $40.50 was the lowest since the report. It came on the day management hosted investor meetings at the Baird Global Industrial Conference in Chicago, and the company announced nothing that day. The fall changes no business fact, but it leaves less of the post-report gain intact. The next hard test of the business is about four months away, so until then the shares can move with the defense group and the broad market.\n\n## Bull Case\n- **Backlog doubled in nine months.** Backlog reached a record $1.7 billion at 2026-09-30, up 108% from fiscal year-end 2025, and third-quarter bookings were nearly $465 million (company 8-K, 2026-11-05). Backlog had been $1.3 billion at 2026-06-30 (8-K, 2026-08-06).\n- **Guidance raised for a second quarter.** On 2026-11-05 the company raised its fiscal 2026 revenue guidance to $755–760 million and its adjusted EBITDA guidance to $225–227 million. Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization, excluding one-off items. In August the ranges were $730–745 million and $215.0–222.5 million. Benzinga put consensus revenue at $742.2 million on the day of the raise.\n- **Missile programs drive the growth.** In the third quarter, Hypersonics and Strategic Missile Defense revenue rose 39.6% to $51.1 million. Tactical Missiles and Integrated Defense Systems revenue rose 51.9% to $67.6 million (8-K, 2026-11-05). The company also announced a seven-year, $218 million Lockheed Martin agreement to supply shrouds for THAAD (Terminal High Altitude Area Defense) production.\n- **Organic growth is strong without deals.** Organic growth was 25% in the third quarter (8-K, 2026-11-05). Benzinga reported adjusted earnings per share of $0.19 against a $0.15 estimate, and sales of $201.6 million against a $194.7 million estimate.\n- **Three directors bought in September.** SEC Form 4 filings show open-market purchases on 2026-09-16 by directors David Stinnett (27,000 shares at $37.32), Mary Petryszyn (500 shares at $37.44) and Stephen Twitty (275 shares at $36.79). The 2026-11-12 close of $40.50 is above all three prices.\n- **Post-report targets sit above the close.** Barclays kept an overweight rating and raised its target to $80 on 2026-11-09. Piper Sandler raised its target to $60 on 2026-11-06, according to Benzinga. Needham's target, cut on 2026-11-06, is $50.\n\n## Bear Case\n- **Debt rose with the Walker deal.** Long-term debt, net of the current portion, was $851.5 million at 2026-09-30, against $68.2 million of cash (8-K, 2026-11-05). The company paid $94.2 million net for Walker Precision during the quarter.\n- **Cash conversion is thin.** Third-quarter operating cash flow was $26.7 million and free cash flow was $13.4 million, against $20.9 million of net income (8-K, 2026-11-05). Trefis put trailing 12-month free cash flow to 2026-09-30 at negative $7.46 million.\n- **The space segment is shrinking.** Space and Launch revenue fell 6.9% year over year to $37.9 million in the third quarter (8-K, 2026-11-05). Trefis tied the decline to launch customer ULA shifting its Vulcan schedule.\n- **Margins slipped slightly.** The third-quarter adjusted EBITDA margin was 30.0%, against 31.0% a year earlier (8-K, 2026-11-05).\n- **Targets keep falling even on beats.** Needham cut its target to $50 on 2026-11-06, the session after a quarter that beat estimates and raised guidance. Needham had already cut from $125 to $80 on 2026-08-07, according to MarketBeat.\n- **Former owners have sold heavily.** Selling stockholders sold 14 million shares at $61 in a secondary offering of about $854 million priced on 2026-05-28, according to Panabee. The company received none of the proceeds. Lock-ups agreed in July 2025 let more former-owner shares become saleable in 2027.\n\n## Setup & Price Structure\nThe shares closed at $40.50 on 2026-11-12. The 3-month change is −34.7%, measured from the $62.01 close of 2026-08-14. The 52-week closing low is $30.14 on 2026-10-14, and the 52-week intraday high is $118.38 on 2026-01-29.\n\nThe results reset the price range. The shares closed at $32.09 on 2026-11-05, the day of the report, and at $45.61 on 2026-11-06. Trefis put that one-day gain at 42.1%, while the S&P 500 rose 0.3%. Closes then held between $43.91 and $45.90 through 2026-11-11, before the drop to $40.50 on 2026-11-12. That close still keeps most of the move up from $32.09.\n\nAs of 2026-11-12, from adjusted daily closes, the 50-day moving average is $36.01 and the 200-day moving average is $60.71. The shares trade above the first and far below the second. A slide back to the 50-day average would put them inside their pre-report range. Recovering the 200-day average would take the business evidence to keep improving.\n\nThe company has announced no new share sale since the May 2026 secondary. The most recent open-market insider purchases on SEC Form 4 are the three director buys of 2026-09-16. Since then the only insider filing is a 5,514-share award to Chief Growth Officer Doug Laurendeau dated 2026-08-20.\n\n## Catalyst Calendar\n\n- **2026-11-17:** Management hosts investor meetings at the RBC Global Industrials Conference in New York. This is the first company appearance since the 2026-11-12 decline. Any comment on fourth-quarter demand, cash flow or leverage would update the guidance picture before the year-end report.\n- **2026-11-18:** Management attends the Global Space and Defense Tech Summit in New York. Gives a read on whether the Space and Launch decline tied to ULA's Vulcan schedule is easing or spreading beyond the third quarter.\n- **~2027-03 (est.):** Fourth-quarter and full-year fiscal 2026 report with first 2027 outlook. Shows whether revenue lands inside the $755–760 million guidance and whether 2027 guidance holds within the 20% to 25% organic range management cites.\n\n## What Would Change Our Mind\n\nA daily close below $38, which would give back more than half of the 2026-11-06 post-report gain and return the shares toward their October range. Fiscal 2026 revenue below the $755 million low end of guidance, or a 2027 outlook under 20% organic growth, would also break the case.\n\nThe risks this note tracks, each with what would confirm it:\n\n- Debt-funded acquisitions raise leverage faster than EBITDA grows. Confirmed by: Net long-term debt rising above the $851.5 million reported at 2026-09-30 without a matching increase in adjusted EBITDA guidance.\n- Analysts keep cutting price targets despite earnings beats. Confirmed by: Target cuts from Barclays ($80) or Piper Sandler ($60), or new targets below Needham's $50 set on 2026-11-06.\n- The Space and Launch decline spreads or deepens. Confirmed by: A second consecutive year-over-year revenue decline in Space and Launch at the fourth-quarter report.\n- Backlog fails to convert into cash. Confirmed by: Quarterly free cash flow staying near or below the $13.4 million third-quarter level while revenue grows.\n- Further sales by former owners weigh on the shares. Confirmed by: A new secondary offering by selling stockholders announced before the fourth-quarter report.\n\n## Correlation Notes\nKarman supplies parts to missile and launch programs, so its shares follow news on defense budgets and missile demand more than any one prime contractor. Its own results drove the 2026-11-06 move. Trefis reported the S&P 500 up 0.3% and the industrials fund XLI up 0.1% that day. Among space peers, Firefly Aerospace rose 37% that session on an engine deal with AST SpaceMobile, while most of the peer list moved less than 6%, according to Trefis.\n\nIf listed defense suppliers rise while Karman stays below its post-report range of $43.91 to $45.90, the problem is specific to Karman, most likely its debt or the supply of shares from former owners. With $851.5 million of long-term debt at 2026-09-30, the shares are also exposed to interest-rate moves. The Space and Launch segment adds exposure to launch schedules at customers such as ULA.",
  "first_seen": "2026-11-10",
  "last_analyzed": "2026-11-12T23:23:56+00:00",
  "last_synthesized": "2026-11-12",
  "date_modified": "2026-11-12",
  "license": "Content © FrontierPicks. Cite the canonical URL."
}