Karman Holdings Inc.

Fast-growing, sole-source defense/space subsystem supplier with strong organic + acquisitive growth but weak cash conversion.

Strengths

• Revenue growth 37% (83rd pct) and operating margin 15.5% (81st pct) reflect a differentiated, vertically integrated franchise with sticky qualified positions
• Diversified across 130+ defense/space programs (no program >12%) with high sole/single-source content and current ratio 3.3

Risks

• Negative FCF (-$42M, 16th pct) and negative OCF margin; cash runway only ~3.2 quarters against variable-rate debt
• Disclosed material weakness in internal controls and customer/program concentration on defense budgets

Notable findings

• Exec changeRecent 8-K item 5.02 8-K ↗
• Auditor changeRecent 8-K item 4.01 8-K ↗
• Cash burnNegative free cash flow (-42.5M)
• Material weakness• our ability to remediate the identified material weaknesses in our internal control over financial reporting; and • the other factors discussed under “Risk Factors