KRMN

Karman Holdings is a US-based maker of components and systems for missiles, defense, and space (recently IPO'd in February 2025), and the growth is genuinely impressive: revenue rose 36.6% to $472M with a strong 40.3% gross margin and a 15.5% operating margin, extending a multi-year ramp from $226M in FY2022. The defense/space niche is attractive — long program lifecycles, rising defense budgets, and high barriers to entry — and operating income of $72.9M shows the underlying business is solidly profitable at the operating line.

The complication is that very little of that operating profit reaches the bottom line, and the cash flow has weakened. Net income was only $17.4M (a 3.7% net margin, 4.5% ROE), as $42.7M of depreciation/amortization (much of it acquisition-related intangibles) and interest on $721M of liabilities (1.89x leverage) consume operating profit. More notably, operating cash flow swung negative to -$22.1M (from positive a year earlier), driven by working-capital growth as the company scales — defensible for a fast-growing manufacturer, but it means the growth is currently cash-consumptive rather than self-funding, against just $34M of cash.