Karman Space and Defense, which makes components for military and aerospace systems, is adding to the list of firms raising Orange County’s industry profile after its initial public offering chalked up a $4 billion valuation.
The Huntington Beach-based company surged 37% on its first day, Feb. 13, raising $506 million (NYSE: KRMN).
Officially known as Karman Holdings Inc., the company’s products include protection for payloads sent into outer space and weapons propulsion for the Department of Defense.
The IPO is the second significant sign this month of a major resurgence in Orange County’s defense industry. Costa Mesa-based Anduril Industries indicated it’s raising more capital at a $28 billion valuation, a doubling since its last funding round in August.
Karman joins other upstart defense companies like military drone maker Dzyne Technologies in Irvine as well as long-established companies such as Ducommun in Santa Ana and Parker Aerospace in Irvine and Boeing, with its local base in Seal Beach.
The PE Deal
It’s a successful IPO for both majority owner Trive Capital and Chief Executive Tony Koblinski.
Trive, a Dallas-based private equity firm, was co-founded in 2012 by Managing Partner Conner Searcy and Partner Chris Zugaro. It currently manages over $8 billion of assets and invests in both equity and debt; its webpage lists more than 50 portfolio companies.
Karman was formed in 2021 when Trive acquired Amro Fabricating Corp. and Aerospace Engineering Corp.
At that time, Tony Koblinski, who has more than 25 years of expertise in building integrated systems and processes, became its CEO. He knows Trive well, having helped it buy Madison-Kipp Corp., a maker of lightweight, high-pressure aluminum die-cast components, where he was CEO from 2011 to 2020.
Koblinski’s prior executive positions include National Vice President of Homebuilding Operations at Pulte Homes in 2007 and vice president of operations for Bombardier Recreational Products.
Karman touts its executive team as having an average of 20 years of experience in aerospace, defense and related industries.
Chief Financial Officer Mike Willis was responsible for 14 business units in five countries for the Forgings Division at Precision Castparts Corp.
Chief Growth Officer Stephanie Sawhill was vice president of Strategy and Business Development at Systima Technologies and is a named inventor on multiple patents; she has also co-authored several papers in the industry. Systima is now a unit of Karman, which acquired it in 2021.
Working on Anduril’s Hypersonic Booster
The company is a subcontractor that supplies missile and aerospace components to major defense contractors such as Northrop Grumman and Lockheed Martin.
Karman provides design and engineering, precision machining, large part forming, thermal coating and sub-assembly services.
“We specialize in the upfront design, testing, manufacturing and sale of mission-critical systems for existing and emerging missile and defense, and space programs,” Karman told the SEC in a filing earlier this month.
The company added: “Our integrated payload protection, propulsion and interstage system solutions are deployed across a wide variety of existing and emerging programs supporting important Department of Defense (“DoD”) and space sector initiatives.”
Karman said it was a “key supplier” of hardware for the Vulcan rocket developed by a joint venture of Boeing and Lockheed Martin.
Last November, Karman announced a collaboration with Anduril to develop, test and deliver the rocket motor casing for ultra-fast “hypersonic” missiles. It is part of the Anduril Denali 18-inch hypersonic booster program.
“As hypersonic technology becomes increasingly critical to national security, the partnership between Karman Space & Defense and Anduril sets a new standard for addressing key challenges in the rocket motor industry,” Karman said in a November statement.
730K Sq. Ft. in Eight Locations
It has approximately 730,000 square feet of design, engineering and manufacturing space spread out in eight locations, including Huntington Beach and Brea. It employs 1,100 people, including 180 engineers.
Sales jumped 24% to $280.7 million in 2023, when its adjusted profit was $81.9 million, about 29% EBITDA margin.
The growth continued in 2024 as revenue in the first nine months climbed 25% to $254 million. Its adjusted EBITDA margin widened to 31%, which compares to about 15% to 20% for the aerospace and defense industry, according to the marketing firm CSIMarket.
Karman went public at a time when the Ukraine war is still dragging on and as the U.S. faces threats from China.
U.S. aerospace and defense companies have said they are still hoping for a boost from the administration of President Donald Trump despite his frantic rush to cut costs.
Karman sold 23 million shares at an initial offering price of $22 each, topping the anticipated $18 to $20 range in its first day of trading.
Trive will continue to own a majority of the voting power at Karman after the IPO. The money raised will be used for development efforts and other uses.
It was sporting a market cap of $3.9 billion as of Feb. 20, with shares selling for $29.98 each.
Familiar Name for Just-Listed Karman
The name Karman Space and Defense, which presumably takes its name from a famous Hungarian-born physicist and aerospace engineer, may well ring a bell with local readers.
Von Karman is the name of a major thoroughfare in Irvine.
Internationally speaking, the von Karman line is the theoretical boundary between Earth’s atmosphere and outer space and is generally set at an altitude of 100 kilometers (62 miles) above sea level.
It’s named after the late scientist and aerospace engineer Theodore von Kármán, who co-founded the Jet Propulsion Laboratory in Pasadena.
