I'm Louis DePama. I cover aerospace and defense and satellites on William Blair's equity research team. This is the third day of the 46th annual William Blair Growth Stock Conference, and the last day, and what's been an amazing week. We're pleased to be hosting a presentation and discussion with the CEO from Carmen Space and Defense. So joining me today is CEO John Rambeau, and in the audience is VP of Investor Relations, Steve Gitlin. I'm required to inform the audience that a complete list of disclosures and potential conflicts of interest are available on our website. John will provide an overview, and then we will jump into Q&A. John, I also wanted to mention he was appointed CEO in late March, and previously he was at L3 Harris and Lockheed Martin. So he has extensive defense industry experience.

And with that, take it away, John. Well, thanks, Louis. And look, I really appreciate so much interest here in the audience. As Louis said, I've been with the company now for just over 60 days, and it's just been a really exciting transition for me to join Carmen. I was excited before I took the job, and I'm even more excited now than I was when I stepped in, just in having gotten to get out to know the people, the technology, customers, and to talk to so many of our investors and analysts that cover the company and to just hear what's on your mind. so I appreciate you all being here. I'm going to go through a few presentation slides, and I guess we're going to have a little bit of Q&A here, and I'm going to look forward to answering some of the prepared questions and then anything that might be on your minds today. So with that, I think we've got our forward-looking statements. You're all fairly familiar with these, so I won't go through them in any detail, but they're here for the record. This is my first slide on the company, Just to really give you a sense of Carmen and why we really are, we say we're a new kind of space and defense company. And when I joined Carmen, I thought this is really a unique company. It's a company that has a unique value proposition and the reasons why are on this slide. You know, if you look at the pyramid on the right, first off, you can see this relatively differentiated position that we occupy in the supply chain. that sits just below the prime level, where we provide them the service of bringing together multiple components, you know, pieces, parts, building those into integrated systems and subsystems, and providing them to the prime level in a way that provides them more value than if they were to make the investment in building the capabilities themselves and having to go out and source all those individual components. We also have, and I highlighted some words in green here that I wanted to make sure I touched on IP enabled capabilities about 40% of Carmen's revenue today are for capabilities where we have design authority so a lot of a lot of technical depth in the company we do have full spectrum end-to-end capability from concept design we can take a sketch on a cocktail napkin and take that all the way through to full rate production so it's a relatively unique capability for company in the position that we we occupy rapid system development as I go out and talk to customers they're really impressed with the speed the agility the capabilities of the team you know we have everything from you know aerodynamic experts material scientists to work on advanced composites we design our own custom propellants for energetic systems so we really do have a depth of technical expertise in the company that's that's rare at this part of the supply chain I talked about the the customer satisfaction I have not yet come across a customer in my travels that is that is unhappy with Carmen which is rare and in fact as I talked to my former colleagues at the primes they go and talk to their employees before the meetings and they typically come in and say you know my team really likes working with your people you're a really good partner we see you as somebody we'd like to do more work with we don't see you as somebody who's a threat that's trying to take our business and become a prime we see you as a committed partner who wants to do more work that's similar to what you're doing as a support contractor to to us at this level and we see value in that and we see good partnership in that so I think that as we continue to expand those customer conversations and elevate them higher in our customer organizations that's going to lead to more good business to follow the work that we're doing today a little bit more about the company if you're not already familiar, we operate in four end markets. Those are hypersonics and strategic missile defense, tactical missiles and integrated defense systems. The integrated defense systems piece principally supports unmanned systems and loitering munitions. We have a maritime defense business which is largely the business that we acquired earlier this year, semen composites and MSC, although there are some legacy Carmen businesses that were folded into, I programs that were folded into that end market after the acquisition that are now part of that maritime defense piece of the business. And then finally, Space and Launch, which has actually been our fastest growing end market, quarter one of 25 to quarter one of 26 at just under 30% year-over-year growth. Just a couple things to highlight. I talked a little bit about the work we do in unmanned systems, if you look at that first green square here, launchers and solid rocket motors. We make small solid rocket motors and energetic systems that are folded into these launching systems for putting these relatively smaller loitering munitions and unmanned systems into the air. We work on propulsor ducts for submarines. I highlight this because I worked in the undersea world for about seven years and I love this stuff. One of the most sensitive parts of a submarine is the the propulsor it's the part of the submarine that actually allows it to push a lot of water rearward very quickly without creating cavitation in the water right bubbles which is noise and when you're submarine you don't want noise so we actually doing some work on those most sensitive parts of the submarine as well as the very large complex bow dome assemblies that cover the acoustic array on the front of the submarine we're doing work with energetic systems that separate stages on launch vehicles. So those, you know, little blasts that you see when the first stage of a launch vehicle is separated from the second stage before it ignites, we do those separation systems for a number of different launch vehicles. And finally, the the submarine baldoms, which I think I touched on, just a very, very large complex piece of hardware that covers the acoustic array on the front of a submarine. And some really differentiated process IP here which is having formulated a process to cure the six-inch thick composite dome outside of an autoclave without baking it in an oven which is typically how you cure a composite component so being able to do that outside of an autoclave is a game changer and we're not aware of anyone else who's doing that in the world today process took years to develop so just a few examples of some of the things that we're doing strong Some financial results, I think you all probably have seen the numbers to date, so generally looking at a year-over-year CAGR, about 30 percent on revenue, that's about 10 percent, think about 5 to 10 percent organic, maybe about 25 percent, 20 to 25 percent annual revenue growth on an organic basis, and I'll talk a little bit more about that on the next Again, about 30 percent margins pretty consistently, EBITDA margins on an annualized basis. This is a chart that we put forth recently to address more questions about where's the growth going to come from looking forward? Is there organic growth that's going to continue to follow what we've seen historically? And I'll just walk you left to right on the slide. If you start with the origins of growth, it all starts with the new business pipeline. And this is really just think the addressable market that we are actively pursuing to convert to contracts. And we We saw a relatively unprecedented increase year over year from quarter one of 25 to quarter one of this year from about a billion dollars in the pipeline to three billion dollars in our new business pipeline this year. We also saw quarter over quarter, 2025 Q1 to 26 Q1, a 4x increase in our bid volume measured by dollars. So the dollar value of the proposals that left Carmen in the first quarter of this year was about 4x what it was a year ago and that's really driven by two things first off the framework agreements that were established as part of the munitions acceleration activity that the US government is pursuing and to think about a lot more annual volume as well as long as as well as longer term contracts that are expected to be coming out of these framework agreements up to seven years is the current expectation and so that's driving an increase in the pipeline, and also a pretty significant increase in the space and launch pipeline. Those are the two key drivers of that substantial growth in the new business pipeline. As you take that pipeline and you start to separate it into end market, and you look at the significant deals that are expected to span multiple years, we started to break those out by end market. No surprise, as you look at the top two categories here, the strategic missile defense, the tactical missiles and integrated defense systems a lot of the volume and opportunity is there but you can also see space and launch pretty significant now the maritime defense piece right now is represented by this much smaller number here I anticipate that that number is going to grow as we continue to integrate the semen composites team into our business development organization and you know more fully unpack what's in the the maritime budget year by year and start to roll those opportunities into the pipeline and into our pursuit plans. And then finally we wanted to give just a little bit of a sense of what's happening with the business now. What happened in the first quarter of this year that provides some evidence that the pipeline is converting. So just four examples we pulled out here to share. The bottom two are contracts we've already signed. One is a program to qualify a system for recovery of torpedoes. that a lot of torpedoes are used for training in the submarine training ranges and the Navy likes to recover those we've developed a system a unique system that allows them to bring the submarine I'm sorry the torpedo to the surface after it's used for for a training mission and so we qualified sorry we signed a contract to qualify that system to get that into production and that actually is a program that predates the semen acquisition there were some questions about whether everything in maritime defense was inorganic and the answer is no, we did have some organic maritime defense business that folded in to that end market after the acquisition. We also signed a $20 million follow-on launching system contract for unmanned air systems, so that just tends to come in in, you know, quarter by quarter purchase orders, so we signed another one of those follow-on contracts in Q1. We were selected, this is a relatively rare instance where we were asked to take the prime role on developing ammunition. We had started with a technology demonstration program through one of the government labs that has now turned into a more comprehensive missile development program and we were asked to take the lead with one of the missile primes as a teammate. It's expected if we get this through qualification that at some point we would then switch roles and the prime would take the lead on production and we would provide the warhead which is a pretty significant deal for us if that goes through to production. And then finally we we have a space and launch long-term agreement that we're in the process of negotiating that I think we'll close on in the next couple of weeks and that's about worth about a quarter of a billion dollars over the next four to five years so just some examples of things that are pulling through from that pipeline is starting to fall into the backlog which backlog I think at the end of Q1 was just a little bit north of a billion dollars so making some good progress across the board here on driving the growth story and continuing to deliver over that 25%-ish annual organic growth going forward. So with that, I think we have some financial statements here that I will not go through. And we can convert over and do some Q&A.

Thanks, John.

So coming from Lockheed and L3, what attracted you to Carmen and that at those you know prior defense primes Carmen was a supplier to you and so you were able to see them you know up close so what was the main motivation Carmen wasn't you know I wasn't off looking for an opportunity I worked for two great primes and you know had great career a lot of challenges in those in those roles and a lot of good colleagues that I've stayed in touch with however I got this call and I was asked to look at this company I said well anything I'll take a look and see what it is and the more I looked at the company I thought this really is something I haven't seen in my 30 years in this industry but were you already aware of Carmen did you ever I was not particular no I didn't have a lot of interaction if you think about the size of the company and how quickly it was put together you know the company was was founded about five years ago and has grown rapidly and so I had not been tracking what was happening in the in the munitions and space side of the business I was more in the mission systems a lot of airborne work so I wasn't working with now as I started to become attuned to the company I found very quickly that my colleague Ken Bedingfield you know is very aware of Carmen and tracking the business and working with Carmen as a major subcontractor so it's not that at the prime level there were not executives tracking the company I personally wasn't and as I started to study it more I thought this is something really interesting and really exciting and something I think would be a lot of fun to be a part of and so long long conversation with my wife about moving across the country and doing something that probably came with a little bit more risk a little bit more reward in the long term and made the decision to give it a try and I have to say I haven't looked back I'm really excited and I assume since you mentioned you conferred with Ken Benningfield and and I'm sure many of your other executives and relationships across the industry, and you did your own due diligence that you have the view that Carmen cannot easily

be displaced, that they have this secret sauce. Because if you did have that view, you probably would not have come to that.

I studied that very carefully. And I talked about the 40% of the revenue where we have design IP where 50 of the remaining 60% we have some process IP and also some patented materials that go into some of those products you know my thought was a it's we have a pretty strong competitive moat around the company be though the commitment to scale and capacity to meet this generational surge in demand was really exciting I thought here's a company who's got it right because one thing I was very acutely aware of as a prime was this incredible pressure to expand capacity for missiles munitions space and launch and and so I thought boy this is right in the heart of where all of the action is going to be in defense for the next you know decade so that was another thing was really exciting to me was that that the growth was going to be there and here was a company I had the vision to get ahead of that definitely and and And some have described that expected explosion in production as a super cycle.

And on your slides, you referenced how your pipeline has dramatically increased. How should investors think about that pipeline converting into backlog, and then that backlog converting into revenue? What's the time frame?

Yeah, I mean, we think about our, you know, we don't advertise our book-to-bill on a quarterly basis. It tends to be lumpy. But generally speaking, on an annualized basis, we like to see a book-to-bill north of 1.3. So that 30%, you know, year-by-year increase in backlog would lead to support that, you know, call it 25% annual organic growth, which is important for us. We think that trajectory is going to sustain at least through the end of the decade is what we see right now. I would say yeah supercycle certainly what we're seeing right now is unprecedented in the in the 30 years I've been in defense and what's exciting also is there's you know as we see this real resurgence of the space economy and we see this generational increase in demand for for certain you know capabilities in defense there's a lot of outside capital is flowing into defense as well and i think that's providing even more energy even more investment in in scaling capacity and capability so it's uh it's an exciting time to be in in this business definitely and related

to what we described earlier as as part of this munitions super cycle and this is also taking place during the discussion and implementation of golden dome there are many of these marquee missile platforms like the PAC-3 interceptor, the TAD interceptor, you're a supplier on GMLRS, there's there's the Stinger missile surface-to-air system and so there's these 15 systems and you traditionally have been a supplier.

Do you see any risk to you being able to scale capacity fast enough to meet your your customers expectations how should we think about right now i don't i don't see any any reason why we won't be able to scale i think the company's committed substantial resources to in a prudent way right i mean it's not over commitment but we've committed five percent of revenue this year to capex and the majority of of that is is going into either expansion of capabilities in existing facilities or we also committed ourselves to a pretty large investment in a new salt lake city facility which is going to be a couple hundred thousand square feet almost exclusively manufacturing to support the unmanned systems part of the business as well as the tactical missile part of the business so yeah i think we're going to be where we need to be we we had a uh what gives me some confidence too that the overall ramp is going to happen i was worried about you know are there going to be three small suppliers that just can't get there and it holds everything back because ultimately the primes will be able to move as fast as their lowest supplier in the grand scheme of things and so what what's giving me confidence is the Department of War has had a contractor that's been out studying all of the suppliers and looking at the details of their investment plans their their capex investments and identifying risk areas and helping to identify sources of capital to get the smaller companies of resources they need and so we had a visit in our Huntington Beach facility where we do some subsystem production for tactical missiles. And after a day and a half of going through spreadsheets and numbers, the conclusion was we're very happy with where Carmen is. You're exactly where I want you to be. You've leaned in on the investments. You're going to meet the aggressive ramp, and you're going to get a green scorecard. So that felt good.

And so for the primes to move forward on this super cycle, do you expect them to to wait for the congressional funding to come in and that like one of the big themes in the industry has been like companies such as anduril or or crossbow or others using their own internal R&D their irad to like develop these manufacturing facilities and the way you described in your prior earnings call it was like contingent funding and is that the main like barrier here in terms of Congress approving it or do you expect the primes

to continue to to move forward with these investments even if the funding is not 100% locked in there's a spectrum you have companies that are oriented more toward the Carmen end of the spectrum that are leaning in and making investments in many cases they're non-traditional but if you look at L3 Harris and you listen to some of Chris's public remarks just in the past week I mean there there's a business that is leaning in and investing they know the demand is going to be there I was a member of the leadership team and I can I can vouch for that huge commitment to making those investments with with the absolute understanding that the contracts will follow and that the contracts will provide the theme I've seen also lately in the in the primes remarks publicly is that there is an expectation that if contracts are for some reason terminated and there's a huge capex bill that can't be liquidated there would be some recovery possibility there at the prime level so obviously all those things will look to to work into our agreements as well but yeah the big the big you know the contingent is when we get our contracts you'll get yours and that that feels good to me i feel confident the contracts are going to happen at the prime level and we seem to be hearing by the end of the year is the time frame for those contracts great and yeah thus far we've been focusing on on munitions but there's also been tremendous excitement in in the space industry and your name has traditionally been Carmen space and defense and so what products are you providing the different space launch providers or satellite infrastructure providers a lot of a lot of the work we're doing in space is not all that different to what we're doing in the munitions area we support you know the subsystems for the for the propulsion portion of the of the launch vehicles we're doing some of the core stage components for a couple of our of our key launch customers we have some areas where we've done we've done design of sub components of launch vehicles from a you know from a just a list of requirements all the way through to a complete integrated assembly that can go right on to a launch vehicle and we're also one of the most exciting projects is we're building a lunar lander in our Seattle facility for for the NASA clips program for one of the primes and the the actual full integration of that lunar lander is going to happen in our facility which is a pretty big deal because a lot of times we'll build a you know a subsystem and we'll ship that to somebody who puts that into the end item and in this particular case we're working with the prime to build and integrate the entire lunar lander in our facility so that's that's pretty exciting great and one question from investors a few weeks ago blue origin experienced a significant mishap with their new Glenn platform and you've previously discussed how they are among like many different space customers do you anticipate any significant impact from the new Glenn mishap on your business I don't at this time I will tell you like everyone else last week I was I was really shocked and disappointed to see what had happened and concerned you know for where that would would lead for Blue Origin and some of the statements that NASA made immediately after the mishap were discouraging however coming out of the weekend hearing some of the public comments that Blue Origin's made about getting back on track by the end of the year if they can recover the the launch site and get it back to you know it's it's it's full functionality by the end

of the year that's that's really encouraging and I will say that in my interactions with Blue Origin and the interactions my team are having it is business as usual if not even perhaps a little bit more resolved and committed to continue their cadence of production so everything I'm seeing right now is full steam ahead and how is your long-term view of the the space industry in terms of how there's blue origin there's ULA with their Vulcan program there's rocket lab with their neutron development and their existing electron and I know many of these launch providers are customers of yours should you

participate in in the growth alongside their expectations to to ramp the launch cadence one of the things that's really great about Carmen is you know if you're thinking about missiles munitions space and launch we're sort of like an index fund we have participation on pretty much all of the platforms we have representation on over 130 programs over 80 individual prime customers that we support and so across the spectrum of defense space and launch traditional non-traditional new entrants we're working with just about everybody in some capacity so we will we will if you look at the macro trends and you look at the you know the bend in the curve for launch cadence it really is starting to get to a point you know and i think artemis too was a big shot in the arm for the entire space community i went to the space symposium this year and there was just a certain energy whether it was the military space or the commercial space folks there's just a real excitement that space is back in this country and it seems to be manifesting itself in real progress here great and for you mentioned the organic growth of 25 percent or around 25 percent for for this year and what is your your visibility in terms of that growth you've reported you know strong backlog at the end of the March quarter and in the fourth quarter but what what needs to happen in terms of contracts coming in and how dependent is that organic growth on different budget items or funding it we are right now we have greater than 90% visibility to the full-year revenue and the remaining less than 10% now is going to be follow-on to current production programs so we're in good shape for this year for top line and we're starting to look towards what next year's gonna gonna look like so good visibility one thing from your presentation that was interesting you discussed how you discussed that really compelling torpedo recovery contract and how you had

existing like maritime programs that are being folded into your new maritime segment in conjunction with the Siemens acquisition how large in terms of revenue was your existing maritime business and now what's your your long term view in terms of you know what other areas into maritime yeah historically maritime was not a significant portion of the business there were a few contracts that was so the torpedo work was one of them so we had a few not a substantial piece so you should say the large majority of the maritime defense business who reported in Q1 was was through semen and MSC and there was a

substantially smaller piece that came from you know we parked it elsewhere in the portfolio given the size so that's that's where that that shakes out the second part of your question was around your long-term view long-term long-term view of maritime yeah are there other products that you're developing or areas in maritime we we have some so a lot of work that we're doing with submarines and that's great business to be in once you have a trusted relationship there and you can perform and deliver that that'll be a long-term relationship so I'm excited about that there's work we're doing on the the ship to shore connector which is a you know think like a hovercraft sort of a vessel a lot of advanced materials work there some some very advanced composites work and looking at what more we can do and unmanned so we're doing some unmanned some subsystems on unmanned platforms for naval customers today for primes and I'd like to see what more we can do and unmanned it's it's a crowded space and the Navy has you know historically moved I'll just say very deliberately intentionally but in a very methodical way to evaluate unmanned systems and finally we're starting to see maybe some larger procurement of those capabilities. It's a crowded space. And if we expand our footprint there, it'll be for something really differentiated. So we're still looking at that.

Well, that is the time we have for the main session. We have many more questions. And we will resume this in the Adler room on the second floor. Thank you very much, John.