Castellum (NYSEAMERICAN:CTM) reported record first-half revenue for 2026 as growth from recently awarded Navy prime contracts helped offset the wind-down of certain programs and lower volume on some subcontract work.
For the six months ended June 30, revenue rose 10% year over year to $28.2 million, while gross profit increased 2% to $9.8 million. The company said it expects to report record revenue for the full year, supported by its contract backlog and pipeline.
“The 10% first-half growth and the ramp-up still ahead of us with our new prime contracts are the much better measures of where our business is heading,” Ives said.
Recent Prime Awards Support Revenue Base
Management attributed first-half growth primarily to the ramp-up of three Navy prime contracts won in 2025. These include a $103.3 million NAVAIR PMA-290 Special Missions Program award to GTMR, a $66.2 million five-year NAWCAD Lakehurst Mission Operations and Integration contract awarded to Specialty Systems, and an approximately $49 million ALRE SSA NAWCAD Lakehurst prime contract.
Collectively, the three awards represent about $220 million of prime contract value and provide five-plus-year runways, according to Ives.
Castellum ended the second quarter with total backlog of $271.7 million, compared with $273 million at March 31 and $265 million at year-end 2025. Its qualified pipeline grew to $953.5 million from $938 million at the end of the first quarter.
Chief Financial Officer David Bell said the company expects to recognize at least 16% of its June 30 backlog over the following 12 months and about 48% cumulatively over the following 36 months. However, he noted that government customers control the timing of funding and option exercises.
During the quarter, Castellum’s CTM joint venture secured a position on the Navy’s Logistics IT Integration and Support multiple-award contract, an IDIQ vehicle with a maximum value of about $250 million. The position enables the venture to compete for task orders under the program.
Specialty Systems also received a $4 million directed subcontract to modernize the Navy’s Aircraft Data Management and Control System, or ADMACS. Ives said the work had begun and that successful modernization could lead to related opportunities involving other Navy systems and platforms.
Margins Decline as Investment Spending Rises
Second-quarter gross profit was $4.7 million, or 34% of revenue, compared with $5.1 million, or 36%, in the prior-year quarter. Bell attributed the lower margin to a higher mix of subcontractor work, particularly on the PMA-290 program and other large contracts, as well as costs associated with completing work on two fixed-price contracts.
Total operating expenses rose 7% to $5.8 million. The increase reflected higher fringe costs, additional business-development headcount, higher health insurance costs, and increased acquisition and investor-relations activities.
Adjusted EBITDA was approximately break-even in the quarter, while the company recorded a net loss of $1.0 million, or $0.01 per share, compared with a net loss of $300,000, or break-even per share, in the second quarter of 2025.
For the first half, adjusted EBITDA was $400,000, compared with $600,000 a year earlier. The net loss narrowed modestly to $1.4 million, or $0.02 per share, from $1.5 million, also $0.02 per share, in the prior-year period.
Management said the lower near-term EBITDA reflected planned investments in business development, investor relations and acquisition efforts. Bell said expenses associated with pursuing contracts, developing offerings and evaluating acquisitions are generally recognized before the related revenue.
“We are trading lower near-term EBITDA for stronger multi-year growth profile,” Bell said.
Cash Balance Grows as Company Pursues M&A
Cash flow from operating activities totaled $2.4 million in the first half, compared with cash used in operations of $2.3 million in the prior-year period. Bell said the improvement was primarily driven by collections of accounts receivable.
Castellum ended the quarter with $16.9 million in cash, up from $14.9 million at the end of 2025. The company reported no long-term debt and said it did not conduct equity or debt financing transactions during the first half.
Ives and Bell said the company intends to use its internally generated cash flow and cash balance to support organic growth and pursue acquisitions. Management said it would seek targets that add differentiated capabilities, contract vehicles or customer access, while remaining disciplined on valuation and accretion.
When asked about share repurchases, Bell said acquisitions and organic growth remain the company’s priority. He said Castellum believes investors expect the company to deploy capital to expand the business rather than use cash primarily for buybacks.
Defense Spending and Workforce Outlook
Castellum said it continues to monitor uncertainty around federal appropriations, continuing resolutions and potential government shutdowns. Ives said management believes defense and national-security spending remains supported across political parties, particularly in areas including cybersecurity, electronic warfare, C5ISR, autonomous systems and related mission technologies.
The company also said it achieved Cybersecurity Maturity Model Certification Level 2, which management said confirms that Castellum and its subsidiaries meet advanced requirements for protecting controlled unclassified information and could expand the set of opportunities it can pursue.
On staffing, Bell said the company’s direct employees are fully utilized and that it will add personnel as contracts are won or acquired. He added that Castellum’s corporate infrastructure has capacity to support additional growth without scaling administrative functions at the same rate as revenue.
Ives said Castellum’s second-half focus will be on executing its existing contracts, converting backlog and pipeline into revenue, improving the durability of margins and pursuing acquisitions that fit its strategic criteria.
About Castellum (NYSEAMERICAN:CTM)
Castellum AB is a Sweden‐based real estate company specializing in the ownership, management and development of commercial properties. The company’s primary focus is on office premises and logistics facilities situated in attractive growth regions across Sweden and the broader Öresund area. With a strategic emphasis on long‐term leases and strong tenant relationships, Castellum aims to deliver stable rental income and capital appreciation over time.
Founded in 1940 and headquartered in Gothenburg, Castellum has grown through a combination of land acquisitions, property development and selective portfolio divestments.
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