Good morning, and welcome to Castellum, Inc.' s second quarter 2026 earnings conference call.

An earnings press release was distributed yesterday, August 6, after the close of the market. A copy of that release, as well as an earnings presentation, is available on the company's website in the Investor Relations section, and should be reviewed in conjunction with the Form 10-Q filed yesterday with the SEC.

Please note that this call is being recorded, and all participants are in listen-only mode. Following management's prepared remarks, we will open the line up for question-and-answer session.

Before we get started, I'd like to remind you that today's call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. These statements represent the company's expectations or beliefs concerning future events, including our expectations for revenue growth, new customer opportunities, improvements to cost structure, and profitability.

Forward-looking statements are subject to certain risks and uncertainties, many of which are outside of the company's control, that could cause actual results to differ from those expressed or implied on this call. These include, among others, our ability to grow and execute on our total backlog and qualified pipeline, our ability to integrate and grow acquired companies, our ability to identify and close additional acquisitions, and factors affecting US government spending, including budget delays, continuing resolutions, and government shutdowns.

Please also note that on this call, management will be referencing non-GAAP adjusted EBITDA, which is a non-GAAP financial measure used by management to measure the company's operating performance. As required by SEC rules and regulations, non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in our earnings release issued yesterday afternoon.

All forward-looking statements speak only as of today, and the company undertakes no obligation to update them except as required by law. Speaking on today's call will be Glen Ives, President and Chief Executive Officer, and David Bell, Chief Financial Officer.

I'd now like to turn the call over to Glen. Glen, please go ahead.

Hey, thank you very much, Val. A very good morning, everyone.

Thanks for joining us. With me today are David Bell, our Chief Financial Officer, and Drew Merriman, our Chief Operating Officer.

They'll both be available as well during the question-and-answer session at the end of the call. Following my opening remarks on the company's performance during the quarter and first half of the year, David will take you through the financials in more detail.

I'll then provide some commentary on our strategic priorities and outlook for the balance of 2026, and then we'll open the line for your questions. That is the part of our call this morning that I'm most looking forward to.

During the first half of 2026, Castellum delivered record revenue of $28.2 million. This first-half revenue, combined with our current trajectory, leads us to anticipate record revenues for the full year.

The second quarter played out largely as we anticipated with regards to contract execution, timing factors for month to month, quarter to quarter in our industry, and we continue to focus on funding our growth investments entirely from our own operations with a debt-free balance sheet and a growing cash position. Revenue for the first 6 months of 2026 grew 10% year over year to, as I stated earlier, $28.2 million, and gross profit increased to $9.8 million.

That growth was driven by the continued ramp-up of the three major long-term prime contracts we won in 2025, which were the NAVAIR PMA-290 Special Missions Program—that was our $103.3 million award to our GTMR subsidiary that ramped up through 2025; also the NAWCAD Lakehurst Mission Operations and Integration award, that was our $66.2 million, 5-year, full and open contract won by our Specialty Systems subsidiary last October; and their second win was our RRA SSA NAWCAD Lakehurst prime contract win of approximately $49 million shortly after that one. These are all multi-year, 5-plus-year runway Navy prime contracts, and they represent approximately $220 million of prime contract value and form the growth base for us in 2026 and well beyond.

This first-half growth trajectory, combined with the total backlog of approximately $272 million and a qualified pipeline that continues to expand, gives us very real confidence that Castellum is on track to deliver record revenue for the full year of 2026. Q2 revenue was stable as compared to the prior year at $13.9 million.

The $100,000 variance primarily reflects gains from the ramp-up of SSI's NAWCAD Lakehurst contract, partially offset by the expected 2026 wind-down of two firm-fixed-price contracts that contributed meaningful revenue in the second quarter of last year, 2025. We also saw lower volume on certain Corvus subcontracts due to a slower-pace trend we have observed in the government backfilling funded open positions.

These are all dynamics that we continue to work through and they are cyclical in nature in our industry. This kind of quarter-to-quarter revenue recognition factor is common in our industry.

Obviously government services revenue does not move in a straight line. Contracts do wind down, new contracts ramp up, and the crossover quarters can look flat even when the underlying trajectory is clearly up.

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. We also ended the quarter with a total backlog of approximately $271 million, compared to $273 million March 31st, 2026, and $265 million December 31st, 2025.

Our qualified pipeline totaled $953.5 million as of June 30th, 2026, compared to $938 million as of March 31st, 2026. We expanded our business development capacity this year specifically to increase the volume and the quality of the opportunities we pursue, and we are seeing that investment show up in our pipeline.

Our pipeline is a very key tool we use to help drive our business development efforts, one can bet that our pipeline is constantly audited for realism. During the quarter, we continued to strengthen our position with the US Navy and Department of War through both contract wins and a key certification milestone.

Our joint venture, CTM-JV, secured a key position on the US Navy's Logistics IT Integration and Support multiple-award contract, a very important IDIQ vehicle with a total maximum value of approximately $250 million. This win provides us the opportunity to compete for and capture individual task orders under this broader program.

Our subsidiary Specialty Systems was also awarded a $4 million directed subcontract to modernize the Navy's mission-critical Aircraft Data Management and Control System, serving as lead system integrator for a phased software and DevSecOps modernization effort. This was a very significant win for us.

Although the monetary value may not be large, there is real potential for further growth. As importantly, and something that should reassure all of us, our government mission customer specifically chose SSI based upon their remarkable past performance and their ability to do the job here with this new requirement to modernize a system that is critical to all our aircraft carriers in the Navy.

In addition, we achieved Cybersecurity Maturity Model Certification Level 2, confirming that Castellum and all our subsidiaries meet advanced cybersecurity requirements for protecting controlled unclassified information in support of Department of War programs, and positioning us to pursue a broader set of CMMC Level 2 opportunities. Although the Department of War is reassessing their CMMC certification process, our Level 2 certification achievement has truly strengthened Castellum, and I believe will still prove to be key to our ability to compete and operate in the defense sector.

Finally, a word on investment. 2026 is a year in which we are purposefully and strategically investing in business development, investor relations, and meaningful acquisition activities.

Let me say that one more time. 2026 is a year in which we are purposefully and strategically investing in business development, investor relations, and meaningful acquisition activities.

These investments will be visible in our near-term EBITDA, and David will walk you through those numbers. We think about these investments as the upfront work required to win, grow, and scale Castellum.

They come before new contract awards and before the associated revenue shows up in our results. We are making these investments from a position of financial strength, funded by our own operations, and we believe they are setting up CTM for a much stronger multi-year growth profile.

There may be concern about our current net profitability. I can say that there are actually many ways to ensure a profit, but as a young company on the move and committed to real growth and value, these growth investments are healthy and vital to our longer-term net profitability.

With that, let me turn the call over to David Bell, our CFO, to take you through the financial results in more detail. David?

Glen, thank you very much, and good morning to everyone, and thank you so much for attending today. I'll start with the second-quarter income statement, then cover the first half of the year, and close with our cash flow, our balance sheet, and backlog composition.

Revenue for the second quarter was stable at $13.9 million as compared to $14.0 million even in the second quarter of 2025. As Glen described, the small $100,000 difference reflects gains from the ramp-up of the $66.2 million NAWCAD Lakehurst MO&I contract, partially offset by expected wind-down of two firm-fixed-price contracts on which revenue was recognized in the second quarter of last year, as well as lower volume on certain Corvus subsidiary subcontracts.

Moving to gross profit, gross profit for the quarter was $4.7 million, or 34% of our revenue, compared to $5.1 million, or 36% of revenue, in the prior-year quarter. Two factors drove the margin change.

First, we carried a higher mix of subcontractor work in the current quarter, particularly on the PMA-290 Special Missions contract and other large programs. Subcontractor labor typically carries a lower margin than our direct labor.

Secondly, we absorbed the cost to complete the remaining work on two fixed-price contracts. As the newer prime contracts mature and our direct labor content builds, we expect the mix to improve over time.

Total operating expenses for the quarter were $5.8 million, up 7% from $5.4 million in the prior-year quarter. The increase was driven primarily by higher fringe expenses, reflecting the headcount we added for business development, along with an expected rise in health insurance costs.

We also ramped up our acquisition and investor relation activities. Adjusted EBITDA for the quarter was essentially break-even, and excludes non-cash expenses, including $800,000 of stock-based compensation and $300,000 of depreciation and amortization.

For further information, please see the reconciliation to non-GAAP adjusted EBITDA chart in our earnings release issued yesterday or our earnings presentation, which can be found on our Investor Relations website. I want to reinforce Glenn's earlier point here: the EBITDA decline was expected, and it reflects the planned 2026 investments in business development, investor relations, and acquisition activities we committed to.

The economics of this work are inherently front-loaded. Whether we're pursuing a contract award, developing a product, or evaluating an acquisition, expenses are generally recognized well in advance of the revenue they're intended to generate.

We are trading lower near-term EBITDA for stronger multi-year growth profile. We are doing this with our own cash flow.

Other income was $100,000 in the quarter, compared to a small net expense in the prior-year quarter. Net loss for the quarter was $1.0 million, or $0.01 per basic and diluted share, compared to a net loss of $300,000, or break-even per share, in the second quarter of 2025.

Now turning to the first half of the year, all 6 months: revenue for the 6 months ended June 30th, 2026, was $28.2 million. That's 10% increase from $25.7 million in the first half of 2025.

That growth was driven primarily by the ramp-up of the PMA-290 Special Missions contract at GTMR and the NAWCAD Lakehurst contract at SSI. Gross profit for the first half was $9.8 million, up 2% from $9.6 million, with a gross margin of 34.7% compared to 37.4%, reflecting the same subcontractor work mix dynamics I described for the quarter.

Total operating expenses for the first half were $11.6 million, up only 1% year over year, as the investments in business development headcount and acquisition, investor relation activities costs were largely offset by lower stock-based compensation and amortization. First half adjusted EBITDA was $400,000 compared to $600,000 in the prior-year period.

Net loss for the first half was $1.4 million, or $0.02 per share, a slight improvement from the net loss of $1.5 million, or $0.02 per share, in the first half of 2025. Now to cash flow, which I consider a highlight of the period: net cash provided by operating activities was $2.4 million for the first half, compared to net cash used of $2.3 million in the first half of prior year, a positive swing of over $4.5 million.

The improvement was primarily driven by strong collections on accounts receivable. Investing activities provided a small amount of cash, reflecting proceeds from the sale of MFSI.

Financing activities used $400,000, primarily to pay off related-party debt. I would highlight that we did not undertake any equity or debt transactions during the first half of 2026.

Our liquidity was funded entirely through cash generated from operations. On the balance sheet, we ended the quarter with $16.9 million in cash, up from $15.8 million at March 31st, 2026, and $14.9 million dollars from year end at December 31st, 2025.

That's an increase of $2.0 million since year end, generated by the operations of the business itself. We have no long-term debt, and stockholders' equity stood at $35.9 million at the end of the quarter.

Simply put, we are funding growth investments internally while the cash balance grows, and that gives us flexibility both for organic investment and disciplined M&A. Finally, a word on backlog composition: total backlog at June 30th, 2026, was $271.7 million.

As Glen noted earlier, we expect to recognize approximately at least 16% of the backlog over the next 12 months, and approximately 48% cumulatively when including the following 24 months. As with all government contracting, the timing of funding and option exercises rest with our customers, but this backlog provides a multi-year foundation of revenue visibility that we believe differentiates Castellum at our size.

To summarize our current financial picture: first-half revenue was up 10%, gross profit was up 2%, growth-focused planned investments are temporarily compressing EBITDA, and we have positive operating cash flow of $2.4 million, with a debt-free balance sheet and $16.9 million of cash. With our first-half momentum, we remain on pace to record record full-year revenue.

With that, I'll turn the call back to Glen to discuss our strategy and outlook.

Thanks very much, David. Let's get to the strategy and outlook.

Our priorities in phase three of Castellum's evolution remain consistent, and they're directly aligned to our 2026 updated strategy and our mission customers' and warfighters' requirements. The first half of 2026 was focused on deploying the right resources to those priorities in the context of a very dynamic government contracting environment.

Based on the momentum we are seeing in our backlog, pipeline, and contract awards, we do expect to deliver record revenue for the full year. Let me repeat that.

We do expect to deliver record revenue for the full year. Our focus for the second half is translating that growth into durable, higher-margin performance.

Let me take you through these priorities. Always our top priority: converting our backlog and pipeline into organic revenue growth.

As I mentioned earlier, we expanded our business development capacity this year specifically to increase the volume and the quality of opportunities we pursue. That investment is already contributing to the growth we delivered in the first half, and we expect it to continue contributing throughout the remainder of the year.

A larger, higher-quality pipeline pursued by a stronger capture team produces more awards over time. Our job is to keep that engine running at full throttle and to execute flawlessly on the programs we have already won.

We're also selectively pursuing M&A opportunities that meet our criteria. Our standards have not and will not change.

We are proactively evaluating businesses that bring differentiated capability, the right contract vehicles, and customer access we do not already have at a valuation that is accretive to our shareholders and will posture us to grow and scale Castellum effectively, efficiently, and expeditiously. We will pass on a transaction rather than force one that isn't in our best interest strategically.

With a debt-free balance sheet and a growing cash position, we can afford to be patient and disciplined while still pressing at full throttle to find that right opportunity. Underpinning these priorities is continued investment in the mission-critical technologies and capabilities that expand both our addressable market and our client base.

We are doing that work from a position of financial strength, funded internally and without any leverage, which is what allows us to invest through the cycle rather than react to it. Let me also briefly address the budget environment, because I do know it is on the minds of many investors.

The political and budgetary environment obviously remains uncertain, and the timing of appropriations is never fully predictable. That is just the nature of our industry.

I can't remember a time when that was not true. That said, we do believe the underlying budget environment remains supportive of defense and national security spending, with backing from both sides of the aisle, particularly in the areas where your company, CTM, operates: highly relevant areas—cybersecurity, electronic warfare, C5ISR, autonomous systems, and all the related mission technologies.

We monitor continuing resolution risks closely and maintain contingency plans. We've been through all this many times before, but our multi-year backlog and the mission-critical nature of our work do provide resilience and meaningful insulation.

As we move through the second half of 2026, disciplined execution remains the priority. We believe that discipline, applied consistently, is what positions CTM for sustainable long-term growth and enhanced shareholder value.

To close where I began: the first half of 2026 was a record revenue period for our company, and we expect the full year to be a record as well. Again, we expect the full year to be a record as well.

We are building that growth on a debt-free balance sheet, funded by our own operations. Our focus for the second half is disciplined execution, converting backlog and pipeline into revenue, and energetically pursuing M&A on our terms, with the goal of creating long-term value for our shareholders.

That is our unbreakable commitment. Before I close my formal remarks, I would like to emphasize what I think is my most important message and takeaway for those listening this morning, and that is CTM, our company, has never been stronger or well postured and positioned for future growth than we are today.

From my perspective, first: our work, our technology solutions and services, are more relevant than ever. They are meaningful and in very real demand by our mission customers and warfighters.

It is work we believe in, work we love to do, work that excites us each and every day, and it's vital work in direct support of our national security and our warfighters. Finally, it's work that no one does better than us.

Two: we've managed to win three major prime contracts valued at approximately $220 million with 5-plus-year runways. We won those three major prime contracts in a 12-month period.

Those three major prime contracts have strengthened and reinforced our business foundation. I would challenge anyone to find another company our size that has achieved that level of success in such a relatively brief period of time.

Those wins have allowed us to expand our strategy to even more effectively continue our organic growth, as well as seriously pursue acquisitions. Three: we have completely eliminated our debt, we have built up our cash, and now have the strongest and healthiest balance sheet we've ever had.

That, combined with the rock-solid strength of our business operations and contracts, places us in an optimal position for M&A. As I said earlier, we are absolutely committed and engaged in pursuing the right, good, accretive, intelligent acquisition that will strengthen CTM and help us scale and grow.

It's almost football season, here's a football analogy for you: organic growth is our ground game—steady yardage moving us up the field—and smart M&A is our passing game to get us down the field more quickly and into the end zone sooner. Then finally, we do have a very special team of world-class professionals that make up of our CTM family.

They are truly world-class in their professionalism and technical knowledge and skills, and they are in demand by our mission customers. As importantly, they are absolutely relentless.

I'll say again: absolutely relentless and true in their share commitment to our mission in direct support of national security and our warfighters, and also to grow and scale CTM to achieve our goals. I could not be more honored and grateful to be working and serving with each of them.

They are truly a remarkable team. I hope these takeaways give you a sense of why I could not be more bullish and optimistic and encouraged and excited about the rest of 2026 and beyond for our company.

I want to thank you once again to all of our listeners, our shareholders, investors, partners, and employees for your ongoing trust, confidence, and commitment to CTM and our shared, vital national security and defense mission. We certainly would not be the great company we are without you.

This concludes our prepared remarks. Let's move on to your questions.

Hi, good morning. I wanted to dig a little bit deeper about the upfront investment you guys are planning this year for the business.

I was wondering kind of what stage you're at in this investment, if you're expecting incremental increases in the back half, or if you think that was largely done in the first half. Then maybe if you could just talk about what you expect the EBITDA margin potential and the operating leverage of the business to be once you begin to build off this base?

Yeah. Derek, thank you very much for that.

We had in our planning the prior year to make investment in our business development by adding in-housing of our business development activities. I think if you look at our pipeline, you'd see that we have very actively engaged in putting verified and qualified pipeline capabilities.

A lot of that came from the discipline of our team that has special knowledge of the areas that we historically worked in, in the Navy space and also expanding beyond the Navy space, which has been our bread and butter. It will take a while for that to develop.

I can't promise when we will win the next contract. We have a number of contracts that we have submitted, and we're waiting to hear back on those, and we have a schedule of contracts that we identified that we're bidding that will take us out through the end of the year.

We'll come back to you as we develop that, but I can't promise anything right now, Derek, forgive me for that. On the M&A front, as Glen said, we're actively looking for the right acquisition.

Part of that is we can't go make somebody sell themselves to us, but we are doing, I think, a fantastic, disciplined job of looking for businesses that either deepens us in where we're competent or expand our breadth of service or also expand our customer base to where we can provide services that we currently perform. If you know anything about our performance ratings, we have super-high performance ratings in the work that we do, and we're looking for partners, other companies that want to do the same type of work so that we can expand that work and the quality of service that we do.

As far as EBITDA, I can't say what the gains will be. We're looking for companies with positive EBITDA.

We're looking for companies where we can build synergies. We're not looking for companies where we can gut the whole management, because most of the time our success has been in our seven acquisitions is where the former owners became a part of the CTM team, and that's been such a success to the growth of our company and in terms of dollars and size of the business in the services that we do.

Naturally there will be some EBITDA improvement. We are not going to load up our expenses.

We're going to make things efficient. Where we can eliminate costs, we're going to eliminate those costs.

We don't need two CEOs. We don't need two COOs.

We don't need two CFOs. We don't need various groups.

We can create good synergies, and if we have great operators and we're efficient, we will build effective our EBITDA. As our EBITDA is partially driven by the investments that we're making now as well as the public company costs we carry.

When we acquire a company, they're not going to bring those incremental costs. We think that there's a lot of ripe opportunities out there for us that will be accretive and incremental.

We've made a commitment to ourselves that those acquisitions will be accretive for our sake and for our investors' sake.

Hey David, if I could just follow on for you, Derek. I think David covered it very well.

Couple of other points to make, though. I do want to reinforce: the investments that we're talking about in business development and our M&A activities, these aren't investments that we just said, "Hey, let's just start doing this."

This is all part of our operational strategic planning efforts that we spent a great deal of time on at the close of 2025 and in the beginning of 2026. To be honest, I did not expect us to be as successful as we were in 2025.

My hope was that those three opportunities that we ended up winning, if we could win two, that would be fantastic; if we could win one, it'd be fantastic. It's a reflection of our team, their hard work, their smart work, a little bit of providence, and there's always some luck involved in our business.

Those good things happened. Like any good company, when that happened, that changed quite a bit for us, and it required us to re-look at our strategy.

I actually moved our strategy up by about 18 to 24 months based upon that success in 2025. As we started 2026, we had a very, very adjusted strategy that was going to take us through this year.

Those investments were identified, and they're budgeted for, and so there's no surprises here. We managed this in a way where we understood where our margins were going to be, where EBITDA was going to be, and we made a calculated, purposeful decision that this was a time for us to continue our growth and these fairly manageable investments would allow us to do what our shareholders are asking, and that is to grow our company in a positive way and through M&A, scale our company.

I hope that answers your question.

That was really helpful color. I had another one just on the $4 million subcontract you guys won in June.

You talked about that a little bit on the call. I was wondering just a couple of things: first, the term of that, if that's 1 year or multiple years, when you expect that work to begin, and then lastly, I think you mentioned that you could see significant growth from that contract.

I was wondering if you could just elaborate if you meant more work within that specific vehicle or with that partner, or just how that could be things?

I can certainly ask Drew to weigh in afterwards. I cannot talk enough about ADMACS and what that represents for our company.

As I mentioned in my prepared remarks, the overall value at $4 million when you compare it to our major prime contracts does not seem very large. In our business, opportunity comes both in terms of the financial side, but also the mission and the technology services and solution side of what we actually do.

ADMACS is a system that's been in place for quite some time, and it just needs to be modernized. It's critical, crucial to aircraft carrier operations, and all of us who stay up with the news can see just how critical our carriers are to our national defense.

This system actually allows the aircraft carrier to manage its flight operations and its flight movement of aircraft on the deck in the hangar bay, and has a direct bearing on how efficient combat missions can be completed off an aircraft carrier. For the customer to come to our company, SSI, our subsidiary, to specifically modernize this system is quite a compliment to our team.

The answer to your question in terms of longevity is our goal in talking with our government customers is to get this done as soon as possible. If we can get this done—and I can't go over specific time periods with you—but the idea is to do it as soon as possible.

This system is also relevant to other platforms in the Navy. When I referenced the fact that it could potentially grow, that is what I was referencing to is that if we're successful in this modernization effort, I would suspect that there would be opportunities to start and modernize other systems that are comparable throughout some of the Navy assets that we have.

Drew, did you have anything to add?

No, I think you covered it, Glen. I would just say that specifically to answer one part of the question, which is that work has started.

Great. That's super helpful.

Then I guess staying on the topic of aircraft carriers, I was wondering with the pipeline of aircraft carriers to come online over the next decade or two, and your guys' positioning with aircraft launch and recovery and the electromagnetic launching system, I was wondering how you view your competitive position with that technology if you expect over the coming years future work on aircraft carriers in that specific field to continue to be a backbone of the business, or just how to think about that component specifically?

I'll take that one, Glen. I would say the short answer is yes.

Obviously the contract that we're doing that work under is the software support activity, and those are two of the primary systems, which is the EMALS, which is the electromagnetic launch system, and then the Advanced Arresting Gear part of it. We believe we have 5 years on the current contract, and we believe that business will continue to be a backbone of what we're doing up in Lakehurst.

Great. One last one for me.

I was curious just

Hey, Derek.

obviously M&A Oh, yeah. Go ahead.

Hey, I'm sorry. I did want to add one further thought on Drew's comment too, because I think you were talking about longevity.

When we're talking specifically about the contracts, yes, it's obviously a 5-year opportunity. When you look at the Navy strategy, there's always debate about the vulnerability of aircraft carriers, but the practical aspect of it is, I don't think there's anybody who really believes that we're not going to have aircraft carriers for the future and who knows how long that's going to be, right?

We have 11 to 12 operational carriers at any given time, and the Gerald Ford is the newest aircraft carrier, supercarrier that has the EMALS technology. They're scheduled to have several carriers in the Gerald Ford class, I cannot imagine for the next 10, 15, 20, 25 years there's not going to be that kind of requirement.

I think we're positioned well to continue to be a main force in that technology area.

Great. That definitely makes sense on that.

Oh yeah, last question just on capital allocation. Obviously M&A is a priority.

I was wondering with the attractive level of cash you have on the balance sheet compared with the current level the stock trades at, I was wondering if you consider any other capital allocation strategies, such as a buyback, or just other potential uses of that cash?

Yeah. I I would say, Derek, that people invested in us to grow.

If if people invested in us to buy back shares, while that may be a a sound short-term strategy, we believe that we're going to grow the company through through through our organic growth and through our acquisitions. One thing that we talked about a little bit about trading current-period EBITDA and current-period operating income to do these investments, we're still positive in those.

We have $17 million of cash that that that we are looking to deploy. We're going to use it to grow organically and we're going to use it to grow through acquisition.

We and, there's some stipulations about whether we buy back shares. It it I don't think I don't think our investors invested in us to gave us money to buy back more shares.

They gave us money, invested in us to go out and grow the company. That's where our focus is.

If there's a time where it makes sense to do it, but that's not our first move, that's not our first play. Our our first play is to grow and grow, grow and acquire.

After we do that, if we have some leftover or we have it makes sense to do it, maybe we'll do a buyback, but that's not in our immediate plan to do.

Thank you, David. Just to follow up, Derek, I think there are certainly plenty of strategies for public companies in the area that you just asked about.

Of course, as a public company, we consider these strategies and we look at them all the time. Like David said, I believe that right now, currently, the way we are postured, the most advantageous path to grow this company and to gain the value that our shareholders are looking for with a little bit of patience here is to grow the company cleanly, right?

To make those organic growth investments, grow organically and grow through acquisition. This is not a rocket science model.

It is a model that is well-proven. The question may be why have some companies succeeded in that model and why have some companies not?

The answer is the important piece is not the model or the strategy, it's how you execute on it. That's the point that I always try to drive home.

I think we've proven that CTM knows how to grow organically. We're going to continue to do that.

We've also proven that we know how to make acquisitions and integrate companies in a way that's very effective, and we're going to do that. With the support of our shareholders and investors, with a little bit of runway here that we have with these new contracts, there's absolutely no reason why we shouldn't have great expectations in terms of making that model work for us and truly growing Castellum, not in terms of just revenue and profitability, but a stable stock, and one that as we get to the Russell 2000, we'll see the kind of stability and the kind of growth that I think all our shareholders are looking for.

All right. Got it.

Thanks for taking my questions, guys.

Hey, good morning, gentlemen. Excellent job on the numbers and a great conference call with everything going forward.

Just a quick question on your backlog and your conversion rate there. I know for the rest of the year, it seems like it's going to be a very small conversion.

On the backlog, is that something that you guys have no control on the conversion rate, or is it something that's just set in stone that that's just the way it is? Then the second question would be if there is no M&As during this year, do you expect your cash balance to stay the same, go lower, go higher if there is no M&A?

The third question would be: do you guys think you have the current workforce right now to continue growing, or you going to have to add, and what would be your current employees' numbers right now for how many workers? Thank you.

I've wrote down the second and third question, Charles. Do you have the first question again?

Hey David, this is Drew. I can

Oh, it's on backlog. Yes, okay.

On the conversion of the backlog, I think it's just important to understand you have the total backlog, which is what is on our contracts the maximum value, and then the conversion rate is based on contracting mods and funding actions. We don't have total control of them, but as in the government contracting world, we can only convert what is funded.

There's always some unknowns, but typically because of the nature of the work we're doing and the programs are programs of record, we do expect them to get modded and funded, but we're always conservative with our estimates, just making sure that we're not over-promising. You have the total backlog, which is the maximum value, and then you have the actual funding and mod actions that we're converting.

Those come incremental. If you think about it almost like an accordion, they grow and shrink, grow and shrink.

Those funding actions come incrementally throughout the year and have usually larger actions near the end of the option years for those contracts, if that makes sense.

Thank you, Drew. I would say we're almost conservative in our disclosure, not about the total backlog amount, but what's turning over in the next 12 and 36 months, in the sense that those are things that are scheduled and funded.

Like Drew said, in the government contracting space, as you're most aware, that the government customer holds the the one-way option call option on when to when to call and to schedule and fund those transactions. We have you know we have a number of contracts that we won that Glen talked about in 2000 2025, and a couple of them ramping up.

We're not we're looking at what is currently scheduled out for the year on certain things that may be ramping up, and we may not be including that in our what our percentage of is what we think will be will be converting. You asked about around cash.

We can't really project what cash we're going to have, but I like we said earlier, with our with the with the operating current income that we have, we have been funding our business development work, which is which are people, team members, that will continue and and our our M&A activity, which is some of our work and some consultant work that we're doing that that will not be eternal. It'll It'll have a It'll have a shelf date.

We will make an acquisition when it's right to make an acquisition. We are not going to We're going to find the right company at the right price.

We're not going to get so crazy that we go out and pay multiples beyond what's appropriate to make an acquisition that that makes sense. We can be patient, and we'll find the right acquisition.

I won't forecast what cash we'll use, but we've been doing all this with with still having positive operating income or positive cash operating income. We have $17 million of cash that we can spend to do this work, but we're still doing it the way we want to do it, and the way we want to do it, we're still showing cash operating income.

I think we're going to still keep that discipline. We have a great team working on the acquisitions.

We have a great spate of companies we're looking at, and we're making sure we get the right fit. We can't tell you when we'll do it, because it's not in totally in our control in our hands, but we are working to do it quickly, but not hurriedly, and not we're not we're not going to get up in a frenzy and do something that's not good and and and beneficial for the company.

Just to follow up on the last comment from David, he's absolutely right. We're going to be disciplined and deliberate in terms of our acquisition process and approach.

I can tell you this, we've got a goal, and we're going to do it expeditiously as well. We realize the importance of what a good acquisition can do for CTM, and obviously the sooner we can do that, the better.

You can bet that, like I said earlier, there are two primary focus areas for us in our strategy: continued organic growth and getting a good acquisition done.

Yeah. The last question was around employee levels.

From a direct employee level, all of our direct employees are fully employed. We don't have people sitting around with excess capacity.

When we win a contract or we acquire a contract, we're going to staff those appropriately and timely so that they're fully utilized. On the G&A and supporting side, we are a small public company, but we're built to be a public company that can have some growth.

From a G&A perspective, we are not going to grow our HR, our finance, our contracting team, our business development team. We don't have to grow it so much more.

We'll have to grow it a little bit, but not on the same trajectory as when we based on the revenue we have. We have teams that have, I wouldn't say capacity, but have the ability to do additional work with given a certain amount of size.

As I said earlier, we don't need a new CFO, we don't need any COO, we don't need a new CEO, we don't need a new general counsel. We have X number of people in our HR group.

If we double our size, we might need one or two more people, but not five more people. Finance situation as well.

We'll grow, but we have capacity to take on more work and more size in the company.

Good morning, gentlemen. At the end of last quarter and the beginning of this quarter, you gave pretty clear guidance on how you were going to go through your backlog, what percentage, and it was pretty easy math to conclude what this quarter should look like if you succeeded.

The problem is, analysts didn't seem to get the picture. They projected higher revenue, and so what was reported was that you missed revenue.

By my calculations, you beat revenue according to your guidance. My question is, how are you going to get that message out there so that in the future analysts don't come back and say you missed revenue, but they understand that you beat revenue when you did?

Thank you very much. Yeah.

The first thing I'll say is, John, this is our first earnings call. We haven't done one to date since we've been a public company, but we are working to get our message out through this vehicle.

We've also, we said, one of our investments was making investments in investor relations, and we have a great group helping us engage with current investors, future investors, and analysts. We're we're making active, deliberate outreach to all those in the know.

We haven't given guidance, and we're not prepared to give guidance right now, and and and any analysts following us knows that they've not received guidance. We're providing as as much information as we can we think is reliable and appropriate.

Like you said, you saw the what we provide in backlog and we talked about 24 months out, and the next 20 the 12 months out, the next 24 months. We're again, we're a little bit conservative on that, maybe, but we're showing what's scheduled, and scheduled and and funded.

If they know the business and how it works, maybe they know that, sometimes the options that in the additional scheduling and on-contract growth that happens, they can see the trajectory of what we've done in the past, and can and can look at that. We are doing active active outreach with the whole investor and analyst atmosphere, stratosphere to make sure that we're getting our message out.

Hey, and

just again another follow-up here for me. Hey, John, thank you very much for that question and for your observation.

It's one that I share. We at CTM, we are unique in many ways.

One is, and one way that that David has pointed out is that we we are a relatively small company to be publicly traded in the defense sector, in the national security sector. I think if you do a study, you know there are very few companies like ours.

I think, you know a lot of our analysts, try to work very closely to ensure that they understand, the machinations of a company our size as opposed to a billion-dollar publicly traded defense company. We track our financials, we track our contract execution, week to week, month to month, quarter to quarter.

I think anyone who understands our business and has worked or is familiar with a company that's in the government contracting sector understands that if you focus overly focus on certain periods, whether it's a month, a quarter, you're probably getting a snapshot picture that could be entirely inaccurate in terms of how the company is doing and even what it's projected to do. I can I can assure you that that our team here at CTM, we're on top of it.

We know how we're performing from a contract execution standpoint and from a financial standpoint. We know it, day to day, week to week, month to month, quarter to quarter.

I had a sense that when we released our earnings for Q3 for Q2 with our you know revenue fairly stable compared to 2025, but not greater than 2025, that there would be some who would misconstrue that. That would be a mistake.

When you look at 6 months, we're well past 2025. As I've said numerous times in my prepared remarks, we're going to have a record revenue year in 2026.

That's due in large part to the hard work of every member of our CTM team.

Thank you very much, Catherine. I'll just close.

I think we've said everything we need to say, and I'll just close with just thanking once again for all of you that took the time to call in, to listen, to ask questions. Thank you for your interest, your commitment, and your confidence in our company.

As David mentioned earlier, we are truly trying to professionalize every aspect of our company as a publicly traded company. When it comes to our investor relations and everything to do with communicating information that's accurate and timely to our shareholders, we take that very, very seriously.

At the same time, we've got a job to do, right? That's to directly support our mission customers and warfighters.

That's always our priority. To be honest, in the business that we're in, there really should not be a lot of spikes up and down.

I think hopefully, as you look at our first 6 months of 2026, you'll see that there are very few spikes, right? It's a steady progression.

Until we get that next big contract win and we make that next major good, solid acquisition that we're looking to do. Once again, thanks for your time, and thanks for your support.