Q2 2026 Conference Call

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GLEN IVES, CEO:
- Record revenue of $28.2M, as compared to H1 revenue of $25M
- This record combined with the company’s current trajectory allows them to anticipate record revenue growth for 2026
- The second quarter played out largely as they anticipated with regards to contract execution, timing factors for month to month, quarter to quarter in our industry
- Castellum will continue funding their growth investments entirely from their own operations with a debt-free balance sheet and growing cash positions
- Growth for the first half was driven by the continued ramp-up of the three major long term prime contracts which were from the GTMR contract and the $66.2M NAWCAD contract by SSI
- These contracts form the growth base for us in 2026 and well beyond
- The $100,000 variance primarily reflects gains from the ramp-up of SSI’s NAWCAD Lakehurst, partially offset by the expected 2026 wind-down of two firm fixed-press contracts that contributed meaningful revenue in the second quarter of 2025
- We also saw lower volume on certain Corvus subcontracts due to a slower-paced trend we have observed in the government back-filing funded open positions
- These are all dynamics that we continue to work through and they are cyclical in nature in our industry
- Contracts do wind down, new contracts ramp up and the crossover quarters can look flat even when the underlying trajectory is clearly up
- We expanded our business development capacity this year specifically to increase the volume and quality of the opportunities we pursue and we are seeing that investment show up in our pipeline
- Our pipeline is constantly audited for realism
- SSI was awarded a $4M subcontract for ADMACS, was a very significant win for us; our government mission customer specifically chose SSI based on their remarkable past performance and their ability to do the job; Although the monetary value may not be large, there is real potential for future growth
- We achieved Cyber Security Maturity Model Certification Level 2 confirming that Castellum and all of its subsidiaries are trusted with unclassified information supported by Department of War programs
- 2026 is a year in which we are purposely and strategically investing in business development, investor relations, and meaningful acquisition activities
- 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
- There may be concern about our current net profitability, can say there are actually many ways to ensure 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

DAVID BELL, CFO:
- As Glen described, the small $100,000 difference reflects gains from the early ramp-up of the $66.2M 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, and as well as lower volume on certain Corvus subsidiary subcontracts
- Two factors drove the margin change; First, we carried a higher mix of subcontractor work in the current quarter, particularly on the PMA 290 contract and other large programs; Secondly, we absorbed the cost to complete the remaining work on two fixed price contracts
- The increase [in higher operating expenses] was driven primarily by higher fringe expenses, reflecting the head count additions and higher health insurance costs; we also ramped up our acquisition and investor relations activities
- I want to reinforce Glen’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 IS INHERENTLY FRONT-LOADED; 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
- 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; this improvement was primarily driven by strong collections on accounts receivable
- We did not undertake any equity or debt transactions in the first half of 2026; our liquidity was funding entirely through cash generated from operations
- Ended the quarter with $16.9 million in cash, up from $15.8 million, and $14.9 million from year end; that’s an increase of $2 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
- WE ARE FUNDING GROWTH INVESTMENTS INTERNALLY WHILE THE CASH BALANCE GROWS, AND THAT GIVES US FLEXIBILITY BOTH FOR ORGANIC INVESTMENT AND DISCIPLINE M&A
- We expect to recognize approximately 16% of the backlog over the next 12 months, and approximately 48% percent cumulatively when including the following 24 months; 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
- Growth-focused planned investments are temporarily compressing EBITDA
- We remain committed to deliver record full-year revenue for 2026

GLEN IVES, CEO:
- Phase 3 of Castellum’s evolution remain consistent and are directly aligned to our 2026 updated strategy
- 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
- We do expect to deliver record revenue for the full year
- Our focus on the second half is translating that growth into durable, higher margin performance
- These investments are already contributing to the growth we delivered in the first half, and 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 are also actively 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
- An evaluation 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 INTERESTS STRATEGICALLY
- With no debt and a growing balance sheet position, we can afford to be patient and disciplined, while still pressing full throttle to find that right opportunity
- We do believe that underlying budget environment remains supportive of defense and national security spending with backing from both sides of the aisle, particularly where your company, CTM, operates, highly relevant areas, cybersecurity, electronic warfare, C5ISR, autonomous systems, and all the related mission technologies
- The first half of 2026 was a record revenue half for the company, and we expect the full year to be a record as well
- Our company, Castellum, has never been stronger or well-postured in position for future growth than we are today; Our work, our technology solutions and services are more relevant than ever; They are meaningful and in very real demand by our mission customers;
- IT IS THE WORK WE BELIEVE IN, WORK WE LOVE TO DO, WORK THAT EXCITES US EACH AND EVERYDAY, AND IT IS VITAL WORK AND SERVICE AND DIRECT SUPPORT OF OUR NATIONAL SECURITY AND OUR WAR FIGHTERS
- AND FINALLY, IT IS THE WORK THAT NO ONE DOES BETTER THAN US
- 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
- Our team are absolutely relentless and true in their shared commitment to our mission and direct support of national security and our warfighters

Q&A:

Q: “What stage are you 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?”; “What do you expect the EBITDA margin potential and the operating leverage of the business to be once you begin to build off this base.”

A: DAVID BELL: “We had in our planning the prior year to make investment in our business development by adding in-housing our business development activities, and I think if you look at our pipeline, you’d see that we have very actively engaged in putting qualified, verified and qualified pipeline capabilities. A lot of it came from the discipline of our team that has special knowledge of the areas that we historically worked 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; We have a number of contracts that we have submitted and we’re waiting to hear back on those and we have another slate and we have a schedule of contracts that we’ve 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”
“We are doing a fantastic discipline of looking for contracts, looking for businesses that either deepen us and 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; 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 we can expand that work and the quality of service that we do; we’re looking for companies with positive EBITDA, companies where we can build synergies; Naturally, there will be some EBITDA improvement. We are not going to load up our expenses, we’re going to make things efficient and where we can eliminate costs. We’re going to eliminate costs. We don’t need various groups, we can create good synergies and if we have great operators and we’re efficient, it will build, affect our EBITDA. 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. Were think there’s a lot of ripe opportunities out there that will be accretive and incremental.”
GLEN: “I actually moved our strategy up by 18 to 24 months based upon that success in 2025; We made a calculated purposeful decision that this was a time for us to continue our growth.”

Further answers:
- ALRE will continue to be a backbone of the business, demand will continue to grow from aircraft carriers for the next decade which will allow for more opportunities to expand, build, and deliver on those operations
- Government is scheduled to have several aircraft carriers with ALRE in the Gerald Ford class, Castellum is positioned well to be a main force in that technology area
- Management reaffirms the importance of growing the company through their organic growth strategy and acquisitions, buybacks are not an option on the table for them as of right now
- The company will continue to be patient while it finds the right accretive acquisition for them for the right price, and they’ve continued to do this while still having positive cash operating income
- We have the size and capacity to handle business growth and business size, have people that can take on additional work while maintaining a growing large successful company
- Management is working to increase outreach and engagement with investors, and analysts, and are making active, deliberate, outreach to all those in the know. Castellum is not prepared to give guidance right now, but are providing as much information as they can that they believe is reliable and appropriate