Castellum (CTM) 2026年第3季財報電話會議：專案管線達16.6億美元

重點摘要

• Castellum 公布 2026 年第三季營收為 14.7 百萬美元，去年同期為 14.6 百萬美元，2026 年第二季則為 13.9 百萬美元。
• 前九個月營收年增 6% 至 42.9 百萬美元，主要反映海軍合約的放量推進。管理層持續預期 2026 全年營收將創歷史新高。
• 第三季毛利率自去年同期的 37.6% 降至 36.1%，但較第二季的約 34% 有所改善。管理層將此差異主要歸因於利潤率較低的分包商業務佔比提高。
• 第三季調整後 EBITDA 仍維持正值，約為 600,000 美元，低於去年同期的 1.1 百萬美元，主因 Castellum 增加了業務拓展與併購活動的支出。
• 截至季末的在手訂單總額為 254.5 百萬美元，而合格潛在專案管道則自 2026 年 6 月 30 日的 953.5 百萬美元增至創紀錄的 約 1.66 十億美元。
• 截至 9 月底，Castellum 擁有 15.7 百萬美元現金、無未償還債務，以及 36.3 百萬美元的股東權益。管理層指出，除了有機成長之外，併購是加速擴大規模的主要途徑。

核心財務數據

業務與營運表現

海軍業務持續引領成長。NAVAIR PMA-290 特殊任務專案合約金額上限於 8 月增加了 32.8 百萬美元，達到 136.2 百萬美元。該專案為 P-8 平台在情報、監視、偵察及目標鎖定方面提供支援。

Castellum 也持續從為期五年、金額 66.2 百萬美元的 NAWCAD Lakehurst 任務營運與整合合約中獲得營收，該合約目前仍處於放量初期。管理層表示，隨著其他專案結束，預期相關工作將移轉至整合物流、工程與網路合約中。

在手訂單總額為 254.5 百萬美元，其中包括 18.2 百萬美元的已撥款在手訂單，以及 236.3 百萬美元的未撥款在手訂單。該公司微調了報告計算方式，將已定價的合約選擇權納入未撥款在手訂單中。管理層預期約 25% 的在手訂單將在未來 12 個月內認列，51% 則在未來 24 個月內認列，具體取決於客戶撥款與選擇權行使情況。

合格潛在專案管道擴大至 約 1.66 十億美元。管理層將此成長歸功於業務拓展資源的增加，並表示該管道儲備延伸至 2030 年。Castellum 正優先爭取 NAVAIR 的機會，同時在太空軍、空軍及陸軍尋求具備類似能力的專案。

管理層表示，目前約有 80% 至 85% 的職缺是用於支援現有合約的成長，其餘則與潛在商機掛鉤。

管理層指引

在已獲合約的支撐下，管理層維持了對 2026 全年營收創歷史新高的預期。電話會議中並未提供具體的全年營收或獲利目標。

公司預期業務拓展與併購投資的效益將在未來 6 至 12 個月內開始顯現。管理層亦目標在此期間展現具體的收購進展，不過也強調目前尚無法保證任何交易必然成行，且時程可能會有所變動。

Castellum 正評估能深化其現有市場地位，或增加相鄰能力、客戶關係與具獲利能力合約的標的。管理層表示，營收約為 15 百萬至 30 百萬美元的公司通常在其可負擔範圍內，同時也在考慮規模與 Castellum 相當的企業。

風險與關注要點

• 政府合約的授予、專案放量與營收認列在各季度之間可能存在重大差異。
• 撥款決策與合約選擇權的行使仍由政府客戶掌控。
• 預算延遲、持續決議案以及政府停擺均可能影響支出與合約執行。
• 相較於直接人工，較高比例的分包商工作可能會對毛利率造成壓力。
• 業務拓展與併購支出正在削弱近期獲利，儘管管理層將這些投資定調為計劃內支出。
• 併購涉及執行、估值、文化契合度與整合等風險。管理層表示，若無可接受的財務條件，不會盲目追求規模。

分析師問答重點

管理層表示，有機成長仍是策略核心，但單靠自身難以足夠迅速地達到理想規模。因此，Castellum 正在採取有機合約成長與併購雙軌並行的策略。

潛在併購資金來源可能包括現有現金、適度負債、發行新股以及將賣方股權轉為 Castellum 股票。管理層表示希望交易能全面增益損益表表現，且無意過度增加資產負債表槓桿，或預先支付未來多年的利潤。

在資本配置方面，管理層表示曾討論過股票回購，且這與併購並不互斥。然而，目前的偏好是保留現金用於合適的收購。財務長亦表示，股票反向分割目前 不在考慮之列，但並未斷然排除未來的任何行動。

在科技產品方面，管理層預期在經過進一步測試與功能開發後，Guard Tower 內部威脅偵測設備將在約六個月內就緒。Castellum 預計將擔任認證經銷商並提供相關服務。在進行更廣泛的商業推廣之前，該公司也正在優化 XRA，這是一款跨平台的延展實境維護工具。

財報電話會議完整逐字稿

完整財報電話會議逐字稿

管理層陳述

Operator

Good morning and welcome to Castellum, Inc.'s third quarter 2026 earnings conference call. An earnings press release was distributed yesterday, November 5, 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 with the SEC. Please note that this call is being recorded. [Operator Instructions]

Before we get started, I would 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 future revenue growth, new customer opportunities, improvements to cost structure and profitability. Forward-looking statements are subject to certain risks and uncertainties, 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, the company's ability to grow and execute on total backlog and qualified pipeline, ability to integrate and grow acquired companies, ability to identify and close additional acquisitions, and factors affecting U.S. government spending, including budget delays, continuing resolutions, and government shutdowns. Please also note on this call, we'll reference 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 the 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. I would now like to turn the call over to Glenn Ives, President and Chief Executive Officer of Castellum. Glenn, please go ahead.

Glen Ives

Well, thank you, and good morning to everyone on our call. Joining me today are David Bell, our Chief Financial Officer, and Drew Merriman, our Chief Operating Officer. And they'll both be available to answer questions as well during the Q&A period at the end of the call. Following my opening remarks on the company's performance during our third quarter and first nine months, David will take you through the financials in more detail, and then I'll provide some commentary on our strategic priorities and also our outlook for the balance of 2026. And then we'll get to the questions during the Q&A period.

For the first nine months of 2026, we generated $42.9 million in revenue, up 6% from last year, and as previously announced, we expect record revenue for the full-year period. Much of that growth reflects the large Navy contracts we won in 2025. Our NAVAIR PMA-290 Special Missions Program contract continues to be a very meaningful contributor. In August, the ceiling on that contract was increased by $32.8 million to a total of $136.2 million. And we're also seeing revenue from the five-year $66.2 million NAWCAD Naval Air Warfare Center Aircraft Division Lakehurst program, which is still early in its ramp-up. As we've regularly emphasized, we encourage investors to evaluate our performance over the long term, rather than focusing too narrowly or too heavily on any single quarter. Given the nature of government contracting, the timing of the awards, program ramp-ups, revenue recognition, they can all fluctuate significantly from quarter to quarter, and as a very common factor in our industry, those fluctuations are a normal part of our business. Our year-over-year growth is what provides a much clearer picture of Castellum's overall trajectory and the steady progress that we're making.

Government services revenue does not move in a straight line, particularly for a company our size with annual revenue between $55 million to $60 million. Contracts do wind down, new contracts ramp up, and the crossover quarters can look very flat, even when the underlying trajectory is clearly up. Our focus, our work, our effort, our commitment is always on delivering for our existing mission customers and growing and strengthening every opportunity that we can possibly have for sustaining our growth.

Turning now to our backlog, we ended the quarter with a total backlog of $254.5 million, including $18.2 million funded and $236.3 million unfunded. This compares to $271.7 million June 30 of this year, 2026. As part of that, backlog has moved to work in progress. During the quarter, we refined how we report backlog by including priced contract options in our unfunded backlog.

This change provides a much clearer view of our contracted business and aligns our reporting with industry standards. We do expect to recognize approximately 25% of our backlog over the next 12 months and about 51% over the next 24. Our qualified pipeline also grew to a record level of approximately $1.66 billion from $953.5 million on June 30 of this year. The pipeline represents potential future awards and reflects the investments we have made in our business development capacity, this year specifically to increase the volume and quality of the opportunities we do pursue. Our team continues to focus on serving our Army, Navy, and our federal customers, pursuing new awards, and expanding our work under existing programs. The August modification to the NAVAIR PMA-290 Special Missions Contract is a very real example of how strong program execution can create additional opportunities. I think our proven CTM team knows how to execute on contracts, and we know how to grow them.

Finally, I'd like to briefly discuss our investments in business development and M&A, which I will expand upon following David's discussion of our financial results. During this year, we purposely increased our investments in these areas in accordance with our current strategy. And the near-term impact on EBITDA because of these strategic investments was planned and anticipated. We view these strategic investments as the upfront work that we need to win, grow, and scale Castellum. And these are investments that precede new contract awards and associated revenue that we do expect to generate. We're making these investments from a position of financial strength, funded by our own operations using that operating income, and we believe they will support and strengthen our sustained growth over the next several years. Just want to reemphasize that point, that we are making these investments from a position of financial strength, a strong balance sheet, and funded by our own operations using that operating income.

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

David Bell

Thank you, Glenn, and good morning to everyone. I'll go over our financial results for the quarter and the first nine months, then discuss cash flow and our balance sheet. Third quarter revenue came in at $14.7 million compared to $14.6 million a year ago and $13.9 million last quarter. The NAVAIR PMA-290 Special Missions and NAWCAD Lakehurst M&I contracts continue to contribute revenue as work continues to ramp up, although timing of work across our contracts can be affected and can affect individual quarters. Gross profit for the quarter was $5.3 million compared to $5.5 million last year. Gross margin was 36.1% compared to 37.6% a year ago, but improved from approximately 34% in the second quarter of this year. The main factor driving this fluctuation is contract mix.

During the third quarter, we carried a higher mix of subcontractor work on larger programs, and that generally carries a lower margin than our own direct labor. As just stated, sequentially gross margin has improved from approximately 34% last quarter. Operating expenses were $5.9 million for the quarter versus $5.0 million a year ago. The increase reflects the business development team we've added, higher employee-related costs, outside support for acquisition activities, stock-based compensation. These are areas where we made intentional investments as part of our growth plan rather than unexpected expenses, just as Glenn stated a second ago. Adjusted EBITDA for the quarter was positive at approximately $600,000 compared to $1.1 million last year. The calculation excludes non-cash expenses such as $800,000 for stock-based compensation and employee stock purchase plan costs, as well as $300,000 in depreciation and amortization. Full non-GAAP reconciliations are available in our earnings press release and presentation.

As Glenn mentioned, the decline in adjusted EBITDA was planned and anticipated as we made a deliberate decision to invest in our business development and acquisition efforts. We have the capacity to spend more, but we're taking a measured approach, investing where we see the strongest potential return while protecting our financial flexibility. We reported a net loss of about $500,000 for the quarter versus a net income of $400,000 last year. The majority of this net loss was due to non-cash items such as stock-based compensation and depreciation and amortization. Of course, the growth initiatives I've just discussed had a real cost and impact. Looking at the nine-month period puts those results in context. Revenue increased by 6% to $42.9 million from $40.3 million a year ago, driven primarily by the ramp-up of our Navy contracts.

Nine months gross profit was essentially flat at $15.1 million. Gross margin was 35.2% compared to 37.5% last year. Operating expenses were $17.4 million compared to $16.5 million a year ago. Adjusted EBITDA remained positive at approximately $1 million versus $1.8 million, and a net loss of $1.8 million compared to $1.1 million last year. Those figures reflect the contract mix and the investment decisions that both Glenn and I have just discussed. Turning to cash flow, which I think is the highlight of the period. Net cash provided by operating activities was $1.1 million for the period, compared to a use of $1.3 million in the nine months of the prior year, a positive swing of $2.4 million. That improvement was primarily driven by a smaller increase in accounts receivable in 2026 than in 2025.

Importantly, we continued to generate positive operating cash flow while investing in business development and M&A. Turning to liquidity, we ended September with $15.7 million in cash and $8.8 million in net accounts receivable, or $24.5 million combined. That combined balance was approximately $23.1 million at the end of 2025. That's an increase of roughly $1.5 million, or about $500,000 per quarter on average. Receivables are not the same as cash, but together with these balances provide a useful context for our liquidity and working capital. We also ended the quarter with no outstanding debt and approximately $36.3 million of stockholders' equity. Finally, an additional word on backlog composition.

As Glenn mentioned, total backlog was $254.5 million at quarter end, with $18.2 million funded and $236.3 million unfunded. We expect to recognize approximately 25% of our backlog over the next 12 months and approximately 51% over the next 24. Importantly, these figures reflect only our existing backlog and do not include potential revenue from new contract awards or other business not currently included in our backlog. As with all government contracting, the timing of funding and option exercises rests with our customers. But this backlog provides a multi-year foundation of revenue visibility. So to summarize our current financial picture: first nine months of revenue is up 6%, adjusted EBITDA and operating cash flow are positive, and we have $24.5 million in cash and accounts receivable with no outstanding debt. While our investments in business development and M&A have weighed on near-term earnings as expected, we anticipate to begin seeing the benefits of these investments over the next six to 12 months.

Building on this momentum, we remain on pace for record full-year revenue for 2026, and with that, I'll turn the call back to Glenn to discuss our strategy and our outlook.

Glen Ives

David, thanks very much. Yes, the financial results reflect the choices that we planned for and that we've been making throughout this year, that has continued to serve and grow our existing mission customers while putting more resources behind the next phase of our growth here at Castellum. So let's focus just for a minute here on how we're positioning Castellum for that next very important phase of growth and why we see acquisitions as really our greatest opportunity to achieve the scale that we are driving toward and are absolutely 100% committed to. That is, again, grow organically and scale inorganically. Organic growth does remain important for us. It is a top priority as we move through the end of 2026 and into 2027. Disciplined execution always remains our priority, and I believe our CTM team over the last year and a half has really proven that and hammered that home. We expect record revenue for 2026, supported by the work we've already won.

We've also strengthened our business development team to pursue larger opportunities, and an increase in our qualified pipeline gives us more to compete for. We will also keep delivering flawlessly on our Army and Navy contracts and programs, and also our federal civilian contracts that we've already won. Strong execution supports and fortifies our business today and provides that rock-solid business foundation for the right acquisitions that we're looking to make. However, organic growth alone, as I said, will not get us to scale, so we are definitely pursuing acquisitions to get to the pace that we want to achieve. Again, that is why M&A is at the center of our growth strategy.

This year we've invested additional time and resources in identifying, screening, and evaluating potential businesses, including support from outside advisors. We've targeted businesses that complement our current capabilities, strengthen our position with federal customers, add useful contracts and profitable contracts or technologies, and contribute meaningful revenue and earnings. But scale alone is not the goal. The price, the cultural fit, the chemistry, and ability to integrate the business all must make sense to us and to our shareholders.

We believe the work we put into that process is bringing us much closer to the right acquisition opportunity, and we are fast approaching that next phase. While no transaction is assured and timing can change, our goal is to begin showing investors tangible results from these efforts over the next 6 to 12 months. We are actively evaluating several opportunities and we intend to move quickly as we determine the strategic fit and financial terms are right. We do see acquisitions as a primary way to accelerate our growth here at Castellum and improve our earnings potential beyond what organic expansion can deliver. That is why we have worked hard to position ourselves for this acquisition phase of our strategic plan.

We built a strong business foundation with multiple large prime contracts that take us well over five years. We've got a strong cash position, no debt, a very strong and healthy balance sheet, so we're ready to move. As we move through the end of 2026 and 2027, we expect the next six to 12 months to be a very important period for demonstrating our potential to scale and our goal, once again, to grow Castellum for our shareholders. I'd like to thank once again all our shareholders, our employees, our partners, our mission customers for your ongoing support, trust, confidence, and commitment to CTM and our vital national security and defense mission. I feel very blessed to have an incomparable world-class team of the very best professionals in our industry who truly believe and are wholly committed to our important and purposeful mission of directly supporting our nation's warfighters to help ensure our freedom and security. That may sound a lot like mom and apple pie, but it's our truth, and it's what drives your CTM team to do our very best to grow and scale and bring real value to our shareholders, our mission customers, and our people. That concludes our prepared remarks. Let's go to questions.

Operator

[Operator Instructions]

Our first question comes from Derek Greenberg with Maxim Group.

分析師問答

Derek Greenberg

I wanted to start off with, I think it was important the point you made about how short-term results aren't really as important and as indicative of company performance as the long term and as those contracts get recognized over the long length. I was wondering maybe if you could just talk about how visibility is in your current contracts in terms of those beginning to ramp. And if you could comment maybe on, I noticed the backlog, the percent you expect to recognize over the next 12 and 24-month period both jumped a decent amount sequentially. So I was wondering if you're expecting acceleration from current contracts.

Glen Ives

Yes. Derek, thanks very much for your question and the point about how to look at government contracting for, especially for a company our size at $55 million to $60 million in revenue. How those contracts are executed, what those timelines are, our relationship with our mission customers and the government, and how all that impacts when we realize revenue on those contracts. I do think it may be helpful for some of our listeners and our shareholders, who don't always hear this part of the business, to maybe get a little more detail on the contracts themselves, because that's the strength of our company, right? These are all technology services solutions contracts in very, very key tech domains that our warfighters and our mission customers need, obviously, to deal with all the different situations across the world. The fact that they're so relevant and so important gives us great confidence that these contracts and the value of these contracts are going to be realized over their five-year period of performance. But I've got my Chief Operating Officer, Drew Merriman, on the line here. Drew, can you share with our listeners just a little bit about our contracts and how we execute on them?

Andrew Merriman

Sure. So, I'll go over the top 3. The first being the 290 Special Missions Contract, which is supporting the P-8 program with intelligence, reconnaissance, surveillance, and targeting. And that's one we recently expanded the scope on. As we're continuing to perform well, we've gotten some new requirements, which answers one of the questions on why we see our execution of our backlog has grown a little bit. And then also on our mission operations and integration contract, I think that's a good example to explain the ramp-up. So, that contract was in its base year, and it's a consolidation contract with logistics, engineering, and cyber. And so, as other contracts come to an end, that work rolls in. So, the ramp-up in the base year is a little bit slower than it is in the out years.

And then our other large contract is the software support activity up at Lakehurst, supporting aircraft launch and recovery, where we do all of the software development for the systems that involve launching aircraft and landing them on the carriers. That's kind of an overview of our top 3.

Glen Ives

Yes, thanks Drew. And so Derek, going back to your question, there's a lot of factors that influence how we execute our contracts in terms of requirements that change depending upon our mission customers and how they fund them. So going back to your point about why it's important to look at revenue growth and EBITDA for us across more of a year timeframe than a quarter by quarter is because those requirements change regularly, constantly. What they had planned to do for one quarter they may push to the next and something else may come up where they want us to take on. So it's very, very difficult to predict. And so when we're looked at quarter to quarter, you're going to see a lot of ups and downs. And our goal is by the end of the year to achieve our objectives, both in terms of how we support a customer and the revenue and the EBITDA that we've guided. Did that answer your question?

Derek Greenberg

Yes, that was very helpful. Thank you. And then maybe turning to the pipeline, maybe if you could just give some more color. That shot up pretty significantly quarter over quarter. But I was wondering if you could maybe talk about the composition of that pipeline, how far along those opportunities are, maybe a rough estimate of when those potential opportunities could potentially be converted upon.

Glen Ives

Sure. So the strength of our pipeline and the growth of our pipeline is due directly to the investments we've been making in business development over the past year. So we all know that in government contracting, we're basically on five-year cycles. And so it's imperative for us to have not just a pipeline of good opportunities, but a very realistic one, one that matches up with our sweet spot, the things that we do really, really well. And I think our listeners on this call understand what we do here at CTM. We provide those tech solutions and services in those key tech domains, whether it's C5ISR, a mission domain like that, or a tech domain, whether it's AI or cyber or any of those that are very relevant to our mission customers. So the idea behind our pipeline is to ensure that we have the kind of opportunities that work directly to our strengths and to the mission customers that we feel we are very, very familiar with and can compete on these opportunities for.

But we also want to balance the pipeline to get us into new markets. And those, the ones I just spoke about with our current market and our current mission customers tend to be more near-term because we're ready to jump on those opportunities. The pipeline opportunities that we have that are longer-term are really associated with markets that are newer to us, ones that we have not penetrated yet, that's going to take us some time to do the kind of capture and that kind of development that we need to do. So I feel very good about our pipeline. It's a good balance of opportunities that will test us in terms of staying on top of our game from a technology perspective, but it's also a pipeline that's balanced in terms of opportunities related to customers and markets that we know, where I know we can be very, very competitive, but then also opportunities that will stretch us, right, and hopefully get us into new markets.

But that ties directly into the message that I was really trying to send today, Derek. And that is, it's just not about pipeline. It's just not about organic growth. We've proven that we can win. We've proven we can compete when it comes to organic growth. 2025 was certainly a year that I think should reinforce that. But as importantly, organic growth will be steady and take us so far. It's going to have to be our acquisition strategy and our acquisition efforts, and doing that part of the business properly, that will help us really scale the company. So that blend of organic and inorganic growth is a vital part of our strategy and it's what's going to drive CTM to the kind of value that we all want.

Andrew Merriman

Hey, Glenn, I can add a little more too. So as far as the composition and timeline, we track our top 10 for 2027, and we prioritize by our core market, which is NAVAIR. And then we look at new markets from same capabilities. So we have opportunities in Space Force, Air Force, Army, the capabilities line up and the pipeline goes out to 2030. So as we start to qualify new opportunities, the pipeline is strong and keeps growing based on we know there's a real requirement, we know there's money behind it, and we know we have the same capabilities. That answers the question.

Derek Greenberg

Yeah, that's really helpful. Thank you. And then I was curious just how you view the investments you've made so far this year in terms of where you're at now with business development and the other areas of investment. Do you feel comfortable with the level you've made, or do you think there'll be more investments to be made going forward? Just your outlook on that.

Glen Ives

Yes, so Derek, that's a question I think I ask myself just about every day. Because when, again, when you're a company our size, you really have to be very, very smart and disciplined about your resources. We certainly are not a billion dollar company and we don't have the kind of resources that some of our large business competitors have. So we have to make the most of what we have. So we challenge ourselves as a team literally every day to ensure that we're balancing our costs and getting the most return out of our investments when it comes to business growth. So I feel like the honest answer is that it's never enough, right? Heck, if I could get two more business developers and two more proposal developers, and add another consultant to help in our acquisition strategy, I'd jump all over it. But no, I can't do that.

No, we need to balance that with what we can really, really do. I feel very confident that that's what we've done. We've really managed our finances, managed our costs, managed our resources, so that we're in a very strong battle rhythm, we're operating optimally. I put our company against any company in our business when it comes to organic growth. Over the summer and the fall, we have really geared up when it comes to our acquisition strategy. I think I'll be able to share some progress and news as we go into the new year. I feel very, very good about where we're at as a company. Again, strong business foundation, contracts that have 5-plus years.

We will realize the value of those contracts over those 5-plus years, healthy balance sheet, strong cash position, no debt, and we are very, very postured for not just the organic piece, but the inorganic piece.

Derek Greenberg

Yes, that makes sense. Last one for me and then I'll pass the line. I was wondering if you could maybe just comment macro wise, if you're seeing any impact either from just the elections or if you have any visibility in terms of funding and appropriations and if those will have any impacts on your business over the next couple of years?

Glen Ives

Sure. The election piece is probably a little too early to really give you an intelligent comment on, although there are some things I think we can probably anticipate. For example, there's a very key initiative right now that the Small Business Administration is considering, and that is changing the small business size standards. Depending upon how that plays out, that could be a very significant change in a very positive way for Castellum and companies like ours. But the beauty of the business we're in when it comes to government contracting, Derek, and I think you know this, sure many of our listeners do too, is that it can be a very reliable, a very steady, in terms of expectations, opportunities, how contracts are executed over those 5 years. But every administration, every change in Congress does come with some impact.

But I think history has proven, especially with our company, that we're pretty resilient. The changes that we see with administration changes and changes in Congress, even with some policy changes, we're able to sort of work through and whether there may be some spikes up and down in terms of impact to some of our contracts or some of our opportunities quarter to quarter, over the period of our sales cycle, which basically in government contracting is about 5 years because of the length of the contracts, we're able to mitigate those. And I don't see how that's going to change. I feel like we'll still be in a position to mitigate and work through any of the changes that may be coming from all the different dynamics that impact our business and our industry.

Derek Greenberg

That makes sense. Thank you for taking my questions.

Glen Ives

No problem, Derek. I think you actually asked 4, so we're trying to figure it out to keep it to 2, but that's okay.

Operator

Your next question comes from Chip Rui with Rui Asset Management.

Unknown Speaker

Glenn, you projected a lot of confidence on this call, and it's really good to hear. And I guess I'll ask 1 question, probably with 7 parts. Sorry about that. But looking at the stock reaction, I'm perplexed. I mean, you've guided to 12-month revenues going forward over $63 million if you just do the math. And I know that may not be a straight line quarter over quarter, but it's definitely good confidence. And so it looks like the one analyst who's on the line will have to raise numbers and your stock's down incredibly on what's good news.

And then you announce a pipeline that's $1.66 billion. And I'm a little confused that a lot of the conversation has been, boy, we have to go out and do a lot of M&A. So, you know, I'm wondering how much of that pipeline can you convert on your current operations and do you have to do M&A to convert that pipeline? Kind of as A. And then B, the acquisitions at this point, it seems to me your best acquisition would be taking $5 million in your own stock and buying back 13% of your company. There's no risk there, it's cheap and carpe diem. And I'm not a person that says repurchase, repurchase, repurchase. I mean it's really carpe diem. It's really buy when you want. There seems to be a giant disconnect, again, with your confidence, your pipeline, your guidance on the conversion to revenues, your guidance on really the quality of the business and the fact that most of your business is the U.S. government, which is well-funded over time. So, 1, can you just talk about the ability to convert that pipeline with the operations that you have, and 2, why would you not buy a significant amount of your stock, $5 million or so? Thank you.

Glen Ives

Chip, thanks for your questions here. Yes, so let's break that down just a little bit. I'm going to start with, I'm not sure it was the first one, but I think they're all related. And you asked, do you have to do an M&A? No, I mean, we really don't have to do an M&A. But then I would maybe ask, hey, what is the purpose of Castellum? We're a publicly traded company. We're in an industry that our team believes in, in terms of national security and national defense.

We're at $55 million to $60 million. Our stock is trading below $0.50. Is that where we want to be? I don't think so. I think the long-term vision is to make the company perpetual and enduring of value to our shareholders. And to me, just based on my own experience in this business, we need to grow the company and we need to grow it in a way that makes sense. It's disciplined, it's deliberate, it's thoughtful, but there also needs to be a sense of urgency, right? There needs to be a sense of drive, let's move this company forward as quickly as we can. Disciplined, smart, but quickly, expeditiously. Stock buyback, they're all, I think, neat strategies.

But at the end of the day, I've got to grow the company. And organic growth is something that is certainly achievable. It's certainly a part of our plan. It's certainly a priority of our plan. But I think anyone who has run a business in our industry will tell you that organic growth is a grind. It's tough. It takes time. It doesn't happen. Go from $55 million to $60 million to $120 million in 18 months with just organic growth, unless you're very, very, very fortunate and very, very lucky.

And so if you look at various models in our industry, whether it's private or public, there is an acquisition plan. And so, it's a plan, it's a strategy that just about every successful company, and I mean successful company in our industry, employs. And that is a mix of, the right mix of organic and inorganic growth. Because if you do not integrate those strategies, you're looking at long-term growth that takes you over an extended period of time. And if you're privately held and you have the patience, that works great. And I've had that experience before. If you're publicly traded, you don't have that same timeline.

You don't necessarily have the same patience from your investors and your shareholders. They're expecting more. And here at CTM, that's what we're trying to do, Chip, is we're trying to move the company forward in a way that makes sense for us. I don't want you to think that we're just making acquisitions haphazardly. There's a lot of planning and thought that goes behind them. They have to be the right acquisition. And so, when we look at our plan, we know that to scale a company, to get it to where we want it to go, organic growth is not enough. Stock buybacks are not enough. I want to leverage our cash. I want to leverage our position to the maximum extent possible and do what's best for the company in terms of how quickly we can grow in a way that is sustainable.

And it has to be through M&A. And again, it's not rocket science. It's not an exceptional model. Many companies have performed to it successfully, but it's the execution piece, right? It's not the model itself, it's understanding the model, but it's really the execution piece. Can you take advantage of your pipeline? Can you make it real? We can, and we will. But I don't have the patience to wait 5 years for that to happen, to realize all those opportunities, or even longer. We have to have a smart strategy. And I liken it to, I don't know if you watched the ball game last night where the Jags beat the Ravens. I happen to be a Jags fan, so I caught at least half the game.

The Jags won because they have a balanced attack. They had a strong ground game and a strong passing game. Our ground game is the organic growth, and our passing game is the inorganic growth. And the teams that have the balanced strategy and can execute on them are the ones that are going to succeed. And that's basically what we're trying to do. Okay.

Unknown Speaker

I hear you and I think that's a great strategy. I've been doing this a very long time. And your balance sheet right now has a lot of cash on it. And I guess the question is, if a balanced passing and running game sounds fine, I don't understand why repurchase can't be part of that. Again, your stock, you said $0.50 a share. I don't know if you know this morning, it's $0.39 a share, down big this year. It's not your fault. I like the company, I like the strategy. But the amount of your company you can buy back at the current valuation with the current backlog and the current pipeline, I would say should not stand as an either/or versus acquisition. And if you can do an acquisition, it's fine.

Glen Ives

It's certainly not an either/or.

Unknown Speaker

Okay, and that's what I'd want to hear. I just, and again, it's $1.20, we would not be having this conversation. And look, I hear you. You've given very thoughtful answers. I just wanted to express my opinion. I'm a fan of the company and it's just an observation. So I'll let it stand there. I'm not trying to be confrontational.

Glen Ives

You are being confrontational, and I do appreciate your question. It's never either/or, right? And we're constantly adjusting our strategy. And, you know, the strategy you brought up in terms of a share stock buyback, you can bet we discuss it, right? We strategize about it, and we go through the pros and cons. And I want to leverage that cash right now for an M&A that I think will help really move us forward and gain us momentum. And there may be a time for a buyback. But when I consider the pros and cons of a buyback as opposed to an M&A near term, right now, we're on that path to do the right M&A. So thanks, Chip. Appreciate your question.

Operator

[Operator Instructions]

Our next question comes from Charles Bicchiero from GTM Capital.

Unknown Speaker

I feel that you guys are on the right track and going in the right direction. A lot of my questions have already been answered on the call, but I just have a couple of small questions that I would like to clarify. First one is job openings. You guys had a bunch of job openings on your website. I know some have been filled, some haven't been filled. Were those positions for current contracts or those for future contracts and did you fill the positions that were posted?

Glen Ives

Charlie, thanks for jumping on the call and asking your questions here. Drew, do you want to take that one on? And I can pile on if you want.

Andrew Merriman

Yes, absolutely. The vast majority of them are for current contracts where we're doing on-contract growth. There are a couple for prospective new opportunities as well, but I would say 80% to 85% are on-contract growth.

Unknown Speaker

Okay, great. Thank you. And I noticed, I know in one of your press releases, you guys are doing a lot of subcontracting work. Is that something that's in the future that you guys are really looking into, or is that something you're going to not do? Because I know the profit margins are not as good as in-house.

Glen Ives

Yes, great question because subcontracting work is sort of a way of life in our business to a certain extent. As we grow, currently right now, the subcontracting work is important to us because as we build teams to win contracts, we really try to pick the right teammates, the right subcontractors for prime contract opportunities. And they bring certain areas of expertise that can enhance our ability to win these contracts. So, again, Charlie, we don't just bring people on as subcontractors unless there's a real reason behind it. And then as we grow larger and as we strengthen certain areas, our own capabilities, there will probably be fewer subcontractors that we would work with. But then again, as much as we are always looking to be the prime contractor, there may be opportunities where we actually perform as a sub as well. The question is, how do you balance that to ensure that you're as effective as you can be as a prime and as a good sub? And that balance is something that we're always working.

Unknown Speaker

Great, thank you. And I know this is another subject that's brought up already. The acquisitions, the merger and acquisitions, what you're looking at, is there anything you can just spell out for investors as far as what area you're looking in and how large of an acquisition it would be? And I know you did 3 acquisitions, which were very successful in the past, would they be a similar structure? I know some were cash, some were stock, some were equity and some were financed. Anyway you can throw something our way just to clear, you know, a color on which way you're going.

Glen Ives

I'll let David weigh in here in just a second on how we're potentially structuring these. But as far as the kind of companies that we're looking at, Charlie, it's really important to us that, what I mentioned earlier, it has to be the right fit. It has to bring the right things to us as a company to further our ability to grow. So some of that is tied to which companies are available. That sort of drives some of your selection criteria, to be honest. But ideally, it would be a company that we could finance where we can do it intelligently and smartly in terms of any debt, just the number of options or the number of shares that we would use, the amount of equity we would use, the amount of cash we would use. David can talk to that, but the kind of companies we're looking for are ones that would take us deeper into our market or into an adjacent market where we can leverage our capabilities even to a greater extent. Companies that have the kind of contracts that we feel are, that we can strengthen and grow upon and continue to strengthen the company.

Those would be very, very important. Companies that have great relationships with their mission customers that we can further develop and strengthen and take advantage of as well. So there's some real basic criteria that we look at. And then obviously with every company we look at in terms of size, one is it affordable for us? And typically, I think companies from $15 million to $25 million to $30 million in revenue are very affordable for us. And then there's companies about our size that I think are potential candidates as well. So we've done much of this due diligence over the summer and through the fall. And so, as I said in my earlier remarks, we're going to see some movement as we go into the first of the year in 2027 is our goal.

David, did you want to talk a little bit about—you want to jump in real quick?

David Bell

Yes, I'll jump in real quickly. Yes, and thank you very much for that question, Charles. I like how Glenn said we're going to be smart about the acquisitions. First and foremost, as Glenn said, is cultural fit. We have to run the right company that has our attitude, our approach, our willingness, our service, and our allegiance, I guess you'd say. But we're also not chasing like top dollar revenue just to bulk ourselves up. We're going to make an intelligent acquisition when we look at the accretion of the acquisition top to bottom, not just revenue, not just gross profit, not just EBITDA, but all the way down to the bottom line. We want to make sure that it works for us and we don't over-leverage ourselves, that we don't give away too much in an acquisition, that we don't pay for the next 10 years of profits. So one thing we're doing where we've invested so much, we've got people that maybe we're looking for companies that are not in a process, they're not trying to sell themselves right now.

And with Glenn's reputation and other leaders' reputations in our area, those companies that don't want to sell to somebody else or don't want to become part of another company, they'll take Glenn's call, they'll take other leaders' calls because they like us, they like the culture fit, they like the work that we do. And so by not getting into a competition and being patient about what we're doing, we're not going to get so worried about the one deal in front of us that we pay through the nose for it. Like I said, we're going to be intelligent about it. And the combination will be some cash that we have. That's why we're holding the cash we have right now when we do the first, second transaction. We'll figure out what to do with the cash, any excess cash later, take some intelligent debt out, issue some shares maybe, or one thing that we're really keen on is we want people that want to come to the company that want to stay and want to help grow. So we're going to expect some of the sellers to convert their equity over to Castellum stock so that they will share in the successes of the company with the consideration that they receive. Hopefully that provides you good background on what we're trying to do, Charles.

Unknown Speaker

That's a great observation, but have you guys ever thought about thinking outside the box as far as your merger and acquisition? I mean, obviously about 60% to 70% of the mergers out there in your industry are 1-for-1 merger, meaning merge with a company directly your size and you switch stock. I mean, that happens a lot. Is that a consideration you consider, that something you wouldn't even look at?

David Bell

We're looking at, like Glenn said earlier, we're looking at small, medium, and large acquisitions. So we're not limiting ourselves to the size of it, but we're looking at the culture fit and how will ultimately benefit the shareholders, the customers, and our people.

Unknown Speaker

Okay, all right. My final questions will be here will be your advanced technology products, the XRA and the Guard Tower. Can you just give a brief description of what you want to do with those, and are they available? I mean, is there any way to make money on them and can you use them in other technologies and other areas?

Glen Ives

Yes, Charlie, absolutely. Drew, you want to start with that one?

Andrew Merriman

Sure. So I'll start with Guard Tower, which is an appliance. It has some AI capabilities where it spins up, what I would say, artificial processes, and it's designed to detect insider threats inside your organization where when a hacker gets in your system, they try to move left and right so they fall on these tripwires. We have a really good partnership with Guard Tower, and we're helping them enhance some capabilities. And we're working with them to do the test and evaluation. And it's not quite ready yet, but we expect in another 6 months or so it'll be ready. And that is something we do expect to be able to sell as a certified reseller. And we also provide the services and support. So we have a really good partnership with them.

XRA is the Extended Reality Maintenance Tool. So if you think about it in the context of you have a maintainer on a ship or really anywhere with the subject matter expert somewhere else, if you have a very complicated piece of equipment that needs to be repaired, you may have a maintainer that doesn't have all of the subject matter expertise. You have these augmented reality glasses that allow the subject matter expert who's not there to remotely see what the maintainer can see and also put things like user manuals up with live wiring tracing. So it's like, okay, this is a 4 millimeter nut, we need this kind of tool, or the wire you want is right here, and it highlights in red. Again, we're also working on adding more capability to that before we really go all in on bringing it to market. But again, we are very excited about that product and it's platform independent. And it's very bleeding edge technology that we're excited about.

Unknown Speaker

Great. Well, thank you. I'm a firm believer in your company and your products. And all we need now is your stock price to realize what the actual company is doing. Thanks again. I appreciate all your time here.

Operator

[Operator Instructions]

Our next question comes from Mo B., a private investor.

Unknown Speaker

Hi, there was some good questions asked in this call, but I would like to expand on it. I'm going to be direct because I think a lot of shareholders on this call can feel the same way I do. I want to start with what I believe. This team has won large prime contracts, built a pipeline that keeps growing, and kept this company free of debt. I followed it closely, and I defended it here because I wanted it to succeed. I also have to tell you what I hear from shareholders every day. The business has been built up for years and stock hasn't followed.

People have asked to be patient for a long time and the stock is making new lows. It trades around its book value with no debt, which tells me the market doesn't really believe what you built. So my first question is, many shareholders are afraid that if the price doesn't recover, the answer will be a reverse split. I understand the math, and I know it doesn't change what anyone owns on paper. It would still feel like a betrayal to shareholders who have waited for years and to the employees who are paid in the stock and buy through the stock purchase plan. A reverse split is what people expect from a company in trouble, and this company has cash but no debt. So is a reverse split under any consideration, and can you rule it out? Thank you.

Glen Ives

David, you want to start with that one?

David Bell

I'd say that, you know, I wouldn't say... reverse split is not on the table for us right now. I can't say what we're going to do, not going to do, but it's not something that we think is the way to improve the stock price of the company. I think Glenn has said build the company, execute on our story, execute on our plan. We believe that as we grow through the business development, the ground game and the passing game and the acquisition, that the market will start to see it. So we're growing long-term. We think we don't want to take necessarily short-term steps, short-term impacts, we're looking long-term. So hopefully that answers your question. We're still looking long-term and we're growing and we're committed to that.

Glen Ives

Yes, I can sort of tag on to that too, Mo. Mo, thanks for jumping on the call and thanks for your question. Yes, so, you know, we're here at CTM, we're not unlike our shareholders, right? But there's certainly frustration on our part in terms of where our stock price is at. A day doesn't go by that I don't think through this. But I would say, Mo, that with many of our shareholders, I know some have been with us for quite some time and some are much newer. For those that joined us 4 or 5 years ago, I can't say enough, and my hat's off to you for believing in us and sticking with us. But the point I would like to make is that we're a very different company since 2024, really over the last 2 years, than the previous 4 years. The previous 4 years, the first phase of this company from 2020 until 2024, there were a lot of good things done, but the company was in a very tricky place mid-year 2024 because it had made 7 acquisitions, right, 7 events where they brought it down to 3 companies and did a great job of doing that.

But while doing it, the company accumulated over $12 million in debt. And the companies that we had acquired at the time were all very small businesses, and 3 of them had done extremely well, but they certainly weren't postured for continued organic growth. So in mid-2024, we realized that the company really needed to adjust in a big way. And we went from integrating those companies into phase two, and that was, hey, we absolutely have to focus and grow this company organically. And so when you think about the timeframe, we started that process, that phase two process, really towards the tail end of 2024 into 2025. And in 2025, I'm not sure you can find a company out there that can say that they were able to, in that short period of time, develop an organic growth plan and execute it and bring 3 prime contracts at the value of $220 million approximately over 5-plus years. That is due in large part to the team that we built here.

And that's important to understand because it's one thing to do business in our industry as a large business or a small. It's a completely different science and art to grow a business from small to large. That's what we're doing, right? And so the team that we have here at CTM, we understand how to do that. You know, we have a model that we know works. We have a strategy that we're always adjusting. But bottom line is we're going to continue to press organically. We're going to continue to press to make the right acquisitions. And that's how we're going to scale. And that's how we're going to get our stock to where it needs to be. We can talk about buybacks, we can talk about reverse splits, we can talk about all those kinds of things. But what I want to do is make sure that we have a healthy, strong company that's going to endure for our shareholders and bring that value that they're looking for. I can't guarantee that in 6 months. But if you hang in there for a little while here while we execute on our strategy and give us a chance to do that, you know, I think we'll also attract more institutional investors, which has to be a big part of our plan.

You know, there needs to be a good balance of our retail investors and obviously our institutional investors as well. All that will come with the kind of growth that we're talking about here. So thanks again, Mo. Really appreciate your question.

Operator

With no further questions in queue, I'd like to turn the call back over to Glenn for closing remarks.

Glen Ives

Hey, thanks, Colby. Much appreciate you guys kind of running this for us. And I want to thank all our listeners today, our shareholders, all of you that are interested in our company and have shown the support that you have over the last few years. I just want you to know that we are truly committed to making this work for everybody involved. And not a day goes by that your team here at CTM isn't giving it their very, very, very best. So I want to thank you for your time. And we look forward to updating you as we progress throughout the year and obviously into 2027. We're looking forward to that. Thanks very much.

Operator

This concludes today's conference. Thank you for participating. You may now disconnect.

This live transcript is auto-generated without human intervention or review.