Redwire Corp Q1 FY2025 earnings call

Key Principles for 2025 Growth Strategy

• Providing picks and shovels: Awarded a contract from Thales Alenia Space for four docking systems for ESA's I-Hab module.
• Delivering multi-domain platforms: Awarded a study contract from ESA to develop the preliminary spacecraft design for the ARRAKIHS dark matter mission using the Hammerhead platform.
• Exploring moon, Mars and beyond: Signed a MOU with i-space-U.S. to jointly pursue commercial lunar exploration and science missions.
• Unlocking venture optionality: Launched new drug development technology and a cancer detection experiment to the ISS, and signed an agreement with Espero Biomedicines to fly additional PIL-BOXES.
• Executing accretive M&A: Expected to close the acquisition of Edge Autonomy in the second quarter of 2025, transforming Redwire into a global leader in multi-domain autonomous technology.

Other Highlights

• Supply chain resilience: U.S. and European based supply chains mitigate tariff impacts.
• Contract awards/backlog: First quarter contract awards were $56.2 million with a book-to-bill ratio of 0.92, backlog remained at $291.2 million as of March 31, 2025, and there's an estimated $6 billion of identified opportunities.

Redwire recorded revenues of $61.4 million in the first quarter of 2025, a decrease sequentially and year-over-year. Adjusted EBITDA improved from a negative $9.2 million in the fourth quarter of 2024 to a negative $2.3 million in the first quarter of 2025. Net loss saw a significant sequential improvement, achieving a net loss of $2.9 million. Cash and total liquidity ended the quarter at a record level of $89.2 million, a 39.2% improvement over the prior year. Additionally, 37% or $107.2 million of the contracted backlog is from international operations in Europe.

Redwire provided a financial forecast for fiscal year 2025 as if the Edge Autonomy transaction closed on December 31, 2024. The combined forecast remains within previously provided ranges with full year 2025 combined revenue expected to be in the range of $535 million to $605 million (52.9% compound annual growth rate from fiscal year 2023 to 2025 at midpoint) and adjusted EBITDA between $70 million and $105 million (138.8% compound annual growth rate from fiscal year 2023 to 2025 at midpoint). Post-closing, guidance for the remainder of 2025 will be provided.

Market Dynamics

• Potential program shifts in space and defense due to budget uncertainties and decision maker transitions.
• Trade environment impacts on supply chains, though current tariffs have not had a material financial impact but are closely monitored.
• Volatility in the U.S. Defense and Government Services sector with the new administration leading to some projected wins slipping to the right.

Q: Greg Konrad asked about risks given Europe's increased independence in space and defense, and the lumpiness on the U.S. side.

A: Peter Cannito responded that Europe's space spending is growing with potential repurposing of programs, and defense spending in Europe is increasing, with Redwire well-positioned. On the U.S. side, it's a dynamic environment with budget shifts but strong growth trends expected once priorities are set.

Q: Suji DeSilva inquired about milestones to watch with the ispace MOU and differentiation in lunar missions.

A: Peter Cannito stated Redwire is a prime on the CLPS contract and will lead full missions with ispace's lunar lander, with key milestones being winning CLPS task orders and missions.

Q: Mike Crawford asked about Redwire's pipeline and Edge Autonomy's pipeline.

A: Peter Cannito mentioned moving up the value chain leading to larger bids, and Jonathan Baliff noted Edge Autonomy's backlog has grown, but specific details on Edge's pipeline aren't disclosed publicly.

Q: Colin Canfield asked about free cash flow indicators and EAC dynamics.

A: Peter Cannito explained expectations of improving cash flow as revenues move into later quarters and milestones are met, while Jonathan Baliff discussed working to reduce EACs as part of balancing growth and profitability.

Q: Brian Kinstlinger asked about bid values, margins, and NASA-related pipeline.

A: Jonathan Baliff stated bids are a mix with a desire for higher margins, and civil business is a portion of revenue, but specific details on NASA-related pipeline are not publicly disclosed for competitive reasons.

Q: Scott Buck asked about Edge Autonomy's role and M&A strategy.

A: Peter Cannito stated Redwire's strategy is opportunistic and focused on accretive M&A, with a land and expand approach in target markets, including space and defense tech.