Redwire (RDW) - 2024 Q4 - Annual Results

Acquisition Details - Redwire is acquiring Edge Autonomy for $925 million, with$150 million in cash and $775 million in stock[10] - The acquisition is expected to close in Q2 2025 and will be immediately accretive to revenue, Adjusted EBITDA, and free cash flow[12][13] - The transaction consideration for Edge Autonomy is$925 million, with $150 million in cash and$775 million in Redwire common stock[52] - The $775 million equity transaction for Edge Autonomy is fixed at$15.07 per share, with the option to issue additional shares in the future[101] - The transaction is subject to regulatory approvals and will be detailed in a proxy statement filed with the SEC[108] Financial Performance and Projections - Edge Autonomy's last twelve months revenue as of Q3 2024 was $222 million, representing a 46.3$520 million, a 74.6% increase from Redwire's standalone revenue of $298 million[42] - Edge Autonomy's Q3 2024 last twelve months Adjusted EBITDA is$72 million, with a margin of 32.2%[43] - Combined Adjusted EBITDA for Redwire and Edge Autonomy is $82 million, a 700$10 million, with a combined margin of 15.7%[43] - Redwire's 2025 combined revenue guidance is projected to be between $535 million and$605 million, representing a 52.9% CAGR from FY23 to FY25[49] - Redwire expects combined Adjusted EBITDA for 2025 to range from $70 million to$105 million, with a 138.8% CAGR from FY23 to FY25[50] - Redwire anticipates being free cash flow positive in 2025, despite planned integration investments and expenses[51] - The financial projections and estimates are forward-looking statements with significant uncertainty and are not audited or assured by Redwire or Edge Autonomy's independent auditors[116] - The inclusion of financial projections and estimates should not be regarded as a reliable prediction of future events[116] - The assumptions underlying the financial projections are subject to significant business, economic, and competitive risks[116] Operational Synergies and Growth - The acquisition expands Redwire's total addressable market and supports organic growth in the defense tech sector[12] - Edge Autonomy operates in 80 countries with over 600 employees across six locations in the US, Canada, and Europe[14] - Edge Autonomy's VXE30 Stalker UAS can stay aloft for 8+ hours, while the Penguin series can remain airborne for over 20 hours[16] - Edge Autonomy's 2023 backlog increased to $408 million from$330 million, reflecting significant growth in program of record revenue[45] - Redwire's pipeline, currently at $7 billion, will significantly increase with the addition of Edge Autonomy's pipeline[82] - Edge Autonomy operates in 80 countries, with combat-proven systems operational in Ukraine, contributing to global demand[85] - Edge Autonomy's manufacturing footprint includes over 265,000 square feet, with capacity for growth and potential synergies with Redwire's operations[87][89] - Redwire and Edge Autonomy's combined operational opportunities include shared manufacturing, CapEx synergies, and leveraging long-term development contracts[97] - The combined company will focus on integrating Edge Autonomy's mature product business model with Redwire's long-term development contracts[97][98] - Redwire's acquisition of Edge Autonomy is expected to enhance technological, financial, and operational synergies, driving future growth[96][97] Customer and Market Diversification - The acquisition of Edge Autonomy diversifies Redwire's customer base, adding international defense as a fourth category alongside national security, civil, and commercial[46] - Edge Autonomy's Group 2 UASs are differentiated by their range and endurance, supported by proprietary battery technology[73] Business Model and Revenue Confidence - Edge Autonomy's backlog is smaller than Redwire's, but the company is confident in achieving its revenue goals due to a complementary business model and operational synergies[96][97][98][99] - Edge Autonomy's business model involves fleet management with new orders and replacements, differing from Redwire's multi-year contract structure[98] - The company has conducted extensive diligence on backlog levels and revenue yield, ensuring confidence in Edge Autonomy's revenue goals[99] Financial Position and Flexibility - Redwire's financial position includes access to existing cash, credit facilities, and committed debt facilities, providing flexibility for future transactions[101] - Redwire's acquisition strategy remains unchanged, with a focus on highly differentiated technology and accretive multiples, broadening the scope of potential acquisitions post-Edge Autonomy deal[100] Non-GAAP Financial Measures - The communication includes Non-GAAP financial measures such as forecasted Adjusted EBITDA and Free Cash Flow for Redwire assuming the acquisition of Edge Autonomy[117] - Non-GAAP financial measures should not be considered in isolation or as a substitute for U.S. GAAP measures and should be read in conjunction with U.S. GAAP information[118] - Adjusted EBITDA is defined as net income adjusted for various expenses including interest, taxes, depreciation, amortization, and other specific costs[119] - Free Cash Flow is computed as net cash from operating activities less capital expenditures and is used to evaluate liquidity and future growth investments[119][121] - Adjusted EBITDA is used to evaluate operating performance, generate future operating plans, and make strategic decisions[120] - Free Cash Flow is an indicator of operating cash generation used to service debt and invest in future growth[121] - Non-GAAP measures may not be comparable to similarly titled measures of other companies due to differing calculations[118] Transaction Support and Shareholder Approval - The transaction is supported by entities representing approximately 73% of Redwire's aggregate outstanding voting pool[13]