Redwire (RDW) - 2023 Q2 - Quarterly Report

Revenue Growth - Revenues increased 64% to $60.1 million for Q2 2023 compared to$36.7 million in Q2 2022, driven by $14.2 million from the Space NV Acquisition[171] - Revenues increased by$48.1 million, or 69%, to $117.7 million for the six months ended June 30, 2023, compared to$69.6 million in the same period of 2022, driven by the Space NV Acquisition and growth in deployables and engineering services[188] Financial Performance - Net loss decreased 93% to $5.5 million in Q2 2023 from$77.0 million in Q2 2022[171] - Net income (loss) attributable to Redwire Corporation was a loss of $12.7 million for the six months ended June 30, 2023, compared to a loss of$94.3 million in the same period of 2022, reflecting an improvement of $81.6 million[202] - Adjusted EBITDA for the six months ended June 30, 2023, was$8.7 million, compared to a loss of $8.7 million in the same period of 2022, indicating a significant operational improvement[202] Cost Management - Gross margin improved to 26$8.9 million increase[176] - Selling, general and administrative expenses as a percentage of revenues decreased to 29% in Q2 2023 from 48% in Q2 2022[178] - Selling, general and administrative (SG&A) expenses decreased by $4.8 million, or 12$33.7 million, representing 29% of revenues in 2023, down from 55% in 2022, due to reduced share-based compensation and legal expenses[191] - Gross margin improved by $18.0 million, or 148$30.1 million, with a gross margin percentage of 26% for the six months ended June 30, 2023, compared to 17% in 2022, attributed to cost reduction activities and a higher proportion of fixed-price contracts[190] Backlog and Contracts - Contracted backlog rose to $272.8 million as of June 30, 2023, up from$162.1 million a year earlier[171] - The contracted backlog as of June 30, 2023, was $272.8 million, down from$313.1 million as of December 31, 2022[213] - Organic backlog at the end of June 30, 2023, was $154.8 million, a decrease from$184.9 million at the end of December 31, 2022[213] - The book-to-bill ratio for the three months ended June 30, 2023, was 0.76, a significant decrease from 1.68 for the same period in 2022[209] - For the last twelve months (LTM) ended June 30, 2023, the book-to-bill ratio improved to 1.49, compared to 1.15 for the LTM ended June 30, 2022[210] - The company expects all amounts reflected in contracted backlog to ultimately be fully funded despite potential terminations or cancellations[216] Expenses and Liabilities - Interest expense increased to $2.7 million in Q2 2023 from$1.7 million in Q2 2022 due to rising variable interest rates[182] - Interest expense, net increased by $2.2 million, or 70$5.3 million for the six months ended June 30, 2023, primarily due to unfavorable changes in variable interest rates[195] - Other (income) expense, net decreased by $14.5 million, or 94$15.8 million, or 110%, for the six months ended June 30, 2023, primarily due to a loss from the increase in the fair value of the Company's private warrant liability[196] - Impairment expense decreased by $80.5 million, or 100$80.5 million, or 100%, with no impairment charges recognized in the first half of 2023, compared to an $80.5 million charge in the same period of 2022[193] Cash Flow and Liquidity - Cash and cash equivalents as of June 30, 2023, were$11.2 million, compared to $10.9 million at the end of June 30, 2022[224] - Net cash used in operating activities for the six months ended June 30, 2023, was$(11.2) million, an improvement from $(15.6) million in the same period in 2022[224] - The company had$25.0 million in available borrowings from existing credit facilities as of June 30, 2023[217] - The increase in cash used for working capital was primarily driven by increases in contract assets of $11.9 million and deferred revenue of$4.0 million[225] Taxation - The effective tax rate was relatively stable at 1.5% for Q2 2023 compared to 2.4% for Q2 2022[184] Research and Development - Research and development expenses remained consistent compared to the same period in 2022[181] - Research and development expenses decreased by $1.0 million, or 28$2.5 million for the six months ended June 30, 2023, as resources were redirected to projects aligned with market needs[194]