Redwire (RDW) - 2022 Q3 - Quarterly Report

Operational Performance - The company reported significant operational wins in areas such as power systems, LEO commercialization, and human space flight, contributing to increased revenues and bookings [244]. - The company successfully delivered multiple L-Band Link-16 Helical Antenna systems for the SDA's National Defense Space Architecture constellation's Transport Layer in Q1 2022 [245]. - The company delivered the fourth Roll-Out Solar Array (ROSA) for the ISS ahead of schedule, with additional wings scheduled for launch in the coming years [246]. - The company is progressing on OSAM-2, a satellite that will manufacture and assemble parts of itself in space, aligning with national strategies for in-space manufacturing [248]. - The company has a robust backlog for its solar array product lines, including projects for NASA and various commercial customers [247]. Financial Performance - Revenues increased 14% to $37.2 million for the three months ended September 30, 2022, compared to$32.7 million for the same period in 2021, driven by $2.3 million from the Techshot Acquisition [266]. - Cost of sales rose by$2.5 million, or 9%, to $29.3 million for the three months ended September 30, 2022, primarily due to$1.5 million from the Techshot Acquisition and increased production costs [267]. - Gross margin improved by $2.1 million, or 35$7.9 million, representing 21% of revenues for the three months ended September 30, 2022, up from 18% in the prior year [268]. - SG&A expenses decreased by $19.0 million, or 55$15.3 million for the three months ended September 30, 2022, mainly due to a reduction in equity-based compensation [271]. - Net income loss narrowed to $10.4 million for the three months ended September 30, 2022, compared to a loss of$24.3 million in the same period of 2021, reflecting a $13.8 million improvement [265]. - Revenues for the nine months ended September 30, 2022 increased by$10.3 million, or 11%, to $106.8 million, with$5.1 million attributed to the Techshot Acquisition [279]. - Cost of sales for the nine months ended September 30, 2022 increased by $12.3 million, or 17$86.7 million, driven by revenue growth and $4.0 million from the Techshot Acquisition [280]. - Gross margin decreased by$2.0 million, or 9%, to $20.1 million for the nine months ended September 30, 2022, representing 19$1.2 million, or 37%, for the nine months ended September 30, 2022, reflecting strategic investments in future technologies [287]. - Impairment expense surged by $80.5 million for the nine months ended September 30, 2022, due to a non-cash impairment charge related to goodwill and long-lived assets [286]. - Interest expense, net increased by$0.6 million, or 12.0%, for the nine months ended September 30, 2022, compared to the same period in 2021 [288]. - Other (income) expense, net rose by $11.5 million, or 386$(10.2) million, compared to $1.8 million for the same period in 2021 [294]. - The company reported a net loss of$104.7 million for the nine months ended September 30, 2022, compared to a net loss of $47.8 million for the same period in 2021 [294]. Liquidity and Capital Structure - The company’s primary sources of liquidity include cash flows from operations and proceeds from the Purchase Agreement with B. Riley [307]. - As of September 30, 2022, the company's available liquidity totaled$17.0 million, consisting of $7.0 million in cash and cash equivalents, and$10.0 million in available borrowings from existing credit facilities [312]. - The total outstanding debt as of September 30, 2022, was $94.681 million, an increase from$79.204 million as of December 31, 2021 [316]. - The company anticipates final net proceeds of approximately $37.0 million to$40.0 million from the sale of Convertible Preferred Stock, net of transaction expenses [314]. - The company sold an aggregate of 80,000 shares of Convertible Preferred Stock for a total purchase price of $80.0 million to AEI and Bain Capital [313]. - The company is executing cost reduction actions, including workforce rationalizations and business unit optimization initiatives, to strengthen its financial position [311]. - The company entered into a committed equity facility on April 14, 2022, allowing it to sell up to$80.0 million of its common stock over 24 months [332]. - The company intends to use proceeds from the Convertible Preferred Stock sale for acquisitions, expanding global infrastructure offerings, and increasing total available liquidity [315]. - The company was in compliance with its debt covenants under the Adams Street Credit Agreement as of September 30, 2022 [326]. - The company has a maturity date of October 28, 2026, for the Adams Street Credit Agreement, which is secured by a first lien security interest in certain assets [321]. - As of September 30, 2022, total contractual obligations amounted to $112.6 million, with long-term debt maturities contributing$94.7 million and future minimum lease payments totaling $17.9 million [335]. Cash Flow and Investment Activities - For the nine months ended September 30, 2022, net cash used in operating activities was$26.8 million, an improvement from $34.3 million in the same period of 2021 [338][339]. - The net cash provided by financing activities for the nine months ended September 30, 2022, was$16.9 million, significantly lower than $75.5 million in the prior year [343][344]. - Net cash used in investing activities for the nine months ended September 30, 2022, was$3.4 million, a substantial decrease from $36.1 million in the same period of 2021 [341][342]. - The company reported a net loss before deducting depreciation, amortization, and other non-cash items of$28.5 million for the nine months ended September 30, 2022 [338]. - The change in net working capital during the nine months ended September 30, 2022, was a favorable $1.7 million, driven by increases in accounts payable and accrued expenses [338]. - The company had a future lease obligation of$1.5 million for a facility lease that had not yet commenced as of September 30, 2022 [336]. - Cash and cash equivalents at the end of the period on September 30, 2022, were $7.0 million, down from$27.3 million at the end of the same period in 2021 [337]. - The company utilized $2.8 million for the purchase of property, plant, and equipment during the nine months ended September 30, 2022 [341]. - The company’s future minimum lease payments for operating leases were estimated at$0.8 million for 2022, with total minimum lease payments of $17.9 million through the expiration of current leases [335].