Redwire (RDW) - 2025 Q2 - Quarterly Results

Executive Summary & Business Update This section provides an overview of Redwire's Q2 2025 performance, strategic developments including the Edge Autonomy acquisition, and the company's financial outlook for 2025 Q2 2025 Highlights & Strategic Developments Redwire Corporation reported its Q2 2025 financial results, highlighting the completion of the Edge Autonomy acquisition, which transforms the company into an integrated space and defense tech firm. Key operational milestones include the Stalker uncrewed aerial system's addition to the DoD's Blue List and a successful Roll-Out Solar Array deployment test. Financially, the company reported a sequential increase in Book-to-Bill ratio to 1.47, but experienced a decrease in revenues and a significant net loss, alongside a record total liquidity - Completed acquisition of Edge Autonomy on June 13, 2025, transforming Redwire into an integrated space and defense tech company focused on advanced technologies[1][3] - Stalker uncrewed aerial system added to Department of Defense's Blue List of Approved Drones; awarded a prototype phase agreement by the U.S. Army in July 2025[1] - Achieved key technical milestones, including a successful Roll-Out Solar Array deployment test for lunar Gateway and a Critical Design Review for Mason, a lunar and Martian manufacturing technology[1] - Formed SpaceMD, a new entity to commercialize Redwire's microgravity drug development breakthroughs, and signed a royalty agreement with ExesaLibero Pharma, Inc[4] Q2 2025 Key Financial Highlights | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Change (YoY) | | :----------------------- | :--------------------- | :--------------------- | :------------- | | Revenues | $61.8 | $78.1 | -20.9% | | Net Loss | $(97.0) | $(18.1) | +$78.9 | | Adjusted EBITDA | $(27.4) | $1.6 | -$29.0 | | Total Liquidity | $113.6 | $55.8 | +$57.8 | | Book-to-Bill Ratio | 1.47 | 1.47 | 0.00 | | Net cash used in operating activities | $(87.7) | $(9.5) | +$78.2 | | Free Cash Flow | $(93.5) | $(11.2) | +$82.3 | Company Overview Redwire Corporation is an integrated space and defense technology company focused on advanced technologies, including space infrastructure, autonomous systems, and multi-domain operations, leveraging digital engineering and AI automation. The company employs approximately 1,300 individuals across the United States and Europe - Redwire Corporation (NYSE:RDW) is an integrated space and defense tech company focused on advanced technologies[12] - The company is building the future of space infrastructure, autonomous systems, and multi-domain operations leveraging digital engineering and AI automation[12] - Redwire has approximately 1,300 employees located throughout the United States and Europe[12] 2025 Financial Forecast Redwire provided its full-year revenue forecast for 2025, including the impact of the Edge Autonomy acquisition from its closing date. However, due to uncertain timing of government contracting, the company has withdrawn its previously provided Adjusted EBITDA forecast for the year 2025 Full Year Revenue Forecast | Scenario | Forecast (Millions USD) | | :-------------------------------------------------------------------- | :---------------------- | | Redwire (including Edge Autonomy from June 13, 2025) | $385 - $445 | | Combined company (assuming Edge Autonomy acquisition on Jan 1, 2025) | $470 - $530 | - The Company is withdrawing its previously provided Adjusted EBITDA forecast for the twelve months ended December 31, 2025, due to uncertain timing of government contracting[7] Condensed Consolidated Financial Statements This section presents Redwire's condensed consolidated balance sheets, statements of operations, and cash flows, reflecting the financial impact of the Edge Autonomy acquisition and operational performance Condensed Consolidated Balance Sheets The balance sheet shows a significant increase in total assets and liabilities from December 31, 2024, to June 30, 2025, primarily driven by the Edge Autonomy acquisition. Goodwill and intangible assets saw substantial increases, reflecting the acquisition's impact Condensed Consolidated Balance Sheet Highlights (in thousands of U.S. dollars) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total current assets | $244,522 | $125,925 | | Property, plant and equipment, net | $47,511 | $17,837 | | Intangible assets, net | $396,130 | $61,788 | | Goodwill | $789,254 | $71,161 | | Total assets | $1,508,186 | $292,617 | | Total current liabilities | $167,429 | $149,343 | | Long-term debt, net | $185,464 | $124,464 | | Total liabilities | $448,701 | $344,526 | | Total shareholders' equity (deficit) | $907,592 | $(188,714) | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Redwire reported a decrease in revenues and a substantial increase in net loss for both the three and six months ended June 30, 2025, compared to the prior year. The increased net loss was significantly impacted by higher cost of sales, selling, general and administrative expenses, and interest expense, partly due to acquisition-related activities and unfavorable EAC adjustments Condensed Consolidated Statements of Operations Highlights (in thousands of U.S. dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $61,760 | $78,111 | $123,155 | $165,903 | | Cost of sales | $80,824 | $65,127 | $133,178 | $138,094 | | Gross profit (loss) | $(19,064) | $12,984 | $(10,023) | $27,809 | | Operating income (loss) | $(91,891) | $(7,130) | $(106,208) | $(10,707) | | Interest expense, net | $23,755 | $3,009 | $27,349 | $5,927 | | Net income (loss) | $(96,979) | $(18,087) | $(99,927) | $(26,183) | | Net income (loss) available to common shareholders | $(126,718) | $(27,791) | $(133,106) | $(38,929) | | Basic and diluted EPS | $(1.41) | $(0.42) | $(1.66) | $(0.59) | - Net Loss for Q2 2025 included over $(90.0) million in expenses related to non-cash, transaction-related, EAC adjustments, and non-routine activity, including $29.6 million for equity-based compensation, $16.6 million in transaction expenses, $25.2 million in net unfavorable EAC impacts, and $20.0 million in interest expense[7] Condensed Consolidated Statements of Cash Flows Cash flows from operating activities for the six months ended June 30, 2025, significantly increased in usage compared to the prior year, primarily due to the net loss and changes in working capital. Investing activities saw a large outflow due to business acquisitions, while financing activities generated substantial cash, mainly from proceeds from debt and common stock issuance Condensed Consolidated Statements of Cash Flows Highlights (in thousands of U.S. dollars) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $(132,744) | $(6,742) | | Net cash provided by (used in) investing activities | $(161,729) | $544 | | Net cash provided by (used in) financing activities | $323,489 | $6,929 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $29,488 | $554 | | Cash, cash equivalents and restricted cash at end of period | $78,559 | $30,832 | - Acquisition of businesses, net of cash acquired, resulted in a cash outflow of $(151,791) thousand for the six months ended June 30, 2025[31] - Proceeds from issuance of common stock contributed $328,684 thousand to financing activities for the six months ended June 30, 2025[31] Supplemental Non-GAAP Financial Information This section provides reconciliations for non-GAAP financial measures, including Adjusted EBITDA and Free Cash Flow, highlighting their significant changes in Q2 2025 Adjusted EBITDA Reconciliation Redwire provides a reconciliation of Net Income (Loss) to Adjusted EBITDA, a non-GAAP measure used to evaluate operating performance. For Q2 2025, Adjusted EBITDA was a loss of $(27.4) million, a significant decrease from the prior year, primarily due to increased interest expense, transaction expenses, equity-based compensation, and warrant liability adjustments Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(96,979) | $(18,087) | $(99,927) | $(26,183) | | Interest expense, net | $23,755 | $3,009 | $27,349 | $5,927 | | Income tax expense (benefit) | $(32,604) | $15 | $(32,786) | $124 | | Depreciation and amortization | $5,060 | $2,925 | $8,106 | $5,678 | | Transaction expenses | $16,643 | $278 | $20,442 | $278 | | Equity-based compensation | $32,686 | $1,918 | $35,598 | $4,453 | | Warrant liability change in fair value adjustment | $16,326 | $8,977 | $2,692 | $10,052 | | Adjusted EBITDA | $(27,394) | $1,625 | $(29,662) | $5,906 | - Redwire incurred significant transaction expenses ($16.6 million in Q2 2025) and equity-based compensation ($32.7 million in Q2 2025) primarily from the Edge Autonomy acquisition, impacting Adjusted EBITDA[35][36] Free Cash Flow Reconciliation The reconciliation of Free Cash Flow shows a significant increase in cash usage for both the three and six months ended June 30, 2025, compared to the prior year. Free Cash Flow for Q2 2025 was $(93.5) million, reflecting increased net cash used in operating activities and higher capital expenditures Free Cash Flow Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $(87,663) | $(9,506) | $(132,744) | $(6,742) | | Less: Capital expenditures | $(5,883) | $(1,687) | $(9,938) | $(4,054) | | Free Cash Flow | $(93,546) | $(11,193) | $(142,682) | $(10,796) | Key Business Performance Indicators This section analyzes Redwire's Book-to-Bill Ratio and Contracted Backlog, highlighting trends in new contracts and future revenue potential, significantly influenced by recent acquisitions Book-to-Bill Ratio Redwire's book-to-bill ratio, an indicator of future revenue growth, remained at 1.47 for the three months ended June 30, 2025, consistent with the prior year. However, the Last Twelve Months (LTM) book-to-bill ratio decreased to 0.87, reflecting a lower level of contracts awarded relative to revenue over the longer period, despite significant acquired contract value Book-to-Bill Ratio (in thousands, except ratio) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Last Twelve Months Ended June 30, 2025 | Last Twelve Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------------- | :------------------------------------- | | Contracts awarded | $90,563 | $114,437 | $227,058 | $374,269 | | Revenues | $61,760 | $78,111 | $261,353 | $292,000 | | Book-to-bill ratio | 1.47 | 1.47 | 0.87 | 1.28 | - For the three months ended June 30, 2025, $73.7 million of contracts awarded relates to the Edge Autonomy acquisition[44] - For the LTM ended June 30, 2025, contracts awarded includes $95.7 million of acquired contract value from Edge Autonomy and Hera Systems acquisitions[45] Contracted Backlog Redwire's contracted backlog increased to $329.5 million as of June 30, 2025, from $296.7 million at December 31, 2024. This growth was primarily driven by acquisition-related contract value, particularly from the Edge Autonomy acquisition, which added $73.7 million during the period Contracted Backlog (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Organic backlog, ending balance | $255,070 | $280,969 | | Acquisition-related backlog, ending balance | $74,413 | $15,683 | | Contracted backlog, ending balance | $329,483 | $296,652 | - Acquisition-related contract value acquired during the period was $73.7 million for the six months ended June 30, 2025, primarily from the Edge Autonomy acquisition[47][50] - Contracted backlog from foreign operations in Luxembourg and Belgium increased to $117.4 million as of June 30, 2025, from $70.5 million at December 31, 2024[51] Important Disclosures & Investor Information This section provides essential investor information, including webcast details, disclaimers on financial projections, cautionary statements regarding forward-looking information, and disclosures on non-GAAP financial measures Webcast and Investor Call Details Redwire will host a conference call and live webcast on August 7, 2025, at 9:00 a.m. ET to discuss the second quarter 2025 financial results. Details for accessing the live stream, dial-in numbers, and replay information are provided - Management will conduct a conference call starting at 9:00 a.m. ET on Thursday, August 7, 2025, to review financial results for the second quarter ended June 30, 2025[8] - A live stream presentation will be available at https://event.choruscall.com/mediaframe/webcast.html?webcastid=Htojl6k0[9](index=9&type=chunk) - A telephone replay of the call will be available for two weeks following the event by dialing 877-660-6853 (toll-free) or 201-612-7415 (toll) and entering the access code 13755131[10] Use of Projections This section serves as a disclaimer, stating that financial outlooks and projections are forward-looking statements based on assumptions subject to significant uncertainty, many beyond Redwire's control. It emphasizes that these projections are not audited and should not be considered a reliable prediction of future events - Financial outlook and projections are forward-looking statements based on assumptions inherently subject to significant uncertainty and contingencies, many of which are beyond Redwire's control[13] - Redwire's independent auditors have not audited, reviewed, compiled, or performed any procedures with respect to the financial projections[13] - The inclusion of financial projections should not be regarded as an indication that Redwire considers them not a reliable prediction of future events[13] Cautionary Statement Regarding Forward-Looking Statements This statement warns readers that the press release contains forward-looking statements subject to numerous risks and uncertainties. It lists over 40 factors, including economic uncertainty, integration risks from acquisitions, competition, reliance on government contracts, and operational challenges, that could cause actual results to differ materially from expectations - Statements regarding expectations of performance or other matters affecting business, results of operations, or financial condition are "forward-looking statements" as defined by the "safe harbor" provisions in the Private Securities Litigation Reform Act of 1995[15] - Forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties, many of which involve factors or circumstances beyond the company's control[15] - Key risk factors include economic uncertainty, integration risks, competition, dependence on U.S. government contracts, supply chain challenges, and the inability to meet expected financial results[16] Non-GAAP Financial Information Disclosure This section clarifies that the press release includes non-GAAP financial measures, specifically Adjusted EBITDA and Free Cash Flow, which are used to supplement U.S. GAAP information. It emphasizes that these measures should not be considered in isolation or as substitutes for GAAP measures and may not be comparable to those of other companies - This press release contains non-GAAP financial measures, including Adjusted EBITDA and Free Cash Flow[18] - Non-GAAP financial measures are used to supplement U.S. GAAP information and should not be considered in isolation or as a substitute for relevant U.S. GAAP measures[19] - Adjusted EBITDA is defined as net income (loss) adjusted for various non-cash and non-recurring items, while Free Cash Flow is net cash provided by (used in) operating activities less capital expenditures[20][21]