Redwire (RDW) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Redwire reported record revenues of $57.6 million for Q1 2023, a 75.3% increase year-over-year from$ 32.9 million in Q1 2022 and a 7.3% increase sequentially from $53.7 million in Q4 2022 [5][21][37] - The company achieved positive adjusted EBITDA of$ 4.3 million, an improvement of $9 million year-over-year, marking the first positive adjusted EBITDA since becoming a public company [23][38] - Net loss improved to$ 7.3 million from a net loss of $17.3 million in Q1 2022, reflecting a$ 10 million positive change [11][23] - Contracted backlog reached $286.8 million, representing a 108.8% growth since March 31, 2022 [45] Business Line Data and Key Metrics Changes - Revenue growth was observed across all three primary focus areas: Space systems, payloads for exploration, and Redwire Europe, with all customer types (national security, civil, and commercial) showing year-over-year growth [22][49] - Gross profit nearly tripled from$ 5.2 million to $14.2 million, with gross margin increasing from 15.7% to 24.7% year-over-year [50] Market Data and Key Metrics Changes - Commercial revenue saw the largest percentage increase of over 129% year-over-year, indicating a balanced customer diversity [49] - The company is positioned as a global leader in international space missions, with significant contracts and collaborations enhancing its market presence [16] Company Strategy and Development Direction - Redwire aims to accelerate humanity's expansion into space by providing reliable and sustainable infrastructure, focusing on differentiated solutions for complex space missions [8][20] - The company is expanding its leadership in in-space manufacturing and bioprinting, with a recent €14 million contract from the European Space Agency for a 3D bioprinting system [43][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year revenue between$ 220 million to $250 million, representing a 46% year-over-year growth at the midpoint [27] - The company is focused on maintaining SG&A as a percentage of revenue while continuing to improve gross margins and operational efficiencies [60][72] Other Important Information - Redwire has made changes to its key performance indicators, now reporting only contracted backlog and using a last 12 months basis for the book-to-bill calculation [10][18] - The company has a healthy pipeline of opportunities, with a focus on converting contracts into revenue [85] Q&A Session All Questions and Answers Question: Can you provide more details on gross margin percentages for the rest of the year? - Management indicated that improvements in gross margins are expected as unique technologies gain wider adoption, with a focus on maintaining efficiency [54][55] Question: How sustainable is the positive EBITDA moving forward? - Management highlighted ongoing efficiency improvements and disciplined execution as key factors for sustaining positive EBITDA [61][62] Question: Can you discuss the dynamics of revenue growth throughout the year? - Management noted that while revenue typically builds sequentially, the timing of contract awards can vary, making it challenging to predict exact quarterly revenue [63][84] Question: What are the implications of the €14 million contract for the 3D bioprinting system? - This contract expands Redwire's global presence in biomanufacturing and represents a shift from single experiments to a full business offering [66][87] Question: How does Redwire plan to manage SG&A as revenue grows? - Management aims to keep SG&A in line with revenue growth while exploring opportunities for further efficiency [60][72]