Redwire (RDW) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Redwire's total revenue for Q4 2022 was $53.7 million, the highest in the company's history, representing a 16.7% increase year-over-year [12][38] - The total backlog grew by 71.2% from$ 271.6 million at the end of 2021 to $465.1 million at the end of 2022 [5][42] - Adjusted EBITDA improved by over 47.5% compared to Q3 2022, with a year-over-year increase of 83.4% [12][47] - The GAAP net loss for Q4 2022 was$ 25.9 million, primarily due to a $16.2 million non-cash impairment charge, while the full year net loss was$ 130.6 million compared to $61.5 million in 2021 [22][45] Business Line Data and Key Metrics Changes - The acquisition of Space NV contributed$ 11.7 million to Q4 revenue since its closing on October 31, 2022, with the overall revenue excluding this contribution still reaching a record $42 million [20][21] - The company launched 11 products and capabilities during Q4 2022, including additional solar arrays installed on the International Space Station [12][13] - The backlog for Space NV increased from$ 109 million at acquisition to $128 million by the end of 2022, indicating strong growth potential [66] Market Data and Key Metrics Changes - Redwire's revenue growth was supported by a diversified customer base, with 86.2% of revenues coming from government and marquee customers [45][60] - The company reported a book-to-bill ratio of 2.04, indicating strong demand and contract additions [42] Company Strategy and Development Direction - Redwire aims to accelerate humanity's expansion into space by providing reliable and sustainable infrastructure, focusing on government contracts and commercial opportunities [11][36] - The company is positioned to capitalize on the growing global space race and the increasing demand for space infrastructure [36][37] - Redwire's strategy includes expanding its global footprint through acquisitions, such as Space NV, which enhances its capabilities and market reach [16][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining liquidity and profitability, emphasizing a focus on cash management and operational efficiency [32][70] - For 2023, the company expects full-year revenue to be between$ 220 million and $250 million, representing a 46% year-over-year growth at the midpoint [25][42] - Management highlighted the importance of backlog conversion and the potential for larger multi-year contracts to drive future revenue [51][66] Other Important Information - Redwire's adjusted EBITDA margin is expected to improve, with a target of exceeding 20% gross margins [94] - The company has a strong liquidity position with$ 53.3 million available as of December 31, 2022, bolstered by recent equity financing [49] Q&A Session Summary Question: How is the backlog conversion expected to change? - Management noted that the backlog conversion may have shifted slightly due to the acquisition and contracts from 2022, but they remain optimistic about future conversions [31] Question: What is the outlook for EBITDA and profitability in 2023? - Management is focused on profitability and expects to continue the positive trend seen in 2022, although they did not provide specific guidance for EBITDA [32] Question: What is the expected contribution from Space NV in 2023? - Management indicated that Space NV is expected to be a strong contributor, with its backlog growing significantly since acquisition [66] Question: How does the company view cash management and working capital? - Management emphasized the importance of cash management and plans to receive cash upfront for contracts to support growth and maintain liquidity [70] Question: What are the key drivers of backlog expansion? - Management stated that no single program drives over 10% of revenue, indicating a diverse base of programs contributing to backlog and revenue growth [96]