TechDogs-"Redwire Corporation Reports Third Quarter 2023 Financial Results"

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Redwire Corporation Reports Third Quarter 2023 Financial Results

By Business Wire

Business Wire
Overall Rating

JACKSONVILLE, Fla.--(BUSINESS WIRE)--$RDW--Redwire Corporation (NYSE: RDW), a global leader in space infrastructure that provides the foundational building blocks that are enabling the most complex space missions, today announced results for its third quarter ended September 30, 2023. Unless otherwise referred to as Comparable Revenues, financial information presented herein includes the results of Space NV for periods including and subsequent to the acquisition date of October 31, 2022.

Redwire will live stream a presentation with slides on November 7, 2023 at 9:00 a.m. ET. Please use the link below to follow along with the live stream:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=7sq0B6S0

Third Quarter 2023 Highlights

  • Revenues for the third quarter of 2023 increased 68.1% to $62.6 million, as compared to $37.2 million for the third quarter of 2022. Revenues also grew sequentially by 4.2%, as compared to the second quarter of 2023.
  • Comparable Revenues1 for the third quarter of 2023 increased 31.8% to $49.1 million, as compared to $37.2 million for the third quarter of 2022. Comparable Revenues also grew sequentially by 7.1%, as compared to the second quarter of 2023.
  • Net Loss for the third quarter of 2023 improved 39.3% to $(6.3) million, as compared to $(10.4) million for the third quarter of 2022. Net Loss increased sequentially by $0.9 million or 15.7%, as compared to the second quarter of 2023.
  • Adjusted EBITDA1 for the third quarter of 2023 increased by $6.4 million to $4.9 million as compared to $(1.5) million for the third quarter of 2022. Adjusted EBITDA increased sequentially by $0.6 million as compared to the second quarter of 2023.
  • Contracted Backlog2 increased 59.5% year-over-year to $253.4 million as of September 30, 2023, as compared to $158.9 million as of September 30, 2022.
  • For the full year ended December 31, 2023, Redwire affirms that it expects revenues to be in a range of $220.0 million to $250.0 million.

“Q3 was our third consecutive quarter of strong revenue growth and positive Adjusted EBITDA1,” stated Peter Cannito, Chairman and Chief Executive Officer of Redwire. “We continue to be disciplined in our technical execution, balancing growth with performance. This results in Redwire’s team of talented space professionals delivering real value for our customers in the present that positions us well for future success.”

________________________________
1Comparable Revenues and Adjusted EBITDA are not measures of results under generally accepted accounting principles in the United States. Please refer to “Non GAAP Financial Information” and the reconciliation tables included in this press release for details regarding these Non-GAAP measures.
2Contracted Backlog is a key business measure. Please refer to “Key Performance Indicators” and the tables included in this press release for additional information.

Additional Financial Highlights:

  • Book-to-bill3 ratio for the third quarter of 2023 was 0.74 as compared to 0.91 as of the third quarter of 2022. On a last twelve month (LTM) basis, book-to-bill was 1.38 as of the third quarter of 2023, as compared to 1.25 as of the third quarter of 2022.
  • Net cash provided by (used in) operating activities for the third quarter of 2023 improved by $8.0 million to $(3.3) million, as compared to $(11.2) million for the third quarter of 2022. Free Cash Flow4 for the third quarter of 2023 was $(5.9) million, as compared to $(12.6) million for the third quarter of 2022.
  • Total available liquidity was $30.9 million as of September 30, 2023, comprised of $10.9 million in cash and cash equivalents and $20.0 million in available borrowings from our existing credit facilities.

“Our strong financial and operational momentum continued through the third quarter of 2023; during the quarter, we once again recognized record revenues of $62.6 million and achieved record positive Adjusted EBITDA of $4.9 million. Our profitability improved due to sequential and year-over-year increase in Gross Margin with a change in contract mix and improved on-time delivery. Our continued management of G&A and other operating expenses also drove improved financial and operating performance,” said Jonathan Baliff, Chief Financial Officer of Redwire. “Operating and free cash flow improved year-over-year. Given our investments in the business year-to-date and our LTM book-to-bill ratio of 1.38, Redwire is poised for a strong finish to 2023.”

Webcast and Investor Call

Management will conduct a conference call starting at 9:00 a.m. ET on Tuesday, November 7, 2023 to review financial results for the third quarter ended September 30, 2023. This release and the most recent investor slide presentation are available in the investor relations area of our website at redwirespace.com.

Redwire will live stream a presentation with slides during the call. Please use the following link to follow along with the live stream: https://event.choruscall.com/mediaframe/webcast.html?webcastid=7sq0B6S0. The dial-in number for the live call is 877-485-3108 (toll free) or 201-689-8264 (toll), and the conference ID is 13742212.

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 13742212. The accompanying investor presentation will be available on November 7, 2023 on the investor section of Redwire’s website at redwirespace.com.

Any replay, rebroadcast, transcript or other reproduction or transmission of this conference call, other than the replay accessible by calling the number and website above, has not been authorized by Redwire Corporation and is strictly prohibited. Investors should be aware that any unauthorized reproduction of this conference call may not be an accurate reflection of its contents.

About Redwire Corporation

Redwire Corporation (NYSE: RDW) is a global leader in mission critical space solutions and high reliability components for the next generation space economy, with valuable intellectual property for solar power generation, in-space 3D printing and manufacturing, avionics, critical components, sensors, digital engineering and space-based biotechnology. We combine decades of flight heritage with an agile and innovative culture. Our “Heritage plus Innovation” strategy enables us to combine proven performance with new, innovative capabilities to provide our customers with the building blocks for the present and future of space infrastructure. For more information, please visit www.redwirespace.com.

________________________________
3 Book-to-bill is a key business measure. Please refer to “Key Performance Indicators” and the tables included in this press release for additional information.
4 Free Cash Flow and Adjusted EBITDA are not measures of results under generally accepted accounting principles in the United States. Please refer to “Non-GAAP Financial Information” and the reconciliation tables included in this press release for details regarding these Non-GAAP measures.

Cautionary Statement Regarding Forward-Looking Statements

Readers are cautioned that the statements contained in this press release regarding expectations of our performance or other matters that may affect our 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. Such statements are made in reliance on the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included or incorporated in this press release, including statements regarding our strategy, financial position, guidance, funding for continued operations, cash reserves, liquidity, projected costs, plans, projects, awards and contracts, and objectives of management, among others, are forward-looking statements. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “continued,” “project,” “plan,” “goals,” “opportunity,” “appeal,” “estimate,” “potential,” “predict,” “demonstrates,” “may,” “will,” “might,” “could,” “intend,” “shall,” “possible,” “would,” “approximately,” “likely,” “outlook,” “schedule,” “on track,” and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are not guarantees of future performance, conditions or results. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control.

These factors and circumstances include, but are not limited to: (1) risks associated with the continued economic uncertainty, including high inflation, supply chain challenges, labor shortages, high interest rates, foreign currency exchange volatility, concerns of economic slowdown or recession and reduced spending or suspension of investment in new or enhanced projects; (2) the failure of financial institutions or transactional counterparties; (3) the Company’s limited operating history; (4) the inability to successfully integrate recently completed and future acquisitions; (5) the development and continued refinement of many of the Company’s proprietary technologies, products and service offerings; (6) competition with new or existing companies; (7) the possibility that the Company’s expectations and assumptions relating to future results may prove incorrect; (8) adverse publicity stemming from any incident involving Redwire or our competitors; (9) unsatisfactory performance of our products; (10) the emerging nature of the market for in-space infrastructure services; (11) inability to realize benefits from new offerings or the application of our technologies; (12) the inability to convert orders in backlog into revenue; (13) our dependence on U.S. government contracts, which are only partially funded and subject to immediate termination; (14) the fact that we are subject to stringent U.S. economic sanctions, and trade control laws and regulations; (15) the need for substantial additional funding to finance our operations, which may not be available when we need it, on acceptable terms or at all; (16) the fact that the issuance and sale of shares of our Series A Convertible Preferred Stock has reduced the relative voting power of holders of our common stock and diluted the ownership of holders of our capital stock; (17) AE Industrial Partners and Bain Capital have significant influence over us, which could limit your ability to influence the outcome of key transactions; (18) provisions in our Certificate of Designation with respect to our Series A Convertible Preferred Stock may delay or prevent our acquisition by a third party, which could also reduce the market price of our capital stock; (19) our Series A Convertible Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to, the rights of holders of our other outstanding capital stock; (20) there may be sales of a substantial amount of our common stock by our current stockholders, and these sales could cause the price of our common stock and warrants to fall; (21) the impact of the issuance of the Series A Convertible Preferred Stock on the price and market for our common stock; (22) the trading price of our common stock and warrants is and may continue to be volatile; (23) risks related to short sellers of our common stock; (24) our management team’s limited experience operating a public company; (25) inability to report our financial condition or results of operations accurately or timely as a result of identified material weaknesses and (26) other risks and uncertainties described in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and those indicated from time to time in other documents filed or to be filed with the SEC by the Company.

The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on us. If underlying assumptions to forward-looking statements prove inaccurate, or if known or unknown risks or uncertainties materialize, actual results could vary materially from those anticipated, estimated, or projected. The forward-looking statements contained in this press release are made as of the date of this press release, and the Company disclaims any intention or obligation, other than imposed by law, to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Persons reading this press release are cautioned not to place undue reliance on forward-looking statements.

Non-GAAP Financial Information

This press release contains financial measures that have not been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”). These financial measures include Adjusted EBITDA, Pro Forma Adjusted EBITDA, Free Cash Flow, and Comparable Revenues.

Non-GAAP financial measures are used to supplement the financial information presented on a U.S. GAAP basis and should not be considered in isolation or as a substitute for the relevant U.S. GAAP measures and should be read in conjunction with information presented on a U.S. GAAP basis. Because not all companies use identical calculations, our presentation of Non-GAAP measures may not be comparable to other similarly titled measures of other companies.

Adjusted EBITDA is defined as net income (loss) adjusted for interest expense, net, income tax expense (benefit), depreciation and amortization, impairment expense, acquisition deal costs, acquisition integration costs, acquisition earnout costs, purchase accounting fair value adjustment related to deferred revenue, severance costs, capital market and advisory fees, litigation-related expenses, write-off of long-lived assets, equity-based compensation, committed equity facility transaction costs, debt financing costs, and warrant liability fair value adjustments. Pro Forma Adjusted EBITDA is defined as Adjusted EBITDA further adjusted for the incremental Adjusted EBITDA that acquired businesses would have contributed for the periods presented if such acquisitions had occurred on January 1 of the year in which they occurred. Accordingly, historical financial information for the businesses acquired includes pro forma adjustments calculated in a manner consistent with the concepts of Article 8 of Regulation S-X, which are ultimately added back in the calculation of Adjusted EBITDA. Free Cash Flow is computed as net cash provided by (used in) operating activities less capital expenditures. Comparable Revenues is calculated as revenues less acquisition-related revenues. Revenues are considered acquisition-related for the first four full quarters since the entities’ acquisition date. After the completion of four fiscal quarters, revenues from acquired entities are presented as comparable in the current period with prior periods conformed to current presentation.

We use Adjusted EBITDA and Pro Forma Adjusted EBITDA to evaluate our operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. We use Free Cash Flow as a useful indicator of liquidity to evaluate our period-over-period operating cash generation that will be used to service our debt, and can be used to invest in future growth through new business development activities and/or acquisitions, among other uses. Free Cash Flow does not represent the total increase or decrease in our cash balance, and it should not be inferred that the entire amount of Free Cash Flow is available for discretionary expenditures, since we have mandatory debt service requirements and other non-discretionary expenditures that are not deducted from this measure. Comparable Revenues is used to compare revenues over various periods, excluding the impact of acquisitions whose results are not reflected in all periods presented. We believe Pro Forma Adjusted EBITDA and Comparable Revenues provide meaningful insights into the impact of strategic acquisitions as well as an indicative run rate of the Company’s future operating performance.

Key Performance Indicators

Management uses Key Performance Indicators (“KPIs”) to assess the financial performance of the Company, monitor relevant trends and support financial, operational and strategic decision-making. Management frequently monitors and evaluates KPIs against internal targets, core business objectives as well as industry peers and may, on occasion, change the mix or calculation of KPIs to better align with the business, its operating environment, standard industry metrics or other considerations. If the Company changes the method by which it calculates or presents a KPI, prior period disclosures are recast to conform to current presentation.

During the first quarter of 2023, we made the following changes with respect to our KPIs:

  • Changed the book-to-bill calculation to present this metric on an LTM (“Last Twelve Months”) basis, whereas prior period disclosures were presented on a year-to-date basis. Book-to-bill LTM is calculated by aggregation of quarterly revenues and contracts awarded for the last four quarters.
  • Changed the backlog calculation to present only contracted backlog, whereas prior period disclosures also presented uncontracted backlog. There was no change in the calculation of contracted backlog.

Management believes these presentation changes will provide meaningful insights into contract award trends and increase comparability of the Company’s performance metrics with those of industry peers.

REDWIRE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(In thousands of U.S. dollars, except share data)

September 30, 2023

December 31, 2022

Assets

Current assets:

Cash and cash equivalents

$

10,859

$

28,316

Accounts receivable, net

24,641

26,726

Contract assets

39,779

31,041

Inventory

1,687

1,469

Income tax receivable

688

688

Prepaid insurance

1,304

2,240

Prepaid expenses and other current assets

5,464

5,687

Total current assets

84,422

96,167

Property, plant and equipment, net of accumulated depreciation of $5,526 and $3,032, respectively

14,631

12,761

Right-of-use assets

14,041

13,103

Intangible assets, net of accumulated amortization of $16,612 and $11,247, respectively

62,969

66,871

Goodwill

64,413

64,618

Equity method investments

3,241

3,269

Other non-current assets

509

909

Total assets

$

244,226

$

257,698

Liabilities, Convertible Preferred Stock and Equity (Deficit)

Current liabilities:

Accounts payable

$

14,185

$

17,584

Notes payable to sellers

1,000

Short-term debt, including current portion of long-term debt

1,976

2,578

Short-term operating lease liabilities

3,677

3,214

Short-term finance lease liabilities

364

299

Accrued expenses

37,678

36,581

Deferred revenue

27,059

29,817

Other current liabilities

2,310

3,666

Total current liabilities

87,249

94,739

Long-term debt, net

79,943

74,745

Long-term operating lease liabilities

13,118

12,670

Long-term finance lease liabilities

883

579

Warrant liabilities

3,789

1,314

Deferred tax liabilities

2,195

3,255

Other non-current liabilities

355

506

Total liabilities

$

187,532

$

187,808

REDWIRE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(In thousands of U.S. dollars, except share data)

September 30, 2023

December 31, 2022

Convertible preferred stock, $0.0001 par value, 88,000.00 shares authorized; 87,289.66 and 81,250.00 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively. Liquidation preference of $179,349 and $162,500 as of September 30, 2023 and December 31, 2022, respectively.

$

85,395

$

76,365

Shareholders’ Equity (Deficit):

Preferred stock, $0.0001 par value, 99,912,000 shares authorized; none issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Common stock, $0.0001 par value, 500,000,000 shares authorized; 64,799,841 and 64,280,631 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

6

6

Treasury stock, 236,012 and 141,811 shares, at cost, as of September 30, 2023 and December 31, 2022, respectively

(629

)

(381

)

Additional paid-in capital

195,500

198,126

Accumulated deficit

(225,503

)

(206,528

)

Accumulated other comprehensive income (loss)

1,775

2,076

Total shareholders’ equity (deficit)

(28,851

)

(6,701

)

Noncontrolling interests

150

226

Total equity (deficit)

(28,701

)

(6,475

)

Total liabilities, convertible preferred stock and equity (deficit)

$

244,226

$

257,698

REDWIRE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Unaudited

(In thousands of U.S. dollars, except share and per share data)

Three Months Ended

Nine Months Ended

September 30,
2023

September 30,
2022

September 30,
2023

September 30,
2022

Revenues

$

62,612

$

37,249

$

180,315

$

106,844

Cost of sales

45,495

29,300

133,077

86,742

Gross margin

17,117

7,949

47,238

20,102

Operating expenses:

Selling, general and administrative expenses

18,302

15,312

52,026

53,825

Transaction expenses

1,819

13

1,913

Impairment expense

80,462

Research and development

1,532

1,133

3,990

4,565

Operating income (loss)

(2,717

)

(10,315

)

(8,791

)

(120,663

)

Interest expense, net

2,629

2,401

7,937

5,523

Other (income) expense, net

1,232

(158

)

2,689

(14,493

)

Income (loss) before income taxes

(6,578

)

(12,558

)

(19,417

)

(111,693

)

Income tax expense (benefit)

(253

)

(2,135

)

(369

)

(6,949

)

Net income (loss)

(6,325

)

(10,423

)

(19,048

)

(104,744

)

Net income (loss) attributable to noncontrolling interests

(72

)

(73

)

Net income (loss) attributable to Redwire Corporation

(6,253

)

(10,423

)

(18,975

)

(104,744

)

Less: dividends on Convertible Preferred Stock

2,874

12,040

Net income (loss) available to common shareholders

$

(9,127

)

$

(10,423

)

$

(31,015

)

$

(104,744

)

Net income (loss) per common share:

Basic and diluted

$

(0.14

)

$

(0.16

)

$

(0.48

)

$

(1.66

)

Weighted-average shares outstanding:

Basic and diluted

64,795,985

63,460,527

64,475,390

63,050,769

Comprehensive income (loss):

Net income (loss) attributable to Redwire Corporation

$

(6,253

)

$

(10,423

)

$

(18,975

)

$

(104,744

)

Foreign currency translation gain (loss), net of tax

(860

)

(177

)

(304

)

(663

)

Total other comprehensive income (loss), net of tax

(860

)

(177

)

(304

)

(663

)

Total comprehensive income (loss)

$

(7,113

)

$

(10,600

)

$

(19,279

)

$

(105,407

)

REDWIRE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands of U.S. dollars)

Nine Months Ended

September 30,
2023

September 30,
2022

Cash flows from operating activities:

Net income (loss) attributable to Redwire Corporation

$

(18,975

)

$

(104,744

)

Net income (loss) attributable to noncontrolling interests

(73

)

Net income (loss)

(19,048

)

(104,744

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization expense

7,971

8,836

Amortization of debt issuance costs and discount

448

345

Equity-based compensation expense

6,317

8,672

(Gain) loss on change in fair value of committed equity facility

179

231

(Gain) loss on change in fair value of warrants

2,475

(16,005

)

Deferred provision (benefit) for income taxes

(1,012

)

(6,964

)

Impairment expense

80,462

Non-cash lease expense

248

229

Non-cash interest expense

525

270

Other

157

143

Changes in assets and liabilities:

(Increase) decrease in accounts receivable

2,031

(283

)

(Increase) decrease in contract assets

(9,008

)

(4,590

)

(Increase) decrease in inventory

(221

)

(1,362

)

(Increase) decrease in prepaid insurance

936

(227

)

(Increase) decrease in prepaid expenses and other assets

255

(803

)

Increase (decrease) in accounts payable and accrued expenses

(2,202

)

6,793

Increase (decrease) in deferred revenue

(2,734

)

1,714

Increase (decrease) in operating lease liabilities

(241

)

Increase (decrease) in other liabilities

(979

)

454

Increase (decrease) in notes payable to sellers

(557

)

Net cash provided by (used in) operating activities

(14,460

)

(26,829

)

Cash flows from investing activities:

Purchases of property, plant and equipment, net

(3,524

)

(2,793

)

Purchase of intangible assets

(1,690

)

(639

)

Net cash provided by (used in) investing activities

(5,214

)

(3,432

)

Cash flows from financing activities:

Proceeds received from debt

23,696

19,696

Repayments of debt

(19,890

)

(4,489

)

Payment of debt issuance fees to third parties

(1,147

)

Repayment of finance leases

(282

)

Proceeds from issuance of common stock

84

2,956

Payment of committed equity facility transaction costs

(571

)

(161

)

Payments of issuance costs related to convertible preferred stock

(52

)

Shares repurchased for settlement of employee tax withholdings on share-based awards

(248

)

Payment of contingent earnout

(443

)

Net cash provided by (used in) financing activities

2,294

16,855

Effect of foreign currency rate changes on cash and cash equivalents

(77

)

(86

)

Net increase (decrease) in cash and cash equivalents

(17,457

)

(13,492

)

Cash and cash equivalents at beginning of period

28,316

20,523

Cash and cash equivalents at end of period

$

10,859

$

7,031


Contacts

Investor Relations Contact:
investorrelations@redwirespace.com

Read full story here

First published on Tue, Nov 7, 2023

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