Redwire Corporation

Greetings. Welcome to the Redwire Space Q2 2023 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Jeff Zunich. You may begin.

Thank you, Shamali, and good morning, everyone. Welcome to Redwire's second quarter 2023 earnings call. We hope that you have seen our earnings release, which we issued yesterday afternoon. It has also been posted in the investor relations section of our website at redwirespace.com. Let me remind everyone that during the call, Redwire management may make forward looking statements that reflect our beliefs, expectations, intentions, or predictions of the future. Our forward looking statements are subject to risks and uncertainties that are described in more detail on slide two. Additionally, To the extent we discuss non-GAAP measures during the call, please see slide three, our earnings release, or the investor presentation on our website for the calculation of these measures and GAAP reconciliations. I am Jeff Zunich, Redwire Senior Vice President, Financial Planning Analysis and Investor Relations. Joining me on today's call are Peter Conito, Chairman and Chief Executive Officer, and Jonathan Bailiff, Chief Financial Officer. With that, I'd like to turn the call over to Pete. Pete?

Thanks, Jeff. During today's call, I will take you through a discussion of our key accomplishments in the second quarter of 2023, followed by Jonathan, who will present the financial highlights for the same period. We will also discuss our continuing outlook for the remainder of 2023, after which we will open the floor for Q&A. Please move to slide six. I'm very pleased to report that the second quarter was another record quarter for financial performance at Redwire. Our ability to deliver high-quality solutions and products to our customers is in turn enabling us to deliver tangible financial results for our shareholders. During the second quarter of 2023, we achieved record revenue, gross profit, and adjusted EBITDA, recognized our first quarter of positive cash from operations and positive free cash flow, made multiple strategic investments in the business to drive future growth, expanded our margins, and continued to execute and win more leading edge high potential contracts. One such leading edge contract is our recently announced award to develop trailblazing systems to build landing pads, roads, and other forms of infrastructure on the moon, a rendering of which is shown on the right of this page. The future lunar economy, based on a permanent presence on the lunar surface, will bring significant benefit to humanity, and we are very proud to be NASA's trusted partner for developing lunar infrastructure solutions to support this critical mission. Please turn to slide seven. The second quarter of 2023 was another incredible quarter for Redwire. during which we built on the momentum from the first quarter of 2023 for a very successful first half of the year. We achieved year-over-year quarterly revenue growth of 63.6% from the second quarter of 2022 to the second quarter of 2023. For adjusted EBITDA, I am very pleased to report that we achieved a second sequential quarter of positive adjusted EBITDA with an $8.4 million increase on a year-over-year basis from the second quarter of 2022 to the second quarter of 2023. Next, we are pleased to report we have achieved a $71.6 million year-over-year improvement in net loss. Also notably in this quarter, we achieved positive free cash flow cash flow for the first time as a public company. In Q2, we achieved a year-over-year improvement in free cash flow of $6.3 million to positive free cash flow of $1.1 million. This is an important milestone for Redwire and an outstanding accomplishment on both an absolute and percentage growth basis. We also achieved year-over-year improvement of $7 million in cash from operations to positive $2.8 million in the second quarter of 2023. That's $7 million in cash from operations improvement. Finally, it's important to note that these positive financial results are due to strong performance in operations. In Q2, we continued our proven track record of delivering dependable, flight-worthy products and extended our already significant flight heritage as we launched 11 solutions on four launches in the quarter. Turning to slide eight. As I just mentioned, our strong financial performance is driven by our proven ability to deliver differentiated solutions for our outstanding customers today. This is how we know it is sustainable. On the next few slides, we'll share just a few examples of our operational success and investments in the second quarter of 2023. During Q2, two additional Red Wire Rollout Solar Arrays, or ROSA wings, were installed onto the International Space Station, bringing the total number of ROSA wing deployments and operating in space to six. In addition, during the quarter, Redwire announced the award of two more IROSA wings, numbers seven and eight, in a follow-on contract from Boeing. Our performance and reliability are leading to follow-on contracts. Redwire also continues to advance the ROSA technology to power other spaceflight platforms and missions, such as for the power and propulsion element for NASA's Gateway and for Astrobotic's Lunar Vertical Solar Array. Turning to slide nine. During the second quarter of 2023, Redwire provided advanced engineering services and payload deployment expertise for the Bolt rocket from Crossbow Systems, their next generation launch vehicle. Redwire developed and delivered four key components, the launch vehicle structure, separation system, launcher interface, and ground support equipment. In addition, Redwire provided vehicle integration, launch, and post-flight recovery services. The technology supporting this mission was developed by Redwire's team in Albuquerque, New Mexico, and this is the second successful mission that Redwire has supported with Crossflow Systems and their suborbital rocket. Please turn to slide 10. Also in Q2, Redwire had three successful experiments returned from the International Space Station. Materials from our PFMI ascent AmpliSpace Maker Health, and Plant Habitat 3A Investigations were returned to their respective researchers on Earth for further study. These are excellent examples of the continuous cycle of in-space payload development and operations that Redwire is known for. Please turn to slide 11. Finally, space is a multinational endeavor, and Redwire Space is a global leader in international space missions. In the second quarter of 2023, Redwire's International Birthing and Docking Mechanism, or IBDM, successfully completed its first round environmental testing. The IBDM is the result of an extensive research and development program and was designed to overcome the limitations of conventional docking systems and to be highly versatile, resilient, high performance, and low impact. It is fully computer controlled and designed for use with both large mass and very lightweight spacecraft. The IBDM will soon complete further testing with the goal of having a fully qualified system by the end of the year. We believe that the IBDM is the docking system for the next generation of space infrastructure. And as of the end of Q2, we have over $60 million of identified opportunities in our current year pipeline associated with this remarkable system. Please turn to slide 12. Speaking of pipeline, our bookings during the second quarter were $45.6 million, an increase over our contracted awards for the first quarter of 2023, which totaled $29.7 million. Our last 12 months book-to-bill ratio was 1.49 times as of Q2 2023. Finally, as you can see on the right-hand side of this slide, our contracted backlog has increased 68.3% since June 30 of last year to a contracted backlog at the end of Q2 2023 of $272.8 million. Growth in contracted backlog is one factor that gives us confidence in our future growth and stability. We continue to have a healthy pipeline with an estimated $3.7 billion of identified opportunities, including $512 million in proposals submitted and currently under review by our customers. Please turn to slide 13. Not only did Redwire achieve positive adjusted EBITDA on free cash flow during the first two quarters of 2023, we did so while continuing to invest in our future growth. During the year-to-date period ending June 30, 2023, we have made $2.5 million in capital expenditures. Examples of capital expenditures during the quarter include spend on our first-of-its-kind radio frequency test chamber in our Longmont, Colorado facility to support our rapidly growing space communications business, as well as investments in a trust for solar production in our Goleta, California facility. During the same period, we have also made investments in research and development, totaling $2.5 million, including significant investments in the IBDM. In addition, we have made a variety of corporate investments in systems and infrastructure, totaling $1.9 million that flow through the SG&A line. Next, moving to slide 14. Redwire recently announced plans for a 30,000 square foot state-of-the-art microgravity payload development facility with a mission operations center at the Nova Park Innovation and Technology Campus in Floyd County, Indiana. Once complete, this facility will support increased demand for commercial companies and academic researchers focused on improving biopharma R&D, in-space commercialization, and enabling technologies essential for sustainable human spaceflight in low Earth orbit and beyond. Construction is expected to begin in the fourth quarter of 2023. Clearly, we are demonstrating our ability to deliver in the present while investing in the future. Please turn to slide 15. With that, I'd now like to turn the call over to Jonathan Bayless, Redwire's Chief Financial Officer. Jonathan?