Redwire Corporation

Greetings, and welcome to the Redwire Space Corporation first quarter 2024 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. I'll now turn the conference over to your host, Jeff Zunich.

You may begin. Thank you, Shamali. And good morning, everyone. Welcome to Redwire's first quarter 2024 earnings call. We hope that you've 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 for 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 that 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 their GAAP reconciliations. I am Jeff Zunich, Redwire Senior Vice President of Financial Planning and 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 would like to turn the call over to Pete. Pete?

Thank you, Jeff. During today's call, I will take you through a discussion of our key accomplishments in the first quarter of 2024. Jonathan will then present the financial highlights for the same first quarter 2024 period, after which we will open the floor for Q&A. Please turn to slide six. The first quarter of this year was another excellent quarter for Redwire, during which we continued our positive momentum from 2023. We have now delivered five consecutive quarters of positive adjusted EBITDA and revenue growth and two consecutive quarters of positive cash from operations. During the first quarter, we achieved $87.8 million in Q1 revenue, a 52.4% improvement over Q1, 2023. It was a very strong quarter for revenue. Positive adjusted EBITDA of $4.3 million and net loss of $8.1 million. Free cash flow of positive $.4 million, a year over year improvement of $15.2 million. cash from operations of positive $2.8 million, a year-over-year improvement of $16.8 million. And finally, we achieved a last 12 months or LTM book-to-bill ratio of 1.11 times during the quarter. It's important to note that we achieved these positive financial results by developing and delivering reliable, critical innovations for our valued customers throughout the first quarter. These results are directly attributable to the commitment and expertise of our workforce. Please turn to slide seven. During our previous earnings call, I introduced Redwire's growth strategy for 2024 that is centered around four key principles. Protecting the core, which means continuing to deliver on our strong foundation of existing products with proven reliability, and demonstrated flight heritage. It is about continuing the growth momentum of our successes in 2023. Scaling production, which means winning and delivering on increasingly larger orders by scaling our production to meet growing demand. Moving up the value chain, which means leveraging our proven capabilities in developing and deploying space subsystems and components into next-generation spacecraft and integrated mission payloads. And finally, venture optionality, which means continuing to pursue breakthrough developments on advanced technologies that could create new markets with game-changing potential. On the next few slides, I will discuss examples of successes in each of these key growth areas for the first quarter of 2024. Please turn to slide eight. Starting with our Protecting the Core growth area, during the first quarter, Redwire's cameras were onboard Intuitive Machines' IM-1 lunar landing mission. These cameras come from our Avionics and Sensors Core offering, which includes spacecraft subsystems and components that are used for navigation, control, and imagery collection. Also during the first quarter, NASA's solar sail, for which Redwire developed deployment mechanisms and 100-foot booms, cleared a key technology milestone with the successful deployment of one quadrant. Solar sail falls into our structures and mechanisms core offering, which includes a variety of space infrastructure that provide critical mechanical functionality for on-orbit operations, from launch release mechanisms and deployable booms to birthing and docking systems. Please turn to slide nine. Looking at our scaling production growth principle, we are excited to announce that we are under contract with Rocket Lab for 18 shipsets of antennas and radio frequency hardware for the SDA transport layer tranche tube beta variant satellites. the third in a series of spacecraft that will make up the proliferated Warfighter space architecture. Our radio frequency systems core offerings includes the systems and payloads that enable space-to-space and space-to-Earth communications. Also in Q1, two ROSA wings were successfully deployed on OBSOM-3, which represents the first integration of ROSA technology with a commercial satellite. In addition, Redwire began executing on our $142 million contract award for power solutions to an undisclosed satellite manufacturer. These operations fall within our power generation offering, which includes solar arrays and power distribution systems that generate the necessary power for space systems to operate regardless of size or location. Please turn to slide 10. Turning to our moving up the value chain growth principle, I'd like to highlight Redwire's U.S. and European operations in Very Low Earth Orbit, or VLEO. During the first quarter of 2024, Redwire was awarded a study related to our new U.S. VLEO platform, Sabersat. This is a very exciting indicator that the market recognizes Sabersat's potential as a critical capability. We are very encouraged with the reception Sabersat has received since our announcement and continue to pursue meaningful opportunities for this potentially groundbreaking VLEO spacecraft. To continue to aggressively assert ourselves as a technology leader in VLEO, today we are announcing Phantom, our VLEO platform for Europe and the international market. Phantom is currently being developed in our Belgian office for the European Space Agency SCIMSAT program, and we will be marketing this platform to other potential customers as well. Thales Alenia Space is the prime contractor for SCIMSAT, and Redwire EU is responsible for providing the VLEO spacecraft, which we are now calling Phantom. Since SCIMSAT is the mission, Phantom is our platform. The SCIMSAT mission is a VLEO satellite mission that aims at reducing the cost of Earth observation and telecommunication satellites while increasing performance by operating at substantially lower altitudes. The potential for this transformational program is extraordinary. Notably, Sabersat and Phantom do not share a common technological baseline. They are two different platforms with differing underlying technologies and performance parameters. This is important as missions in VLEO are as dynamic as all the other Earth orbits, such as LEO and GEO, and different approaches reduce risk and enable us to cover a broader set of customer requirements. As Redwire moves up the value chain, we are very excited that Sabersat and Phantom expand Redwire's offering of full satellite system development and operations that include the Redwire International PROVA satellite, as well as our proprietary platform-agnostic digital engineering and modeling and simulation solutions that enable rapid spacecraft development and deployment. Please turn to slide 11. Lastly, I would like to spend some time providing a deeper look into our fourth principle, venture optionality, by focusing on Redwire's in-space pharmaceutical development to benefit human health on Earth. Pharmaceutical companies are constantly looking to deliver new, optimized treatments for patients, and many of those treatments rely on crystals as their active ingredient. Form of the crystals will dictate a drug's properties, and as a result, precision matters. Historically, a significant proportion of drugs have not made it to the market as a result of crystal formation challenges. Growing crystals in microgravity could be transformative, potentially yielding a more uniform product with fewer imperfections and improving the drug discovery and development process. As pharmaceutical companies look to deliver new optimized treatments to help patients on Earth, microgravity could be a major differentiator. With the drug discovery market size having been estimated at approximately $80 billion in 2023, growing to approximately $180 billion by 2032, this represents a significant growth opportunity for Redwire. Redwire has already demonstrated the ability to develop crystals in space using our pillbox facility on the International Space Station. Redwire's proprietary pillbox is a proven cutting-edge in-space pharmaceutical manufacturing platform that builds on Redwire's extensive heritage in microgravity and offers pharmaceutical companies and biomedical researchers novel and flexible services to study small batch crystal growth of proteins. Redwire is at the forefront with our microgravity technology built on decades of in-space manufacturing success. Our successful inaugural pill one mission demonstrated that insulin crystals grown on the ISS using pillbox were larger and more highly ordered than terrestrial crystals. Our next step is to execute a production level cadence of crystal manufacturing using a variety of compounds. Our second pillbox mission has already returned and the results are promising. We are currently manifested for 16 additional pillbox missions this year. The economic potential for this technology is high and gaining momentum. Recent venture funding for related industry players has revealed a significant valuation premium for pharmaceutical microgravity development, validating that the venture optionality associated with this subset of Redwire's business has real value. Turning to slide 12. The inaugural Pillbox-1 mission launched in November 2023 and returned to Earth in late December 2023 for delivery to Eli Lilly, our research partner. Following closely on the heels of the successful Pill-1 mission, Pill-2, again in partnership with Eli Lilly, and Pill-3, in partnership with Butler University, launched to the International Space Station this past March, just three months later. The second Pillbox mission is focused on researching widespread chronic diseases which have massive global demand for treatment. Pill 3 has now returned to Earth in April 2024, and Pill 2 is anticipated to return in the coming months, demonstrating the rapid cadence Redwire can execute with this capability. This tempo is critical to demonstrate the industry model is viable for sustained development in orbit. For the remainder of the year, we have 16 additional pillbox missions manifested and a robust pipeline of interest from commercial entities. As launch costs decrease and commercial space station availability increases, the opportunity for on-orbit development and manufacturing at scale will expand, and Redwire is delivering tangible and useful results, not someday, but now. Please turn to slide 13. Now, turning to our contract awards and backlog. Our contract awards during the first quarter of 2024 were $35.1 million. Our last 12 months' book-to-bill ratio was 1.11 times for the first quarter of 2024. As we continuously reinforce, we often see lumpy contract awards growth from quarter to quarter. but we are continuing to maintain a positive growth rate on an annual basis. As you can see on the lower right-hand side of this slide, our contracted backlog has increased 10.9% year over year to a total of $318 million. The growth in contracted backlog is one of many factors that gives us confidence in our future growth. Finally, we continue to have a healthy pipeline with an estimated $6.3 billion of identified opportunities, including approximately $610 million in proposals submitted year-to-date as of March 31st. As you can see on the upper right-hand side of this slide, this represents a 177.3% increase over the corresponding year-to-date period ending March 31, 2023. The momentum continues. Please turn to slide 14. With that, I'd now like to turn the call over to Jonathan Bailiff, Redwire's Chief Financial Officer. Jonathan?