Redwire Corporation

Thank you for standing by. My name is Janine and I will be your conference operator for today. At this time, I would like to welcome everyone to the Red Wire Space Third Quarter 2024 Earnings Call. All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star followed by the number one on your touch-down phone. To withdraw your question, please press star followed by the number one again. I would now like to turn the conference over to Jeff, Janine, please go ahead.

Thank you, Janine, and good morning, everyone. Welcome to Redwire's third 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 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 calculations of these measures and their reconciliums to U.S. GAAP measures. 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 third quarter of 2024. Jonathan will then present the financial highlights for the same period, after which we will open the floor for Q&A. Please turn to slide six. During the third quarter, Redwire continued to effectively execute on our 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 throughout the year. Scaling production, referring to winning and delivering on increasingly larger orders to meet growing demand and delivering production capacity to fill critical gaps in the space industry supply chain. Moving up the value chain, which means leveraging our proven capabilities in developing and deploying space subsystems and components in the next generation spacecraft and integrated mission payloads. And finally, venture optionality, as we continue pursuing breakthrough developments on advanced technologies that could create new markets with game-changing potential. As I have done on previous calls, over the next few slides, I will discuss examples of successes in each of these key growth areas from the third quarter of 2024 to demonstrate our extraordinary progress against these objectives. Please turn to slide seven. M&A has always been a core strength of Redwire's. With nine integrated acquisitions through the first half of 2024, our team has the demonstrated expertise and performance to effectively scale both through organic and inorganic strategies. This is a competitive advantage and enables us to rapidly scale as a public platform. In the most recent quarter, I am very pleased to introduce Redwire's 10th acquisition as part of our platform development strategy, Hera Systems. Hera Systems is an agile and differentiated spacecraft development company. They have expertise in specialized missions for national security space customers and unique technical achievements with a path to transformative capabilities in the emerging area of dynamic space operations. The acquisition of Hera is right on strategy for Redwire. On the following slides, I will specifically highlight how the purchase of HERA accelerates our third growth principle, moving up the value chain. Please turn to slide eight. The HERA Systems acquisition complements our existing suite of national security space solutions and moves Redwire up the value chain as an integrated spacecraft platform provider. Hera Systems has developed a new class of high-performance spacecraft to support the evolving requirements for national security missions in contested space. And their acquisition broadens Redwire's product technology portfolio and extends our spacecraft platform capabilities with two additional spacecraft that we have recently rebranded as Mako and Thresher. Renderings of Mako and Thresher are shown on the right-hand side of this slide. Mako is a rad-hard GEO and MEO platform that is currently under contract on the U.S. Space Force's Tetra-5 program, while Thresher is a LEO spacecraft currently on contract with an undisclosed customer designed and built in the United States for operating in contested environments. As the national security space architecture evolves, MACO and Thresher are bringing unique capabilities to the warfighter in LEO, MEO, and GEO with plans for autonomy, edge processing, and maneuverability that will enable emerging concepts in dynamic space operations and rendezvous and proximity operations. Turning to slide nine. The addition of Mako and Thresher through the acquisition of HERA significantly enhances Redwire's full platform spacecraft portfolio, as we now have five unique spacecraft platforms for missions in every orbit, from VLEO to LEO, GEO, and beyond. Redwire's advanced spacecraft designs incorporate cyber-secure communications, resilient power systems, highly accurate pointing, extensive maneuverability, and expanded onboard computing power that can support mission and payload-specific machine learning. On the next few slides, I will provide a detailed outline of our complementary spacecraft platforms to emphasize how well we are now positioned to scale. Please turn to slide 10. Hopefully by now everyone is familiar with our two VLEO spacecraft, Sabersat and Phantom. Sabersat, depicted on the upper right, is a U.S.-built platform designed for performance, endurance, and cost-effectiveness, with a modular design and optional air-breathing engine. Sabersat is currently being leveraged on DARPA's Otter flight program. This is a new market opportunity for spacecraft, and Redwire is well-positioned as a first mover in this emerging area of operations. In fact, from a VLEO perspective, we are not only well positioned in the U.S. national security market segment, but we are also a leader in Europe VLEO development with Phantom, depicted on the lower right. Phantom is a European VLEO platform that is designed to carry out a wide array of intelligence, earth science, and communications missions. Redwire is advancing Phantom's design and development through the European Space Agency's SCIMSAT mission. It is important to emphasize that both Sabersat and Phantom are supporting funded contracts with premier customers and are on a path to flight operations. Turning to slide 11. Now turning to low Earth orbit, or LEO, I am pleased to announce for the first time Redwire's rebranding of our European P200 LEO satellite platform that has been supporting generations of ESA probe emissions. as Hammerhead, shown on the upper right. Hammerhead is a European LEO platform developed at Redwire's facility in Belgium. Much like how Phantom is the Redwire platform that supports ESA's SCIMSAT, Hammerhead is the new name for our platform that has been supporting ESA PROBA missions for more than 40 years in orbit without failure on ESA's PROBA 1, 2, 3, and 5 missions. As previously mentioned, with the acquisition of HERA, we have now added a US LEO platform called Thresher, which is depicted on the lower right of this slide. Thresher is a LEO platform designed and built in the US for US-centric missions and can support a wide variety of surveillance, space domain awareness, and tactically responsive space missions. Thresher is currently targeted for delivery in 2025 on a contract with an undisclosed customer. Please turn to slide 12. Also added as part of our HERA acquisition, we now have a GEO and MEO spacecraft in our portfolio, Mako. Mako is a high-agility, rad-hard platform designed for the harsh environments of GEO and MEO and built in the U.S. for precision rendezvous and proximity operations. Mako is currently being developed on the U.S. Space Force's Tetra-5 program with a targeted launch in 2025. On this inaugural mission, MAKO is being developed to demonstrate the feasibility of on-orbit refueling. As with all of our products, Flight Heritage is key to Redwire's differentiation, and all these platforms are currently under contract with a customer and have a pathway to flight. Please turn to slide 13. So why does this matter? What are we achieving by building out this differentiated portfolio of spacecraft and moving up the value chain? The answer is simple. By moving up the value chain, Redwire is able to access increasingly larger opportunities and supercharge our growth. This portfolio of platforms significantly increases our TAM in order to scale. We are seeing early signs of success with this strategy as evidenced by the substantial year-over-year increases in pipeline and year-to-date bids submitted. We are focused on satisfying market needs, scaling rapidly, and leveraging our classified and global reach, particularly in Europe. As Redwire moves forward, we will continue building on our heritage as a spacecraft platform provider with innovative solutions to meet the challenges of our customers around the globe. Please turn to slide 14. Of course, we continue protecting the core of our existing product portfolio in order to build on our successes. As an example, Redwire is proud to have provided the onboard computer system for the European Space Agency's HERA mission. Not to be confused with HERA the company, our most recent acquisition, HERA the mission is Europe's inaugural flagship planetary defense mission. On HERA, Redwire's advanced data and power management system leverages 25 years of flight heritage and is designed to meet the challenges of operating in deep space. The system will control all vital spacecraft operations, including power, navigation, and key mission milestones, such as the deployment and monitoring of ESA's two deep space cubesats. Onboard computers fall within our avionics and sensors core offering, which includes spacecraft subsystems and components that are used for navigation, control, and imagery collection. Also during the third quarter, Redwire's expertise was critical for Crossbow's latest commercial mission one launch, which took place on September 12th, 2024. Redwire developed and delivered the launch vehicle structures and launcher interfaces for the flight test mission. This is the third in a series of Crossbow launches supported by Redwire technology and our structures and mechanisms core offering. which includes a variety of space infrastructure that provides critical mechanical functionality for on-orbit operations from launch release mechanisms and deployable booms to berthing and docking systems. Please turn to slide 15. Looking at our scaling production growth principle, this quarter Redwire announced that we have signed a strategic cooperation agreement with in-space propulsion leader phase four. to build and deliver an advanced thruster technology called Valkyrie that is designed for reliable high-volume production to fill a gap in the supply chain. Redwire will leverage its scale business operations, marketing resources, and extensive heritage as a trusted space system supplier to bring this in-space propulsion system to market. and the Valkyrie thrusters are anticipated to go into full-rate production in 2025. These thrusters fall within the avionics and sensors core offering, which I described earlier. Turning to the right-hand side of the slide, we have also recently shipped IROSA Wings 7 and 8 to Boeing. These wings are a follow-on to the six IROSA wings that have already been deployed on the International Space Station. Furthermore, as of September 2024, we had 25 ROSA wings contracted, a 170% increase when compared to September of 2023. Rollout solar arrays fall within our power generation core 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 16. Finally, turning to our venture optionality growth principle, I would like to take this opportunity to highlight the exciting progress we've made this year with our innovative space pharmaceutical platform, Pillbox. Redwire is proud of the launch cadence we have achieved for Pillbox since its first launch a year ago. At the beginning of this year, we stated that our goal was to launch 16 additional Pillbox systems to the ISS. I am very pleased to report that the 12 new pillboxes launched earlier this week on SpaceX 31 Commercial Resupply or CRS mission bring us to 28 pillboxes launched in total, clearly demonstrating the sustained operational tempo required to turn this into a viable business model. In addition, customer demand is building. And we are proud to have worked with a number of notable commercial customers this year, including our newest commercial partners, Bristol-Myers Squibb and Excessive Libro Pharma. We launched investigations this week on the CRS mission. The objective of our pillbox strategy is to accelerate small molecule drug discovery to treat a variety of conditions and diseases on Earth. Since small molecule drugs comprise a majority of all marketed drugs, pharma companies are continually investigating the crystal structure of new and exciting drugs, new and existing drugs to meet specific therapeutic goals. Pillbox is poised to be a game-changing innovation. And I'm excited to report that in addition to our launch objectives, Redwire has achieved two critical milestones that further distinguish it as the premier space pharmaceutical development platform. As we have previously discussed, the first milestone is that Redwire has successfully and repeatedly demonstrated that small molecule drug crystals grown on orbit using our proprietary pillbox system are larger and more highly ordered than terrestrially grown crystals. Today, I'm excited to announce a second key milestone in what we believe to be a first of its kind achievement here on Earth. Redwire successfully replicated space-grown crystal forms using crystals returned from space as seeds or templates. Not only that, but we successfully replicated them through five generations of copies from copies. To detail this achievement, using Redwire's pillbox system, we successfully formed two different small molecule drug seed crystals in space, preserved the space-flown crystal structures, and safely returned the crystals to Earth. The returned crystals retain their microgravity-induced attributes, and once on the ground, we used these seeds to grow new crystals with the same structure, successfully demonstrating that seed crystals formed in space can be used as a template to generate those same crystals on Earth. This pivotal step is required for future commercial expansion, and Redwire has now taken it. To our knowledge, this result is the first of its kind, and nothing close to it has been achieved previously. It is not only a technical achievement, but also an important step towards taking one of our spaced, enhanced crystals to commercial production at scale on the ground. Please turn to slide 17. Going forward, we see two different avenues for the ongoing commercial application of our Pillbox platform. First, we will continue flying crystals on behalf of our partners, as we have done this past year. Redwire has developed a list of more than 80 promising small molecule targets for experimentation. Redwire will continue to fly experiments on our own behalf to generate a library of valuable space-developed crystal forms that will be protected as our own IP. We have already seen interest in licensing this information from commercial customers and see this as a viable means to realizing a business model based on back-end royalty revenue in the future. Ultimately, pharmaceutical manufacturers want new and better crystal forms regardless of whether they are produced on Earth or in space, as these new forms can provide new properties and unique approaches towards the treatment of human diseases. We believe in the value that those created in space will provide. And through Pillbox, Redwire is proud of our efforts to harness the power of space to support human health here on Earth. Please turn to slide 18. Now turning to our contract awards and backlog. Our contract awards during the third quarter of 2024 were $44.5 million. Our last 12 months book to bill ratio was 1.25 times for the third 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 healthy growth rate on an LTM basis. As you can see on the lower right hand side of this slide, our contracted backlog has increased 30.2% year over year to a total of $330.1 million. The growth in contracted backlog is one of many factors that give us confidence in our growth as we look towards 2025 and beyond. Finally, as I mentioned earlier, we continue to expand our pipeline with an estimated $6.9 billion of identified opportunities, including approximately $2.9 billion in proposals submitted year-to-date as of September 30, 2024. This is a result of our moving up the value chain and scaling production growth principles leading to larger bids. As you can see on the upper right-hand side of the slide, this represents a significant increase of 306.2% over the corresponding year-to-date period ended September 30, 2023. The growth in bids submitted is a result of our efforts to increase the average size of the individual opportunities we are pursuing. As previously mentioned, we are now bidding on individual programs in the 100 million plus award value on a more regular cadence. Of course, there is no guarantee we will win these opportunities, But we now have a pipeline of bids that could result in a substantial increase in backlog if we land some of these larger opportunities. We are able to pursue these opportunities because of the critical investments we have made in building the Redwire platform. The foundation we have laid is yielding results. Please turn to slide 19. With that, I'd now like to turn the call over to Jonathan Bailiff, Redwire's Chief Financial Officer. Jonathan?