Q2 2023 Redwire Corporation Earnings Call
[music].
Greetings and welcome to the Red wire space Q2, 2023 earnings call. At this time, all participants are in a listen only mode.
You didn't answer session will follow the formal presentation.
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Please note this conference is being recorded.
Now I'll turn the conference over to your host Jeff <unk> you may begin.
Thank you so Molly and good morning, everyone welcome to rent why our second quarter 23 earnings call.
Hope that you have seen our earnings release, which we issued yesterday afternoon and it has also been posted in the Investor Relations section of our website at Red wire space Dot Com, Let me remind everyone that during the call Red wire 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 just doing like Red wire senior Vice President of financial planning analysis, and Investor Relations. Joining me on today's call are Peter <unk>, Chairman and Chief Executive Officer, and Jonathan Bailey, Chief Financial Officer with that I'd like to turn the call over to Pete Pete.
Thanks, Jess 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 with another record quarter of financial performance at Red wire.
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 continue 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 as trusted partner for developing lunar lunar infrastructure solutions to support this critical mission.
Please turn to slide seven.
Yeah.
The second quarter of 2023 was another incredible quarter for Red wire 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 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.
Positive free cash flow of $1 $1 million.
This is an important milestone for red wire and an outstanding accomplishment on both an absolute and percentage growth basis.
We also achieved year over year year over year improvement of $7 $1 million or $7 million in cash from operations to positive $2 8 million in the second quarter of 2023 at $7 million in cash from operations improvement.
Finally, it is important to note that these positive financial results are due to strong performance and 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, new solutions on for 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.
The next few slides, we'll see here just a few examples of our operational success and investments in the second quarter of 2023.
During Q2, two additional red wire rollout sort of raise a rosa wings were installed onto the international space station, bringing the total number of Rosa wing deployments and operating in space to six in.
In addition, during the quarter Red Wire announced the award of two more Iressa wings number seven and eight and a follow on contract from Boeing our performance and reliability are leading to follow on contracts Red.
<unk> also continues to advance the roasted technology to power other space flight platforms and missions such as for the power and propulsion element for Nasa's Gateway and for Astro Biotics lunar vertical solar array.
Turning to slide nine.
During the second quarter of 2023, Red wire provided advanced engineering services and payload deployment expertise for the bolt rocket from cross both systems. There are next generation launch vehicle.
Red wire developed and delivered four key components.
Launch vehicle structure.
Separation system launch or interface and ground support equipment. In addition, red wire provided vehicle integration launch and post flight recovery services. The technology supporting this minutes mission was developed by Red wires team in Albuquerque, New Mexico and this is the second successful mission that Red wire has supported with Cros.
Systems and their sub orbital rocket.
Please turn to slide 10.
Also in Q2 Red wire had three successful experiments returned from the international space station materials from our semi ascent and fluids space maker Health and plan habitat three a investigations will return to their respective researchers on Earth for further study. These are excellent examples of the continuous.
Cycle in space payload development and operations that Red wire is known for.
Please turn to slide 11.
Finally space is a multinational endeavor and red wire space as a global leader in the international space missions in the second quarter of 2023, Red wires International Berthing and docking mechanism or IBD M successfully completed its first round environmental testing. The IBD M is the result of an extensive.
Search and development program and was designed to overcome the limitations of condensed 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 IBD and will soon complete further testing with the goal of having a fully qualified system by the end of the year.
We believe that the IBD M 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 or 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 or last 12 months book to Bill ratio was 149 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 our 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 red wire achieve positive adjusted EBITDA and free cash flow during the first two quarters of 2023, we did so while continuing to invest in our future growth during.
During the year to date period, ending June 32023, we have made $2 5 million and capital expenditures examples of capital expenditures during the quarter include spend on our first of its kind radiofrequency test chamber and 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 IBD M.
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.
Red wire recently announced plans for a 30000 square foot state of the art micro gravity payload development facility with emission Operation Center at the Novo Park innovation and technology campus and Floyd County, Indiana.
Once complete this facility will support increased demand for commercial companies and academic researchers focus on improving biopharma R&D in space commercialization and enabling technologies are central for sustainable human spaceflight and lower orbit and beyond construction.
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 Balas Red wires, Chief Financial Officer Jonathan.
Thank you Pete.
Please turn to slide 16.
Similar to last quarter, I will help quantify and expand on a number of the themes that Peter has talked about including key financial takeaways, starting with the financial quarterly metrics shown on this chart and then continue with other quarterly year to date and last 12 month financial information and also a brief update to our financial outlook for the remainder of the year.
Important points to reiterate in detail for this quarter's financials.
One red wires excellence in execution initiatives continue to deliver on our growth promises and our differentiated path to profitability as we scale our business with record quarterly and first half revenues gross profit adjusted EBITDA and now positive cash from operations and free cash flow.
So let's discuss the specifics.
We achieved record revenue of $61 million in the second quarter of 2023.
We achieved our second consecutive adjusted EBITDA quarter, since becoming a public company our positive adjusted EBITDA of $4 4 million in the second quarter of 2023, and as said before Thats, an $8 $4 million increase on a year over year basis versus the second quarter of 2022.
This record adjusted EBITDA of core occurred primarily due to a more than doubling of gross profit year over year, which we will detail in a few minutes.
This excellent progress in gross profit program management and continued cost controls also contributed to a $71 $6 million year over year improvement to a $5 5 million net loss in the second quarter of 2023.
Second and notably in Q2 2023, we achieved positive free cash flow for the first time as a public company and that was $1 $1 million based on a positive $2 $8 million of cash from operations.
This is a year over year improvement in cash from operations of $7 million and a sequential $16 $9 million improvement over the last quarter.
Please turn to slide 17.
Specifically for quarterly revenue as you can see from the chart on the right and as I said before we had a $60 1 million dollar revenue stream for the second quarter of 2023 versus $57 6 million for the first quarter of 2023.
Representing an increase of four 3% on a sequential basis.
<unk> said before this is 63, 6% increase on a year over year basis.
Excluding revenue contributed by space Envy, our second quarter revenues were $45 9 million.
Excellent growth of 24, 9% on a comparable year over year basis.
We were able to achieve this in the U S businesses due to the significant growth in backlog more than 85% of our revenue was derived from funded government programs or from global marquee customers, who are delivering for example in the National security area, Leo commercialization habitation and exploration of space areas to name a few.
Finally on our Q2 2023 full year last 12 months basis Red wire grew revenue at 45, 6%.
An acceleration of revenue growth from Q1, 2020, threes last 12 months of 33, 5% talked about on last quarter's call.
Turning to slide 18.
For this year to date or first half <unk> recorded $117 $7 million of revenue, which excluding the revenue contributed by space <unk> was growth up 31% compared to the first half of 2022.
<unk> first half of 2023 saw 69, 1% year over year revenue growth across all three primary focus areas, whether it be space systems as an integrated space mission enabler.
Our payloads to explore live work in space.
Or with Red, while our Europe , and our multinational space leadership.
The first half revenue percentage by customer type shown on this chart also shows the strength of the diversification of Red wire revenue adjusted EBITDA and cash flow with revenue streams 45, 4% from civil 33, 5% from commercial and 21% from National security customers.
Of note. This half our first half 2023 commercial customer revenues have seen the largest growth percentage 103, 6% year over year.
In our National Security revenues grew year over year by 43, 9% in the half.
Nine 1% growth in the first half of 2022 and almost five times acceleration of this customer classes revenue.
Please turn to slide 19.
Okay.
<unk> path to profitability continued successfully in this quarter as you can see from the progress made on the chart to the right with a steady March of quarterly financial improvement in 2022 now continuing in 2023 with Q2 2023, adjusted EBITDA, improving $8 $4 million year over year to <unk>.
Positive $4 4 million.
This record adjusted EBITDA improvement was primarily driven by our improvement in gross profit our excellence in execution initiatives are showing results better contract mix the roll off of lower margin contracts better labor utilization better program management increased on a year over year.
Gross margin basis from 19% to 26, 5%.
And our year over year gross profit grew to three times higher.
From $7 million to $15 9 million.
The adjusted EBITDA improvement was also supported by cost control with Red Bar second quarter 2023, SG&A expenses at 29, 4% of revenue a significant drop from the 47, 8% in the second quarter of 2022.
Please move on to slide 20.
Similar to our first quarter on the left hand chart, we show free cash flow as a reminder, free cash flow provides a metrics based on our U S. GAAP cash from operations minus Capex.
As you can see during the second quarter of 2023, we had positive free cash flow of $1 1 million.
Compared with the first quarter of 2020 Three's use of cash of $14 8 million.
The sequential improvement of almost $16 million.
On a last 12 months basis free cash flow also improved 16, 5% in the second quarter of 2023.
Credit for this goes to the revenue growth and profitability improvements already discussed but in addition, we had more efficient and effective working capital management over the second quarter and our management continues to be laser focused on this through 2023 and beyond.
And remember this cash flow improvement is after the almost $7 million of first half investments for growth that Pete spoke about earlier and is not dependent on any one solution or any one customer class.
On the right hand chart, we show our available liquidity as of June 32023, which totaled an ample $36 2 million a nominal change from Q1 'twenty three.
This quarter's liquidity is much improved from a year ago, and we continue our path to profitability and I want to thank all of <unk> teams for this quarter's result, a total global effort that will continue through 2023 and beyond.
I will now turn the presentation back over to Pete to provide a brief outlook for the remainder of 2023.
Thanks, Jonathan Please turn to slide 22.
As you can see from our presentation Red wire continues to deliver now with strong operational and financial performance, while investing in our future, resulting in strong pipeline and future backlog.
For these reasons for 2023, we reaffirm our full year guidance range of $220 million to $250 million, which.
<unk>, 46% year over year growth at the midpoint of the range.
With that I'd like to thank all of the Red wire employees for their hard work and then on an excellent second quarter and all of our customers for trusting Red wire, we will now open the floor for questions.
And at this time, we will be conducting a question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue you.
You May press star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Our first question comes from the line of Mike Crawford with B Riley Securities.
Please proceed with your question.
Thank you.
Maybe I'd like to start with your.
The numbers you gave for the proposals submitted and under review so the deck shows 489 million at June 30th you mentioned 512 million today.
Is that accurate.
There was a $23 million increase in the <unk>.
First months of the quarter.
Yes.
So I think the we will have to get back to you on that question, Mike I think it's in that range and we might be confusing year to date submitted bids.
As of.
On a certain time period versus.
The year to date, let me see here, but I'm going to pull up the number real quick.
Maybe more importantly, you have the $3 7 billion pipeline.
Pipeline.
Do you have enough experience at this point to characterize like potential win rate or.
Uh huh.
Thoughts on <unk>.
Youre going to turn that into a backlog in the coming year.
Yeah, no. It's a really good question.
The answer is essentially no at this point, we don't have a.
Conversion rate that.
Has enough consistency over time that we're comfortable reporting on.
A number of those opportunity if there is some big swings in there.
That could for instance change any conversion rate I were to give you any ways.
So.
So I think the $3 7 billion really underscores that theres a lot of great opportunities for us.
To work against and based on.
The backlog growth.
We have a consistent enough win rate to improve that include our growth over time here.
Jonathan do you have any additional comments on the $5 12 versus <unk> 89, Yes, I think that on the 49, it's only those submitted during the year. So 49, we just had a cut off on the year to date submitted bids to slide 12 includes a few other bids that have been submitted.
Okay, perfect and then.
Jonathan.
You gave a few.
The reasons are.
The drivers of the improvement in gross margin with your excellence in execution.
All up lower margin contracts better program management et cetera, but.
Was there anything particular in the mix in this quarter and last that led to these really.
Sizable beats versus.
Forecasted margins and I guess the follow through is is that more of a new baseline for what we should expect going forward.
Look Mike.
Always appreciate your question and trying to get at basically.
Projection of what our current gross margins, which we do not publicly give but let me help you out here look if you look at last year and the nature of a number of EAC adjustments in some program management really what <unk> seen its improvement across all three focus areas, whether it be enabling space missions live work in space or what we call red.
<unk>, Europe and international or multinational all three saw improvement in the growth gross margins and gross profit, but you really saw it in the.
At space industries, or basically the live work in space focus area, you really saw that year over year improvement and Thats, just due to some new contracts coming on.
Program management.
EAC adjustments all the things that I talked about before I do have to also mentioned when we talk about cost control. We don't just talk about cost control from the standpoint of SG&A and operating margin. We also talk about within the contracts themselves and so being able to operate on time and do better on time delivery of milestones both helps us for.
A gross margin standpoint in gross profit and then obviously from a cash flow standpoint.
Is that helpful.
Yeah, Yeah. So.
So that was a great job of trying to answering the question, but not really sure.
Okay.
We've told you Mike in this in the past we are not giving guidance, but we have an intent of getting these margins up right. We just don't give any guidance, Mike, but you can tell we're making progress.
Quarter over quarter, it's Pete direction to all the management team to continue this it's not going to be an overnight, but you can see the progress and then you see also the.
The money dropping to the bottom line, which is really the operating leverage coming back into the business as a public company and I will just add that the.
Again, the key factor is as I mentioned in the pipeline, we have some pretty big swings. Some of these swings may be cost plus fixed fee for instance, and therefore, the gross margin profit could change based on landing one of these big swings.
Even though the absolute value of the profit would significantly increase with scale.
So theres a number of different tradeoff, that's happens when youre kind of building a complex mix of programs like like we are.
And an outsized cost plus fixed fee could be France is an example of a.
One of the reasons, we're reluctant too.
Put a mark on the wall for for our gross profit margin.
Alright, Thanks, Peter I guess I have one closing kind of bigger picture question.
If you look at space systems space industry's multinational.
They're one.
Okay.
Of these addressable markets that is most attractive or are there different.
Potential margin characteristics.
For for any of those three I wouldn't call them segments, but areas of focus.
No it's really about the portfolio effect in this instance, they each bring something to the table obviously sub.
The focus areas are growing faster than others.
Some have provide more scale others are really important for the future certainly there's different growth rates occurring internationally versus the U S market in the U S market as you saw from the percentages that Jonas third that Jonathan presented you have a number of different dynamics in civil <unk>.
<unk> Securities security and commercial as well and so it's really I think the important part is that.
Each.
Area of focus brings something to the portfolio that.
Makes the the whole.
Come together in a really resilient.
Stable.
Growing growing way.
Okay.
Thank you. Thank you very much.
Thank you Mike.
Our next question comes from the line of Greg Konrad with Jefferies. Please proceed with your question.
Good morning.
Okay, I'm just going to add Greg how are you. Good how are you there.
Just kind of follow up on margins not expecting an answer but just coming at it a different way.
You mentioned some of the variability around mix going forward, but I mean, when you think about the second half of the year is there at least a baseline to maintain.
Positive EBIT.
And if we do think about the biggest swings is that more on the Cogs line or is there some variability around SG&A and just thinking about opex spending.
Yeah, no in terms of.
The margin mix or the margins, it's really a function of the product mix and the type of contracts that we win as we scale in terms of is on what I call gross margin discipline. That's an area that we've been putting a lot of focus on and we've demonstrated as part of our excellence in execution initiatives the.
<unk> two <unk>.
Continue to make great headway, there and that is our intention to continue that going into the future.
Hey, Jonathan.
The only I would add is we we continue to see improvement on the SG&A margin line. The SG&A margin line. This quarter is still much better on a year over year basis, but this quarter more than any other we had a lot of investments.
In socks, ERP that find its way into that SG&A line. So we really did see on a run rate basis, our SG&A margin go down sequentially quarter over quarter, but it looks a little higher but really we had some specific investments.
Investments is what I would call them one offs, but we include them, we don't try to.
Say that theyre, not SG&A and do some adjustments so thats why youre seeing that but I think that where once we.
Continue to win these bigger projects and revenue youre going to see that stay fixed on an absolute basis, and that's where operating leverage comes on the gross margin basis again, I know you're asking a specific question about the future. We really have an intent to keep this gross margin moving from the standpoint of being able to continue the past excellent.
On time delivery better on time delivery better programs that have higher margins. So we're going to continue that's an intent. We just don't give a guidance towards the Craig, but I do hopefully you're getting a sense of what we're trying to do here.
Yeah, No I mean, there's been great momentum.
And then I.
Just switching to the outlook for the top line for the year, if we kind of take the midpoint of the guide is kind of a sequential.
Flat in <unk> versus Q2 levels.
What is the variability is it the supply chain is it orders that you expect coming in.
Capacity, just how are you kind of thinking about revenues at least near term.
Yes, so it has to do with.
The size of orders and the timing of orders as you know in this industry can be very.
Difficult sometimes to predict when for instance, our government award occurs.
So I would say that the majority of the uncertainty.
Is about timing associated with awards.
Yes, and just know him again.
We want to be prudent in our guidance and sticking with that we're halfway through the year. We're proud of what we've been able to achieve team has done a great job.
Executing but like Pete said, it can be lumpy, but we're just trying to be prudent.
Okay, and then just last one I mean in each one commercial led the increase not sure how much of that is organic versus inorganic but have you seen any broader changes in the commercial realm. I mean, there is obviously a little bit of volatility around funding.
Before and some other items just can you talk about the broader trends in the commercial business.
Yes, I think you hit on it and it talked a lot about it.
The news commercial is growing fast, there's a significant amount of opportunity there, but red wires emission enabler.
Had some exposure to.
Customers receiving their funding as well.
So depending on the funding profile of our customers, obviously that trickles down to us as well.
But overall, there's still a lot of enthusiasm around the commercial segment.
The market and.
And we believe that trend will continue.
Over time, we're also seeing a lot of breakout commercial successes as well that is leading to some tailwind and then while we're on the topic of this.
Point out and reemphasize one of the areas. We're excited about in the National security area, which happens to be the area that.
Growing or accelerating the fastest as part of our growth. There is certainly a significant amount of opportunity emerging in national security as well and we think that red wire based up on some of our security infrastructure and contracts has a real opportunity to capitalize on those trends.
Thank you.
Yes, I mean, just to emphasize without space N V. Just ask answer specific question here, we saw 31% growth.
Without space NV on a first half basis and on an LTM basis as you know.
We saw 45, 6% growth and so we're.
We're making progress best way I can say.
Thank you.
Our next question comes from the line of <unk> Desilva with Roth MTN. Please proceed with your question.
Hi, Peter Hi, Jonathan and congrats on all the progress here.
Thank you very much.
Sure. So first of all I just want to try to distinguish in the pipeline. Maybe this is a follow up to some of the ask questions. The $500 million of contracts submitted versus the multi billion dollar pipeline. When you submit the proposal does that give you some level of understanding of the timeframe for the award or should I refer back to your prior comments are Jonathan where that is now one of the most uncertain parts.
Got it running the revenue line.
Yes, no we don't control the timing of the award.
So it can be highly variable government contracts are notorious for being awarded late it can be a continuing resolution.
Some it can be.
Protests there is a lot that goes into the timing of these awards.
So it's very difficult to predict.
I'll just make a note.
I'm sorry go ahead.
No I am just making note when you compare to the last quarter. The pipeline has moved up almost 300 million from three four to $3 seven so we're seeing more.
Coming through the pipeline, but as Pete said the the timing.
It's something that we think long and hard about and be prudent about what we what we can predict.
Yeah. So just to ask the question a little more simply I mean is it reasonable to expect that the ones. When you submitted a contract that will be aware within the next 12 months or is that not a reasonable way to think about it.
So I would just repeat that the government has a number of things that they have to deal with as well as our commercial customers to include their financing. So it's very difficult to predict yes, Sir yes, I mean I would think.
Got to focus on something I focus on the backlog.
We had.
Excellent growth in our backlog, we're very proud of that our team has done an extraordinary job.
In winning the confidence of our customers to increase that backlog and that's where I would look to in terms of.
That that reliable revenue moving into the future.
That's helpful color and great execution on the backlog and maybe you can in a second question as you focus on the National security part of the business. There's not a lot of talk today about launch in about satellites in Earth observation I, just want to understand red wire set of offerings and national security because that maybe kind of highlight maybe it may have been highlighted little less in the last few quarters. So just curious what the op.
<unk> are there.
Yeah.
We have interest across our entire portfolio mix from the National security.
Segment of the market.
It is not.
So much I would focus on.
Which products they are interested in specifics unless offerings, because it's pretty much across the board.
I would focus on is that red wire has.
<unk> unique security infrastructure.
And personnel clearances and contracts quite frankly that if you follow government contracting industry you know.
That you have to have contracts that have documentation that allows you to participate.
In.
<unk>.
More classified work and we have those.
Elements as part of our business. So when I talk about the accelerated growth and when you see the accelerated growth I think it's more a reflection of the fact that we're a trusted company.
That has.
That barrier to entry if you will in terms of the ability to work on some of the government's most sensitive space programs does that makes sense yeah.
Absolutely its very helpful perspective, and then maybe lastly, you say of the 85%.
Marquee customer.
A data point and put it in the presentation I'm. Just curious is that mix expected to change for the next one to two years or stay roughly there and maybe you could just kind of help us understand the 15% of our large customers.
Site in that to understand how that can grow or is that.
Diversified across a lot of emerging customers.
Sure.
I'll ask you to repeat the last part because I didn't totally get that but let me let me jump on the first part first.
All of our mix.
One of the.
Exciting things that I like to talk about Red wire is that we hit above our weight class in terms of the opportunity that were opportunities that were pursuing in the pipeline right. So somehow sometimes you have the potential to have a really large wins in a particular area of the business.
That can have an outsized impact on our base. If you will which is awesome and really exciting about red wire. Because these are these big swings of the kinds of things that are fueling our growth. However at the same time it makes it difficult sometimes to make bold predictions about.
A variety of different mixes like national security, we may be growing or any one of the different segments or even sometimes your gross margins as I referenced in this idea of that a very large cost plus fixed fee.
When could change our profile there so.
So you might have an instance, where.
You might have on.
An increase in the number of wins.
In the commercial segment, except for their smaller dollar amounts compared to say a large.
Any large single win in.
The civil or national security space and that could occur.
Again change these numbers so we like the mix I think the most important.
Thing to US is that we're operating across all these different areas successfully and that gives us a lot of resilience and stability regardless of what the market's doing sometimes when the commercial slows down due to maybe access to capital we have really great stability associated with increases in national security growth.
Civil is always there Europe is one of the areas, we're particularly excited about because.
They are really growing their budgets over there so that gives us additional.
Stability and resiliency in that portfolio effect I talked about earlier as well I didn't understand the second half of the question about the 15% what was that in reference to sure Peter I think you answered it.
The remaining 15%, whether it's across many smaller customers or whether there is one or two large customers dominating that portion of that majority incentives relatively okay.
Got it let me just I'm going to go.
Bolt onto that because when you look at the customers that we're doing current bids for.
You have 85% that are Mark Kaye and government and were pretty specific about how you get into that bucket the other 15%.
These are actually many of them very very large customers too right and when you look at the $489 million of bids. This year those are submitted to date.
The 512, there were a little bit of residual coming out of 2022 that adds to that 49, but the bottom line is is that 15% are still really quality customers too right.
Got it great guys. Thanks, I appreciate the answers.
Yeah.
Okay.
And we have reached the end of the question and answer session I will now turn the call back over to Peter <unk>.
<unk> for closing remarks.
Thank you very much I'd like to thank everybody for those outstanding questions I'd like to really thank the team for another great quarter. Thank all of our employees and customers for the exciting work. We do every day like I mentioned, we're really excited when a customer like naphtha and trusts us with a really incredible.
Program like the Mason program to build roads and launch pads on the Moon.
Again, that's what we're all about here Red wire and we appreciate everyone's time today and thank you for listening go Red wire.
And this concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
Yeah.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Hum.
Okay.
Okay.
Yes.