Q1 2024 Redwire Corp Earnings Call

Operator: 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 you, Jeff Zeunik. You may begin. Thank you.

Greetings welcome to the Red Wire Space Corporation first quarter of 2024 I can call at this time, all participants on a listen only mode.

He didn't answer session will follow the formal presentation, if anyone should require operators.

Conference Police Quest Star Zero on your telephone keypad.

Speaker Change: Turn the conference over to your house.

Speaker Change: You may begin.

Jeff Zeunik: Thank you, Shamali. And good morning, everyone.

Speaker Change: Thank you Molly good morning, everyone welcomed the red wire its first quarter of 2024 earnings call.

Jeff Zeunik: 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.

Speaker Change: 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 Red wire space Dot com.

Speaker Change: You remind everyone that during the call right by our management may make forward looking statements that reflect our beliefs expectations intentions or predictions for the future.

Speaker Change: Are forward looking statements subject to risks and uncertainties that are described in more detail on slide too.

Speaker Change: Additionally to the extent that we discuss non-GAAP measures during the call. Please see sly three our earnings release or the Investor presentation on our website for the calculation of these measures and their gap reconciliations.

Jeff Zeunik: Additionally, to the extent that we discussed 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 reconciliation. My name is Jeff Zeunik, Redwire Senior Vice President of Financial Planning and Analysis and Investor Relations. Joining me on today's call are Peter Cannito, Chairman and Chief Executive Officer, and Jonathan Baliff, Chief Financial Officer. With that said, I would like to turn the call over to Peter.

Speaker Change: I am just as your neck red wire.

Speaker Change: President of financial planning and analysis and Investor Relations.

Speaker Change: Joining me on today's call or a Peter Peter Chairman and Chief Executive Officer, and Johnson, Bayliss, Chief Financial Officer with that I would like to turn the call over to Pete Pete.

Jeff Zeunik: 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 of 2024 period, after which we will open the floor for Q&A. Please turn to slide six.

Peter Anthony Cannito: Thank you Jeff.

Peter Anthony Cannito: During today's call I will take you through a discussion of our key accomplishments in the first quarter of 2024.

Johnson: Jonathan will then present the financial highlights for the same first quarter 2024 period.

Jonathan: After which we will open the floor for Q&A.

Peter Anthony Cannito: Please turn to slide six.

Peter Anthony Cannito: 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. The company had positive adjusted EBITDA of $4.3 million and a net loss of $8.1 million.

Peter Anthony Cannito: The first quarter of this year was another excellent quarter for Red wire during which we continued our positive momentum from 2023.

Jonathan: We have now delivered five consecutive quarters.

Jonathan: Adjusted EBITDA and revenue growth.

Jonathan: And two consecutive quarters.

Jonathan: They've cash from operations.

Jonathan: 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.

Jonathan: Positive adjusted EBITDA, a $4.3 million and net loss of $8.1 million free.

Peter Anthony Cannito: Free cash flow of positive $0.4 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.

Jonathan: Free cash flow positive point $4 million, a year over year improvement a $15.2 million.

Jonathan: 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 L. T. M book to Bill ratio of one point 11 times during the quarter.

Peter Anthony Cannito: 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.

Jonathan: It's important to note that we achieve 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.

Jonathan: Please turn to slide seven.

Peter Anthony Cannito: 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, and 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 payload.

Jonathan: During our previous earnings call I introduced Red wires growth strategy for 2024 that is centered around four key principles.

Jonathan: Protecting the core which means continuing the dose 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.

Jonathan: Scaling production, which means winning and delivering an increasingly larger orders by scaling our production to meet growing demand.

Jonathan: Moving up the value chain, which means leveraging our proven capabilities in developing and deploying space sub systems and components into next generation spacecraft and integrated mission payloads.

Peter Anthony Cannito: And finally, venture optionality, which means continuing to pursue breakthrough developments in advanced technologies that could create new markets with game-changing potential. In 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.

Jonathan: And finally venture Optionality, which means continuing to pursue breakthrough developments on advanced technologies that could create new markets with game changing potential.

Jonathan: On the next few slides I will discuss examples of successes in each of these key growth areas for the first quarter of 2024.

Jonathan: Please turn to slide eight.

Peter Anthony Cannito: 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.

Jonathan: Starting with our protecting the core growth area. During the first quarter Red wires cameras were onboard intuitive machines I am one lunar landing mission <unk>.

Jonathan: These cameras come from our avionics and sensors core offering which includes spacecraft sub systems and components that are used for navigation control and imagery collection.

Jonathan: Also during the first quarter <unk> solar sail for which red wire developed deployment mechanisms and 100 foot boons cleared a key technology milestone with the successful deployment of one quadrant.

Peter Anthony Cannito: Solar Sail falls into 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 nine.

Jonathan: 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 Orange release mechanisms in deployable balloons to Berthing and docking systems.

Jonathan: Please turn to slide nine.

Peter Anthony Cannito: 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 tronch 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 include the systems and payloads that enable space-to-space and space-to-earth communication. Also, in Q1, two ROSA wings were successfully deployed on OBSOM 3, which represents the first integration of ROSA technology with a commercial satellite.

Jonathan: Looking at our scaling production growth principle.

Jonathan: We are excited to announce that we are under contract with rocket lab for 18, Shipsets of antennas and radio frequency hardware for the F. D. A transport layer trunk to beta variant satellites.

Jonathan: The third in a series of spacecraft that will make up the proliferated warfighter space architecture.

Jonathan: Our radio frequency system's core offerings includes the systems and payloads that enables space space and spaced Earth communications.

Jonathan: Also in Q1, two Rosa wings were successfully deployed on Amazon three which represents the first integration of relic Rosa technology with a commercial satellite.

Peter Anthony Cannito: 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.

Jonathan: In addition, red wire began executing on our 142 million dollar contract award for power solutions to an undisclosed satellite manufacturer.

Jonathan: These operations fall within our power generation offerings, which includes solar rays empowered distribution systems that generate the necessary power for space systems to operate regardless of size or location.

Jonathan: Please turn to slide 10.

Peter Anthony Cannito: Turning to our moving up the value chain growth principle, I'd like to highlight Redwire's US 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 US VLEO platform, SaberSat. This is a very exciting indicator that the market recognizes Sabersatz's potential as a critical capability. We are very encouraged by 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.

Jonathan: Turning to our moving up the value chain gross principle I'd like to highlight red wires U S and European operations in very low Earth orbit or V. Leo.

Jonathan: During the first quarter of 2024 Red wire was awarded a study related to our new U S V Leo platform Sabre set.

Jonathan: This is a very exciting indicator that the market recognize recognizes <unk> potential as a critical capability. We are very encouraged with the reception Saber said has received since our announcements and continue to pursue meaningful opportunities for this potentially groundbreaking V Leo spacecraft.

Jonathan: Left.

Peter Anthony Cannito: The Phantom is currently being developed in our Belgian office for the European Space Agency's Skinset program, and we will be marketing this platform to other potential customers as well. Talus Alenia Space is the prime contractor for SkimSat, and Redwire EU is responsible for providing the VLEO spacecraft, which we are now calling Phantom. Since Skim Set is the mission, Phantom is our platform. The SkimSat 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.

Jonathan: To continue to aggressively assert ourselves as a technology leader in V. Leo today, we are announcing Phantom R V Leo platform for Europe, and the international market.

Jonathan: Phantom is currently being developed in our Belgian office for the European Space Agency skin set program and will be and we will be marketing this platform to other potential customers as well.

Jonathan: Tell us Alenia space is the prime contractor for skim set and read Y R. E. U is responsible for providing the V. Leo spacecraft, which we are now calling Phantom.

Jonathan: Tim Skim set is the mission Phantom is our platform.

Jonathan: <unk> mission is a V. Leo satellite mission that aimed at reducing the cost of Earth observation and telecommunications satellites, while increasing performance by operating at substantially lower altitudes.

Peter Anthony Cannito: 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.

Jonathan: Potential for this transfer make mention of program is extraordinary.

Jonathan: Notably Sabre sat in fandom do not share a common technological baseline. They are two different platforms with differing underlying technologies and performance parameters. This as important as missions and <unk> are as dynamic as all the other earth orbits such as Leo NGO and different approach.

Peter Anthony Cannito: 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, which includes the Redwire International Proba 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.

Jonathan: <unk> reduced risk and enable us to cover a broader set of customer requirements.

Jonathan: As redwater moves up the value chain, we are very excited that sabre sat in Phantom expand red wires offering a full satellite system development and operations that includes the Red wire International Provo satellite as well as our proprietary platform agnostic digital engineering and modeling and simulation.

Jonathan: <unk> solutions that enable rapid spacecraft development and deployment.

Jonathan: Please turn to slide 11.

Peter Anthony Cannito: 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. The form of the crystals will dictate a drug's properties, and as a result, precision matters.

Jonathan: Lastly, I would like to spend some time, providing a deeper look into our fourth principle venture optionality.

Jonathan: By focusing on red wires in space pharmaceutical development to benefit human health on Earth.

Peter Anthony Cannito: 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.

Jonathan: Pharmaceutical companies are constantly looking to deliver new optimize treatments for patients and many of those treatments rely on crystals as the active ingredient.

Jonathan: Form of the crystals will dictate a drugs properties and as a result precision matters here.

Jonathan: Historically, a significant proportion of drugs have not made it to the market as a result of Crystal Crystal formation challenges.

Jonathan: Growing crystals in microgravity could be transformative potentially yielding a more uniform product with fewer imperfections and improving the drug discovery and development process.

Jonathan: As pharmaceutical companies look to deliver deliver new optimize treatments to help patients on earth microgravity could be a major differentiator.

Jonathan: With the drug discovery market size, having been estimated at approximately $80 billion in 2023.

Jonathan: Growing to approximately $180 billion by 2032. This represents a significant growth opportunity for red wire.

Peter Anthony Cannito: 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. For example, our successful inaugural PIL-1 mission demonstrated that insulin crystals grown on the ISS using PIL-BOTS were larger and more highly ordered than terrestrial crystals.

Jonathan: Red wire has already demonstrated the ability to develop crystals in space using our pillbox facility on the international space station.

Jonathan: Red wires proprietary pillbox is a proven cutting edge in space pharmaceutical manufacturing platform that builds on red wires extensive heritage in microgravity and offers pharmaceutical companies and biomedical researchers novel and flexible services to study small batch crystal grow.

Jonathan: Both of proteins.

Jonathan: Red wire is at the forefront with our microgravity technology built on decades of in space manufacturing success.

Jonathan: Are successful inaugural pill, one mission demonstrated that insulin crystals grown on the ISS using pillbox were larger and more highly ordered then terrestrial crystals.

Peter Anthony Cannito: 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.

Jonathan: Our next step is to execute a production level cadence of crystal manufacturing using a variety of compounds.

Jonathan: Our second pillbox mission has already returned and the results are promising.

Jonathan: We are currently manifested for 16 additional pillbox missions of this year.

Jonathan: The economic potential for this technology is high and gaining momentum.

Jonathan: 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 Red wires business has real value.

Peter Anthony Cannito: Turning to slide 12, the inaugural Pillbox One 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 PIL-1 mission, PIL-2, again in partnership with Eli Lilly, and PIL-3, in partnership with Butler University, launched to the International Space Station this past March, just three months later. The second Pilbots mission is focused on researching widespread chronic diseases, which have massive global demand for treatment. PIL-3 has now returned to Earth in April 2024, and PIL-2 is anticipated to return in the coming months, demonstrating the rapid cadence Redwire can execute with this capability.

Jonathan: Turning to slide 12.

Jonathan: The inaugural Pillbox, one mission launched in November 2023, and return to Earth in late December 2023 for delivery to Eli Lilly or research partner.

Jonathan: Following closely on the heels of the successful pill, one mission pill to again in partnership with Eli Lilly and pill three in partnership with Butler University launch to the International Space station. This past March just three months later.

Jonathan: The second pillbox mission is focused on researching widespread chronic diseases, which have massive global demand for treatment pill.

Jonathan: Until three has now returned to Earth in April 2024, and pill too is anticipated to return in the coming months, demonstrating the rapid cadence red wire can execute with this capability.

Peter Anthony Cannito: 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.

Jonathan: This tempo is critical to demonstrate the industry industry model is viable for sustained development in orbit.

Jonathan: For the remainder of the year, we have 16 additional pillbox missions manifested in a robust pipeline of interest from commercial entities.

Jonathan: Has launched costs decrease in commercial space station Availably availability increases the opportunity for on orbit development and manufacturing at scale will expand and red wire is delivering tangible and useful results not someday, but nap.

Peter Anthony Cannito: 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.

Jonathan: Please turn to slide 13.

Jonathan: I was turning to our contract awards and backlog our contract awards during the first quarter of 2024 or $35.1 million.

Jonathan: Our last 12 months book to Bill ratio was one point 11 times for the first quarter of 2024 as.

Peter Anthony Cannito: 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.

Jonathan: 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.

Jonathan: As you can see on the lower right hand side of this slide are contracted backlog has increased 10.9% year over year to a total of $318 million.

Jonathan: The growth and contracted backlog is one of many factors that gives us confidence in our future growth.

Peter Anthony Cannito: 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 31. 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 ended March 31, 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 Baliff, Redwire's Chief Financial Officer. Jonathan.

Jonathan: Finally, we continue to have a healthy pipeline with an estimated $6.3 billion of identified opportunities, including approximately $610 million and proposals submitted year to date as of March 31, as you can see on the upper right hand side of this slide this.

Jonathan: <unk>, a 177.3% increase over the corresponding year to date period ended March 31, ending March 31 2023.

Jonathan: The momentum continues.

Jonathan: Please turn to slide 14.

Jonathan: With that I'd now like to turn the call over to Jonathan Bayliss Red wires, Chief Financial Officer Jonathan.

Jonathan E. Baliff: Thank you, Pete. Before I turn to the financial results, I'd like to highlight the photo on this slide, which is of the PROBA-3 satellite from Redwire's Belgium facility, slated to launch later this year. The European Space Agency's PROBA-3 mission is composed of two spacecraft acting as one element and is the world's first precision formation flying mission in space.

Jonathan Bayliss: Thank you paid before I turn to the financial results I would like to highlight the photo on this slide in terms of the progress three satellite from Red bars Beltran facility slated to launch later this year.

Jonathan Bayliss: The European space Agency's progress remission is composed of two spacecraft acting as one element and is the world's first precision formation flying mission in space.

Jonathan E. Baliff: Turn to slide 15. Our first quarter of 2024 was an excellent start to the year, as Pete spoke about, as we saw continued positive momentum driven by Custard of Man. Quarterly revenue was a record $87.8 million, and though we did see a slight decline in net loss for the same period year over year, our adjusted EBITDA remained flat year over year at a positive $4.3 million. We will discuss the drivers of our adjusted EBITDA on a subsequent slide.

Jonathan Bayliss: Turn to slide.

Jonathan Bayliss: 15.

Jonathan Bayliss: Our first quarter of 2024 was an excellent start to the year is Pete spoke about as we saw continued positive momentum driven by customer demand.

Jonathan Bayliss: Quarterly revenue was a record 87 $8 million. So we did see a slight decline in net loss for the same period year over year, our adjusted EBITDA remained flat year over year at a positive for $3 million.

Jonathan Bayliss: We will discuss the drivers are adjusted EBITDA on a subsequent slide.

Jonathan E. Baliff: The first quarter of 2024 also saw positive cash from operations of $2.8 million and free cash flow of $0.4 million, a year-over-year improvement of $16.8 million and $15.2 million, respectively. And this is after making significant investments in growth capital expenditures and internal research and development to advance our path to profitability. These impressive results are attributable to the capability and commitment of our global team members, satisfying our customers' growing demand for space infrastructure. Please turn to slide 16.

Jonathan Bayliss: The first quarter of 2024 also saw positive cash from operations of $2.8 million in free cash flow upfront $4 million, a year over year improvement of $16 $8 million and $15 $2 million, respectively, and this is after making significant investments and growth capital expenditures and.

Jonathan Bayliss: In total research and development to advance our path to profitability.

Jonathan Bayliss: These impressive results are attributable to the capability and commitment of our global team members satisfy our customers growing demand for space infrastructure.

Jonathan Bayliss: Please turn to slide 16.

Jonathan E. Baliff: Specifically for quarterly revenue, as you can see from the chart on the right, this quarter's record $87.8 million represented a 52.4% increase on a year-over-year basis and an increase of 38.3% on a sequential basis. During the quarter, more than 90% of our revenue derived from funded government programs or from global marquee customers for delivery in the areas of national security, satellite proliferation, and the exploration of space, to name just a few.

Jonathan Bayliss: Specifically for quarterly revenue as you can see from the chart on the right. This quarter's record 87 $8 million represented 852.4% increase on a year over year basis at an increase of $38, 3% on a sequential basis.

Jonathan Bayliss: During the quarter more than 90% of our revenue derived from funded government programs.

Jonathan Bayliss: Global marquee customers for delivering in the areas of National Security satellite proliferation, and the exploration of space to name just a few.

Jonathan E. Baliff: Finally, we'd like to note that after the completion of the full fiscal year post the SpaceNV acquisition, our fiscal year 2024 will no longer present year-over-year comparable revenues, which exclude the results of SpaceNV. Please turn to slide 17.

Jonathan Bayliss: Finally, we would like to note that after the completion of the full fiscal year post the space and V acquisition, our fiscal year 2024 will no longer present year over year comparable revenues, which excluded the results of space envy.

Jonathan Bayliss: Please turn to slide 17.

Jonathan E. Baliff: For quarterly adjusted EBITDA, Q1 2024 remained flat at positive $4.3 million compared to the first quarter of 2023, while increasing 151.2% on a sequential basis from the fourth quarter of 2023. Gross profit increased 4.3% from $14.2 million to $14.8 million. Quarterly gross margins over the same period declined to 16.9%.

Jonathan Bayliss: For quarterly adjusted EBITDA Q1, 2024 remained flat at positive for $3 million compared to the first quarter of 2023, while increasing $151, 2% on a sequential basis from the fourth quarter of 2023.

Jonathan Bayliss: Gross profit increased 4.3% from $14.2 million to $14.8 million.

Jonathan Bayliss: Quarterly gross margins over the same period declined to $16 9%.

Jonathan E. Baliff: These results were primarily impacted by EAC adjustments during the first quarter, exacerbated by our record revenue. The $3.9 million in EAC adjustments largely resulted from unplanned design and test cycles required to meet customer requirements as we neared completion on discrete projects during the quarter. Offsetting these gross margin declines, our sequential quarter adjusted EBITDA improvement was also supported by excellent cost control and the continued operating leverage being driven by scale as Redwire's SG&A expenses are now below 20% of revenue, a notable drop from the 27.8% in the first quarter of 2023. We continue to drive tens of millions of dollars in revenue increases with single-digit growth in yearly SG&A. That's the benefit of operating leverage and scale kicking in. Please turn to slide 18.

Jonathan Bayliss: These results were primarily impacted by EAC adjustments during the first quarter exacerbated by our record revenues.

Jonathan Bayliss: The $3.9 million EAC adjustments largely resulted from unplanned design and test cycles required to meet customer requirements as we neared completion on discrete projects during the quarter.

Jonathan Bayliss: Offsetting these gross margin declines are sequential quarter. Adjusted EBITDA improvement was also supported by excellent cost control and the continued operating leverage being driven by scale as regulators SG&A expenses are now below 20% of revenue a notable drop from the 27.8% in the first.

Jonathan Bayliss: Quarter of 2023.

Jonathan Bayliss: We continued to drive tens of millions of dollars in revenue increases with single digit growth in yearly SG&A.

Jonathan Bayliss: That's the benefit of operating leverage and scale kicking in.

Jonathan Bayliss: Police started to slide 18.

Jonathan E. Baliff: As we have mentioned several times today, throughout the first quarter, we continue to make prudent investments to support growing customer demand and also industry-leading innovation. We're risk reducing.

Jonathan Bayliss: As we have mentioned several times today throughout the first quarter, we continued to make prudent investments to support growing customer demand.

Jonathan Bayliss: Also industry, leading innovation.

Jonathan E. Baliff: And we're also achieving global business scale. During the first quarter of 2024, we made $2.4 million in capital expenditures, our highest first quarter capital investment since going public. Plus, we made $1.0 million in investments in internal research and development, and $1.0 million in a variety of other corporate investments that mostly flow through the SG&A line. We continue to demonstrate our ability to perform financially now while also making investments for future growth, risk reduction, and profitability. Please turn to slide 19.

Jonathan Bayliss: Risk, reducing and we're also achieving global business scale.

Jonathan Bayliss: During the first quarter of 2024, we made $2.4 million and capital expenditures are highest first quarter capital investments since going public plus.

Jonathan Bayliss: Plus we made $1.0 million in investments and internal research and development and $1.1 million in a variety of other corporate investments that mostly whoa through the SG&A line.

Jonathan Bayliss: We continue to demonstrate our ability to financially perform now while also making investments for future growth risk reduction and profitability.

Jonathan Bayliss: Please turn to slide 19.

Jonathan E. Baliff: Similar to last quarter, on the left-hand chart, we show free cash flow. As a reminder, free cash flow provides a metric based on our U.S. GAAP cash from operations minus capital expenditures. On a year-over-year basis, quarterly free cash flow improved by $15.2 million to a positive $0.4 million for the first quarter. Credit goes to the revenue growth already discussed, but in addition, we had more efficient and effective working capital management over the first quarter while continuing to invest at record rates as our cash generation now funds our growth.

Jonathan Bayliss: Similar to last quarter on the left hand chart, we show free cash flow as a reminder, free cash flow provides a metric based on our U S gap cash from operations minus capital expenditures.

Jonathan Bayliss: On a year over year basis quarterly free cash flow improved by $15 $2 million to a positive point $4 million for the first quarter due to a $16 $8 million improvement in cash from operations.

Jonathan Bayliss: Credit goes to the revenue growth already discussed but in addition, we had more efficient and effective working capital management over the first quarter, while continuing to invest at record rates as our cash generation now funds are growth.

Jonathan E. Baliff: This is due to improving returns on our invested capital as compared to our cost of capital, creating a virtuous cycle that differentiates us in a very capital-intensive industry. On a last 12-month basis, we recorded both positive cash from operations of $18 million, and for the last 12 months, positive free cash flow of $8.1 million, a significant first for Redwire. As you can see on the right-hand chart, this yields higher available cash and cash equivalents of $32.6 million as of March 31, 2024, with $47.6 million in total available liquidity.

Jonathan Bayliss: This is due to improving returns on our invested capital as compared to our cost of capital, creating a virtuous cycle that differentiates us in a very capital intensive industry.

Jonathan Bayliss: On the last 12 months basis, we recorded both positive cash from operations of $18 million and for the last 12 months positive free cash flow of $8 $1 million a significant first for <unk>.

Jonathan Bayliss: As you can see on the right hand chart. This yields higher available cash and cash equivalents up $32.6 million as of March 31, 2024, with $47 $6 million in total available liquidity.

Jonathan E. Baliff: Please turn to slide 20 for a brief discussion on the outlook for the remainder of 2024. Our first quarter was a strong start to the year, and as a result, for 2024, we affirmed full-year revenue at $300 million, which represents a 23% year-over-year growth rate. This quarter's revenue achieved 29% of our $300 million annual revenue guidance forecast, and much of this outside quarterly revenue was due to the timing of long lead items associated with large contract wins in 2023.

Jonathan Bayliss: Please turn to slide 20 for a brief discussion on the outlook for the remainder of 2024.

Jonathan Bayliss: Our first quarter was a strong start to the year and as a result for 2024, we affirm full year revenue at $300 million, which represents a 23.

Jonathan Bayliss: Year over year growth right.

Jonathan Bayliss: This quarter's revenue achieved 29% of our $300 million annual revenue guidance forecast.

Jonathan Bayliss: And much of this outside quarterly revenue was due to the timing of long lead items associated with large contract wins in 2023.

Jonathan E. Baliff: We're not currently forecasting similar large, large long lead purchases during the remainder of 2024. Finally, through our excellence and execution initiatives, we continue to focus on improving our program management to reduce EAC volatility while we also create more operating leverage and cost efficiency to continue on our path to profitability. I will now turn the presentation back over to Pete to provide brief final remarks.

Jonathan Bayliss: We are not currently forecasting similar long large large long lead purchases during the remainder of 2024.

Jonathan Bayliss: Finally, there are excellent excellent.

Jonathan Bayliss: Excellent and execution initiatives, we continue to focus on improving our program management to reduce volatility. While we also create more operating leverage and cost efficiency to continue on our path to profitability.

Jonathan Bayliss: I will now turn the presentation back over to Pete to provide brief final remarks.

Jonathan Bayliss: Pete.

Peter Anthony Cannito: Thank you, Jonathan. Please turn to slide 21. I want to thank all of Redwire's team for this quarter's excellent results, a total global effort that we will work to continue in the second quarter of 2024 and beyond. We will now open the floor to questions.

Pete: Thank you Jonathan Please turn to slide 21.

Pete: I want to thank all red wires team for this quarter's excellent results of total global effort that we will work to continue in the second quarter of 2024 and beyond we will now open the floor for questions.

Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is busy. You may press star two if you would like to remove your question from the list. For participants using speaker equipment, it may be necessary to pick up your handset before pressing these star keys. We do ask all participants in the Q&A session to please limit themselves to only one question and one follow-up. And if you would like to ask additional questions, you may rejoin the queue. Our first question comes from the line of Gregory Konrad with Jefferies. Please proceed with your question.

Speaker Change: Mmm. Thank you at this time, we will be conducting a question and answer session.

Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad and confirmation tone will indicate your line is in the questions you have.

Speaker Change: <unk>, if you would like to remove your question Comiskey.

Pete: Participants using speaker equipment or may be necessary to pick up my answer the four questions. These doggy, we do ask all participants in the Q&A assertion to please limit themselves only one question and one follow up and if you would like to ask additional questions you may rejoined the team.

Pete: Our first question comes from the line of Conrad Jeffries. Please proceed with your questions.

Conrad Jeffries: Good morning.

Unknown Attendee: Morning, Greg. Hey, Greg.

Conrad Jeffries: Good morning, Greg Greg.

Gregory Arnold Konrad: You have a good quarter, and then people ask, why isn't the outlook better, which is kind of what I'm getting at. But I mean, I think you explained some of it on the long lead items. But just thinking about the 610 million in bids submitted year to date, can you maybe talk about the dynamics around what type of win rates you see? And what do you think about typical conversion of awards?

Conrad Jeffries: You have a good quarter and then people ask why isn't the outlook better which is kind of what I'm getting at but I mean, I think you explained some of it on the bong lead items, but just thinking about the $610 million submitted bids year to date can you may be talking about the NAMIC surround what type of wind rates.

Conrad Jeffries: You see and how do you think about typical conversion awards and then just thinking about the walk for 2024 and the rest of the year, what's kind of in backlog versus assumption of yet to win and just thinking about potential upside for the year.

Peter Anthony Cannito: So, that was like three questions in one. So, congratulations on your efficiency. I still get a follow-up. Yeah, yeah, yeah. All right, good.

Speaker Change: So that was like three questions in one says congratulations on your efficiency [laughter] I still get you'll.

Peter Anthony Cannito: So, you know, the contracted backlog is being printed, right? And you can see, you know, the best way I would think about that is you can see what our contracted backlog was at the beginning of 2023, what our forecast for 2023 was for, what the contracted backlog was at the start of 2024, and then evaluate whether or not you think of our forecast as a result of what's in our contracted backlog now. So, that's essentially how we think about contracted backlog and what that means. But to us, in terms of the bidding, you can see that bidding is accelerating. And that's a function of two dynamics.

Speaker Change: You'll get a follow up yeah.

Speaker Change: So.

Speaker Change: The contracted backlog as printed right and you can see the best way I would think about that as you can see what our contracted backlog was at the beginning of 2023.

Pete: What our forecasts was 2023 was for what the contract did backlog as at the start of 2024, and then evaluate whether or what you think of our forecast a result of what's in contracted backlog nap. So that's that's essentially how we think about contracted backlog in.

Pete: What that means.

Peter Anthony Cannito: One is, more aggressively going to market, but two, as part of the growth principles, bidding on those higher-level production contracts for higher quantities, as well as some larger contracts for the full systems integrator, right? So, that's really the takeaway from, I think the key takeaway from the increase in the number of bids. In terms of win rates, we're just dealing with, you know, too dynamic of a market and too small in numbers, quite frankly, and such a variety of different bid sizes that the win rate tends to bounce around, so we don't publish a win rate associated with that.

Pete: To us in terms of the.

Pete: The bidding you can see that bidding is accelerating and that's a function of two dynamics one is.

Pete: More aggressively going to market, but too.

Pete: As part of the growth principles is bidding those higher level production contracts for higher quantities as well as.

Pete: Some larger contracts.

Pete: The full systems integrator right. So so that's really the takeaway from I think the key takeaway from.

Pete: The increase in the number of beds in terms of wind right. We're just dealing with.

Pete: To to dynamic of a market and two smaller numbers quite frankly, and such a variety of different sizes that.

Pete: The the wind right.

Pete: Tends to bounce around so we don't we don't want publisher of wind rate associated with that but.

Peter Anthony Cannito: But the key is that when you look on an annual basis, which I always like to emphasize is the best time scale to measure an emerging growth company like Redwire's performance. When you look at that on an annual basis, you can see that there is, or you can make your own evaluation of whether the backlog plus the bid of rate and size is enough to sustain our current year forecast. And we believe that it is.

Pete: The key is is that when you look on an annual basis, which I always liked emphasizes the.

Pete: Best time.

Pete: Scale to measure then emerging growth company like Red wires performance. When you look at that on an annual basis, you can see that there is.

Pete: Or you can make your own evaluation of whether the backlog plus the bid.

Pete: Ah right in size is.

Peter Anthony Cannito: And that's how we came up with that number. In terms of the lumpiness, you know, I think Jonathan did a pretty good job explaining this. You know, lumpiness cuts two ways. You have a nice lumpy Andres Sheppard, Gregory Konrad, Andres Sheppard, Gregory Konrad, And then due to the timing of, you know, critical subcontracts or long lead items. That number can go up. And, you know, it's just the first quarter; it's early in the year.

Pete: Is enough.

Pete: To sustain our current year forecast and we believe that it is and that's how we how we came up with that number.

Pete: In terms of the Lumpiness.

Pete: I think Jonathan did a pretty good.

Pete: Job explaining this lumpiness cuts two ways you you have a nice lumpy.

Pete: Quarter and the fourth quarter, we have really strong contract awards and then in the first quarter is lower.

Pete: Same thing with like you could have a.

Pete: Lower revenue of quarter.

Pete: And then due to the timing of.

Pete: Critical sub contracts are long lead items.

Peter Anthony Cannito: So we're very pleased with the results for first quarter revenue, but at this point, we're going to hold to our $300 million revenue forecast for the year as we see the remainder of these quarters play out. Did I get every part of your question, Greg? Or did I? Yeah, no, that was great.

Pete: Of that number can go up and.

Pete: It's just the first quarter. It's early in the year. So we're very pleased with the results for first quarter revenue.

Pete: But at this point.

Pete: We're going to hold two or $300 million in revenue forecast for the year as we see the remainder of these.

Pete: Quarters play out.

Speaker Change: Did I get every part of your question graduated I may I know that that was great and now for the follow up.

Gregory Arnold Konrad: And now for the follow-up, um, you know, EBITDA momentum, good SG&A rationalization, you know, gross margins kind of bounced around, it was high 16% in the quarter, you know, dating back to the first three quarters of last year, I think you were more in the mid 20s. You called out EACs, which is probably one driver, but just, you know, a sense of any impact from mix and whether the higher long lead items have anything to do with gross margin? Or is that generally, you know, booked at a pretty consistent gross? Yeah, no, I think you're on to it.

Pete: EBIT momentum good SG&A rationalization gross margins kind of.

Pete: Bounced around it was high 16% in the quarter dating back to the first three quarters of last year. I think you were more in the mid twenties.

Pete: Called up the Eac's, which is probably one driver but just.

Pete: A sense of any impact from mix and this is a higher long lead items have anything to do with the gross margin or is that generally booked at a pretty consistent gross margin.

Speaker Change: Yeah, No I think you're onto it right and so hopefully.

Peter Anthony Cannito: Right. And so hopefully, Andres Sheppard, Gregory Konrad, Andres Sheppard, Gregory Konrad, Andres Sheppard, Gregory Konrad, to get, you know, have those puts and takes even out over the year. And also, there's going to be ups and downs in terms of the contract mix of the revenue that's recognized on a quarter by quarter basis. So when you tend to have more material purchases or really large subcontracts, they can have lower gross margins.

Speaker Change: Obviously, even bonus for awhile, so you're really getting to know the company that's exactly right right like aace's they happen from quarter to quarter. The important thing is that we drive through our excellence and execution.

Pete: To get.

Pete: This puts and takes even out over the year and also there's going to be.

Pete: Ups and downs in terms of the contract makes of the revenue that's recognized by a quarter by quarter basis. So when you tend to have more material purchases or really large sub-contract. They can have lower gross margins.

Pete: Ah.

Peter Anthony Cannito: As opposed to where a lot of it's being driven by maybe labor utilization or some other dynamic; that all goes into the calculus. It also has to do with what products are leading for that quarter; the really large scale products have really high operating income on an absolute value basis but might, on a percentage basis, be lower whereas, and if those are the ones that are primarily driving revenue in a given quarter, that'll bring it down.

Pete: As opposed to where a lot of it being driven by maybe labor utilization or some other dynamic that goes into the calculus. It is also has to do with what are the products that are leading for that quarter, the really large scale.

Pete: Products have really high.

Pete: Operating.

Pete: Income on Ah.

Pete: Luke value basis.

Pete: But might on a percentage basis be lower whereas and if those are the ones that are.

Pete: Primarily driving revenue in a given quarter that will bring it down and then in other quarters. When we do maybe a delivery of a higher value higher margin products set that can.

Peter Anthony Cannito: And then in other quarters, when we do maybe a delivery of a higher-margin product set, that can have an effect on a quarter by quarter basis, in terms of either LTM looking backwards or what we look to be our future, and that all goes into our forecast. But I do want to add.

Pete: That can have an effect on a quarter by quarter basis, and that's why it's so critical that what we focus on as a management team is that overall.

Pete: You will balance.

Pete: In terms of.

Pete: Either LTM looking backwards or or what we look to be are.

Pete: Future and that and that all goes into our forecasts, but I do want to add.

Peter Anthony Cannito: And I've said this and stressed this in previous calls that we're constantly trying to balance the top line and the bottom line and we have a goal or an objective to always be EBITDA positive and to drive towards profitability. But that doesn't necessarily mean that in certain instances where it's really important that we go out and take market share, we may make decisions at times to go out and win large revenue projects that might have lower than average operating margins.

Pete: And I've said this and emphasis dragged emphasize this and previous calls that we're constantly constantly trying to balance between top line.

Pete: And bottom line and.

Pete: We have a.

Peter Anthony Cannito: A goal or an objective is to always be EBITDA positive and to drive towards profitability.

Pete: But that doesn't necessarily mean in certain instances, where it's really important that we go out and take market share that we may make decisions at times.

Pete: To go out and win large revenue projects that might have lower than average.

Peter Anthony Cannito: So I think that's what I'm trying to articulate: in certain cases, we may optimize for the top line and future growth because we know we'll be able to squeeze the operating margins out longer term. And that can have near-term or short-term fluctuations that have an impact as well.

Pete: Operating margins, so I think that's.

Pete: But I'm trying to articulate as in certain cases, we.

Pete: We may optimize for the top line.

Pete: And the future growth because we know we will be able to squeeze the operating margins out longer term.

Pete: And that can have near term or short term fluctuations that have an impact as well.

Speaker Change: Thank you.

Speaker Change: Thank you thanks, Greg.

Operator: Our next question comes from the line of Griffin Boss with BeRoger Securities. Please proceed with your question.

Speaker Change: Our next question comes from the line of Griffin boss would be around the securities. Please proceed with your questions.

Griffin Taylor Boss: Hey, good morning. Thanks for taking my question. So, I want to dig into venture optionality. I'm glad you guys sort of honed in on it in this presentation.

Griffin Taylor Boss: Hey, good morning, Thanks for taking my question.

Griffin: So I want to dig into the venture Optionality I'm I'm glad you guys sort of honed in on it and this presentation.

Griffin Taylor Boss: You cite this $80 to $180 billion drug discovery market size. In the past, you've talked about your specific internal projection for a five-year TAM of $5 to $10 billion for this, you know, explore, live, and work in space. So, I guess my question is, are you seeing maybe a bigger near-term TAM for Redwire, given that market size for drug discovery and what seems to be a rapidly growing interest in micrograv

<unk> site this $80 $180 billion drug discovery market size in the past you've talked about your specific.

Griffin: Internal projection for a five year Tam.

Jonathan E. Baliff: Of $5 billion to $10 billion for this explore live and work in space. So I guess my question is are you seeing a maybe a bigger near term Tam for red wire.

Griffin Taylor Boss: Given that that market size for drug discovery, and what seems to be a rapidly growing interest in microgravity research.

Peter Anthony Cannito: Hey, Griffin. How are you? Thank you for that question. So yeah, we are trying to focus. I think each quarter, we'll focus on a different growth principle because, you know, obviously, part of this call is to help educate investors on the Redwire operating model. And this is a critical part of our business that I think sometimes gets overlooked that has real tangible value. Unknown Speaker, Jonathan Biskner, Gregory Konrad, Andres Sheppard, to make sure that investors understand where we're positioned in that context, and where we are positioned in this context is that the TAMs are pretty much the TAMs that you just articulated.

Griffin Taylor Boss: Hey, Griffin how are you. Thank you for that question. So yes, we are trying to purchase I think.

Peter Anthony Cannito: Each quarter will focus on a different growth principle, because obviously part of this call is to help educate.

Peter Anthony Cannito: Investors on.

Peter Anthony Cannito: The red wire.

Peter Anthony Cannito: Operating model.

Peter Anthony Cannito: And this is a critical part of our business that I think sometimes gets overlooked that has real tangible value.

Peter Anthony Cannito: Especially based on some of the things that are already going out on the marketplace. There right. We do have a lot of venture.

Peter Anthony Cannito: Mundane and venture investing activity happening this space that gives interesting comps in terms of trying to put a valuation on this venture optionality. So we wanted to hone in.

Peter Anthony Cannito: To make sure that investors understand where we're positioned in that context, and where we're positioned on this contacts is the tans are pretty much the times that you just articulated above what we Wanna do is.

Peter Anthony Cannito: But what we want to do is... start to educate investors just how far along we are in transitioning this from what I would call research or experimentation into an actual production level business. And that's why I tried to emphasize the pace at which we're starting to do this. Previously, you would spend a lot of time kind of researching and developing. It took, quite frankly, many years to come up with the ability for Pillbox to work, and now it does.

Griffin: <unk>.

Peter Anthony Cannito: Start to educate investors just how far along we are in.

Peter Anthony Cannito: <unk> this from what I would call research or experimentation into.

Peter Anthony Cannito: An action actual production level business and that's why I tried to emphasize.

Peter Anthony Cannito: The cadence at which we're starting to do this previously you would spend a lotta time researching and developing it took quite.

Griffin: Quite frankly, many years to.

Peter Anthony Cannito: Come up with the ability for pillbox to work quite frankly, and now it works and we're transitioning out of that period that investment has been made and if you look at what we're achieving in terms of the pillbox and the cadence and you can pair that to the amount that we have to invest on the slides that Jonathan showed showing our capex or Iran. We're past the heavy invest.

Peter Anthony Cannito: And we're transitioning out of that period, that investment has been made. If you look at what we're achieving in terms of the Pillbox and the cadence, and you compare that to the amount that we have to invest in the slides that Jonathan showed, showing our CapEx, our IRAD, we're past the heavy investment phase in this capability. Now we have to produce, or we have to demonstrate that we can reach a production level cadence.

Peter Anthony Cannito: <unk> face in this capability now we have to produce or we have to demonstrate that we can reach a production level cadence and we have started to do that now by showing that we had a launch and we were able to do in in mere three months a turnaround another launch and we have 16 additional launches.

Peter Anthony Cannito: And we have started to do that now by showing that we had a launch, and we were able to do, in a mere three months, a turnaround another launch, and we have 16 additional launches for the remainder of the year planned. One of the key questions we get around this technology is, can you get to the production level to really turn this into a business that would satisfy or help you get a large enough share of those TAMs? And that's really what venture optionality is all about. We didn't deep dive too much into the tech, but just for some additional color.

Peter Anthony Cannito: For the remainder of the year manifested one of the key questions. We get around this technology is can you get to the production level to really turn this into the business that wood wood.

Peter Anthony Cannito: Satisfy or help you get a large enough share of those tan and that's that's really what that venture Optionality is all about we didn't deep dive too much into the tech, but just for some additional color.

Peter Anthony Cannito: For these crystals, there are two interesting things about the production model here. For the crystals to be valuable to biopharma companies, you need a certain size and level of what are called seed crystals. So you're not trying to develop in microgravity all of the crystals they'll need for production. Instead, you're delivering a seed crystal. It's actually the same way it's done on Earth. They build the seed crystals on Earth, and then they use that in their production process.

Peter Anthony Cannito: For these crystals, there's two interesting things about the production model here for the crystals to be valuable to Biopharma companies you need a symbol size.

Peter Anthony Cannito: And each one of these, what we call investigations, pill one, pill two, pill three, is looking at as high as, I think we've done as high as 36 compounds in a single investigation. So you're looking at 36 different crystals that you can develop a seed crystal for. When you start taking that and you say, okay, we have two that have gone up and down, a third that's still up there that should be back sometime this summer, and then 16 additional manifested, you start to see that we can reach production-level seed crystal development on the International Space Station, which has been a question for some.

Peter Anthony Cannito: Level of what are called seed Crystal So you're not trying to develop in microgravity all of the crystals only for production you you're you're delivering a seed crystal it's actually the same way it's done on Earth, they build that seek crystals on earth.

Peter Anthony Cannito: And then they use that in their production thing.

Peter Anthony Cannito: And each one of these what we call investigations pill, one purl two pill three are looking at as high as I think we've done as high as 36 compounds.

Peter Anthony Cannito: And a single investigation, so you're looking at 36 different crystals.

Peter Anthony Cannito: That you can develop a seed crystal for when you start taking that you say, okay. We have.

Peter Anthony Cannito: Two that have gone up and down a third that's still up there that should be back sometime this summer and then 16 additional manifest did you start to see that we can reach production level.

Peter Anthony Cannito: Crystal development on the international Space station, which has been a question for some is this something that you have to do on.

Peter Anthony Cannito: On a commercial space station in order to achieve the correct volumes or is this something that can be done on the ISS. We believe we're demonstrating that this is something that can be done now on the ISS and I believe our partnerships with Eli Lilly and Butler and everything like that or were optimistic that these are going to be proved out over time. So the tans are essentially the same the critic or what I think the critical mile.

Peter Anthony Cannito: Is this something that you have to do, you know, on a commercial space station in order to achieve the correct volumes, or is this something that can be done on the ISS? We believe we're demonstrating that this is something that can be done now on the ISS, and I believe our partnerships with Eli Lilly and Butler and everything like that, we're optimistic that these are going to be proven out over time. So the TAMs are essentially the same.

Peter Anthony Cannito: What I think the critical milestones that we're achieving are that we're moving this from being a research project into actually developing this. We are getting smarter, and we're making the investments to really understand this industry. Making seed crystals for biopharma is not anything new. Doing it in space is what's new. We envision a day someday when we're in the marketplace, and our customers don't even ask about where it was developed. They just want the best possible crystal there is, and the fact that it was developed in space is really amazing, irrelevant to the execution of the business model.

Peter Anthony Cannito: Stones that were achieving is that we're moving this from being a research project into actually developing these <unk>.

Peter Anthony Cannito: We are getting smarter and we're making the investments to really understand.

Peter Anthony Cannito: This industry, making seed crystals for Biopharma.

Peter Anthony Cannito: Is not <unk>.

Peter Anthony Cannito: Anything new doing it in space is what's new we envision a day some day, where we are in the market place and our customers don't even ask about where it was developed they just want the best possible.

Peter Anthony Cannito: Crystal there is and the fact that it was developing space is really.

Peter Anthony Cannito: So, there have been some really interesting dynamics in the venture world that I think are worth noting in terms of when you start looking at what this venture optionality is, how to value this venture optionality in Redwire that is critical to our longer-term growth plan. And I, in my mind, think of venture optionality as something that's, you know, still five years away. That's how we differentiate between the space now that we deliver today that is generating revenue and EBITDA.

Peter Anthony Cannito: Irrelevant to the execution of the business model, so, but there has been some really interesting dynamics in the venture world that I think are worth noting in terms of when you start looking at.

Peter Anthony Cannito: What this venture option I only had a value of their adventure optionality in red wire that is critical to our longer term.

Peter Anthony Cannito: Growth plan and I.

Peter Anthony Cannito: In my mind think of.

Peter Anthony Cannito: [noise] drops analogy is on something that's still five years.

Peter Anthony Cannito: That's how we differentiate between the space now that we deliver.

Peter Anthony Cannito: Today that is generating revenue and EBITDA I've talked about in the past our heritage plus innovation strategy. We're we're we're generating the cash flow generating and the profit generating capabilities now on our infrastructure side, but those give us the ability. The optionality. If you will to again use that word.

Peter Anthony Cannito: I've talked about in the past our heritage plus innovation strategy where we're generating the cash flow generating and the profit generating capabilities now on our infrastructure side. But those give us the ability, the optionality, if you will, to again use that word to look forward and really position ourselves for some of these. Dean changing. Yes, less defined. Yes, still a few years out. But nevertheless, very valuable breakthrough technology.

Peter Anthony Cannito: To look forward and really position for some of these gains.

Peter Anthony Cannito: <unk> changing yes, less defined yes, still a few years out, but nevertheless, very valuable.

Peter Anthony Cannito: Breakthrough technologies in the future.

Jonathan E. Baliff: that was color. Yeah, I just want to put a financial Yeah.

Peter Anthony Cannito: So that was <unk>.

Speaker Change: Yeah, I just want to put a financial yeah financial element to what Peaches talked about we gave you $5 billion to $10 billion Tam on that prior to pillbox too.

Jonathan E. Baliff: The rapid.

Jonathan E. Baliff: He talked about the uptempo to use the operational term, it's getting faster than we thought when we did the 5% to 10, we will update the five to 10, we will talk about it maybe being brought forward or against stay the same but we are we are more confident.

Jonathan E. Baliff: In that five to 10 and will be given an update to that the second thing and this is actually really important to demonstration of value. We are seen tens of millions of dollars raised in the market today at hundreds of millions of dollars evaluation for companies that are very interested in doing this and obviously we're competitors. So we don't give a lot of competitive information, but the boss.

Speaker Change: Mine is that repeatedly.

Jonathan E. Baliff: Quickening of the pace here to development means that we can demonstrate value in this a number of different ways, but most importantly, it has to do it for our customers and Eli Lilly is that customer with Butler University that will accelerate.

Griffin Taylor Boss: Great, that was exactly what I was looking for. I appreciate all the color there.

Speaker Change: Great that was exactly what is looking for appreciate all the color. There and then just for the quick follow up you talked about moving up the value chain.

Griffin Taylor Boss: We've seen it saber sat Phantom great great progress to see can you give some more color on this this modified commercial earth imagery spacecraft that you're developing Ah I think it's a study contract for Nasa's Mars exploration program.

Speaker Change: So we don't say.

Griffin Taylor Boss: Which this study contract for the V. Leo is oriented towards right now that we did also when a.

Speaker Change: A study for the.

Griffin Taylor Boss: Mars.

Speaker Change: Investigation that those are two totally different things right. So an unrelated I just want to be clear about that.

Speaker Change: So the.

Griffin Taylor Boss: And then just for the quick follow-up, you talked about moving up the value chain. You know, we've seen it, SaberSat, Phantom, great, great progress to see. Can you give some more color on this, this modified commercial Earth imaging spacecraft that you're developing? I think it's a study contract for NASA's Mars Exploration Program.

Speaker Change: So but to give a little additional color I mean.

Peter Anthony Cannito: So we don't know which the study contract for the VLEO is oriented towards right now, but we do know that we did also win a study for the Mars investigation.

Peter Anthony Cannito: Those are two totally different things. Right. So unrelated. I just want to be clear about that.

Griffin Taylor Boss: We're looking at is when we look at moving up the value chain is.

Peter Anthony Cannito: Not is.

Peter Anthony Cannito: So, but, you know, to give a little additional color, I mean, What we're looking at when we look at moving up the value chain is not picking and choosing where we're going to do the full systems integration and trying to avoid the mistake of being a follower and a me too, in terms of that marketplace for spacecraft. Of course, we already do full systems integration now in Europe with the Prova satellite, and we've run a number of missions for decades doing that.

Peter Anthony Cannito: Picking and choosing where we're going to do the full systems integration.

Peter Anthony Cannito: And <unk>.

Peter Anthony Cannito: Trying to avoid the mistake of being a follower and meet too.

Peter Anthony Cannito: In terms of.

Peter Anthony Cannito: That.

Peter Anthony Cannito: Marketplace for spacecraft of course, we already do full systems integration now in Europe with the Provost satellite and we've run a number of missions for decades doing that but.

Peter Anthony Cannito: But we see a leap ahead opportunity and be Leo and the potential of V. Leo is really strong you get there has been <unk>.

Peter Anthony Cannito: But we see a leap ahead opportunity in VLEO, and the potential of VLEO is really strong. You know, there have already been a number of experimental missions that have been operated in VLEO that show that being closer to Earth can reduce your power requirements, it can give you higher fidelity imagery, and it can give you higher levels of communication. So the VLEO moving up the value chain is not only about becoming a full systems integrator and expanding that part of our business, but we also see it as a leap ahead technology.

Peter Anthony Cannito: Already a number of.

Peter Anthony Cannito: Experimental missions that have them operate in <unk> that show that being closer to Earth can reduce your power requirements that can gives you higher fidelity.

Peter Anthony Cannito: <unk> it can give you.

Peter Anthony Cannito: A higher.

Peter Anthony Cannito: Levels of communication.

Peter Anthony Cannito: Vealy moving up the value chain is not only about becoming a full systems integrator and expanding that part of our business, but also we see it as a leap ahead technology and there's a lot of the nice thing about getting the study as well as.

Peter Anthony Cannito: And there's a lot of the nice thing about getting the study, as well as wanting to emphasize that we're already a performer as a subcontractor to Talas Alina on the SkimScat program, the European VLEO program, is that we're pretty far ahead now in terms of relative to the overall industry development of spacecraft in VLEO. And we're really excited about that validation from the market. Especially on the Sabersat side, this is something that customers are really interested in, and specifically, understanding more about what the performance parameters are that we can achieve.

Peter Anthony Cannito: Wanting to emphasize that we're already a performer as a subcontractor to tell us Alina Skim Scat program. The European Belial program is that we're pretty far ahead now in terms of relative to the overall industry development of spacecraft NB Leo and we're really.

Peter Anthony Cannito: Cited about that validation from the market.

Peter Anthony Cannito: Especially on the <unk> side.

Peter Anthony Cannito: That this is something that customers are really interested in and specifically undoing standing more what the performance parameters are that we can achieve.

Griffin Taylor Boss: Yeah, that's helpful. I guess what I was trying to get at was specifically for that Mars exploration program and the Earth imaging spacecraft, is that a new capability for you? As in, is that just another example of, you know, how you're showcasing rapid spacecraft development and deployment and just moving up the value chain in general?

Speaker Change: Yeah. That's that's helpful. I guess, what I was trying to get out was specifically for that Mars exploration program in the in the Earth imaging spacecraft is that does that a new capability for U as in is that just another example of how you are showcasing rapid spacecraft development and deployment.

Griffin Taylor Boss: Just moving up the value chain in general.

Peter Anthony Cannito: Yeah, no, it is, well, anything that goes to Mars is going to be new, but that particular study is based on our decades of heritage providing provo, which is our traditional Leo platform. Right. Understood. Okay. Okay, great.

Griffin Taylor Boss: Yeah no. It is it well anything that goes to Mars is going to be new but.

Peter Anthony Cannito: That particular study is based on our decades of heritage providing Provo.

Speaker Change: Which is R. Traditional Leo platform right understood. Okay, Okay, great I'll I'll pass it off thanks, a lot for taking my questions.

Griffin Taylor Boss: Right, understood. Okay. Okay, great. I'll pass it off. Thanks a lot for taking my question.

Speaker Change: Great. Thank you.

Operator: Thank you. Our next question comes from the line of Brian Kinstlinger with Allianz Global Partners. Please proceed with your question.

Speaker Change: Thank you. Our next question comes from the lineup Brian.

Brian David Kinstlinger: Linger with our global partners. Please proceed with your questions.

Brian David Kinstlinger: Great, thanks for taking my questions. Impressive submissions for the first quarter. As you look at the RFPs out available for bidding, the $6.3 billion pipeline, and the commentary on bidding larger programs, should we expect to see proposal submissions to remain at this elevated level consistently on a quarterly basis? And then, did I hear you accurately? You're bidding more as a prime than you have in the past?

Brian David Kinstlinger: Great. Thanks for taking my questions impressive submissions for the first quarter.

Brian David Kinstlinger: As you look at the Rfps.

Brian David Kinstlinger: Available for bidding $6.3 billion pipeline.

Brian David Kinstlinger: Commentary on getting larger programs.

Brian David Kinstlinger: Should we expect to see proposal submissions to remain at this elevated level consistently on a quarterly basis, and then did I hear you accurately your bidding more as a prime then you have in the past.

Peter Anthony Cannito: So I'll take the last part first. Yes, we are bidding more as a prime than we have in the past. The other part, the number of bids, our goal is to continue to keep it at the level that it's at right now. We have to take into account, however, that the RFPs come out on the timeline that they do, right? So many of these are government procurements, you know, large government procurements, but commercial customers have their own pace as well.

Speaker Change: So I will take the last part first yes, we are bidding wars O'brien than we have in the past.

Peter Anthony Cannito: The other part.

Peter Anthony Cannito: The the number of beds. Our goal is to continue to keep it at the level that is that right now we have to take into account. However, the rfp's come out on.

Peter Anthony Cannito: On the timeline that they do right. So.

Peter Anthony Cannito: Many of these are government.

Peter Anthony Cannito: Large government procurement.

Peter Anthony Cannito: But the commercial customers have their own tempo as well so.

Peter Anthony Cannito: So what I say is, the answer to your question, like I said, is we're bidding more prime, and we want to keep our bid rate up. And it's really the bids under review that are really, you know, critical that we have that number up. But it will also fluctuate, like anything else from a quarter to quarter basis, based on, you know, if you turn something in, something's due, you know, the week before the end of the quarter, and it's a really large procurement, that's going to affect the numbers.

Peter Anthony Cannito: What I say that so the answer to your question like I said, we're getting more prime and we want to keep our bid right up.

Peter Anthony Cannito: Or likewise, if something's the RFP gets turned in, and the bid gets submitted in the first week of the following quarter, that's going to, you know, it can you can get some of these quarter by quarter deviations that look lumpy, but it has more to do with the timing of the submission than anything else. Does that answer your question?

Peter Anthony Cannito: And it's really the bids under review that are really critical that we have that.

Peter Anthony Cannito: Number up but but it will also fluctuate like anything else from a quarter to quarter basis based on if you turn something in some things do the week before the end of the quarter and it's a really large procurement that's going to affect the numbers are likewise if something's.

Peter Anthony Cannito: EMP gets turned in and debated gets submitted in the first week of the following quarter, that's going to it you can get.

Peter Anthony Cannito: Some of these quarter by quarter.

Peter Anthony Cannito: Deviations that look lumpy <unk>, but it has more to do with the timing of the submission than anything else does that answer your question.

Speaker Change: You guys. Thanks.

Brian David Kinstlinger: And my follow-up in regards to the EAC adjustment. What are the lessons learned for Redwire, and what can they glean from them as it prices future contracts and or accounts for flexibility in changes to program requirements in its contract?

Speaker Change: My follow up in regards to the EAC adjustments.

Speaker Change: What lessons learned or red wire, what can they glean and knees.

Speaker Change: Is it prices contracts and or accounts for flexibility and changes the program requirements contracting.

Peter Anthony Cannito: Yeah, no, it's great.

Peter Anthony Cannito: Yeah, no, it's a great question. Well, first of all, it just underscores the fact that capability and the ability to deliver with operational excellence are key. And you have to also be able to be disciplined in the way that you bid. It's a bit of a cliche now, but many cliches start, because it's true, space is hard.

Speaker Change: Yeah, no. It's a great question well first of all it just underscores the fact that.

Peter Anthony Cannito: Capability and the ability to deliver with operational excellence is key and.

Peter Anthony Cannito: You have to also be able to be disciplined in the way that you bet.

Peter Anthony Cannito: But.

Peter Anthony Cannito: It's a bit of a cliche now, but many cliches start.

Peter Anthony Cannito: Because it's it's true is that space is hard.

Peter Anthony Cannito: So you're gonna, you know, we did a lot of firm price, fixed price contracts, and sometimes you're gonna, you know, have an EAC. And although these things do have an impact on financial performance on a near-term, quarter-by-quarter basis, If you're running a really good operation, you're going to see that level out over time. So we focus on our long-term profitability, not the perturbations that happen on a project-by-project basis, which in some cases can be, you know, high relative to a small base in the near term.

Peter Anthony Cannito: So you're going to we paid a lot a firm price fixed price contracts and sometimes you're going to.

Peter Anthony Cannito: Have an AAC and although these things do have an impact on financial performance on a near term quarter by quarter basis.

Peter Anthony Cannito: If you're running a really good operation.

Peter Anthony Cannito: You're going to see that that levels out over time, so we focus on our long term profitability not the perturbations that happened on a project by project basis, which in some cases can be high.

Peter Anthony Cannito: Hi relative to a small base.

Peter Anthony Cannito: In the near term.

Peter Anthony Cannito: However, these things also indicate that, in this particular case, we found something in test, and we had to move out and fix it. It may seem like a large EAC in the near term, but it also underscores the quality of our processes to know that we are testing these things, and we're finding deviations, and we're moving out. As we get better and better at executing firm fixed prices, and some of these are just the result of growing pains in addition to space being really hard, as we get better and better at that, we hope that you see balances.

Peter Anthony Cannito: However, these things also indicate that in this particular case, we found something and test.

Peter Anthony Cannito: We had to move out to fix it so what is a.

Peter Anthony Cannito: Ah may seem as a large EAC in the near term also understand underscores the quality of our processes to know that we are testing these things and we're finding deviations and we're moving out.

Peter Anthony Cannito: As we get better and better at executing firm fixed prices in some of these are.

Peter Anthony Cannito: Or just the result of growing pains. In addition to have space being really hard.

Peter Anthony Cannito: As we get better and better to that we hope that you see balances from fixed price contracts also offer the opportunity to overperform.

Peter Anthony Cannito: Firm fixed price contracts also offer the opportunity to over perform, where you may have a reserve or you find that you can execute well with more efficiency, where the overall impact can move in the other direction. We've seen that in previous quarters when we had a tailwind in terms of realizing a profit on particular programs greater than what we had expected. So the critical thing is, and I'll just continue to emphasize, is that we look at our performance on an annual basis, we don't, and we recognize that sometimes these metrics are going to move up and down on a quarter by quarter basis, depending on what's going on in that quarter. Thank you.

Peter Anthony Cannito: Where you may have a reserve or.

Peter Anthony Cannito: You find that you can execute this more efficiency.

Peter Anthony Cannito: The overall impact can move in the other direction and we've seen that in previous quarters, where we had a tailwind in terms of.

Peter Anthony Cannito: Realizing.

Peter Anthony Cannito: Profit on particular programs.

Peter Anthony Cannito: Greater than what we had expected. So the critical thing is is that I'll just continue to emphasize is that we.

Peter Anthony Cannito: Look at our performance on a annual basis, we not and we recognize that sometimes these metrics are going to move up and down on a on a quarter by quarter basis, depending on what's going on in that quarter.

Speaker Change: Great. Thank you.

Peter Anthony Cannito: Okay.

Peter Anthony Cannito: You.

Operator: Thank you. Our next question comes from the line of Suji DeSilva with Ross MKM. Please proceed with your question.

Roth MTN: Our next question comes from the liner sushi, the silver with Roth MTN.

Suji DeSilva: Proceed with your question.

Suji DeSilva: Morning, Peter. Jonathan, congratulations on the revenue for the quarter. I just want to ask about the non-recurring, recurring seasonality of the bookings and the fact that it seems to come in at the end of the year. I'm just wondering if that's a trend you're observing, if there's any kind of explanation for that, or whether it's just happenstance and it wouldn't necessarily recur.

Suji DeSilva: Peter Johnson, congrats on the revenue in the quarter.

Suji DeSilva: I just don't ask about sure thing I Wanna ask about the non-recurring recurring seasonality of your.

Suji DeSilva: The book the bookings and the fact that it seems to come in at the end of the year I'm. Just wondering if that's a trend you're observing and if there's any kind of explanation for that or whether it's just happenstance and it wouldn't necessarily recur.

Peter Anthony Cannito: You know, it's, it's strange, right? So I would say it's not a trend. It's a, it's a, it's a two data point trend. So it just happened to kind of fall out that way.

Suji DeSilva: You know.

Peter Anthony Cannito: If there is something associated with our underlying, you know, maybe the flow of our RFPs or how quickly we respond from Christmas break and start ramping up for the rest of the year. We haven't been able to figure that out yet. So you know, I don't want to I don't want to say that, you know, it's Two times has us looking at it, but I'm not ready to declare it some sort of seasonality or anything like that, because I don't think we understand. Definitely not due to the weather, Suji, or anything like that.

Peter Anthony Cannito: It's.

Peter Anthony Cannito: It's strange right. So I would say, it's not a trend.

Peter Anthony Cannito: It's a two data point trend.

Peter Anthony Cannito: So it's just that happened to kind of fall out that way. If there is something associated with our underlying maybe the flow of rrsp's or.

Peter Anthony Cannito: How quickly respond from Christmas break and often start ramping up for the rest of the year, we haven't been able to figure that out yet.

Peter Anthony Cannito: So I don't want I don't want to say that.

Peter Anthony Cannito: Two times has us looking at it but I'm not ready to declare it.

Peter Anthony Cannito: Some sort of seasonality or anything like that because I don't think we understand if I got through to the weather surgery.

Peter Anthony Cannito: Or anything like that I mean, we make light of it because we really do believe that the nature of this.

Jonathan E. Baliff: We make light of it because we really do believe that the nature of this is to look at our company on an annual basis or a set of annuals. If you look at the LTM, we're banging away. We're saying what we're doing with the bidding strategy and the amount of contracts we're winning. I think what's most notable is that for this quarter, to see the number of bids move up almost 200%, and also for us to then disclose that we're seeing more of that in the future, is, I think, significant.

Jonathan E. Baliff: Is to look at our company on an annual basis or a set of annual if you look at the LTM.

Jonathan E. Baliff: We're banging away.

Jonathan E. Baliff: We're doing what we're saying what we're doing on the bidding strategy in the amount of contracts were winning I think what's most notable is that for this quarter to see the number of bids move up almost 200% and also for US too then disclose that we're seeing more of that in the future.

Jonathan E. Baliff: Is I think notable how that then translates into quarterly contract wins.

Jonathan E. Baliff: How that then translates into quarterly contract wins is just look at us on a more annual basis. That's why we're starting to talk a little bit about LTM for the last 12 months as part of that to give more education to you and the rest of the investor community.

Jonathan E. Baliff: Is just look at us on more on an annual basis.

Jonathan E. Baliff: And that's why we're starting to talk a little bit about LTM last 12 months as as part of that to give more education to you and the rest of the Investor community.

Suji DeSilva: Got it. Sorry, I'm going to cut out there briefly. And also, my other question is following up on microgravity. With the 16 missions and manifests, are those new customers or existing more Eli Lilly-type businesses? Is it 100% commercial, or is there some government mixed in there? And most importantly, can customer readiness move at the cadence that you're trying to do in terms of production? Can they pull off being ready for those cadences you're trying to achieve?

Speaker Change: Got it sorry America there briefly and then also my other question is following up on microgravity with.

Suji DeSilva: With the 16 missions and manifest are those new customers are existing more Eli Lilly type business or is it 100 per cent commercial or is it some government mixed in there and most importantly can the customers move.

Suji DeSilva: Customer readiness move at the cadence that you're trying to do in terms of production can they pull off being ready for those cadence you're trying to achieve.

Peter Anthony Cannito: Yes, well, we obviously don't disclose who our customers are on every mission until we do, but it's, there are a mix of customers that are interested in all of these. And in certain instances, if we don't, and we're looking harder at this, have a customer, there are compounds out there that are open that are not protected, that Redwire can fly on its own behalf to generate its own intellectual property. And that's really exciting as well. So we will make it, I guess the takeaway is we will make each one of those 16 missions.

Speaker Change: Yes, well, so obviously don't disclose who our customers are on every mission until we do.

Peter Anthony Cannito: But there are a mix of customers that are interested in all of these and in certain instances. If we don't and we are looking harder at this half of customers. There are compounds out there that are open that are not protected that red wire can fly on its own behalf to generate its own intellectual property and that.

Peter Anthony Cannito: Really exciting as well so.

Peter Anthony Cannito: We will make.

Peter Anthony Cannito: Guess, the takeaways, we will make each one of those 16 missions used.

Peter Anthony Cannito: Useful.

Jonathan E. Baliff: Yeah, and it's important to note, you know, these are partner customers, right? And because of the nature of how we do this, we don't lose money on this, right? The research and development has been put in place; we are now in the development phase. As part of that, the economics start to change and adjust and become more like a contract developer, a manufacturing office, or organization, which in the biotech world is a very no, Suji, you know, this world has an economy that could create multiples of value for the invested capital that we've put in already. And again, we are decades further ahead than many of our competitors. We've been doing this for a very, very long time, and it's starting to come to fruition with the intellectual property being Redwire intellectual property.

Peter Anthony Cannito: It's important to note. These are partner customers right and the nature of how we do this we don't lose money on this right. The research and development has been put in place. We are now in the development phase as part of that the economic start to change and adjust and become more like a contract developer.

Jonathan E. Baliff: Factoring office or organization, which in the biotech World is a very note Tsuji you know this world It has economics that could.

Jonathan E. Baliff: Create multiples of value for the invested capital put in already and again, we are decades further ahead than many of our competitors. We've been doing this for a very very long time, and it's starting to come.

Jonathan E. Baliff: To fruition with the intellectual property being red wire intellectual property.

Suji DeSilva: All right. Thanks, Peter. Thanks, Jeff.

Speaker Change: Alright, thanks for your thanks, Sir.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from the lineup Andres Shepherd categories drove please proceed with your questions.

Unknown Attendee: Hey, Pete. Hey, Jonathan. Good morning. Congratulations on the quarter and thanks for taking our questions. You know, I think a lot of our questions, yeah, I think...

Speaker Change: Hey, Jonathan Good morning <unk>.

Speaker Change: Gratulation from a quarter and thanks for taking our questions.

Speaker Change: And can we save our questions I.

Speaker Change: A lot of our questions I've been asked by now, but maybe just two.

Speaker Change: Follow up on an earlier question on margins.

Unknown Attendee: How should we think about gross margins throughout the rest of the year.

Speaker Change: And I guess, how should we think about those.

Speaker Change: As well 442024, thank you.

Peter Anthony Cannito: So I'll start us off, and then I'll let Jonathan jump in. I think we talked about all the different dynamics that play into gross margins and the strategic decision making that we have to make on a really bid by bid basis as to whether, say, the absolute value of margin contribution from a particular bid or maybe the strategic value of a large win, whether, in that particular case, we're, we're willing to sacrifice maybe an operating margin run rate, if you will.

Speaker Change: So I'll start us off and then I'll, let Jonathan jump in I think we talked about all the different dynamics that play into gross margins and the strategic decision, making that we have to make on a.

Peter Anthony Cannito: Really a bit by bit basis as to whether.

Peter Anthony Cannito: Say the absolute value of margin contribution from a particular bed or maybe the strategic value of large wind.

Jonathan: Whether in that particular case we're.

Peter Anthony Cannito: We are willing to sacrifice may be.

Peter Anthony Cannito: Operating margin run right if you will.

Peter Anthony Cannito: As a result, that's going to, that's going to vary over time as those opportunities present themselves. We very deliberately give revenue forecasts for the year and shy away from giving an EBITDA forecast, although we are driving, as Jonathan has said multiple times, towards profitability. And that's because that leaves us the opportunity to make good strategic decisions around our operating margins. So I think our philosophy has exposed itself in terms of our 2023 performance.

Jonathan: As a result, so that's gonna that's gonna vary over time as those opportunities present themselves.

Peter Anthony Cannito: We very deliberately give revenue forecast for the year and shy away from giving an EBITDA forecasts, although or are we.

Peter Anthony Cannito: Are driving is Jonathan said multiple times stretch profitability and that's because that leaves us the opportunity to make good strategic decisions around are operating margins. So.

Peter Anthony Cannito: I think our.

Peter Anthony Cannito: Philosophy has.

Peter Anthony Cannito: But we maintain the flexibility to not have that inhibit us from doing something really smart throughout the year. But, and this is at the strategic level, I think Jonathan can maybe perhaps reaffirm this idea that product mix and many other dynamics, such as EACs and such, go into that. The only other thing that I'll add before I hand it over is that our goal is overall margins, although operating margins are important. Controlling our SG&A, making sure we're efficient there, plays into our overall profitability dynamics as well. Jonathan, I want to answer your question.

Peter Anthony Cannito: Exposed itself in terms of our 2000 2003 performance.

Peter Anthony Cannito: But we maintain the flexibility to not have that.

Jonathan: Inhibit us from doing something really smart.

Jonathan: Throughout the year.

Peter Anthony Cannito: But.

Peter Anthony Cannito: And that's at the strategic level I think Jonathan can.

Peter Anthony Cannito: Maybe perhaps reaffirmed this idea that product mix and many other dynamics such as <unk> and such.

Jonathan: Go into that the only other thing that I will add before I handed over it.

Jonathan: We look at our goal is towards overall margins, although operating margins are important Ah controlling.

Jonathan: R SG&A.

Jonathan: Making sure we're efficient there.

Peter Anthony Cannito: Has a place into our overall profitability dynamics as well Jonathan I would answer your question directly and use historic basis.

Jonathan E. Baliff: Well, I want to answer your question directly and on a historical basis because, number one, we do not give an operating margin or gross profit forecast for 2024. That being said, as we have said before, in FY22, we had almost 18% gross margins. In FY23, we had almost 24% gross margin. We have said that we will not increase those gross margins as much in 2024 because of the significant revenue growth that we're seeing.

Jonathan E. Baliff: Because again number one we do not give operating margin or gross profit forecasts for 2024 that being said, what we said before in FY twenty-two we had almost 18% gross margins in FY twenty-three, we had almost 24% gross margins. We have said that we will not increase those gross margins as much and.

Jonathan E. Baliff: 2024, because of the significant revenue growth that we're seeing 23% organic revenue growth.

Jonathan E. Baliff: 23% organic revenue growth is something that we believe is conservative but also very achievable. And as we go through the year with our bids and our win rates, we'll be able to talk about that. As far as gross margins are concerned, on EACs, we are driving towards low volatility, right? We don't want to see this level of EAC on an absolute basis.

Jonathan E. Baliff: That we believe is conservative.

Jonathan E. Baliff: But also very achievable and we go through the year with our bids and and our when rates will be able to talk about that as far as the gross margins are concerned.

Jonathan E. Baliff: On the <unk>, we are driving towards low volatility right. We don't want to see this level of TASC on.

Jonathan E. Baliff: But it's really looked at on an LTM basis, not on a quarterly basis. You could see a movement upward, but we are really trying to drive towards what great program management looks like, which is zero EACs. And like Pete said, we can actually achieve higher targets through better performance, and some of our contracts allow for that. So going from 18% to 24%, which we did last year, we're not going to see that this year.

Jonathan E. Baliff: On an absolute basis, but it's really looked at on an LTM basis not on a quarterly basis, you could see a movement up but we are really trying to drive towards what great program management looks like which is zero eac's and what like Pete said, we can actually achieve higher.

Jonathan E. Baliff: Through through better performance and some of our contracts allow for that so going from.

Jonathan E. Baliff: 18% to 24%, which we did last year, we're not going to see that this year, but that doesn't mean again I'm getting to the third point, which is really important is that we are driving towards much higher profitability margins, where there'd be EBITDA margins because SG&A now is going below 20% or importantly, because we haven't gotten this question, but we're very focused on it at red Y which is cash flow.

Jonathan E. Baliff: But that doesn't mean, again, getting to the third point, which is really important, is that we are driving towards much higher profitability margins, whether it be EBITDA margins because SG&A is now going below 20%. Or, importantly, because we haven't got this question, but we're very focused on it at RedWire, which is cash flow, right? We continue to be able to produce higher returns on invested capital, which then yields better cash flow, and then funds that growth that Pete's talking about, right? Which creates that virtuous cycle.

Jonathan E. Baliff: Right, we continue to be able to produce higher returns on invested capital yields better cash flow than funds that growth that pete's talking about right, which creates at virtuous cycle. So look more at the bottom line obviously for US. It's cash flow. We are focused on EPS two guys and so just for all the analysts out there we do want to talk.

Unknown Attendee: So we look more at the bottom line. Obviously, for us, it's cash flow. We are focused on EPS, too, guys, and so just for all the analysts out there, we do want to talk to you guys later. Our EPS is eventually, we're on a path to profitability, which includes improving that too as we go forward. But again, look at the revenue, being conservative. Margins are not going to increase as much in 2024, but that doesn't mean that we can't achieve better bottom-line profitability margins, especially on the cash flow side.

Unknown Attendee: Two guys later, our EPS is eventually we're on a path to profitability, which includes improving that too as.

Unknown Attendee: As we go forward, but again look at the revenue being conservative margins not gonna increase as much in 24, but that doesn't mean that we can't achieve.

Unknown Attendee: Chief better bottom line profitability margins, especially on the cash flow.

Unknown Attendee: Got it. Thank you. That's super helpful. I appreciate all that context. Maybe just to end, can you remind us, and maybe investors, what are some of the most important near-term catalysts that we should be highlighting or that we should be monitoring for this year? Thank you.

Speaker Change: Got it. Thank you that's super helpful. I appreciate all the overall context.

Speaker Change: Maybe just to and can.

Speaker Change: Can you remind us and maybe.

Unknown Attendee: Investors what are some of the most important near term catalyst that we should be highlighting or that we should be monitoring for for this year. Thank you.

Peter Anthony Cannito: So I would point out to everybody, if I understand correctly, catalysts in terms of executing our plan, the near-term catalysts are executing on our four principles of growth. So what we're gonna try to do on a quarter-by-quarter basis is highlight our progress against that, hence the structure of the presentation today. We wanna continue to reassure everyone that we have a really strong foundation in our core business offering, and that's

Speaker Change: So I would point everybody.

Peter Anthony Cannito: Enter.

Peter Anthony Cannito: If I understand correctly catalysts in terms of executing our plan the.

Peter Anthony Cannito: The near term catalyst are executing on our four principles of growth.

Peter Anthony Cannito: What we're going to try to do on a quarter by quarter basis is highlight are progress against that.

Peter Anthony Cannito: Hence the the structure of the presentation today, we want to continue to reassure everyone that we have a really strong foundation in our core business offerings and that's going to continue there is strong demand for.

Peter Anthony Cannito: There's strong demand for what we call protecting the core, and we need to continue to execute there. And it's actually, we've achieved really good growth just on our foundational technologies. But we also have a number of initiatives focused on the near-term to continue to show that we can scale production, and that'll lead to higher revenues over the long term; that we can move up the value chain, and that will also lead to a nice pace of revenue growth, as well as to execute on this venture optionality and unlock what I think is some of the more hidden potential value in the enterprise as well.

Peter Anthony Cannito: Or what we call protecting the core.

Peter Anthony Cannito: And we need to continue to execute there and it's actually with achieved really good growth just on our foundational technologies.

Peter Anthony Cannito: But we also have a number of initiatives.

Peter Anthony Cannito: Focused on the near term.

Peter Anthony Cannito: To continue to show that we can scale production and that will lead to higher revenues over the long term that we can move up the value chain.

Peter Anthony Cannito: That will also lead to.

Peter Anthony Cannito: A nice pace of revenue growth.

Peter Anthony Cannito: As well as to execute on this adventure Optionality and unlock what I think is.

Peter Anthony Cannito: Some of the more hidden.

Peter Anthony Cannito: Potential value.

Peter Anthony Cannito: In the enterprise as well so those are the things that I would track is essentially our progress in terms of near term in the market.

Peter Anthony Cannito: So those are the things that I would track is essentially our progress. In terms of near-term in the market, just for the space industry writ large, I think we just have to keep watching, of the budgets, and, you know, the continued growth and excitement around a real capabilities out there like participating in FDA programs being selected as one of just a half a dozen of what I think are some of the best of the best in the industry for Mars exploration, for being looking at who's being selected for future lunar infrastructure programs and whether Redwire's portfolio of programs aligns really well with the strong trends in the industry.

Peter Anthony Cannito: Just for the space industry with large I think we just have to keep watching.

Peter Anthony Cannito: The budget.

Peter Anthony Cannito: And.

Peter Anthony Cannito: The continued growth and excitement around a real capabilities out there like participating in SDA programs being selected.

Peter Anthony Cannito: As one of just a half a dozen of what I think are some of the best of the best in the industry for Mars.

Peter Anthony Cannito: Exploration for being looking at who's being selected for future lunar infrastructure programs and whether.

Peter Anthony Cannito: Red wires portfolio of programs the lines really well with the strong trends in the industry I think if you were to.

Peter Anthony Cannito: I think if you were to line those up, quite frankly, we look pretty good, but I would point investors to those dynamics as well. Because we're focused on the growth trends in the industry. And that's where we're moving to is where the puck is going.

Peter Anthony Cannito: Line those up quite frankly, we look pretty good but I would I would I would point investors.

Peter Anthony Cannito: To those dynamics as well.

Peter Anthony Cannito: Because we're focused on the growth trends in the industry and that's where we're moving to is where the puck is going.

Unknown Attendee: Wonderful! That's very helpful. I appreciate it. Congratulations again on the quarter, and I'll pass it on. Thank you.

Speaker Change: Wonderful that's very helpful.

Speaker Change: Congrats again on the quarter and I'll pass it all thank you.

Speaker Change: Thank you.

Peter Anthony Cannito: Thank you. And we have reached the end of the question and answer session. I'll now turn the call back over to Peter Cannito for closing remarks.

Unknown Attendee: Okay. Thank you and we have reached the end of the question and answer session I'll now turn the call back over to Peter Dino Foreclosing remarks.

Peter Anthony Cannito: Yeah, some excellent questions. Thank you very much. I appreciate everybody participating in today's call. And thank you for taking the time to listen. Go Redwire!

Peter Anthony Cannito: Yes, some excellent questions. Thank you very much I appreciate it everybody participant participating in today's call and thank you for taking the time to listen go Red wire.

Operator: And this concludes today's conference, and you may disconnect your line. Thank you for your participation.

unknown: [inaudible]

unknown: And this concludes today's conference or you may disconnect. Your lines at this time. Thank you for your participation.

unknown: Okay.

unknown: Mmm.

unknown: [music].

unknown: Oh.