RDW 2026Q1

Greetings, and welcome to the Redwire Corporation Q1 2026 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Alex Curatolo, Senior Director of Investor Relations. Thank you. You may begin.

Good morning, and thank you, Shamali. Welcome to Redwire's First Quarter 2026 Earnings Call. We hope that you have seen our earnings release, which we issued yesterday afternoon. It has also been posted in the Investor Relations section of our website at rdw.com. Let me remind everyone that during the call, Redwire management may make forward-looking statements that reflect our beliefs, expectations, intentions or predictions of the future. Our forward-looking statements are subject to risks and uncertainties that are described in more detail on Slides 2 and 3. Additionally, to the extent we discuss non-GAAP measures during the call, please see Slide 3 in the appendix, our earnings release or the investor presentation on our website for the calculation of these measures and their reconciliation to U.S. GAAP measures. I am Alex Curatolo, Redwire's Senior Director of Investor Relations. Joining me on today's call are Peter Cannito, Redwire's Chairman and Chief Executive Officer; and Chris Edmunds, Redwire's Chief Financial Officer. With that, I would like to turn the call over to Pete. Pete?

Thank you, Alex. During today's call, I will outline our key accomplishments during the first quarter of 2026, after which Chris will present the financial highlights for the same period and discuss our outlook for the remainder of 2026. We will then open the call for Q&A. Please turn to Slide 6. During the first quarter of 2026, Redwire saw strong demand across our differentiated products. During the quarter, Redwire achieved a strong book-to-bill ratio of 1.92 and as a result, ended the quarter with record contracted backlog of $498.1 million, providing confidence in our forecast as we move further into 2026. We sharpened our operational performance and portfolio management, resulting in sequential and year-over-year improvement in gross margins, moving from 9.6% in Q4 2025 and 14.7% in Q1 2025, up to 26.6% in Q1 2026. And finally, we accelerated investing in large procurement opportunities across our portfolio, such as Andromeda, the Commercial Lunar Payload Services Program, or CLPS, the Quantum Key Distribution satellite often referred to as QKDSat and the Army's long-range reconnaissance program for Group 2 Unmanned Aerial Systems or LRR. Each of these programs have significant growth potential and are gaining momentum. To summarize the quarter, we returned to strong growth in areas with better gross margins, and therefore, we will continue to invest in our highest potential opportunities where we are well positioned with differentiated capabilities. Please turn to Slide 7. Next, I would like to briefly touch on a highlight or 2 from the first quarter for each of our 5 value drivers to underscore our continued value creation in each area. We will start with our Space segment, which encompasses next-generation spacecraft, large space infrastructure and microgravity development and then turn to our Defense Tech segment, which encompasses combat proven UAS and sensors and payloads. Please turn to Slide 8. In Q1, Redwire achieved a significant milestone in our spacecraft strategy as we continue to move up the value chain in the space segment. In April, we were selected as 1 of 14 vendors out of a total of 32 bids on the Space Systems Command $1.8 billion 10-year Andromeda Indefinite Delivery Indefinite Quantity, or IDIQ contract. And earlier this week, Space Systems Command provided a notice of its intent to raise the total shared ceiling for the Andromeda IDIQ to more than $6 billion to meet increased demand. The Andromeda contract vehicle is focused on rapidly fielding proliferated space domain awareness capabilities in geosynchronous orbit. We see this as a proof point for the success of our moving up the value chain strategy and further validation that we are strategically positioned as a trusted prime contractor on next-generation spacecraft. We now have 10 years in a limited competition pool to monetize this multibillion-dollar contract as we invest in our Mako next-generation maneuverable, refuelable autonomous spacecraft in GEO. Please turn to Slide 9. During the first quarter, Redwire was awarded a contract to continue development on a quantum secure satellite under ESA's QKDSat program. For QKDSat, Redwire will manufacture and deliver its European-built Hammerhead spacecraft equipped with a quantum key distribution payload and Redwire's proprietary ADPMS-3 suite of avionics, leveraging our experience in spacecraft development and avionics in support of this critical program. This program has the potential to grow into a constellation-sized opportunity. During the period, Redwire was also awarded a prime contract for the Belgian Ministry of Defense to build and deliver Belgium's first national security satellite to provide secure, resilient and independent access to critical space-based services in support of national defense priorities. We see this as an early entry point in European space-based defense capabilities as the trend towards increased organic European investment in both space and defense gained significant momentum, and Redwire is seen as a trusted partner. Please turn to Slide 10. Turning to our space infrastructure. You may remember that on our last earnings call, I introduced ELSA, our new high-performance low mass solar array for high-quantity constellations of small sats. I am proud to say that during the first quarter, Redwire made its first sale of this new product with a $12.8 million contract to deliver ELSA solar arrays to Moog. These ELSA arrays will be integrated with Moog's Meteor satellite buses in support of a low Earth orbit mission for an undisclosed national security customer and have also been baselined as a standard component for the Meteor line of spacecraft. With the introduction of ELSA, our power product portfolio now spans the total addressable market from large constellations in LEO to the lunar surface and beyond. Please turn to Slide 11. Turning to our microgravity development value driver. During the quarter, Redwire received an additional $4 million from NASA to support drug development investigations on the International Space Station using Redwire's proven pharmaceutical manufacturing solution, PIL-BOX. This additional funding expands an existing task order under a $25 million 5-year IDIQ through NASA's In-Space Production Applications or InSPA program. During the quarter, Redwire's PIL-BOX also supported a cancer therapy investigation led by Aspera Biomedicines that launched aboard the Crew-12 mission. NASA sees the groundbreaking potential and continues to invest in PIL-BOX. And by supporting partners like Aspera, Redwire is helping to usher in a new era of biotechnology where microgravity is used to unlock insights that can improve treatments for some of the world's most challenging diseases. Please turn to Slide 12. Turning next to our combat proven UAS value driver, which falls within our Defense Tech segment. During the quarter, Redwire was awarded more than $20 million in follow-on purchase orders to deliver standard and advanced navigation Stalker systems supporting the Navy Marine Corps Small UAS program management office. This award in support of the long-range tactical program of record encompasses the Marine Corps' first acquisition of the advanced navigation version of Stalker Block 30. These new systems will join the approximately 250 existing Stalker aircraft already fielded by the Marine Corps as our trusted, combat proven platform continues to scale for the most demanding customers. This is not a demonstration. This is not an experiment. This is scaling a field-proven capability. Please turn to Slide 13. In addition, during the first quarter, Stalker continued integration efforts with the U.S. Army's next-generation Command and Control or NGC2 tactical network during the Ivy Sting exercises, further integrating the platform into the U.S. Army's future concepts of operations. Continued integration is expected at upcoming events to enhance situational awareness and decision-making across the battlefield. Stalker was the only fixed wing VTOL to support this exercise, underscoring the criticality of our Stalker as a platform for the warfighter. Please turn to Slide 14. Lastly, moving to our sensors and payloads value driver. Building on the extensive heritage of our avionics and sensor products, on April 1, Redwire's advanced imaging and navigation technology launched aboard NASA's Artemis 2 mission, the first crew mission for the Artemis program. Through these images, everyone here on Earth was able to take part in Artemis 2's historic journey of discovery. Once again, Redwire is proud to be a trusted partner on the most important missions on and off earth. Please turn to Slide 15. As part of our transformation over the last 2 years, both moving up the value chain and expanding into multi-domain technologies, Redwire has become very well positioned at the ground floor of some emerging opportunities with asymmetric upside potential. As a result, we have begun to ramp investment with a more than $10 million increase in research and development expense during the first quarter on a year-over-year basis. We are in quality growth mode. In Q1, we demonstrated the ability to grow while simultaneously increasing our gross margin. This is the focus. Therefore, as you can see from this slide, net of discretionary IRAD spending, we would have had positive adjusted EBITDA for the quarter. We are currently investing in quality growth. As to where we plan to invest, we are specifically increasing investment in 6 critical opportunities with outsized potential, most of which we have already spoken about today. These opportunities include VLEO in the United States and Europe with our SabreSat and Phantom spacecraft, QKDSat for a quantum secure constellation, maneuverable refuelable GEO spacecraft for programs like Andromeda, Lunar infrastructure, including such opportunities as a Lunar power grid and future CLPS Lunar lander missions; SpaceMD, including PIL-BOX and bioprinting and finally, our next-generation Stalker Block 40 and Penguin Mark III aircraft. These are investments to strengthen our positioning, supported by identified opportunities with existing customers. Please turn to Slide 16. With that, I'd now like to turn the call over to Chris Edmunds, Redwire's Chief Financial Officer, to discuss the financial results for the first quarter of 2026.

Thank you, Pete. Before turning to Slide 17, I want to highlight this incredible image of the Orion capsule with a lunar eclipse taken by a Redwire camera during the Artemis 2 mission. Now let's turn to the financial results. Please turn to Slide 17. During the first quarter, in line with our expectations, we reported total revenue of $97 million, a 57.9% increase on a quarterly year-over-year basis. Our Space segment recorded revenue of $52.7 million, and our Defense Tech segment recorded revenue of $44.3 million. I would note that the contributions from the acquisition of Edge Autonomy were the primary driver behind the significant increase for Defense Tech on a quarterly year-over-year basis. With more than $350 million in bookings during the last 2 quarters, we expect our revenue to build as we move through 2026. Please turn to Slide 18. As we mentioned on our year-end earnings call, gross margin improvement is a significant focus area for Redwire, and I'm pleased to report that in line with our expectations, we achieved gross margin of 26.6% during the quarter, representing an 11.9-point improvement on a year-over-year basis and a 17-point improvement on a sequential basis. Our first quarter 2026 net loss was $76.5 million, which was impacted by more than $44 million in nonrecurring activity, $42.5 million of which was the noncash, nondilutive impact from the accelerated vesting of the equity incentive units assumed through the Edge Autonomy acquisition. Our first quarter adjusted EBITDA was negative $9.2 million, a decrease on a year-over-year basis, but a sequential increase. Notably, the unfavorable impact from net EA fees decreased to $1.1 million during the first quarter, a marked improvement. We are proud of the progress we've made. Cost control and program execution remain a key focus. Finally, Redwire remains highly focused on capital allocation. Based on the signals we are receiving from the market and our customers, we have significantly increased our internal research and development investment from under $1 million in Q1 2025 to $12.6 million in Q1 2026. We see this investment as accelerating the maturation of our products and solutions to meet current demand, like the recent $1.8 billion Andromeda IDIQ. Please turn to Slide 19. Turning next to a discussion of liquidity and capital structure. We ended the first quarter of 2026 with record total liquidity of $175.2 million, comprised of $145.2 million of cash, cash equivalents and restricted cash and $30 million in undrawn revolver capacity, a significant year-over-year improvement. Redwire saw a meaningful reduction in net cash used in operating activity on both a sequential and a year-over-year basis to $6.7 million. This improvement is largely related to improvement in gross margin, disciplined cost control and positive working capital contribution. With improvement in quarterly free cash flow of more than $36 million on a year-over-year basis and $17 million on a sequential basis, we have reduced our cash burn. As mentioned on our previous call, during the first quarter, the company amended its credit agreement, extending the maturity to May 2029 and lowering the interest spread from SOFR plus 700 to SOFR plus 375 resulting in an annualized interest savings of approximately $3 million, contributing to a total estimated annual interest savings of more than $17 million from delevering and refinancing activities completed in 2025 and the first quarter of 2026. Finally, we remain committed to a disciplined approach to responsibly fund growth initiatives like those Pete spoke about earlier. With scalable opportunities for investment, we've entered into another at-the-market or ATM program to allow us to opportunistically fund emerging technologies across our portfolio. We are investing in quality growth. Please turn to Slide 20. During the first quarter, we saw a continuation of the positive trend in contracts awarded with bookings of $186.5 million, a significant increase on both a year-over-year and sequential basis, resulting in a book-to-bill ratio for the quarter of 1.92 with a book-to-bill ratio of 1.54 on a last 12 months basis. Turning to bookings by segment. Space bookings were $114.6 million, driven by strong demand for Power Solutions, including the first sale of ELSA and an approximate $50 million follow-on production order for ROSA Wings. Defense Tech bookings were $72 million, driven by demand for our Stalker and Penguin aircraft. Turning to backlog. We once again saw strong growth in the metric as backlog increased by 21.1% on a sequential basis and 71.1% on a year-over-year basis to a record $498.1 million. As of March 31, 2026, space backlog was $359.7 million and Defense Tech backlog was $138.4 million. As a reminder, the majority of Defense Tech revenue is recognized at a point in time, whereas in our Space segment, the majority of revenue is recognized over time, driving different backlog profiles. With further line of sight into 2026, we remain pleased with the continued positive change in our trend line of contracts awarded and believe our pipeline of new opportunities across Space and Defense Tech around the globe remains strong, bolstering our confidence in continued growth through the year. Please turn to Slide 21 for a brief discussion of the outlook for the remainder of 2026. Having achieved first quarter revenue in line with our expectations, plus another quarter of acceleration in our contracts awarded, confidence provided by our record backlog of $498.1 million and a supportive macro environment, we are reaffirming our full year 2026 revenue forecast in the range of $450 million to $500 million, which represents 41.6% year-over-year growth at the midpoint. With more than $350 million in bookings during the last 2 quarters, we expect our revenue to build as we move through 2026. With that, please turn to Slide 22, and I'll now turn the call back over to Pete.

To summarize the quarter, we returned to strong growth in areas with better gross margins. And therefore, we will continue to invest in our highest potential opportunities where we are well positioned with differentiated capabilities. With that, I want to thank the entire Redwire team for their achievements during the first quarter of 2026. We will now open the floor for questions.

Our first question comes from the line of Suji DeSilva with ROTH Capital Partners.

Pete, Chris, congratulations on the progress here. My question is about the Andromeda Space Force program, the IDIQ program. How is Redwire positioned in this program? And how are you planning to invest specifically for this program? I appreciate in the presentation, the 5 areas of investment you have, but how is this one going to be targeted with the investment?

Suji, great question. I mean this Andromeda opportunity, as I noted in my speaking portion of today, is a real significant milestone for us to have 32 bids go in and be selected as 1 of 14 vendors really just underscores the progress we've made on moving up the value chain, particularly in this unique white space that's emerging around highly maneuverable refuelable GEO spacecraft. And therefore, we got to invest. If you look at our 14 competitors, it's a limited competition pool, but many of them are doing raises, are going out there and investing heavily. So it's going to be, and Redwire has to do the same. I think that's one of the keys to both increasing our overall IRAD investment run rate, as I believe Chris noted, going from only $1 million in IRAD Q1 last year to now ramping up to approximately $12 million in this year. And we're going out there and using the ATM, which we believe is a really efficient low cost of capital opportunity to much like our peers on that Andromeda opportunity, raise the money to make sure that we can deliver the best capability for the program. So super excited about this win. It's 10 years. So it's got a lot of period performance to it. And by then raising the ceiling from $1.8 billion to $6 billion, that really underscores that this is an area where the government is making significant investment.

Our next question comes from the line of Griffin Boss with B. Riley Securities.

I guess I would love to get an update on your VLEO platforms. Obviously, that's one area where you're ramping quality growth investment. But just curious if you could kind of discuss what kind of traction you're seeing or any new developments on that front? I think that's a great area of growth for the company.

Griffin, yes, thanks for that question. So VLEO, as I mentioned, is one of the areas where we're continuing to ramp up investment. VLEO is probably, I would say, the number one area where we're going to play strongly in Golden Dome, in my opinion. I think that particular orbital regime has something unique to bring to the fight in Golden Dome. And I think Redwire is really well positioned there. It can be difficult to talk about some specifics around our concepts of employment there. But again, much like highly maneuverable, refuelable GEO, our moving up the value chain spacecraft strategy is not a me-too strategy. We've specifically picked areas where Redwire can lead where there is no one who's in a dominant position. And I think VLEO is, in particular, one of those areas where with the award of Otter and other programs over the last year, we have a nice jump start, and we think it has a lot of potential in Golden Dome. So we're investing in maturing the technology with our partners at DARPA, AFRL and others and super excited about that. And again, one of the things I want to underscore, so at the risk of repeating myself, there's a little bit of a pivot happening here. We're excel because we feel like we're so well positioned on these new opportunities and because we've been now able to execute with better cost control and more operational execution, we can go out and we can do a nice ATM raise and start applying that money to these high gross margin, high growth rate opportunities. And so that's our current strategy.

Our next question comes from the line of Austin Weller with Canaccord Genuity.

So just touching on that LEO opportunity, if you're to compete on Golden Dome as a satellite bus manufacturer or Prime, can you talk about the specific layers of the Golden Dome architecture that you're targeting to bid on? Is that like tracking of hypersonic vehicles in the atmosphere? And should we expect contract awards for that in the second half of this year or '27?

Austin, that's an interesting question. The government has not put a lot of information out publicly about the Golden Dome architecture. To provide an answer without simply saying we can't talk about certain things: at a high level, I believe Golden Dome is going to be a multi-orbit, all-of-the-above type strategy. It's not one space-based interceptor or one killer tech, so to speak. That's exciting for us because there are opportunities for us to participate; I mentioned already VLEO. If it's going to be a multi-orbit, resilient architecture, VLEO adds another orbital regime the government can use to enhance the overall Golden Dome capability. I also think that a highly maneuverable, refuelable GEO has interesting roles it can play in the Golden Dome architecture as well. I won't speak for the government, but increasing the total ceiling on that program from $1.8 billion to $6 billion underscores how important that orbital regime is. For the lay person, when I talk about these orbital regimes I mean there will be relevant elements in VLEO, LEO, and GEO. Redwire is positioning itself to be a leader in LEO and GEO, and for those building large, proliferated constellations in LEO, we're acting as a merchant supplier. So prime lead in VLEO, prime lead in highly maneuverable, refuelable GEO, and merchant supplier in LEO — that's our Golden Dome high-level positioning. I hope that answers your question.

Our next question comes from the line of Greg Konrad with Jefferies.

This is Ceara on for Greg. So really strong gross margins in the quarter, but EBITDA was still negative. How do you think about leverage in the business and expectations around gross margins and OpEx going forward? Is it mostly about volume? And is there a certain level of sales where we would expect adjusted EBITDA to turn?

Yes. I appreciate the question, and I'll give Chris some time to speak because we want to make sure he has airtime. Briefly, our goal, which we achieved this quarter and intend to maintain going forward, is to have positive EBITDA net of IRAD. We're focused on quality growth but we must invest; we want to be clear we're not funding losses but funding investment. If we position ourselves this way, regardless of the macro environment, we can turn the IRAD dial up or down based on opportunities.

Yes. No, we're super excited about where we came in this quarter at 26 percent, which is the result of a number of factors. We have had strong bookings the last several quarters that replenished our order book with higher-margin profiles. Moving capabilities from development into low-rate and full-rate production, as we discussed on our last call, is a contributor. We're also pleased that we managed the ACs much tighter this quarter, producing a net $1 million benefit, which is a marked improvement. Those two points are really helping bolster gross margin. And, as Pete said, by managing growth and that investment without the IRAD, we would have had positive adjusted EBITDA. We now expect a little bit of modest SG&A growth, but operating margins should expand as we continue to grow top-line revenue this year. We expect revenue to scale throughout the year, and if we continue to hold the portfolio in a similar position, the additional gross profit will help cover and expand profitability at the bottom line, while managing the IRAD, which could offset some of that additional gross profit.

Our next question comes from the line of Alexandra Mandery with Truist Securities.

What do the R&D investments include for the 6 opportunities mentioned? Is it labor, facilities, material, inventory? And what is the expected R&D cadence for the remainder of the year?

So the first answer to your question is yes. So it's all of those things. It's going to be deployment of the capital in a way that is outlined in detailed plans as part of our execution strategy, and it is a mix of all those things that you mentioned. In terms of the template for going forward, what I'm trying to underscore is that we have a lot of these opportunities that we're well positioned for. And whether it be driving towards the constellation of QKDSat delivering a strong capability for Golden Dome, monetizing the $6 billion roughly, whatever, Andromeda opportunity, all these things, we're going to be dialing IRAD up or down based on how those strategies are playing out. So it's opportunistic, and it will be market dependent, but I think we're really positioned in these areas, but they're going to take some investment to fully realize the potential. But the potential for each one of these is strong and the demand signal out there is really strong. And we're really excited about how many paths the victory we have on these opportunities that have basically been born of the strategy we've been talking about for well over a year now of moving up the value chain and becoming a multi-domain company. So we're not providing any like future overall guidance for IRAD for the year. But as you can see this quarter, we are ramping.

I think you got it.

Our next question comes from the line of Michael Leshock with KeyBanc Capital Markets.

I wanted to ask on NASA's accelerated lunar initiatives and the goal of building a lunar base and establishing a permanent presence on the moon. What would you say is the biggest opportunity for Redwire specifically as it relates to the moon base and the lunar economy? I know there's a lot of opportunities there, but curious if there's one or two things that you're most excited about for the lunar economy.

Yes, that's a great question. And thank you for that. It's really simple. There's two areas that I think we're really well positioned for. One is to be the prime to build the lunar grid. We are a power company. We have I believe, and I'm obviously biased, the best heritage there is out there in space power on the solar side with our ROSAs and now our ELSAs to include being the power provider with our ROSA on the International Space Station. So one of our primary objectives, and I mentioned it as one of the areas we're investing is in positioning to build a lunar grid for this infrastructure that's going to come there with ROSA as the underpinning technology. So that's super exciting. This pivot to the moon, I think, has incredible opportunities. The second is we don't spend a lot of time, and we haven't in the past talking about the fact that Redwire is in fact, on Eclipse Prime and Eclipse, the Commercial Lunar Payload Services contract has been a key highlight for NASA Administrator Isaacman recently where he sees that as ramping up; I think he mentioned one a month. So previously, Redwire wasn't really active on CLPS because we didn't have a baseline where we could achieve the economics that we wanted for the limited amount of launches that were occurring. But now that this is a really big focus for NASA, we're going to start leveraging that prime contract position and investing there because we think there's a bigger total addressable market than there has been in the past, which presents us with the right kind of investment profile we want to go after. So those are the two, lunar grid and Eclipse. But we're also obviously a merchant supplier of key things like mating technologies and just space infrastructure in general. So, yes. So I think there'll be other opportunities as well. But those are the two big ones.

Our next question comes from the line of Alex Preston with Bank of America.

I wanted to turn things to Edge Autonomy, right? You're coming close to a year since the acquisition. I was wondering if you could sort of walk through maybe what's performing as planned or above expectations, things that might be behind schedule? Any synergies you realized that you can note on costs or contracts? And then I guess, on margins as well, sort of Edge seemed like it was hovering around, call it, 30% EBITDA margins when you got it. Defense Tech is printing 12% this quarter. I get it's not 100% Edge anymore, but sort of what's driving the differential there? And how do you see the margins trending from here? Sort of any color there would be really helpful.

Yes. That was a rapid fire. I'll try to make sure I hit every part of that question; correct me if I don't. So we're really excited about what we've been able to do with Edge, which we don't call Edge anymore. It's fully branded now as Redwire. For those who have been involved in M&A, that's a key cultural milestone, and culture in many ways drives success in M&A. We're excited about how rapidly they've been able to become part of Redwire. As you noted on the margin side, Defense Tech is not representative of just the legacy Edge Autonomy; it includes other defense aspects of our portfolio that were previously part of legacy Redwire. So yes, we're pleased with the direction it's headed. As we talked about in previous quarters, they, like everybody else, ran into a government shutdown in the second half of 2025. But in 2026 you can see things starting to ramp again: the government has a budget now, and there are a lot of opportunities. For instance, the Marine Corps has a budget and is adding to our existing 250 aircraft. Those developments and others are really bullish signs that the Stalker is an important part of our platform. In Europe we're also seeing defense budgets scale, so Penguin has a really bright future in our view. Overall, based on the timeline, we're really comfortable with the way it's gone so far.

Yes. I mean just to echo that, they did have $72 million in bookings this quarter, which was an increase from where we have been, obviously impacted by some of the government budget matters this past year. So happy to see them return to a stronger book-to-bill for the quarter. We do continue to see that product line holding good gross margin, consistent where they have been historically. I think that's important to note that we are continuing to hold quality gross margin. Similar to what we've talked about earlier today, we have increased the rate of investment into the 3 major product groups there that came along with that acquisition. And that has consumed some of the net EBITDA margin. But again, as we look at the pipeline and the future opportunity set, we are investing in good quality growth there. And the important point is that the gross margins are holding, so.

And we have reached the end of the question-and-answer session. I would like to turn the floor back to Peter Cannito for closing remarks.

All right. Well, thank you all for your questions and your active engagement. With that, we appreciate everyone taking the time to listen today and go Redwire.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. We thank you for your participation.