Redwire Corporation
11/06/2025 | Press release | Distributed by Public on 11/06/2025 15:13
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is provided as a supplement to, and should be read in conjunction with, the condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q. Certain information contained in this discussion and analysis includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to Item 1A. "Risk Factors" and the "Cautionary Note Regarding Forward-Looking Statements" sections of this Quarterly Report on Form 10-Q. Unless the context otherwise requires, all references in this section to the "Company," "Redwire," "we," "us" or "our" refer to Redwire Corporation and its consolidated subsidiaries.
Business Overview
Redwire is an integrated space and defense company focused on advanced technologies including space infrastructure, autonomous systems and multi-domain operations leveraging digital engineering and artificial intelligence automation. Redwire's proven and reliable airborne and space-based capabilities include our core space infrastructure and platform offerings of avionics, sensors, and payloads; power generation; structures and mechanisms; radio frequency ("RF") systems; airborne and spacecraft platforms and missions; and microgravity payloads. Redwire combines decades of flight heritage and proven experience with an agile and innovative culture.
Redwire's primary business model is providing proven, mission critical solutions based on core airborne and space infrastructure offerings through both short- and long-duration projects for U.S. and international government and commercial customers.
Our core space-based offerings have been enabling space missions since the 1960s and have been flight-proven on over 200 spaceflight missions, including the National Aeronautics and Space Administration's ("NASA") Artemis program, New Horizons and Perseverance, the Space Forces' GPS, and the European Space Agency's Project for On-Board Autonomy ("PROBA") programs. We are also a provider of innovative technologies with the potential to help transform the economics of space and create new markets for its exploration and commercialization.
Our field-proven core airborne offerings have decades of innovation and more than 400 thousand flight hours. Key operations include developing and manufacturing Uncrewed Aerial Systems ("UAS") for commercial, government, and military applications in areas such as surveillance, logistics, reconnaissance, border security, and emergency response. We design and deploy UAS technology through solutions including autonomous flight systems, artificial intelligence ("AI") powered data processing, and specialized sensors. Redwire is committed to delivering innovative space and airborne platforms to help transform the future of multi-domain operations.
The following discussion should be read along with the financial statements included in this Form 10-Q, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Liquidity and Capital Resources," and "Risk Factors" included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 11, 2025 (the "Company's Annual Report"),which provides additional information on our business, the environment in which we operate and our operating results.
Recent Developments
During the third quarter of 2025:
•Revenues increased 51% for the three months ended September 30, 2025 compared to the same period in 2024.
•Selling, general and administrative expenses as a percentage of revenues increased to 49% for the three months ended September 30, 2025 from 26%duringthe same period in 2024.
•Net loss increased $20.2 million for the three months ended September 30, 2025 compared to the same period in 2024.
•Book-to-bill ratio increased to 1.25 for the three months ended September 30, 2025 from 0.65 for the same period in 2024.
•The Company was awarded a contract to develop and deliver Roll-Out Solar Arrays for Axiom Space's first commercial space station module.
•The Company's UAS deliveries during the three months ended September 30, 2025 included Stalker systems for the U.S. Army's Long Range Reconnaissance program and Penguin systems for the Ukrainian Armed Forces.
•The Company launched a total of 14 PIL-BOXes during the three months ended September 30, 2025, with three different partners: Bristol Myers Squibb, Butler University, and Purdue University. This brings the total number of PIL-BOX launches to 42.
Industry and Regulatory Updates
U.S. Budget Environment
On March 15, 2025, the President signed into law the Full-Year Continuing Appropriations and Extensions Act of 2025, which extends federal funding (including for the U.S. Department of War ("DoW", formerly referred to as the Department of Defense) at near fiscal year ("FY") 2024 levels through September 30, 2025, but included an increase of $6 billion to defense spending, with NASA held approximately flat at FY 2024 budget levels of roughly $24.9 billion. Although the full-year continuing resolution offers budget continuity through September 2025, its flat funding and lack of detail on appropriation levels has constrained agencies' procurement efforts to make new awards.
In May 2025, the President's FY 2026 budget request proposed reducing NASA's funding from approximately $24.9 billion to $18.8 billion. The proposal included cuts to Earth science missions, the Mars Sample Return program, and several space science initiatives. As part of the "One Big Beautiful Bill" passed in July 2025, Congress included a supplemental appropriations package that restored approximately $10 billion in NASA funding. The package provided continued funding for the Lunar Gateway, International Space Station operations, and infrastructure projects at Johnson Space Center, while leaving certain proposed cuts to science programs in place. The DoW's FY 2026 budget request includes a request for additional investment in AI-enabled autonomy, including Unmanned Aerial Vehicle systems.
In July 2025, the U.S. House passed a Defense Appropriations Act proposing approximately $832 billion for FY 2026, including increased research and development funding. The Senate Armed Services Committee's companion FY 2026 budget proposal as part of the National Defense Authorization Act ("NDAA") includes $878.7 billion for DoW.
Congressional drafts propose funding for the "Golden Dome" initiative, with approximately $25 billion in initial investment and a projected $542 billion over the life of the program. The NDAA also includes provisions increasing Ukraine security assistance to $500 million, up from $300 million in FY 2025.
As of October 1, 2025, the U.S. federal government remains unfunded and under a partial shutdown due to unresolved FY 2026 appropriations. This has delayed full budget implementation and may constrain contract awards, funding commitments, and new program starts, including for NASA and the DoW.
International Developments
In March 2025, the European Commission introduced the Readiness 2030package (previously dubbed "ReArm Europe"), to deploy nearly €800 billion over four years for collective defense, including drone systems, missile defense, cyber and autonomous platforms. The package includes a suspension of fiscal constraints allowing up to 1.5% of Gross Domestic Product ("GDP") to be put toward additional defense spending and launched the €150 billion Safe Action for Europe ("SAFE") loan facility.
The SAFE fund, formally established in May 2025, is a new European Union ("EU") financial instrument that is expected to increase defense spending among member states through common procurement. It will be financed by EU borrowing, with the European Commission authorized to issue up to €150 billion in loans. This funding is intended to strengthen the European Defence Technological and Industrial Base by facilitating joint investments in defense capabilities. EU contracts under SAFE will require greater than 65% of value tied to member-state supply chains.
At the June 2025 North Atlantic Treaty Organization summit in The Hague, member states committed to raising combined defense and security spending to 5% of GDP by 2035-including a 3.5% core defense floor, and up to 1.5% in broader security or industrial base investment - up from the prior 2% target.
The European Space Agency's 2025 budget is approximately €7.7 billion, with continued investment in human and robotic missions, Earth observation, navigation, and telecom infrastructure.
The European Commission formally introduced the EU Space Act in June 2025 as a proposed regulation to harmonize legal frameworks across the EU for space activities. It establishes a single market for space service providers and applies to EU and non-EU operators whose activities impact the EU internal market. The regulatory structure will be focused on three areas: safety (including orbital debris mitigation and space situational awareness), resilience (including space-based cybersecurity), and sustainability (including in-orbit servicing). If enacted by the European Parliament and Council, the regulation is designed to apply from January 1, 2030, with a two-year transition period for existing missions not yet launched by that date.
In October 2025, the European Commission and European External Action Service announced additional details of the Readiness 2030package mentioned above with the release of the "Preserving Peace - Defence Readiness Roadmap 2030", which is a European Union plan to strengthen Europe's defense capabilities by 2030. The roadmap focuses on increasing defense spending and production,
joint procurement efforts, and closing capability gaps. The plan enumerates four flagship projects: the European Drone Defence Initiative, the Eastern Flank Watch, the European Air Shield, and the European Space Shield. The roadmap also aims to establish a unified military mobility area by 2027 to allow for swift troop and equipment movement. Specific funding levels will depend on member state commitments and joint investments.
U.S. and international government spending levels and timely funding thereof may adversely affect our financial condition and operating performance over the short and long term. Please refer to Item 1A. Risk Factors included in our Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 11, 2025, for additional information related to government funding risks.
Geopolitical Environment
We operate in a complex and evolving global space and defense environment and our business is affected by geopolitical issues. Russia's invasion of Ukraine significantly elevated global geopolitical tensions and security concerns, and following the acquisition of Edge Autonomy, a portion of the combined company's sales are to customers in Ukraine. Those sales have been declining and may continue to decline in the event that the war and hostilities in Ukraine end, decline or change, or as a result of changes in international support for military assistance to Ukraine.
Results of Operations
A majority of our contracts are accounted for under the percentage-of-completion cost-to-cost method. As a result, revenues on contracts are recorded over time based on progress towards completion for a particular contract, including the estimate of the profit to be earned at completion. The following discussion of material changes in consolidated revenues should be read in tandem with the subsequent discussion of changes in consolidated cost of sales because changes in revenues are typically accompanied by a corresponding change in cost of sales due to the nature of the percentage-of-completion cost-to-cost method.
Net EAC Adjustments
We record changes in costs estimated at completion (net EAC adjustments) using the cumulative catch-up method of accounting. Net EAC adjustments can have a significant effect on reported revenues and gross profit and the table below presents the aggregate amounts for the following periods:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (dollars in thousands) | September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||||||||
|
Gross favorable
|
$ | 4,371 | $ | 6,087 | $ | 9,075 | $ | 11,259 | |||||||||||||||
|
Gross unfavorable
|
(12,705) | (7,639) | (45,708) | (19,838) | |||||||||||||||||||
|
Total net EAC adjustments impact to gross profit
|
$ | (8,334) | $ | (1,552) | $ | (36,633) | $ | (8,579) | |||||||||||||||
The Company evaluates the contract value and cost estimates at completion for performance obligations no less frequently than quarterly, and more frequently when circumstances significantly change. Changes in contract estimates occur for a variety of reasons including, but not limited to, changes in contract scope, labor productivity, the nature and technical complexity of the work to be performed, availability and cost volatility of materials, subcontractor and vendor performance, volume assumptions, inflationary trends, and schedule and performance delays. We utilize information available to us at the time when revising our estimates and apply consistent judgment across the full portfolio of programs. The gross unfavorable EAC adjustments in 2025 were primarily due to a $15.2 million unfavorable adjustment, including a $6.5 million loss reserve, related to a program in the Company's RF systems offerings as a result of an increase in estimates made for the programmatic and technical assumptions based on the nature and technical complexity of the work to be performed to meet customer specifications.Refer to Note O - Revenuesof the accompanying notes to the condensed consolidated financial statementsfor additional information.
Results of operations for the three months ended September 30, 2025 compared to the three months ended September 30, 2024:
| Three Months Ended | $ Change from prior year period | % Change from prior year period | ||||||||||||||||||||||||
| (in thousands, except percentages) | September 30, 2025 | % of revenues | September 30, 2024 | % of revenues | ||||||||||||||||||||||
| Revenues | $ | 103,432 | 100 | % | $ | 68,638 | 100 | % | $ | 34,794 | 51 | % | ||||||||||||||
| Cost of sales | 86,622 | 84 | 56,615 | 82 | 30,007 | 53 | ||||||||||||||||||||
| Gross profit | 16,810 | 16 | 12,023 | 18 | 4,787 | 40 | ||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Selling, general and administrative expenses | 50,285 | 49 | 17,521 | 26 | 32,764 | 187 | ||||||||||||||||||||
| Transaction expenses | 684 | 1 | 5,121 | 7 | (4,437) | (87) | ||||||||||||||||||||
| Research and development | 7,693 | 7 | 1,893 | 3 | 5,800 | 306 | ||||||||||||||||||||
| Operating income (loss) | (41,852) | (40) | (12,512) | (18) | (29,340) | 234 | ||||||||||||||||||||
| Interest expense, net | 6,282 | 6 | 3,610 | 5 | 2,672 | 74 | ||||||||||||||||||||
| Other (income) expense, net | (13,844) | (13) | 5,309 | 8 | (19,153) | (361) | ||||||||||||||||||||
| Income (loss) before income taxes | (34,290) | (33) | (21,431) | (31) | (12,859) | 60 | ||||||||||||||||||||
| Income tax expense (benefit) | 6,862 | 7 | (472) | (1) | 7,334 | (1,554) | ||||||||||||||||||||
| Net income (loss) attributable to Redwire Corporation | $ | (41,152) | (40) | % | $ | (20,959) | (31) | % | $ | (20,193) | 96 | % | ||||||||||||||
Revenues
Revenues increased by $34.8 million, or 51%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The increase in revenues is primarily driven by $49.5 million of revenues related to the Edge Autonomy acquisition. The increase is partially offset by $8.9 million of net unfavorable EAC adjustments for the three months ended September 30, 2025 as compared to $1.6 million of net unfavorable EAC adjustments for the same period in 2024 and timing in the stage of production cycles year-over-year for certain larger contracts for power generation offerings. The foregoing resulted in decreased volume of production.
Cost of Sales
Cost of sales increased $30.0 million, or 53%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The year-over-year increase in cost of sales was primarily driven by $34.4 million of costs related to the Edge Autonomy acquisition, which was completed in the second quarter of 2025 and therefore has no comparable amounts in 2024. This amount includes non-cash expense of $11.2 million related to the purchase accounting fair value adjustment to inventory for the inventory sold after the acquisition date, which is non-recurring. The increase is partially offset by a decrease in costs due to decreased volume of production as described above.
Gross Profit and Margin
Gross profit increased $4.8 million, or 40%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. Although gross profit increased, as a percentage of revenues, gross margin was 16% and 18% for the three months ended September 30, 2025 and 2024, respectively. The year-over-year decrease in gross margin was primarily driven by the $8.3 million net unfavorable EAC adjustments for the three months ended September 30, 2025. Please refer to Note O - Revenues of the accompanying notes to the condensed consolidated financial statements for additional information related to the Company's net EAC adjustments.
Selling, General and Administrative ("SG&A") Expenses
SG&A expenses increased $32.8 million, or 187%, for the three months ended September 30, 2025, as compared with the same period in 2024. This contributed to a year-over-year increase of SG&A as a percentage of revenue to 49% for the three months ended September 30, 2025 from 26% for the same period in 2024. The year-over-year increase was primarily due to $31.4 million in SG&A expenses related to Edge Autonomy, including $7.0 million related to the Edge Incentive Units, for which there was no comparable cost in 2024.
Transaction Expense
Transaction expenses decreased $4.4 million for the three months ended September 30, 2025, as compared with the same period in 2024. The decrease is primarily due to pre-acquisition costs incurred during the three months ended September 30, 2024, consisting of due diligence and expenses related to prospective acquisitions.
Research and Development
Research and development expenses increased $5.8 million during the three months ended September 30, 2025, as compared with the same period in 2024. The increase is primarily related to $6.7 million of costs related to Edge Autonomy for which there was no comparable costs in 2024.
Interest Expense, net
Interest expense, net increased $2.7 million for the three months ended September 30, 2025, as compared with the three months ended September 30, 2024. The increase was primarily related to interest on the new JPMorgan Credit Agreement entered into during the second quarter of 2025 for which there was no comparable amount in 2024. Refer to Note I - Debt of the accompanying notes to the condensed consolidated financial statements for additional information related to the Company's debt obligations.
Other (Income) Expense, net
Other (income) expense, net decreased by $19.2 million for the three months ended September 30, 2025, from net expense to net income as compared to the same period in 2024. The year-over-year change was primarily due to an increase in the gain recognized as a result of changes in the fair value of the private warrant liability of $12.3 million during the three months ended September 30, 2025 as compared to the same period of 2024. The change is also due to a decrease in expense of $8.0 million due to a legal settlement recognized during the three months ended September 30, 2024 for which there was no comparable activity in the current year. Refer to Note D - Fair Value of Financial Instruments of the accompanying notes to the condensed consolidated financial statements for additional information related to the fair value of private warrants.
Income Tax Expense (Benefit)
The table below provides information regarding our income tax expense (benefit) for the following periods:
| Three Months Ended | |||||||||||
| (in thousands, except percentages) | September 30, 2025 | September 30, 2024 | |||||||||
| Income tax expense (benefit) | $ | 6,862 | $ | (472) | |||||||
| Effective tax rate | 20.0 | % | (2.2) | % | |||||||
The Company recorded tax expense of $6.9 millionfor the three months ended September 30, 2025, ascompared to a tax benefit of $0.5 millionfor three months ended September 30, 2024. This change is primarily due to the impact of measurement period adjustments related to the Edge Autonomy acquisition, which decreased the Company's deferred tax assets resulting in tax expense for the three months ended September 30, 2025. Refer to Note L - Income Taxes of the accompanying notes to the condensed consolidated financial statementsfor further discussion.
Results of operations for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024:
| Nine Months Ended | $ Change from prior year period | % Change from prior year period | ||||||||||||||||||||||||
| (in thousands, except percentages) | September 30, 2025 | % of revenues | September 30, 2024 | % of revenues | ||||||||||||||||||||||
| Revenues | $ | 226,587 | 100 | % | $ | 234,541 | 100 | % | $ | (7,954) | (3) | % | ||||||||||||||
| Cost of sales | 219,800 | 97 | 194,709 | 83 | 25,091 | 13 | ||||||||||||||||||||
| Gross profit | 6,787 | 3 | 39,832 | 17 | (33,045) | (83) | ||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Selling, general and administrative expenses | 123,495 | 55 | 52,971 | 23 | 70,524 | 133 | ||||||||||||||||||||
| Transaction expenses | 21,126 | 9 | 5,399 | 2 | 15,727 | 291 | ||||||||||||||||||||
| Research and development | 10,226 | 5 | 4,681 | 2 | 5,545 | 118 | ||||||||||||||||||||
| Operating income (loss) | (148,060) | (65) | (23,219) | (10) | (124,841) | 538 | ||||||||||||||||||||
| Interest expense, net | 33,631 | 15 | 9,537 | 4 | 24,094 | 253 | ||||||||||||||||||||
| Other (income) expense, net | (14,688) | (6) | 14,734 | 6 | (29,422) | (200) | ||||||||||||||||||||
| Income (loss) before income taxes | (167,003) | (74) | (47,490) | (20) | (119,513) | 252 | ||||||||||||||||||||
| Income tax expense (benefit) | (25,924) | (11) | (348) | - | (25,576) | 7349 | ||||||||||||||||||||
| Net income (loss) | (141,079) | (62) | (47,142) | (20) | (93,937) | 199 | ||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | - | - | 4 | - | (4) | (100) | ||||||||||||||||||||
| Net income (loss) attributable to Redwire Corporation | $ | (141,079) | (62) | % | $ | (47,146) | (20) | % | $ | (93,933) | 199 | % | ||||||||||||||
Revenues
Revenues decreased by $8.0 million, or 3%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The year-over-year decrease in revenues was primarily related to $29.9 million of net unfavorable EAC adjustments for the nine months ended September 30, 2025 as compared to $8.6 million of net unfavorable EAC adjustments for the same period in 2024. Please refer to Note O - Revenues of the accompanying notes to the condensed consolidated financial statements for additional information related to the Company's net EAC adjustments. The decrease is also partially due to timing in the stage of production cycles year-over-year for certain larger contracts for power generation offerings. The foregoing resulted in decreased volume of production and therefore decreased revenue compared to the same period in 2024. These decreases were partially offset by an increase in revenue of $55.5 million related to the Edge Autonomy acquisition.
Cost of Sales
Cost of sales increased $25.1 million, or 13%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The year-over-year increase in cost of sales was primarily driven by $40.2 million of costs related to the Edge Autonomy acquisition, including non-cash expense of $13.6 million related to the purchase accounting fair value adjustment to inventory for the inventory sold after the acquisition date, which is non-recurring. The increase is also due to a $6.5 million contract loss reserve recognized during the nine months ended September 30, 2025 for which there was nominal comparable amounts in 2024. These increases were partially offset by reduced costs due to a shift in the production cycle associated with certain larger contracts in power generation offerings.
Gross Profit and Margin
Gross profit decreased $33.0 million, or 83%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. As a percentage of revenues, gross margin was 3% and 17% for the nine months ended September 30, 2025 and 2024, respectively. The year-over-year decrease in gross margin as a percentage of revenues was driven by a $36.6 million negative impact of net EAC adjustments for the nine months ended September 30, 2025 as compared to $8.6 million of net unfavorable EAC adjustments for the same period in 2024. The decrease is also partially due to changes in contract mix, including larger contracts with lower margins and completion of certain higher margin contracts, impacting the overall contract portfolio gross margin. Please refer to Note O - Revenues of the accompanying notes to the condensed consolidated financial statements for additional information related to the Company's net EAC adjustments.
Selling, General and Administrative ("SG&A") Expenses
SG&A expenses increased $70.5 million for the nine months ended September 30, 2025, as compared with the same period in 2024. SG&A expenses as a percentage of revenues also increased to 55% for the nine months ended September 30, 2025from 23% during the same period in 2024. The year-over-year increase in SG&A expenses was primarily driven by an increase in share-based
compensation of $39.1 million, including $36.6 million related to the Edge Incentive Units, for which there was no comparable cost in 2024. The increase is also due to $27.8 million in SG&A expenses, other than equity-based compensation related to Edge Autonomy for which there is no comparable cost in 2024. The increase is also partially due to an increase in labor related costs, including severance, intangible amortization and professional fees.
Transaction Expenses
Transaction expenses increased $15.7 million primarily due to costs incurred related to the Edge Autonomy acquisition for the nine months ended September 30, 2025, as compared with the same period in 2024. Please refer to Note C - Business Combinations of the accompanying notes to the condensed consolidated financial statements for additional information related to acquisitions.
Research and Development
Research and development expenses increased $5.5 million for the nine months ended September 30, 2025 as compared with the same period in 2024 primarily due to $7.8 million of costs related to the Edge Autonomy acquisition.
Interest Expense, net
Interest expense, net increased $24.1 million for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. This increase was primarily related to $20.0 million of interest expense recognized related to the repayment of the Seller Note. The increase is also partially due to interest on the new JPMorgan Credit Agreement entered into during the nine months ended September 30, 2025 as well as an increase in borrowings on the revolving credit facility compared to 2024. Please refer to Note I - Debt of the accompanying notes to the condensed consolidated financial statements for additional information related to the Company's debt obligations.
Other (Income) Expense, net
Other (income) expense, net decreased by $29.4 million for the nine months ended September 30, 2025, from net expense to net income as compared to the nine months ended September 30, 2024. This year-over-year change was primarily due to a gain of $11.5 million recognized as a result of a decrease in the fair value of the Company's private warrant liability for the nine months ended September 30, 2025 compared to a loss of $8.1 million recognized during the same period in 2024. The change is also due a decrease in expense of $8.0 million due to a legal settlement recognized during the nine months ended September 30, 2024 for which there was no comparable activity in the current year. Please refer to Note D - Fair Value of Financial Instruments of the accompanying notes to the condensed consolidated financial statements for additional information related to the Company's private warrants.
Income Tax Expense (Benefit)
The table below provides information regarding our income tax expense (benefit) for the following periods:
| Nine Months Ended | |||||||||||
| (in thousands, except percentages) | September 30, 2025 | September 30, 2024 | |||||||||
| Income tax expense (benefit) | $ | (25,924) | $ | (348) | |||||||
| Effective tax rate | (15.5) | % | (0.7) | % | |||||||
The effective tax rate decreased to (15.5)% for the nine months ended September 30, 2025 ascompared to (0.7)%for the nine months ended September 30, 2024, primarily related to the Company's decrease in valuation allowance and mix in earnings between U.S. and foreign jurisdictions. Please refer to Note L - Income Taxes of the accompanying notes to the condensed consolidated financial statementsfor additional information.
Net Income (Loss) Attributable to Noncontrolling Interests
The Company had no net income (loss) attributable to noncontrolling interests for the nine months ended September 30, 2025 and a de minimis amount for the same period in 2024.
Supplemental Non-GAAP Information
During the third quarter of 2024, we changed the Supplemental Non-GAAP Information to present only Adjusted EBITDA, whereas prior period disclosures also presented Pro Forma Adjusted EBITDA. Management believes the presentation of Pro Forma Adjusted EBITDA no longer provides the same meaningful insights into the Company's performance as it did during the initial years of the Company's formation. Prior period disclosures were recast to conform to current presentation. There was no change in the calculation of Adjusted EBITDA.
We use Adjusted EBITDA to evaluate our operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources which are not calculated in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP") and are considered to be Non-GAAP financial performance measures. These Non-GAAP financial performance measures are used to supplement the financial information presented on a U.S. GAAP basis and should not be considered in isolation or as a substitute for the relevant U.S. GAAP measures and should be read in conjunction with information presented on a U.S. GAAP basis. Because not all companies use identical calculations, our presentation of Non-GAAP measures may not be comparable to other similarly titled measures of other companies.
Adjusted EBITDA is defined as net income (loss) adjusted for interest expense, net, income tax expense (benefit), depreciation and amortization, impairment expense, transaction expenses, acquisition integration costs, acquisition earnout costs, purchase accounting fair value adjustment related to deferred revenue and inventory, severance costs, capital market and advisory fees, litigation-related expenses, write-off of long-lived assets, equity-based compensation, committed equity facility transaction costs, debt financing costs, gains on sale of joint ventures, net of costs incurred, and warrant liability change in fair value adjustment.
The table below presents a reconciliation of Adjusted EBITDA to net income (loss), computed in accordance with U.S. GAAP for the following periods:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (in thousands) | September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||||||||
| Net income (loss) | $ | (41,152) | $ | (20,959) | $ | (141,079) | $ | (47,142) | |||||||||||||||
| Interest expense, net | 6,282 | 3,610 | 33,631 | 9,537 | |||||||||||||||||||
| Income tax expense (benefit) | 6,862 | (472) | (25,924) | (348) | |||||||||||||||||||
| Depreciation and amortization | 12,121 | 2,860 | 20,227 | 8,538 | |||||||||||||||||||
| Transaction expenses (i) | 684 | 5,121 | 21,126 | 5,399 | |||||||||||||||||||
| Acquisition integration costs (i) | 1,041 | 96 | 1,498 | 96 | |||||||||||||||||||
| Purchase accounting fair value adjustment related to inventory (ii) | 11,227 | - | 13,645 | - | |||||||||||||||||||
|
Severance costs (iii)
|
353 | 365 | 2,529 | 532 | |||||||||||||||||||
| Capital market and advisory fees (iv) | 837 | 1,071 | 4,545 | 5,503 | |||||||||||||||||||
| Write-off of long-lived assets (v) | 165 | - | 165 | - | |||||||||||||||||||
| Litigation-related expenses (vi) | 1,216 | 9,096 | 1,216 | 11,329 | |||||||||||||||||||
| Equity-based compensation (vii) | 11,993 | 3,593 | 47,591 | 8,046 | |||||||||||||||||||
| Debt financing costs (viii) | - | - | 105 | - | |||||||||||||||||||
| Gain on sale of joint ventures, net of costs incurred (ix) | - | - | - | (1,255) | |||||||||||||||||||
| Warrant liability change in fair value adjustment (x) | (14,198) | (1,941) | (11,506) | 8,111 | |||||||||||||||||||
| Adjusted EBITDA | $ | (2,569) | $ | 2,440 | $ | (32,231) | $ | 8,346 | |||||||||||||||
i.Redwire incurred acquisition costs including due diligence, integration costs and additional expenses related to pre-acquisition activity. Acquisition deal costs was reclassified as Transaction expenses to conform with current period presentation.
ii.Redwire adjusted inventory related to the application of purchase accounting for the Edge Autonomy acquisition and recognized expense for the amount of the fair value adjustment included in cost of sales for the inventory sold after the acquisition date.
iii.Redwire incurred severance costs related to separation agreements entered into with former employees.
iv.Redwire incurred capital market and advisory fees related to advisors assisting with transitional activities associated with becoming a public company, such as the implementation of internal controls over financial reporting, and the internalization of corporate services, including, but not limited to, implementing enhanced enterprise resource planning systems.
v.Redwire incurred a loss on the write-off of long-lived assets.
vi.Redwire incurred expenses related to securities litigation and settlements of legal matters. Refer to Note M - Commitments and Contingencies of the accompanying notes to the condensed consolidated financial statements for additional information.
vii.Redwire incurred expenses related to equity-based compensation under Redwire's equity-based compensation plan and Edge Incentive Units.
viii.Redwire incurred expenses related to debt financing agreements, including amendment related fees paid to third parties that are expensed in accordance with U.S. GAAP. Refer to Note I - Debt of the accompanying notes to the condensed
consolidated financial statements for additional information.
ix.Redwire recognized a gain related to the sale of all its ownership in two joint ventures during 2024, presented net of transaction costs incurred.
x.Redwire adjusted the private warrant liability to reflect changes in fair value recognized as a gain or loss during the respective periods.
Key Performance Indicators
The following Key Performance Indicators ("KPIs") are used by Management to assess the financial performance of the Company, monitor relevant trends and support financial, operational and strategic decision-making. Management frequently monitors and evaluates KPIs against internal targets, core business objectives as well as industry peers and may, on occasion, change the mix or calculation of KPIs to better align with the business, its operating environment, standard industry metrics, or other considerations. If the Company changes the method by which it calculates or presents a KPI, prior period disclosures would be recast to conform to current presentation.
Book-to-Bill
Our book-to-bill ratio was as follows for the periods presented:
| Three Months Ended | Last Twelve Months | ||||||||||||||||||||||
| (in thousands, except ratio) | September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||||||||
|
Contracts awarded
|
$ | 129,800 | $ | 44,503 | $ | 312,355 | $ | 372,249 | |||||||||||||||
|
Revenues
|
103,432 | 68,638 | 296,147 | 298,026 | |||||||||||||||||||
|
Book-to-bill ratio
|
1.25 | 0.65 | 1.05 | 1.25 | |||||||||||||||||||
Book-to-bill is the ratio of total contracts awarded to revenues recorded in the same period. The contracts awarded balance includes firm contract orders, including time-and-material ("T&M") contracts, awarded during the period and does not include unexercised contract options or potential orders under indefinite delivery/indefinite quantity contracts. Although the contracts awarded balance reflects firm contract orders, terminations, amendments, or contract cancellations may occur which could result in a reduction to the contracts awarded balance.
We view book-to-bill as an indicator of future revenue growth potential. To drive future revenue growth, our goal is for the level of contracts awarded in a given period to exceed the revenue recorded, thus yielding a book-to-bill ratio greater than 1.0.
Our book-to-bill ratio was 1.25 for the three months ended September 30, 2025, as compared to 0.65 for the three months ended September 30, 2024. For the three months ended September 30, 2025, none of the contracts awarded balance includes acquired contract value. For the three months ended September 30, 2024, $21.9 million of the contracts awarded balance relates to acquired contract value from the Hera Systems acquisition.
Our book-to-bill ratio was 1.05 for the Last Twelve Months ("LTM") ended September 30, 2025, as compared to 1.25 for the LTM ended September 30, 2024. For the LTM ended September 30, 2025, contracts awarded includes $73.7 million of acquired contract value from the Edge Autonomy acquisition, which was completed in the second quarter of 2025. For the LTM ended September 30, 2024, contracts awarded includes $21.9 million of acquired contract value from the Hera Systems acquisition, which was completed in the third quarter of 2024.
Backlog
The following table presents our contracted backlog as of September 30, 2025 and December 31, 2024, and related activity for the nine months ended September 30, 2025 as compared to the year ended December 31, 2024.
| (in thousands) | September 30, 2025 | December 31, 2024 | |||||||||
| Organic backlog, beginning balance | $ | 296,652 | $ | 372,790 | |||||||
| Organic additions during the period | 145,221 | 229,789 | |||||||||
| Organic revenue recognized during the period | (171,128) | (304,101) | |||||||||
| Foreign currency translation | 8,782 | (1,826) | |||||||||
| Organic backlog, ending balance | 279,527 | 296,652 | |||||||||
| Acquisition-related contract value, beginning balance | - | - | |||||||||
| Acquisition-related contract value acquired during the period | 73,716 | - | |||||||||
| Acquisition-related additions during the period | 57,670 | - | |||||||||
| Acquisition-related revenue recognized during the period | (55,459) | - | |||||||||
| Foreign currency translation | 174 | - | |||||||||
| Acquisition-related backlog, ending balance | 76,101 | - | |||||||||
| Contracted backlog, ending balance | $ | 355,628 | $ | 296,652 | |||||||
We view growth in backlog as a key measure of our business growth. Contracted backlog represents the estimated dollar value of firm funded executed contracts for which work has not been performed (also known as the remaining performance obligations on a contract). Our contracted backlog includes $92.4 million and $16.7 million in remaining contract value from contracts which recognize revenue at a point in time as of September 30, 2025 and as of December 31, 2024, respectively.
Organic backlog change excludes backlog activity from acquisitions for the first four full quarters since the entities' acquisition date. Contracted backlog activity for the first four full quarters since the entities' acquisition date is included in acquisition-related contracted backlog change. After the completion of four fiscal quarters, acquired entities are treated as organic for current and comparable historical periods.
Organic contract value includes the remaining contract value as of January 1 not yet recognized as revenue and additional orders awarded during the period for those entities treated as organic. Acquisition-related contract value includes remaining contract value as of the acquisition date not yet recognized as revenue and additional orders awarded during the period for entities not treated as organic. Organic revenue includes revenue earned during the period presented for those entities treated as organic, while acquisition-related revenue includes the same for all other entities, excluding any pre-acquisition revenue earned during the period. The acquisition-related backlog activity presented in the table above is related to the Edge Autonomy acquisition completed during the second quarter of 2025.
Although contracted backlog reflects business associated with contracts that are considered to be firm, terminations, amendments or contract cancellations may occur, which could result in a reduction in our total backlog. In addition, some of our multi-year contracts are subject to annual funding. Management expects all amounts reflected in contracted backlog to ultimately be fully funded. Contracted backlog from foreign operations was $128.7 million and $70.5 million as of September 30, 2025 and December 31, 2024, respectively. These amounts are subject to foreign exchange rate translations from their respective local currencies to U.S. dollars that could cause the remaining backlog balance to fluctuate with the foreign exchange rate at the time of measurement.
Liquidity and Capital Resources
Our operations are primarily funded with cash flows provided by operating activities, proceeds from the exercise of warrants and equity offering, and access to existing credit facilities. As of September 30, 2025, we had $52.3 million in cash and cash equivalents and $35.0 million in available borrowings from our existing credit facilities.
Our primary requirements for liquidity and capital are for the Company's material cash requirements, including working capital needs, satisfaction of our indebtedness and contractual commitments, investment in expanding our breadth and footprint through acquisitions as well as investment in facilities, equipment, technologies, and research and development for our growth initiatives and general corporate needs.
Our ability to fund our cash needs is dependent upon the successful execution of our business strategy and future operating results. Our future operating results are subject to, among others, general economic conditions, including as a result of heightened inflation,
rising interest rates and supply chain pressures, competitive dynamics in our target markets as well as legislative and regulatory factors that may be outside of our control. As part of our business and debt management strategy, we continuously evaluate opportunities to further strengthen our financial and liquidity position, including issuing additional equity or debt securities, refinancing or otherwise restructuring our existing credit facilities, or entering into new financing arrangements. There can be no assurance that any of these actions will be sufficient to allow us to adequately service our debt obligations, meet our debt covenants, or that such actions will not result in an adverse impact on our business. In the event that we require additional financing, we may not be able to secure such financing on terms acceptable to us or at all. For further information, please refer to the risk factors contained in the Company's Annual Report.
We believe our existing sources of liquidity will be sufficient to meet our working capital needs and debt service obligations and to comply with our debt covenants for at least the next twelve months from the date on which our condensed consolidated financial statements were issued.
Indebtedness
Please refer to Note I - Debt of the accompanying notes to the condensed consolidated financial statements for additional information related to the Company's debt obligations.
Contractual Obligations
During the nine months ended September 30, 2025, there were no material changes to the Company's contractual obligations as presented in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Company's Annual Report that were outside the ordinary course of our business, except for an increase in operating lease liabilities as a result of the Edge Autonomy acquisition. Refer to Note C - Business Combinations for additional information related to the Company's contractual obligations.
Off-Balance Sheet Arrangements
From time to time, we are a party to certain off-balance sheet arrangements, such as standby letters of credit. Liabilities related to these arrangements are generally not reflected in our consolidated balance sheets. We do not expect any material impact on our cashflows, results of operations or financial condition to result from these off-balance sheet arrangements.
As of September 30, 2025 and December 31, 2024, we had $2.0 million and $15.4 million of standby letters of credit, respectively. Our standby letters of credit outstanding generally relate to submitted proposals and performance guarantees, which are secured by our restricted cash. Refer to Note B of the accompanying notes to the condensed consolidated financial statements for additional information related to the Company's restricted cash.
Cash Flows
The table below summarizes certain information from the condensed consolidated statements of cash flows for the following periods:
| Nine Months Ended | |||||||||||
| (in thousands) | September 30, 2025 | September 30, 2024 | |||||||||
|
Cash, cash equivalents and restricted cash at beginning of year
|
$ | 49,071 | $ | 30,278 | |||||||
| Operating activities: | |||||||||||
| Net income (loss) | (141,079) | (47,142) | |||||||||
|
Reconciling adjustments to net income (loss)
|
43,344 | 23,878 | |||||||||
| Changes in working capital | (55,334) | (1,148) | |||||||||
|
Net cash provided by (used in) operating activities
|
(153,069) | (24,412) | |||||||||
|
Net cash provided by (used in) investing activities
|
(169,218) | (3,050) | |||||||||
|
Net cash provided by (used in) financing activities
|
326,919 | 40,280 | |||||||||
|
Effect of foreign currency rate changes on cash, cash equivalents and restricted cash
|
625 | (2) | |||||||||
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
5,257 | 12,816 | |||||||||
|
Cash, cash equivalents and restricted cash at end of period
|
$ | 54,328 | $ | 43,094 | |||||||
Operating activities
Net cash used in operating activities increased by $128.7 million year-over-year. The change was primarily due to an increase in cash used by working capital of $54.2 million and an increase of $93.9 million in cash used related to the Company's net loss, partially offset by an increase of $19.5 million in the effects of reconciling adjustments to net income (loss) for the nine months ended
September 30, 2025 in comparison to 2024. The increase in cash used by working capital was primarily due to a decrease of $34.1 million in deferred revenue for 2025 compared to a decrease of $7.4 million in deferred revenue for 2024 and a decrease in cash provided by accounts receivable and other liabilities of $12.9 million and $10.4 million, respectively, year-over-year. The decreases in other liabilities were primarily a result of timing of payments and recognition of liability. The changes in accounts receivable and deferred revenue were primarily driven by the timing of billable milestones during the nine months ended September 30, 2025 compared to 2024. The increase in non-cash adjustments is primarily related to increases in depreciation and amortization expense of $11.7 million, share-based compensation of $39.5 million and recognition of the inventory purchase accounting fair value adjustment of $13.6 million, all of which are primarily related to the Edge Autonomy acquisition. These increases were partially offset by a gain recognized on the change in fair value of the outstanding private warrants of $11.5 million during the nine months ended September 30, 2025 compared to loss of $8.1 million recognized in 2024 and an increase in the deferred tax benefit of $25.9 million year-over-year. Please refer to Note D - Fair Value of Financial Instruments and Note L - Income Taxes of the accompanying notes to the condensed consolidated financial statements for additional information related to the fair value of warrants and income taxes.
Investing activities
Net cash used in investing activities increased by $166.2 million for thenine months ended September 30, 2025, as compared to the same period in 2024. The change was primarily due to cash used to complete the Edge Autonomy acquisition, and an increase in capital expenditures primarily related to licensed software for internal-use. The increase in cash used in investing activities was also due to proceeds received during the nine months ended September 30, 2024 related to the sale of joint ventures for which there is no comparable activity in the current period.
Financing activities
Net cash provided by financing activities increased by $286.6 million during the nine months ended September 30, 2025, as compared to 2024. The change was primarily due to an increase in net proceeds received from the issuance of common stock and exercise of the Company's public and private warrants of $337.8 million during the nine months ended September 30, 2025, for which there was nominal activity for the same period in 2024 and an increase of net cash provided by debt of $29.3 million during the nine months ended September 30, 2025, compared to the same period in 2024. The increases were partially offset by a repurchase of the Company's Series A Convertible Preferred Stock of $63.9 million, for which there was no comparable activity for the same period in 2024. The increase in net proceeds from debt was driven primarily by the proceeds from the issuance of the JPMorgan Credit Agreement for which there was no comparable activity for the same period in 2024, partially offset by increased repayments on draws from the Adams Street Revolving Credit Facility during the nine months ended September 30, 2025, compared to 2024. Please refer to Note I - Debt of the accompanying notes to the condensed consolidated financial statements for additional information related to the Company's debt obligations.
Foreign Currency Exposures
Our operations in Europe conduct transactions that are primarily denominated in euros, which limits our foreign currency exposure. However, changes in exchange rates will affect the Company's condensed consolidated financial statements as expressed in U.S. dollars.
Critical Accounting Estimates
There have been no material changes to our critical accounting policies and estimates as disclosed in our audited financial statements included in the Company's Annual Report.
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