Griffin Boss

Griffin Boss, a Research Analyst at B. Riley, sought clarification on the expected marginal growth in adjusted EBITDA for 2027, the CapEx cadence for 2025 and 2026, and the revenue potential of new campuses once they reach scale.

Answer

Bruce Schuman, CFO, clarified that the marginal growth in adjusted EBITDA for 2027 is expected over 2026 numbers, with significant acceleration anticipated in 2028 and 2029. He also explained that 2025 CapEx was closer to expectations on an accrued basis, with the cash basis being a timing issue. Jerome Grant, CEO, detailed that a full comprehensive campus like UTI Salt Lake City is expected to generate $40 million-$45 million in revenue at peak with 1,200-1,300 students, while Concorde campuses are projected to yield $20 million-$25 million in revenue with 600-700 students, with Bruce Schuman, CFO, adding that these campuses typically achieve IRRs north of 30%.

Griffin Boss of B. Riley Financial requested more detail on the EBITDA trajectory, asking to quantify the expected increase in operating expense investments for fiscal 2026 and 2027 compared to the current year.

Answer

CFO Bruce Schuman did not provide a specific guide for FY26 but offered context, stating that the second half of FY25 includes about $6 million in growth-focused OpEx. He also emphasized the $55 million CapEx budget for FY25, with 70% of the remaining $40 million dedicated to growth investments like new campuses, which are critical for future performance.

Griffin Boss of B.Riley Securities asked about the economics of revenue share agreements with MNO partners, particularly if the 50/50 split changes with ASTS bringing its own spectrum. He also inquired about real-world user capacity based on the 120 Mbps peak data rate and the possibility of an earlier batch launch of Bluebird 2 satellites.

Answer

President & Chief Strategy Officer Scott Wisniewski affirmed the 50/50 revenue share model remains "sacrosanct" in current contracts, where partners provide spectrum and customers. Founder, Chairman & CEO Abel Avellan explained that the 120 Mbps peak data rate is per cell, shared among users, and that there is no plan to launch a batch of satellites ahead of the scheduled FN1 launch.

Griffin Boss of B. Riley Securities inquired about the incremental subscriber potential from the new SATCO joint venture with Vodafone, the nature of the $43 million SDA contract, and its revenue recognition timeline.

Answer

Executive Scott Wisniewski explained that the Vodafone joint venture significantly expands the addressable market in Europe, potentially tripling the number of covered countries to reach a market of over 600 million connections. He confirmed the $43 million contract is for non-communication applications but declined to provide specifics, stating the revenue is expected to be recognized over the next 12 months on a milestone basis, likely becoming linear after an initial ramp-up period.

Griffin Boss of B. Riley Securities inquired about the future direction of capital expenditures given the accelerated campus growth and asked for clarification on the year-over-year decline in average revenue per student.

Answer

CFO Brian Meyers projected that CapEx would be lower in the next year, as major spending on current projects is concluding. He explained the revenue-per-student decline was due to two factors: a shift to a pro-rata revenue recognition policy for student drops and a one-time academic calendar shift that moved a large student start and its associated revenue from Q2 into Q3 of 2025.

Griffin Boss from B. Riley Securities asked about the expected cadence of capital expenditures for the remainder of the year, noting the Q1 spend was higher than he had anticipated.

Answer

CFO Brian Meyers detailed the expected spending pattern, stating that Q2 is forecasted to be the heaviest quarter for CapEx, slightly exceeding the $25 million spent in Q1. He projected that Q3 spend would be slightly less than Q1, with the remainder of the $70-$75 million annual budget allocated to Q4.

Griffin Boss from B. Riley Securities sought to quantify the remaining development work for the XCOM RAN platform and clarify whether progress was contingent on the initial customer's decision to proceed.

Answer

CEO Paul Jacobs clarified that the core technology for the initial customer is complete and has undergone extensive testing. He stated that current development is focused on minor, incremental features for new opportunities and on building a more horizontal platform. Jacobs also noted that the company is close to completing its own software stack components to replace third-party software, which will lead to future cost savings.

Griffin Boss asked if an out-of-period performance bonus was included in prior guidance, requested more detail on progress with the global retail customer, and sought clarification on the timing for upcoming beta testing.

Answer

CFO Rebecca Clary stated the bonus was likely factored into the midpoint of prior guidance but was not the sole reason for the increase. CEO Paul Jacobs described progress with the retail customer as "very well," noting they are awaiting the customer's internal processes to move forward. He clarified that the progression to beta testing is expected in Q1 2025.

Griffin Boss of B. Riley Securities requested details on Edge Autonomy's full second-quarter financial results and its contribution to the backlog. He also asked about the Army's LRR program, including the potential number of down-selected companies and the expected award timing.

Answer

CFO Jonathan Baliff noted that since the acquisition closed on June 13, only a small portion of Edge's results are in the Q2 report. However, he disclosed that Edge Autonomy's revenue for the full second quarter was approximately $58 million, with more pro forma details to be provided in the 10-Q. CEO Peter Cannito stated they do not know how many companies will be selected for LRR but feel well-positioned, and while award timing is uncertain, the DoD's focus on drone dominance suggests it will not linger.

Griffin Boss pointed out that the LTM book-to-bill ratio fell below 1x and asked for context, questioning if award cycles are lengthening or bid losses are increasing. He also requested directional guidance for the first quarter of 2025.

Answer

CEO Peter Cannito attributed the sub-1x book-to-bill to timing, highlighting the record $4.1 billion in bids submitted during the year as a balancing factor. CFO Jonathan Baliff added that the wide full-year guidance range accounts for the longer sales cycles on these larger bids. Peter Cannito declined to provide Q1 guidance, stating the company's focus is on closing the Edge Autonomy acquisition.

Griffin Boss from B. Riley Securities requested an update on the progress of the ROSA program with Thales and inquired about Redwire's forward-looking M&A strategy, including current valuation trends in the space market.

Answer

Chairman and CEO Peter Cannito confirmed the Thales ROSA program is progressing well and that planned investments are being made. CFO Jonathan Baliff highlighted that strong growth in commercial revenue reflects this progress. On M&A, Mr. Cannito stated that market valuations have come down, creating opportunities to acquire companies with excellent technology that have run out of capital. He reiterated that M&A is a core competency and Redwire will remain selective, focusing on technological differentiation without overpaying.

Griffin Boss from B. Riley Securities inquired about the financial profile of the recently acquired Kinetics, including its revenue and potential synergies. He also sought clarification on what it means to be the only NASA-certified commercial company for deep space navigation and asked about the expected increase in operating expenses from bringing satellite manufacturing in-house.

Answer

CEO Steve Altemus and CFO Pete McGrath explained that Kinetics had approximately $9.8 million in 2024 revenue with a 14% EBITDA margin. Altemus highlighted Kinetics' unique, NASA-certified expertise in deep space navigation, similar to JPL, and its proprietary software. McGrath noted the initial investment for in-house satellite production would be about $5 million in NRE, with recurring costs at or below market rates, creating a new organic capability.

Griffin Boss of B. Riley Securities questioned whether technical changes for future CLPS missions would materially impact costs, and asked about NASA's selection strategy for the LTV Phase 2 contract.

Answer

CEO Steve Altemus acknowledged a 'slight cost increase' for additional sensors on IM-3 but stated it would not impact the schedule. Regarding the LTV contract, he revealed the draft RFP includes an option for NASA to select one primary vendor while potentially funding a second through critical design review.

Griffin Boss inquired about the Q3 revenue mix, specifically the contributions from the OMES and LTV contracts, and asked for expectations on the revenue ramp for the Near Space Network Services (NSNS) contract.

Answer

CFO Pete McGrath clarified that OMES contributed $34 million and the LTV contract added approximately $2-3 million per month. CEO Steve Altemus then provided a detailed breakdown of the initial five task orders for the NSNS contract's $150 million verification phase, outlining their value and duration leading to full operational capability.

Griffin Boss of B.Riley Securities inquired about the recent investment in Lightroom, asking for details on the investment size and strategic intent. He also sought clarification on the dip in digital revenue and the drivers behind increased administrative expenses.

Answer

Founder and CEO Golnar Khosrowshahi explained that the Lightroom investment is opportunistic, designed to leverage both existing and future IP for immersive content. CFO Jim Heindelmeyer added that it represents a single-digit equity stake. Heindelmeyer also clarified that the digital revenue dip was due to the timing of receipts from DSPs, not a negative trend, and that the rise in administrative costs was primarily driven by higher management revenue, not just inflation.

Griffin Boss of B.Riley Securities sought clarification on the $115 million in capital deployed during the fiscal year, asked for a comparison of India's market growth and monetization versus other regions, and questioned if the fiscal 2026 guidance implies a mid-single-digit organic growth rate, which seems conservative given recent M&A.

Answer

Founder, CEO & Director Golnar Khosrowshahi clarified the $115 million was for the full fiscal year and detailed the significant growth potential in India due to lower streaming saturation and a large population. CFO Jim Heindelmeyer reiterated that the FY2026 guidance is built prudently, excluding projections for major new hits or non-recurring items like the audit recoveries that benefited FY2025, and that guidance will be updated as the year progresses.

Griffin Boss of B. Riley Securities inquired about the drivers of higher administrative expenses, the outlook for the M&A pipeline following significant recent capital deployment, and Reservoir's perspective on the direct licensing deal between Spotify and Universal.

Answer

Executive Jim Heindlmeyer clarified that the increase in administrative expenses was primarily variable, linked to higher management revenue and corresponding compensation for artist managers. Executive Golnar Khosrowshahi affirmed that the M&A pipeline remains robust with off-market opportunities and expressed general optimism about the industry implications of the Spotify-Universal deal.

Griffin Boss inquired about the sustainability of record-high Music Publishing margins, the strength of the deal pipeline, and current trends in catalog acquisition multiples.

Answer

CFO Jim Heindlmeyer explained that margins fluctuate based on revenue mix and deal types, rather than a new sustainable level. CEO Golnar Khosrowshahi affirmed the deal pipeline remains very strong with good visibility for the fiscal year, noting that while high-teen multiples persist in the market, Reservoir is finding opportunities to execute at 'better multiples' through its off-market sourcing strategy.

Griffin Boss asked for a reminder of the expected revenue synergies from the planned institutional consolidation, particularly for the healthcare business, and inquired about the driver behind the outsized interest expense included in the Q2 guidance.

Answer

CEO Angela Selden explained that while specific revenue synergy numbers have not been provided, a key benefit is enabling Hondros to offer Rasmussen's broader curriculum, including early and post-licensure nursing and other online programs. CFO Richard Sunderland clarified that the higher interest expense in Q2 guidance is driven by the one-time redemption premium on the company's preferred stock.

Griffin Boss asked for more specific details on a sustainable margin profile for the Space & Satellite and Terrestrial & Wireless segments, questioned the company's options regarding the unfavorable GFSR protest ruling, and sought commentary on the recent FCC agenda's focus on NG-911 resilience.

Answer

Chairman, President and CEO Kenneth Traub reiterated that Comtech is not providing specific margin guidance but is focused on improving margins through better discipline and product positioning. Regarding the recent GFSR ruling, Traub stated they are evaluating all options, acknowledging the contract's low-margin profile. Jeff Robertson, President of Terrestrial and Wireless Networks, commented that the FCC's focus on location accuracy and NG-911 resiliency is very favorable for their business and aligns with their current product strategy.

Griffin Boss inquired whether the new, comprehensive strategic review is a continuation of the previously announced process for the Terrestrial & Wireless (T&W) segment or a complete reset of that timeline. He also asked for an update on the remaining unbilled receivables following the significant charge taken in the quarter.

Answer

CEO Kenneth H. Traub clarified that the review is a continuation and broadening of the prior process, intended to provide more optionality by evaluating all assets. CFO Michael Bondi addressed the receivables, stating the unbilled balance for the two key troposcatter programs is now about $10 million and that the overall unbilled balance has decreased as items moved to the billed category, with an expectation to continue working it down.

Asked whether the recent order growth is driven by improved macro fundamentals or inventory replenishment, and questioned the sustainability of the announced cost savings.

Answer

The company attributes the order growth to a mix of factors including expected EU rate cuts, customer inventory depletion, and new business wins. The planned $5 million in cost savings are described as permanent structural improvements, involving G&A consolidation and manufacturing efficiencies, which will reduce the cost base regardless of future revenue levels.

Griffin Boss from B. Riley Securities asked whether the improved book-to-bill ratios in Sensors and Weighing Solutions were driven by renewed capital spending due to macro certainty or simply inventory replenishment. He also sought clarity on the sustainability of the planned $5 million in cost savings at higher revenue levels.

Answer

CEO Ziv Shoshani responded that the positive order trend is a result of multiple factors, including anticipated interest rate cuts in the EU, the continued depletion of customer inventories, and early traction from VPG's business development initiatives. Regarding cost savings, Shoshani confirmed the $5 million in reductions are permanent and structural, stemming from the consolidation of services to India and operational efficiencies like automation, which reduce the cost base regardless of revenue volume.

Griffin Boss of B. Riley Securities questioned whether the recent order strength, indicated by a book-to-bill above 1.0 in key segments, was driven by improving customer capital spending amid less macro uncertainty or simply by inventory replenishment. He also sought clarity on the long-term sustainability of the announced $5 million in cost savings.

Answer

CEO Ziv Shoshani responded that the improved order intake is a result of multiple factors, including anticipated EU interest rate cuts boosting demand, the continued depletion of customer inventories, and early positive results from new business development initiatives. He affirmed that the entire $5 million in cost savings is designed to be permanent, with $1 million from G&A consolidation and over $4 million from operational efficiencies like manufacturing consolidation to India and increased automation, which reduces the cost base regardless of sales volume.

Griffin Boss inquired about the resolution of labor inefficiencies, the cause of higher DSOs impacting free cash flow, the potential scale of a new humanoid robot customer, and the expected growth drivers for the recent Nokra acquisition.

Answer

CEO Ziv Shoshani confirmed that the labor inefficiencies were resolved entering Q4. CFO Bill Clancy attributed the temporary rise in DSOs to late-quarter sales and one-time cash outlays, expecting a return to positive free cash flow. Ziv Shoshani added that revenue from the first humanoid robot customer is projected to double in 2025, with the second customer having similar potential. He also stated that Nokra's growth will be driven by leveraging VPG's existing KELK sales channels, with a goal to nearly double its revenue in 2025.

Griffin Boss of B. Riley Securities asked about the economics of the new NHL partnership, questioning if the upfront investment would be similar to the NFL's Tuesday Night Gaming. He also inquired about potential sponsor overlap between the two leagues and asked for clarity on how much of the planned reduction in video programmatic revenue was realized in Q1.

Answer

Interim CEO Adrian Montgomery stated that the company expects a much-improved economic model for the NHL partnership right from the start, as it can leverage the production capabilities already built for the NFL. He confirmed strong initial sponsor interest for the NHL series, with some overlap and some new brands, asserting the two partnerships will not cannibalize each other. CFO Felicia DellaFortuna clarified that a $15 million reduction in video revenue was realized in Q1 and a similar, if not slightly higher, reduction should be anticipated for Q2 and beyond.