Redwire - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 revenue was $69.6M, up 9.6% year over year, but profitability deteriorated: gross margin fell to ~6.6% and adjusted EBITDA was $(9.2)M, driven by net unfavorable EACs and a $43.8M non-cash increase in private warrant liability.
• Operating cash flow and FCF turned positive sequentially in Q4 2024 ($7.1M and $3.0M, respectively), a material improvement versus Q3’s cash use, while quarterly book-to-bill fell to 0.51 and contracted backlog ended the year at $296.7M.
• Management reaffirmed a combined FY2025 forecast (assuming Edge Autonomy closed 1/1/2025) of $535–$605M revenue, $70–$105M adjusted EBITDA, and positive FCF; liquidity at year-end was $64.1M, and public warrant exercises added ~$65.5M to available liquidity in early 2025, supporting 2025 execution.
• Stock reaction catalysts: lumpy awards/book-to-bill <1, warrant liability volatility’s impact on GAAP results, and narrative around pipeline scale ($4.1B submitted bids in 2024) and multi-domain platform strategy with Edge Autonomy.

What Went Well and What Went Wrong

What Went Well

• Positive operating cash flow and FCF in Q4 ($7.1M and $3.0M), sequentially stronger than Q3 and reflecting working capital release; CFO: “Net cash provided by operations totaled a positive $7.1 million… a significant improvement sequentially”.
• Strategy execution: robust revenue growth (+24.7% FY), expansion of spacecraft platforms (SabreSat, Phantom, Thresher, Hammerhead, Mako) and venture optionality (27 PIL-BOXes launched); CEO: “moving up the value chain… supported by accretive M&A”.
• 2025 outlook reaffirmed for the combined company with positive FCF expectation and stronger balance sheet; management highlighting organic growth potential ~20% without synergies.

What Went Wrong

• Profitability pressure: Q4 adjusted EBITDA $(9.2)M and gross margin ~6.6% versus 17.5% in Q3; Q4 net loss $(67.2)M, including a $43.8M non-cash warrant fair value loss and $9.1M net unfavorable EACs.
• Demand signal softness in the quarter: book-to-bill 0.51 (vs. 2.81 in Q4 2023) and backlog down to $296.7M at year-end; management noted lumpiness in awards and timing effects.
• Elevated litigation and transaction costs impacted FY results (e.g., 2024 litigation-related expenses including a $7.0M loss contingency; Q3 had $8.0M litigation contingency); adjusted EBITDA adds back these items but GAAP results reflect them.

Transcript

Operator (participant)

Greetings and welcome to the Redwire Corporation Q4 and full year 2024 earnings call. At this time, all participants are in a listen-only mode. The question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jeffrey Zeunik, SVP, Financial Planning and Analysis. Thank you. You may begin.

Jeff Zeunik (SVP of Financial Plannimg and Analysis)

Good morning, and thank you, Daryl. Welcome to Redwire's fourth quarter and full year 2024 earnings call. We hope that you've seen our earnings release, which we issued yesterday afternoon. It has also been posted in the investor relations section of our website at redwirespace.com. Let me remind everyone that during the call, Redwire management may make forward-looking statements that reflect our beliefs, expectations, intentions, or predictions of the future. Our forward-looking statements are subject to risks and uncertainties that are described in more detail on slide three. Additionally, to the extent we discuss non-GAAP measures during the call, please see slide four, 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 Jeff Zeunik, Redwire Senior Vice President of Financial Planning and Analysis and Investor Relations.

Joining me on today's call are Peter Cannito, Redwire's Chairman and Chief Executive Officer, and Jonathan Baliff, Redwire's Chief Financial Officer. With that, I would like to turn the call over to Pete. Pete.

Peter Cannito (Chairman and CEO)

Thank you, Jeff. During today's call, I will outline our key accomplishments during 2024, and Jonathan will then present the financial highlights for the same period. We will then discuss our 2025 outlook, after which we will open the call for Q&A. Please turn to slide seven. During 2024, Redwire effectively executed on the four key principles of our 2024 growth strategy, leading to approximately 25% revenue growth and a strong positioning for 2025. During the year, Redwire continued to provide critical picks and shovels as a trusted supplier to some of the most remarkable missions of the year. For example, in 2024, Redwire delivered 186 sensors, including sun sensors, star trackers, and cameras to our customers. Additionally, Redwire effectively scaled our production capabilities to meet growing demand through affordable capital investments. For example, in 2024, we increased the number of ROSA arrays under contract by 23.8% year-over-year.

Also, in order to be better positioned for scalability and growth, Redwire effectively moved up the value chain from trusted supplier to strategic platform provider with the introduction of five spacecraft platforms across multiple orbits serving the U.S. and international markets: SabreSat and Phantom for VLEO, Thresher and Hammerhead for LEO, and Mako for MEO/GEO. Finally, Redwire made incredible advancements in the field of microgravity manufacturing that furthered our venture optionality strategy by launching 27 pillboxes for partners including Eli Lilly, Bristol Myers Squibb, and ExesaLibero Pharma. Please turn to slide eight. Taking a look at Redwire 2024 execution by the numbers, Redwire executed on programs for more than 100 customers, with greater than 85% of revenues coming from our many government and marquee customers around the world, showcasing our strong revenue diversity.

In addition, Redwire announced the launch of more than 70 products and solutions on 15 launches during the year, and that does not include product launches that did not get announced due to customer confidentiality. We expanded our footprint across the globe, adding three facilities, two in California and one in Poland. As you can see in the right-hand column, our performance resulted in a robust year-over-year top-line growth of 24.7% to record annual revenue of $304.1 million. Please turn to slide nine. Turning to our contract awards and backlog, our contract awards during the full year 2024 were $229.8 million. Our book-to-bill ratio was 0.76 times for the year, and we ended 2024 with a backlog of $296.7 million. As we have continuously reinforced, we often see lumpy contract awards from quarter to quarter.

We continued to expand our pipeline with an estimated $7.1 billion of identified opportunities, including approximately $4.1 billion in proposals submitted during full year 2024. This is a result of our moving up the value chain and scaling production growth principles leading to larger bids. As you can see on the upper right-hand side of this slide, this represents a significant increase of 334.3% over the corresponding prior year period. This growth in bids submitted throughout the year is a result of our effort to increase the average size of the individual opportunities we are pursuing. We are now bidding on individual programs in the $100 million-plus award value on a more regular cadence. Of course, there is no guarantee we will win these opportunities. However, we now have a pipeline of bids that could result in a substantial increase in backlog if we land some of these larger opportunities.

Because of the success of our transformational investments building the Redwire platform in 2024, we are now positioned to continuously pursue larger opportunities in 2025 and beyond. Please turn to slide 10. With that, I'd now like to turn the call over to Jonathan Baliff, Redwire's Chief Financial Officer, to discuss the final financial results for the fourth quarter and full year 2024. Jonathan?

Jonathan Baliff (CFO)

Thank you, Pete. As we said before, we're on slide 10, so let's review 2024 with a focus on full year results. Starting with revenue, Redwire's full year and fourth quarter performance illustrate the strong positive growth momentum that Redwire has demonstrated during 2024 and over the past three years. Our full year 2024 revenues reached a record $304.1 million, a 24.7% increase on a year-over-year basis. This excellent revenue growth was achieved despite having a $17.7 million net unfavorable estimate at completion, or EAC adjustment, that resulted from program replanning, which we'll discuss further. Turning to profitability, in 2024, we recorded positive adjusted EBITDA for three out of four quarters and positive free cash flow for two out of four quarters, including fourth quarter 2024. However, our fourth quarter adjusted EBITDA was a negative $9.2 million, primarily due to unfavorable net EAC adjustments for the quarter.

As a result, for full year 2024, Redwire realized an adjusted EBITDA loss of $0.8 million. You should note that these EACs also impacted our net loss, which was additionally impacted by other one-off items that I'll talk about momentarily. EAC adjustments are project accounting measurements most often associated with fixed-price contracts that occur when a project doesn't proceed exactly as planned. EAC adjustments result from changes in project execution, timing, and costs that can either accelerate or delay recognition of revenue, and Redwire has faced both. An unfavorable EAC adjustment results in revenue being recognized in future periods while costs remain at actual levels in the present. These adjustments then impact revenue, gross profit, net income, and adjusted EBITDA. Turning to our cash from operations during the fourth quarter 2024, net cash provided by operations totaled a positive $7.1 million.

This is a sequential and significant improvement of $24.7 million over the third quarter 2024. On a full year basis, we saw a use of cash from operations of $17.3 million, and this is despite achieving two quarters of positive free cash flow during 2024. The full year results reflect the deliberate investments we have made into organic and M&A growth, including more than $20 million in capital expenditures, internal research and development, and a variety of important corporate investments that flow through SG&A. This includes $4.1 million of capital expenditures in the fourth quarter of 2024, our highest quarterly cap expense since going public. We do expect these investments to yield better revenue growth, scale, and returns on invested capital in 2025 and beyond.

We have clearly continued to demonstrate our ability to financially perform now while also making investments for growth, risk reduction, and profitability in 2025 and beyond. Finally, our total liquidity at the end of 2024 was $64.1 million, comprised of $48.7 million in available liquidity and $15.4 million in restricted cash. Subsequent to the end of 2024, in 2025 today, our total available liquidity has been significantly expanded by the $65.5 million we have collected associated with the exercise and resumption of our public warrants through March 7, 2025. Please turn to slide 11. In order to provide additional insight into the nature of our 2024 net loss, we provided here a breakdown of the key drivers of the year-over-year decrease. In summary, Redwire's 2024 net loss was primarily impacted by significant non-routine activity, as shown on this slide, which bridges between 2023 and 2024.

Key among these were the $49.9 million increase in a loss recognized for the non-cash warrant liability fair value adjustment. Also, a $14.2 million increase in net unfavorable EAC impacts already discussed, a $9.8 million increase in litigation settlement and related expenses, and a $9.1 million increase in transaction expenses between 2023 and 2024. Please turn to slide 12. In summary, though not without growing pains, 2024 was a transformational year for Redwire. We entered 2025 well-positioned with robust revenue growth, demonstrated cost control, and ample liquidity. With that, I'd like to turn the call over to Pete to provide a discussion on our 2025 outlook.

Peter Cannito (Chairman and CEO)

Thank you, Jonathan. Please turn to slide 13.

Now we would like to focus on our 2025 growth strategy, which is centered around five key principles: providing picks and shovels, which means delivering on our strong foundation of proven products with demonstrated flight heritage that form the building blocks of space missions for our customers; delivering multi-domain platforms, which means executing our platform strategy by delivering highly differentiated space and airborne platforms for critical missions to include multi-domain missions; exploring the Moon, Mars, and beyond, which means capitalizing on our decades of experience in providing systems for space exploration and delivering on ambitious missions to the lunar surface, to Mars, and beyond; advancing venture optionality, which means continuing to pursue breakthrough developments on advanced technologies that could create new markets with game-changing potential; and finally, executing a creative M&A, which means continuing our proven track record of effectively creating enterprise value by acquiring technologically differentiated companies at accredited values, a key competitive advantage of Redwire, which enables us to continue to rapidly scale as a public platform.

Over the next few slides, I will discuss examples of early successes to demonstrate how we are already executing against these focus areas. Please turn to slide 14. Starting with providing picks and shovels, in early 2025, two lunar landers with Redwire cameras on board headed to the Moon: Firefly's Blue Ghost, which landed on the lunar surface on March 2, 2025, and Intuitive Machines' IM-2, which landed on the lunar surface on March 6, 2025. Redwire's cameras provided critical data and stunning images, such as the ones shown on the right of this slide. These cameras leveraged decades of flight heritage on prestigious missions, including acting as the Eyes of Orion on NASA's Artemis 1 mission. Please turn to slide 15. Next, delivering multi-domain platforms.

In early February, Redwire was proud to announce that it has been awarded a contract to deliver a Mako spacecraft to support TETRA-6, a U.S. Space Force Space Systems Command mission in geosynchronous orbit, or GEO. TETRA-6 is a follow-on contract to TETRA-5, for which Redwire is delivering two Mako spacecraft. The Mako spacecraft for both the TETRA-5 and TETRA-6 missions will be the first satellites in GEO to be refueled and demonstrate compatibility with multiple available refueling mechanisms. Please turn to slide 16. Moving next to exploring the Moon, Mars, and beyond, Redwire has been awarded a study contract by the European Space Agency to conceptualize a spacecraft platform that could be delivered to Mars as part of the agency's LightShip initiative. Redwire's solution is built around an adapted version of our highly versatile small satellite platform, Hammerhead, and our proven avionics capabilities.

Redwire's European facility in Belgium has more than 40 years of spaceflight heritage developing spacecraft platforms and success delivering innovative technology for game-changing ESA programs, including as the prime contractor for ESA's PROBA-1, PROBA-2, and PROBA-V missions, which have a combined flight history of 50 years without failure. Please turn to slide 17. Turning to advancing venture optionality, Redwire is excited to announce our upcoming Golden Balls investigation, which is looking into the production of gold nanospheres, a high-potential space-enabled product for biomedical applications, including managing cancer or other diseases. There is an existing market for gold nanospheres, and by producing them in space during this investigation, Redwire aims to yield higher quality, more uniform gold nanospheres.

In addition to the Golden Balls investigation, Redwire also has several other payloads expected to launch in the coming months, including four additional pillboxes, building on the success of the 28 pillboxes launched today. Please turn to slide 18. Finally, when it comes to executing a creative M&A, as many of you know, in January 2025, Redwire announced that it has signed an agreement to acquire Edge Autonomy. This transaction is expected to transform Redwire into a global leader in multi-domain autonomous technology, broadening its portfolio of mission-critical space platforms to include combat-proven autonomous airborne platforms. This transaction is expected to close during the second quarter of 2025. Please turn to slide 19. Now let's turn the focus towards the combination of Redwire and Edge Autonomy platforms.

Edge Autonomy is a leader in providing field-proven, innovative autonomy and uncrewed airborne systems, advanced optics, and resilient energy solutions, and currently brings two airborne platforms to market: the VXE-30 series, an airborne platform focused on the U.S. market, and the Penguin series, which is focused on the high-potential European defense market, as well as the global UAS market. Redwire is a leading provider of space-based platforms to national security, civil, and commercial customers, and currently brings five space-based platforms to market. By combining with Edge Autonomy, we extend our platform strategy to become multi-domain. Multi-domain capability is critical to our national security customers as they start moving towards the future of advanced warfighting concepts such as the Joint All-Domain Command and Control, or JADC2, strategy. Like our customers, we believe in a future where autonomous space and airborne vehicles collaborate during multi-domain operations that deliver a strategic advantage.

Therefore, this combination provides competitive differentiation by supporting integrated missions from the surface of the Earth to the surface of the Moon, Mars, and beyond. Please turn to slide 20. The broad benefits of this transformational transaction can be categorized into three key areas: technical, operational, and financial. Starting with the technical benefits of the combination, Edge Autonomy systems leverage similar operational technology such as avionics, optical sensors, computer vision, AI, and autonomy software. Like Redwire, Edge Autonomy brings proven flight heritage. As a result, these technologies are already in production. Moving to the operational benefits of the combination, combining autonomous airborne and space platforms will meet customer mission requirements for multi-domain operations. Redwire satellites and Edge Autonomy airborne vehicles are designed for similar missions, such as intelligence collection and communications, to name a few.

Further, Redwire and Edge Autonomy have complementary geographic operations and paths to growth, especially in Europe, where space and defense markets are forecasted to grow. Finally, with respect to financial, we expect the combination with Edge Autonomy to accelerate growth across key financial metrics, with the added scale driving operating leverage and cash flows, and to position Redwire with a stronger balance sheet and enhanced credit quality. I speak for the entire team when I say that we couldn't be more excited to welcome the Edge Autonomy team to Redwire, and I look forward to building a multi-domain defense tech company together. Finally, please turn to slide 21 for a brief discussion of the outlook for 2025.

As part of the announcement of our combination with Edge Autonomy, we provided a financial forecast for fiscal year 2025 as if the transaction closed on January 1, 2025, and we are reaffirming that forecast at this time. To reiterate, taking the sum of the standalone full-year fiscal 2025 forecasts for Redwire and Edge Autonomy, Redwire is forecasting full-year 2025 combined revenue to be in the range of $535 million-$605 million, which represents a 52.9% compound annual growth rate from FY 2023 to FY 2025 revenue at the midpoint. In addition, we expect the added scale from the combination with Edge Autonomy will significantly increase operating leverage and cash flow.

As a result, and taking the sum of the standalone full-year 2025 forecast for Redwire and Edge Autonomy into account, Redwire is forecasting full-year combined adjusted EBITDA to be between $70 million and $105 million, which represents a 138.8% compound annual growth rate from FY 2023 to FY 2025 adjusted EBITDA at the midpoint. It is important to note that these numbers are intended to be conservative and do not include run rate synergies, but actually do include continued investments and expenses, including integration planned in FY2025. Even taking these investments into account, we expect the combined company to be free cash flow positive in 2025. Further, the transaction consideration positions Redwire to have a significantly stronger balance sheet with enhanced credit quality as a result of better operational and financial scale. Please turn to slide 22.

With that, I want to thank the entire Redwire team for their contribution to our results during 2024, a truly global effort. We believe 2024 was a transformational year for Redwire as we balanced top-line and bottom-line performance. In 2024, we capitalized on our solid foundation as a merchant supplier of critical space subsystems and components to transform into a strategic platform provider with soon-to-be two uncrewed airborne systems and five spacecraft to fuel our future expansion. We believe with the acquisition of Edge Autonomy, we are well-positioned and stronger than ever and look forward to an exciting 2025. We will now open the floor for questions.

Operator (participant)

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. We ask that you please limit yourself to one question and one follow-up question. One moment, please, while we poll for your questions. Our first questions come from the line of Greg Conrad with Jefferies. Please proceed with your questions.

Greg Konrad (Analyst)

Good morning.

Peter Cannito (Chairman and CEO)

Hey, Greg.

Greg Konrad (Analyst)

Maybe just to start on the guidance. I mean, I appreciate the pro forma guidance, but any insight into underlying Redwire organic growth? I mean, just given the wide p roforma range, how much of that is timing of the deal versus other swing factors? Maybe what are the main drivers of the top and bottom end of the range?

Jonathan Baliff (CFO)

Let me take that, Greg. Look, we're giving you actually a full year as if the deal was closing on December 31, and it's a combined forecast range. As we get closer to giving pro forma information out on a US GAAP basis as we approach the end of the first quarter and then the second quarter, you'll get more information to understand that. Again, we're giving you everything you need to understand on a combined forecast for revenue and EBITDA. Now let's just talk about the growth rates. If you look at the growth rates for Redwire, especially these last three years, we've grown at roughly between 15% and 25% revenue growth, and that's pretty much on an organic basis.

If you look at Edge Autonomy over their period of time, and even not going back too far, but the last couple of years, they've grown between 20% and 30% organically. The combined business, even without synergies, should be able to grow around 20% organically without further additions. When we look at 2025, which is still somewhat of a transition year for both companies as large contracts are still being formed and the companies themselves are bidding on especially a lot of European space and defense, we feel confident, and that's why we're giving this range. It is fairly wide because of, especially on the space side, the nature of our business. Hopefully that answers your question, or at least gives you more detail.

Greg Konrad (Analyst)

Maybe just combining the EACs and cash. First, on the EACs, I mean, how do you think about those trending into 2025? And then just on cash, you had a good Q4, good working capital release. I mean, how do you think about all of that rolling into free cash flow conversion in 2025, just given some of the investments that you've talked about?

Jeff Zeunik (SVP of Financial Plannimg and Analysis)

Yeah. Good question, Greg. I'll address the EACs, and then I'll turn it over to Jonathan to talk about cash impact. As you know, when you're first starting out bidding a program, some of the nature of the firm fixed price that we are bidding when we break into a new market have some non-recurring engineering associated with them as you develop these new technologies that in some cases have never been built before.

As a result, as you move through those, as part of the growing pain of entering these new markets and introducing these new technologies, you sometimes run into these replanning on the programs that result in an unfavorable EAC that pushes the revenue out into a future period while keeping the cost in the same period, thus having an impact both on revenue and the bottom line. The goal is to continue to refine our bid processes and, where possible, to include more management reserve to reduce the total impact of the EACs. Also, as you move from early non-recurring engineering, when these technologies are first being developed and proven, after you get the flight heritage, you move into production, and then those revenues should be a lot more predictable and stable, and you'll see the EACs tail off over time.

Jonathan, you want to talk a little bit about that?

Jonathan Baliff (CFO)

Yeah. My comments agree with everything Pete said. Again, transformational year, but not without growing pains. This is an example of growing pains. Let me just reemphasize. No one at Redwire is happy about these net EAC unfavorable adjustments. We are, in essence, trying to do better on a total revenue basis, and you're seeing, from a percentage standpoint, still pretty low compared to our peers. When we look at the future, we're meant to be neutral on our EACs as we move forward with a number of tools at hand that Pete just talked about.

Jeff Zeunik (SVP of Financial Plannimg and Analysis)

I think, as you pointed out, the cash flows were positive despite the EACs because they do not have a direct cash impact on the period that they're recorded.

Jonathan Baliff (CFO)

That's right.

Greg Konrad (Analyst)

Thank you.

Operator (participant)

Thank you.

Our next questions come from the line of Scott Buck with H.C. Wainwright. Please proceed with your questions.

Scott Buck (Analyst)

Hey, good morning, guys. Thanks for taking my questions. Pete, it sounds like a full-year 2025 revenue guide. There are some potential benefits from combining the businesses that are not fully captured in the guidance. Can we get some additional color on what those synergies could look like?

Peter Cannito (Chairman and CEO)

Yeah. Great question. You're right. As I pointed out, we took a conservative approach and did not put revenue synergies in there. The fact of the matter is we have a really strong presence geographically that aligns between the two companies, with major engineering centers in Belgium and Latvia and a new office for expansion in Poland. There are opportunities there, right?

There's opportunities to go into Ministry of Defense customers on the revenue side that are either buying spacecraft now and are looking for opportunities to acquire UAS systems from a trusted supplier or vice versa, countries that are currently buying UAS capabilities from Edge Autonomy that are very interested in expanding in space. That's an example. You can also, obviously, do all the traditional playbooks when you look at M&A in terms of consolidating manufacturing capabilities, not only in Europe but also in the U.S. We think that the growth is the real story here, the organic intrinsic growth that both of these organizations have demonstrated over the last three years, and that's what we're forecasting. Any additional revenue synergies that we squeeze out above any of the costs associated with integration will just be additional upside.

Scott Buck (Analyst)

Great. I appreciate that. Then my second one, can you just remind us what Edge's pipeline looked like on a standalone basis?

Jonathan Baliff (CFO)

Sure. We gave some description of that when we announced the transaction back in January. Their pipeline is different than ours. They have fleets of their Stalkers and Penguins out there in which they do fleet replacement, fleet upgrades, and a number of other aspects that mirrors a bit more like commercial aerospace. Their programs of record, although growing, is about $100 million is what we disclosed for 2023. We will give more updates. Their sales cycle is very short, right? They generally are a much more mature company, and a lot of their customers will buy to increase those fleets. That is, in essence, their competitive advantage because it is hard to replace the fleets for their especially DOD and MOD customers.

As those expand, you get almost like an annual recurring revenue that happens as part of both the expansion, replacement, and upgrades. It is about $100 million right now. They are bidding in the future on very, very large projects also. We do expect that to grow.

Jeff Zeunik (SVP of Financial Plannimg and Analysis)

Jonathan highlights a key point here that I talked about, the benefits of this transaction in the context of technical, operational, and financial. On the financial side, one of the things we are really excited about is the UAS market is just a more mature industry than space is right now. It looks different. It has this fleet replacement aspect to it that is much more predictable, fewer EACs, etc. That is very complementary to Redwire, which is in a less mature industry that tends to have a lot of this non-recurring engineering.

If you think about it, when you walk into a Redwire facility, you'll see a lot of engineers and technicians working on a single spacecraft that is standardized but is highly bespoke for the particular customer mission in there. That's the way that has to do with the maturation of the industry. Whereas in the UAS industry, these are things that are being moved off of a production line, much more like in the automotive industry. It's very complementary. You have lower backlog because the sales cycles are smaller compared to the multi-year contracts that you get in a space contract. They're complementary in the sense that they have less of that variability associated with doing technological things that have never been done before. We think that's going to smooth things out for us over time.

Jonathan Baliff (CFO)

Just to add one thing, Scott, briefly, their pipeline also is changing quickly with the European defense environment, that dynamic environment increasing. We will be giving more information about the pipeline, especially in Europe, over the coming months.

Scott Buck (Analyst)

Great. I appreciate the added color there, guys, and looking forward to 2025.

Peter Cannito (Chairman and CEO)

Thank you.

Operator (participant)

Thank you. Our next questions come from the line of Brian Kinstlinger with Alliance Global Partners. Please proceed with your questions.

Brian Kinstlinger (Analyst)

Great. Thanks so much. With the new administration's clear positioning in Ukraine, or unclear for that matter, are there any changes you expect for Edge's Ukraine-related revenue compared to your previous internal expectations? Maybe touch on the overall budgetary environment in the U.S. and procurement cycle for the Redwire business.

Peter Cannito (Chairman and CEO)

Yeah. Hey, Brian. How are you? Good question, as usual. Talking about the Ukraine first, first and foremost, we took a very conservative position on forecasting the Ukraine portion of Edge's future revenue. If you go back to the presentation that we did, and I believe we 8-K'd some information on this as well, we put out some detail on our conservative approach. However, I would like to highlight whether we all hope for peace in the Ukraine. Whether peace happens tomorrow or not, we still see real opportunity because any peace in the Ukraine will likely, based on the current discussions that we are tracking, result in some sort of demilitarization zone or peacekeeping effort.

The way you're going to, we believe that that is going to be executed is using drones as a surveillance capability to monitor to peace or to potentially monitor a persistent, really indefinite, at least for the near future, demilitarization zone. Again, regardless of what happens in Ukraine, we feel we're protected to the downside because we took a very conservative approach in forecasting Edge's revenue. Like I said, there's more details out there that we've put out. We also see peace in Ukraine as not being a standstill or a total stop, possibly even an opportunity for peacekeeping drone technology as well. In terms of the continuing resolution and everything that's going on in the government, this is actually not unknown territory for companies like Redwire. Those of us who have been around for many years doing this actually lived through sequestration.

The fact of the matter is that because of the large, oftentimes multi-year contracts that we have, typically companies like Redwire or defense contractors in general or federal contractors in general, whether short-term, even government shutdowns, if hopefully it does not come to that, but because we continue to work on our contracts. As far as delays, as far as we have heard from the government, we have not heard about any delays on our procurements, any of our major procurements yet. In many cases, we are a supplier, and the orders continue as prime contractors continue to execute. I think it is too early to say right now, based on where the political process is, for us to make any predictions about the long-term impact on that.

Jonathan Baliff (CFO)

Financially, Brian, we are very protected. We have got record liquidity. Obviously, we spent some money, obviously, in 2024, but had it more than covered. Again, we have some level of discretion over our spending, but we feel in a really good position.

Brian Kinstlinger (Analyst)

Great. My follow-up is you talked about larger programs, $100 million plus total contract value. Does the competitive landscape change who you're competing with, essentially, on these larger programs? Just a quick numbers question with the warrant redemption that you mentioned. Can you update us on the share count? Thanks so much.

Peter Cannito (Chairman and CEO)

Sure. Yes. The competitors can change. Although in Europe, we've already been functioning as a prime in many cases. I think over in Europe, our competitive landscape won't shift materially. Yes, when we choose to prime. However, I will say that our prime strategy is very selective. Being a merchant supplier in many of the existing architectures is already foundational to Redwire.

Our prime strategy is to look at areas where there's white space, where there is no clear leader already, and where we can offer a future technology through our platform that isn't currently being done. The example I'll give is in VLEO. Rather than attacking the proliferated LEO market, we're trying to do a leap ahead into what we think is the future of hybrid orbit architectures to include VLEO. In that particular case, because of our technological differentiation, the competitive landscape is really a small handful of people that are trying to build that market. In terms of the share count, Jonathan, do you have that?

Jonathan Baliff (CFO)

Sure. As of Friday, concerning the redemptions, the total share count as of Friday, which we'll disclose in our 10-K, is 75,573,294 shares.

Brian Kinstlinger (Analyst)

Thank you so much.

Operator (participant)

Thank you. Our next questions come from the line of Griffin Boss with B. Riley Securities. Please proceed with your questions.

Griffin Boss (Analyst)

Hi. Good morning. Thanks for taking my question. I just want to start out on bookings. I understand, obviously, bookings are lumpy, but this is the first time, I believe that I recall since going public that LTM book-to-bill fell below one. Just given the magnitude of your bids submitted, the $1.2 billion in the quarter, $4.1 billion on the year, can you talk about how many of those bids maybe are still outstanding today? Are you seeing longer contract award cycles? Are you losing more bids than historically? Any context around that would be helpful.

Peter Cannito (Chairman and CEO)

Bids, pipeline, and backlog are this constant back and forth depending on whenever you snap the chalk at Redwire, right? We're obviously constantly trying to move things from pipeline into backlog. Something can move from pipeline into backlog pretty quickly, especially from the bid submitted number. I think we kind of look at them as combined factors to look at when we do our revenue forecasting to substantiate it. Right now, although you're correct that our current book-to-bill is below, you can see that on the pipeline side, it's fairly large. I think what we'd like to see occur in the next quarter is for more of those bids to move out of submitted and into backlog. I don't think we have enough data to say that that is anything other than a timing perspective.

I wouldn't lean forward and say that we see any changes in terms of government procurement timelines as of yet. It just seems to be where each of these different bids are in the process. Certainly, some people point to the holidays as being a slow period. Again, that's just speculation. I don't know. Jonathan, do you want to add anything?

Jonathan Baliff (CFO)

I would just say, Griffin, the wide range that we use, $535 million-$605 million, takes some of this into account because, again, it's a longer sale cycle for the current bids outstanding. There's no doubt that they're larger bids too. That's kind of how we'll disclose it right now, and we'll give you updates.

Griffin Boss (Analyst)

Okay. Fair enough. Thanks for that. Just second one for me, given that we're just a few weeks away from the end of the first quarter, is there any sort of directional guidance you could give for the first quarter? Obviously, I know you didn't provide it, but directionally could be helpful, I think, for us to understand kind of the cadence looking into the year now that we're almost through the first quarter.

Peter Cannito (Chairman and CEO)

No, obviously, we don't give quarterly guidance. I think if you look at what we're doing right now, we're hyper-focused on closing on Edge Autonomy, which will materially change the overall profile. I think stand by, and once we close, we'll have some additional information on the remainder of the year that Jonathan referenced earlier.

Griffin Boss (Analyst)

Okay. All right. Thanks, Pete.

Peter Cannito (Chairman and CEO)

Thank you.

Operator (participant)

Thank you. Our next questions come from the line of Suji Desilva with Roth Capital Partners. Please proceed with your questions.

Suji Desilva (Analyst)

Hi, Pete. Hi, Jonathan. Just to understand the combined—yeah, I guess. Just to understand the combined company guidance for the full year. You said it's conservative. I just want to understand maybe there's a % of backlog coverage you're using this year going into 2025 versus what you've done with Redwire guidance, full year guidance in the past years. That might be helpful to understand how much higher backlog coverage is maybe this year as an element of conservatism.

Peter Cannito (Chairman and CEO)

Let me take that. Let me try to give you some additional color on how we come up with these forecasts. We do basically a line-by-line look at each opportunity in the pipeline while also taking a look at the backlog. Of course, the pipeline is weighted based on what we call PGO, probability of that the procurement is going to go forward, and PWIN, which is our probability of a win.

We go line by line on that, and we look at the different probabilities, and we bring in a number of different experts to give us additional insights. It's really a bottoms-up build-up. Then we look at macro factors like saying, "Okay, what if the war in Ukraine ends?" or "How much do we want to really lean into war-related revenues?" which, as I stated, was not a lot. We wanted to make sure that we were conservative there. That's how we come up with these forecasts. We also take a look at a little bit on our burn rates, and we try to make a forecast based on looking at where we are in terms of each one of the projects we're at. That can kind of give you a good idea of how much your revenue is going to come from backlog.

It is not as simple as having a heuristic percentage of pipeline and backlog that moves in. We actually get into the nitty-gritty of looking at, "Well, this one is expected to be awarded in March, and it is this size, and it has a probability of this probability of occurring and us winning," and that would give us a certain runtime, and we build out a number of spreadsheets on that. I cannot give you—as a result of that kind of detailed bottoms-up approach to forecasting, I cannot give you a high-level heuristic number to use for what I think you are looking for. I do not know, Jonathan, do you have?

Jonathan Baliff (CFO)

We have given an ability for investors and analysts to look at our average contract length, which in Redwire, that is very known and knowable that we are two and a half years, plus two years. You can kind of use that as a way to look at also at least our disclosed backlog. When we get closer to closing, and then other information concerning Edge Autonomy, we will give how to look at them. Then as a combined basis, but Pete gave a really good overview there, Suji.

Suji Desilva (Analyst)

Okay. Great. Appreciate the discussion of the probability-weighted approach to pipeline. Also on the lunar interplanetary mission opportunity, I think that cadence is going to pick up here. We already saw two missions this month. What is the opportunity for Redwire to expand its content there? It seems like cameras are your primary opportunity. Are we missing those other elements, or there can be in the future? Any color there would be helpful. Thanks.

Peter Cannito (Chairman and CEO)

Yeah. Great question. We have talked about MASON in the past, which is a program where we are building a technology to build landing pads on the moon. That is an example of our lunar technology. Obviously, we are highlighting in this call LightShip or our study for LightShip. We are really excited about the fact that we are well-positioned and got the confidence of ESA to be one of the study members on looking at building a spacecraft to go to Mars. That is really, from an organization like ESA to select a company like Redwire and their confidence in our Hammerhead platform, I think underscores the way we are thought of in terms of a competitive participant in future Mars exploration and vehicles for future Mars exploration. Of course, we have the cameras that you mentioned as well.

Many of our vehicles, particularly Mako, are such that they have the wherewithal to be able to operate in cislunar. The other aspect of it that I'll point to is in terms of we've talked about our microgravity manufacturing in the past. We like to say, "Make it, don't take it." We believe that there's a real opportunity for microgravity manufacturing when you start looking at building out permanent lunar infrastructure as well as, quite frankly, a venture to Mars. They're going to be very limited on the amount of material that they'll be able to bring. Having Redwire-like manufacturing capabilities on board could be something that could be mission essential. We're looking at those kinds of things as part of our active participation in that community.

Suji Desilva (Analyst)

All right. Great, Pete. Thanks. Great rundown. Very exciting. Thanks, guys.

Peter Cannito (Chairman and CEO)

Thank you.

Operator (participant)

Thank you. We have reached the end of our question and answer session. I would now like to turn the floor back over to Jonathan Baliff for any closing remarks.

Jonathan Baliff (CFO)

First, I want to thank all the institutional analysts, sell-side analysts for your questions. Before we conclude today's call, we'd like to actually at Redwire introduce a new initiative in which we will draw a question or two. Today, it'll be one drawn from our retail investor community. Today's question comes from our Reddit community. This will be for both of us, but it's really for Pete. What percentage of Redwire's business is based in Europe and able to service the European space and defense efforts, which we've been hearing a lot about these past number of weeks?

Peter Cannito (Chairman and CEO)

Thank you, Jonathan. Clearly, based on the question we received from the analyst, the retail investor is thinking along the same lines. I'm really excited, first of all, about this initiative and the ability to incorporate the voice of the retail investor into our earnings call. From a technological standpoint, both Redwire and Edge Autonomy have platforms specifically focused on the overseas market, particularly the European market with Phantom and Hammerhead satellites. For Redwire, obviously, we're the platform for the ESA SkimSat, which is the premier VLEO program over in ESA, which has both civil as well as potential defense application. Edge Autonomy has very notably the Penguin series of UAS that is currently a combat-proven platform operating in Ukraine, as we've discussed. From an operational viewpoint, both Redwire and Edge Autonomy have significant physical footprints in Europe to serve our European and international customers.

Redwire has a large engineering facility in Belgium. We have an engineering facility in Luxembourg and recently announced our expansion in Poland. Edge Autonomy has facilities in Latvia and, as of January 2025, a very small facility in Ukraine. Given that our products are produced for European customers in Europe, we do not have any anticipated tariff risks because the products that are built for the European market are produced in our European facility. We are well-positioned to take advantage of any trends that may emerge in Europe as a result. From a financial perspective for full year 2024, we had $153.8 million or 50.6% of Redwire's revenue based on the location of where our customer came from. Even if it was produced in the U.S., the customer was in Europe, which represented a 117.1% increase over 2023 revenues of $70.8 million.

As we previously disclosed for FY 2023, which is the most recent audit numbers we have, approximately 57% of Edge Autonomy's revenue was derived from international defense customers. Obviously, Edge Autonomy is very well-positioned with their manufacturing facility in Latvia as well. Finally, as has been widely discussed, why is this important? European defense budgets are slated to ramp up. Given the factors discussed above, we believe Redwire is well-positioned as we move into 2025 and beyond in those markets. Great question from our friends on Reddit, and we look forward to continued engagement with our retail investor community. With that, we appreciate everyone taking the time to listen today, and go Redwire.

Operator (participant)

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.