Redwire Corp (RDW)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue of $61.4M missed Wall Street consensus, while EPS of $(0.09) materially beat; book-to-bill improved sharply to 0.92, driven by European wins . Revenue Consensus Mean $73.6M*, EPS Consensus Mean $(0.35)*.
• Management reaffirmed full-year combined 2025 forecast (post-Edge Autonomy close) of $535–$605M revenue and $70–$105M Adjusted EBITDA with positive free cash flow; prior quarter’s outlook unchanged (maintained) .
• Record total liquidity of $89.2M (cash $54.2M + revolver availability $35.0M), helped by $82.9M public warrant exercises; operating cash flow was $(45.1)M due to working capital and one-time payments (litigation $8.0M; M&A $3.4M) .
• Stock narrative catalysts: sequential EPS beat despite US award delays (NASA/SDA transitions), European contract momentum (IBDM I‑Hab; ESA studies), and pending Edge Autonomy close positioning RDW for multi-domain defense/space growth .

What Went Well and What Went Wrong

• What Went Well

  • “Bookings increased significantly compared to Q4 2024, with key wins coming from the European market” (IBDM for Lunar I‑Hab; ESA studies for Mars LightShip and ARRAKIHS) .
  • Book-to-bill improved YoY and sequentially to 0.92; backlog held relatively flat at $291.2M with 37% from Europe (contract awards $56.2M) .
  • Record liquidity ($89.2M) primarily driven by public warrant exercises; management reaffirmed combined FY25 forecast ranges .

• What Went Wrong

  • Revenue declined 30% YoY to $61.4M; gross margin fell to ~15% (from 17% last year), weighed by unfavorable EACs of $3.1M on structures/mechanisms and avionics/sensors programs .
  • US award delays and revenue pushed right due to transition of key decision-makers and budget uncertainty; net cash used in operations $(45.1)M) and FCF $(49.1)M) worsened on working capital and one-time costs .
  • Adjusted EBITDA of $(2.3)M vs $4.3M last year; sustained EAC pressure highlights execution risk during development-to-production transitions .

Financial Results

Segment/Customer Grouping Breakdown

KPIs and Liquidity

Estimate vs Actual (Wall Street Consensus – S&P Global)

Values marked with * retrieved from S&P Global.

Highlights: Revenue miss; EPS beat. Management cited US award timing and EACs as key drivers of revenue/margin pressure .

Guidance Changes

Note: Combined guidance assumes Edge Autonomy closed on Jan 1, 2025; formal guidance to be provided post-close .

Earnings Call Themes & Trends

Management Commentary

• CEO: “Bookings increased significantly compared to Q4 2024, with key wins coming from the European market… notable delays in awards in the U.S. government market due to transition of key decision makers… we are confident that Redwire’s geographic, product and customer diversity… provides resiliency” .
• CFO: “We achieved record levels of cash and total liquidity of $54.2M and $89.2M, respectively, primarily driven by the redemption of $82.9M of the public warrants… Adjusted EBITDA of $(2.3)M with significant sequential and year-over-year improvement in Net Loss to $(2.9)M” .
• CFO on EACs and execution: “Adjusted EBITDA included a net unfavorable impact from EACs of $3.1M… additional unplanned labor and increased production costs related to development of new technologies” .
• Strategic direction: Multi-domain autonomy post-Edge; Golden Dome architecture opportunities; resilient global supply chain .

Q&A Highlights

• Europe vs US dynamics: European independence in space/defense spurring investment; US budget priorities and admin transitions causing short-term lumpiness but expected to normalize .
• Drones/UAV outlook with Edge Autonomy: Drones viewed as force multipliers; strong U.S./European demand; backlog grew to $99.4M at Edge pre-close .
• Free cash flow cadence: Expect improvement through 2025 with milestone billing and contract assets normalization; capex moderate at ≤~2–2.5% revenue .
• EAC recovery: Project management rigor and transition from development to production to reduce EAC variability; pricing/recoverability over ’25–’26 .
• Mix shift: National security revenue share increasing; commercial largest; civil < one-third in quarter .

Estimates Context

• Q1 2025 actual revenue of $61.4M vs consensus $73.6M* → miss; EPS $(0.09) vs consensus $(0.35)* → beat. 4 estimates each for revenue/EPS*. Values retrieved from S&P Global.
• Implications: Street likely revises near-term revenue/margin expectations lower for standalone RDW due to US award timing and EACs, while keeping combined FY25 ranges pending Edge close .

Key Takeaways for Investors

• Near-term setup: Mixed print—EPS beat on lower EACs and other income tailwinds vs revenue miss; book-to-bill recovery suggests backlog conversion potential as US award cycle stabilizes .
• Liquidity de-risked: $89.2M total liquidity and revolver availability provide cushion to manage working capital swings and M&A close-in costs .
• European growth vector: Strong wins and backlog exposure to Europe offset US timing risk; local footprint mitigates tariff/supply-chain shocks .
• Execution priority: Focus on reducing EAC variability as programs move from development to production; watch Adjusted EBITDA trajectory and cash conversion in H2 .
• Edge Autonomy catalyst: Combined FY25 guidance maintained; multi-domain platform strategy positions RDW for defense tech growth; formal guidance post-close .
• Trading implications: Expect volatility around US budget headlines and deal closing; monitor contract award flow, backlog growth, and FCF cadence for confirmation of the improving trajectory .
• Strategic thesis: Diversified civil/commercial/national security portfolio with differentiated platforms (IBDM, Hammerhead, Mako) and in-space manufacturing optionality (PIL-BOX) supports medium-term growth .