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

Good morning, and thank you, Shamali. Welcome to Redwire's First Quarter 2026 Earnings Call. We hope that you have seen our earnings release, which we issued yesterday afternoon. It has also been posted in the Investor Relations section of our website at rdw.com. Let me remind everyone that during the call, Redwire management may make forward-looking statements that reflect our beliefs, expectations, intentions or predictions of the future. Our forward-looking statements are subject to risks and uncertainties that are described in more detail on Slides 2 and 3.

Additionally, to the extent we discuss non-GAAP measures during the call, please see Slide 3 in the appendix, our earnings release or the investor presentation on our website for the calculation of these measures and their reconciliation to U.S. GAAP measures. I am Alex Curatolo, Redwire's Senior Director of Investor Relations. Joining me on today's call are Peter Cannito, Redwire's Chairman and Chief Executive Officer; and Chris Edmunds, Redwire's Chief Financial Officer. With that, I would like to turn the call over to Pete. Pete?

Thank you, Alex. During today's call, I will outline our key accomplishments during the first quarter of 2026, after which Chris will present the financial highlights for the same period and discuss our outlook for the remainder of 2026. We will then open the call for Q&A. Please turn to Slide 6. During the first quarter of 2026, Redwire saw strong demand across our differentiated products. During the quarter, Redwire achieved a strong book-to-bill ratio of 1.92 and as a result, ended the quarter with record contracted backlog of $498.1 million, providing confidence in our forecast as we move further into 2026.

We sharpened our operational performance and portfolio management, resulting in sequential and year-over-year improvement in gross margins, moving from 9.6% in Q4 2025 and 14.7% in Q1 2025, up to 26.6% in Q1 2026. And finally, we accelerated investing in large procurement opportunities across our portfolio, such as Andromeda, the Commercial Lunar Payload Services Program, or CLIPS, the Quantum Key Distribution satellite often referred to as QKDSat and the Army's long-range reconnaissance program for Group 2 Unmanned Aerial Systems or LRR.

Each of these programs have significant growth potential and are gaining momentum. To summarize the quarter, we returned to strong growth in areas with better gross margins, and therefore, we will continue to invest in our highest potential opportunities where we are well positioned with differentiated capabilities. Please turn to Slide 7. Next, I would like to briefly touch on a highlight or 2 from the first quarter for each of our 5 value drivers to underscore our continued value creation in each area. We will start with our Space segment, which encompasses next-generation spacecraft, large space infrastructure and microgravity development and then turn to our Defense Tech segment, which encompasses combat proven UAS and sensors and payloads.

Please turn to Slide 8. In Q1, Redwire achieved a significant milestone in our spacecraft strategy as we continue to move up the value chain in the space segment. In April, we were selected as 1 of 14 vendors out of a total of 32 bids on the Space Systems Command $1.8 billion 10-year Andromeda Indefinite Delivery Indefinite Quantity, or IDIQ contract. And earlier this week, Space Systems Command provided a notice of its intent to raise the total shared ceiling for the Andromeda IDIQ to more than $6 billion to meet increased demand.

The Andromeda contract vehicle is focused on rapidly fielding proliferated space domain awareness capabilities in geosynchronous orbit. We see this as a proof point for the success of our moving up the value chain strategy and further validation that we are strategically positioned as a trusted prime contractor on next-generation spacecraft. We now have 10 years in a limited competition pool to monetize this multibillion-dollar contract as we invest in our Mako next-generation maneuverable, refuelable autonomous spacecraft in GEO.

Please turn to Slide 9. During the first quarter, Redwire was awarded a contract to continue development on a quantum secure satellite under ESA's QKDSat program. For QKDSat, Redwire will manufacture and deliver its European-built Hammerhead spacecraft equipped with a quantum key distribution payload and Redwire's proprietary ADPMS-3 suite of avionics, leveraging our experience in spacecraft development and avionics in support of this critical program. This program has the potential to grow into a constellation-sized opportunity.

During the period, Redwire was also awarded a prime contract for the Belgian Ministry of Defense to build and deliver Belgium's first national security satellite to provide secure, resilient and independent access to critical space-based services in support of national defense priorities. We see this as an early entry point in European space-based defense capabilities as the trend towards increased organic European investment in both space and defense gained significant momentum, and Redwire is seen as a trusted partner.

Please turn to Slide 10. Turning to our space infrastructure. You may remember that on our last earnings call, I introduced ELSA, our new high-performance low mass solar array for high-quantity constellations of small sats. I am proud to say that during the first quarter, Redwire made its first sale of this new product with a $12.8 million contract to deliver ELSA solar arrays to Moog. These ELSA arrays will be integrated with Moog's meteor satellite buds in support of a low earth orbit mission for an undisclosed national security customer and have also been baselined as a standard component for the Meteor line of spacecraft. With the introduction of ELSA, our power product portfolio now spans the total addressable market from large constellations in LEO to the lunar surface and beyond.

Please turn to Slide 11. Turning to our microgravity development value driver. During the quarter, Redwire received an additional $4 million from NASA to support drug development investigations on the International Space Station using Redwire's proven pharmaceutical manufacturing solution, PIL-BOX. This additional funding expands an existing task order under a $25 million 5-year IDIQ through NASA's In-Space Production Applications or InSPA program.

During the quarter, Redwire's PIL-BOX also supported a cancer therapy investigation led by Aspera Biomedicines that launched aboard the Crew-12 mission. NASA sees the groundbreaking potential and continues to invest in PIL-BOX. And by supporting partners like Aspera, Redwire is helping to usher in a new era of biotechnology where microgravity is used to unlock insights that can improve treatments for some of the world's most challenging diseases.

Please turn to Slide 12. Turning next to our combat proven UAS value driver, which falls within our Defense Tech segment. During the quarter, Redwire was awarded more than $20 million in follow-on purchase orders to deliver standard and advanced navigation Stalker systems supporting the Navy Marine Corps Small UAS program management office. This award in support of the long-range tactical program of record encompasses the Marine Corps first acquisition of the advanced navigation version of Stalker Block 30. These new systems will join the approximately 250 existing Stalker aircrafts already fielded by the Marine Corps as our trusted, combat proven platform continues to scale for the most demanding customers. This is not a demonstration. This is not an experiment. This is scaling a field-proven capability.

Please turn to Slide 13. In addition, during the first quarter, Stalker continued integration efforts with the U.S. Army's next-generation Command and Control or NGC2 tactical network during the Ivy Sting exercises, further integrating the platform into the U.S. Army's future concepts of operations. Continued integration is expected at upcoming events to enhance situational awareness and decision-making across the battlefield. Stalker was the only fixed wing VTOL to support this exercise, underscoring the criticality of our stalker as a platform for the warfighter.

Please turn to Slide 14. Lastly, moving to our sensors and payloads value driver. Building on the extensive heritage of our avionics and sensor products, on April 1, Redwire's advanced imaging and navigation technology launched aboard NASA's Artemis 2 mission, the first crude mission for the Artemis program. Through these images, everyone here on Earth was able to take part in Artemis 2's historic journey of discovery. Once again, Redwire is proud to be a trusted partner on the most important missions on and off earth.

Please turn to Slide 15. As part of our transformation over the last 2 years, both moving up the value chain and expanding into multi-domain technologies, Redwire has become very well positioned at the ground floor of some emerging opportunities with asymmetric upside potential. As a result, we have begun to ramp investment with a more than $10 million increase in research and development expense during the first quarter on a year-over-year basis. We are in quality growth mode.

In Q1, we demonstrated the ability to grow while simultaneously increasing our gross margin. This is the focus. Therefore, as you can see from this slide, net of discretionary IRAD spending, we would have had positive adjusted EBITDA for the quarter. We are currently investing in quality growth. As to where we plan to invest, we are specifically increasing investment in 6 critical opportunities with outsized potential, most of which we have already spoken about today. These opportunities include VLEO in the United States and Europe with our SabreSat and Phantom spacecraft, QKDSat for a quantum secure constellation, maneuverable refuelable GEO spacecraft for programs like Andromeda, Lunar infrastructure, including such opportunities as a Lunar power grid and future Clips Lunar lander missions; SpaceMD, including PIL-BOX and bioprinting and finally, our next-generation Stalker Block 40 and Penguin Mark III aircraft. These are investments to strengthen our positioning, supported by identified opportunities with existing customers.

Please turn to Slide 16. With that, I'd now like to turn the call over to Chris Edmunds, Redwire's Chief Financial Officer, to discuss the financial results for the first quarter of 2026.

Thank you, Pete. Before turning to Slide 17, I want to highlight this incredible image of the Orion capsule with a Lunar Eclipse taken by a Redwire camera during the Artemis 2 mission. Now let's turn to the financial results. Please turn to Slide 17. During the first quarter, in line with our expectations, we reported total revenue of $97 million, a 57.9% increase on a quarterly year-over-year basis. Our Space segment recorded revenue of $52.7 million, and our Defense Tech segment recorded revenue of $44.3 million.

I would note that the contributions from the acquisition of Edge Autonomy were the primary driver behind the significant increase for Defense Tech on a quarterly year-over-year basis. With more than $350 million in bookings during the last 2 quarters, we expect our revenue to build as we move through 2026.

Please turn to Slide 18. As we mentioned on our year-end earnings call, gross margin improvement is a significant focus area for Redwire, and I'm pleased to report that in line with our expectations, we achieved gross margin of 26.6% during the quarter, representing an 11.9-point improvement on a year-over-year basis and a 17-point improvement on a sequential basis. Our first quarter 2026 net loss was $76.5 million, which was impacted by more than $44 million in nonrecurring activity, $42.5 million of which was the noncash, nondilutive impact from the accelerated vesting of the equity incentive units assumed through the Edge Autonomy acquisition.

Our first quarter adjusted EBITDA was negative $9.2 million, a decrease on a year-over-year basis, but a sequential increase. Notably, the unfavorable impact from net EA fees decreased to $1.1 million during the first quarter, a marked improvement. We are proud of the progress we've made. Cost control and program execution remain a key focus. Finally, Redwire remains highly focused on capital allocation. Based on the signals we are receiving from the market and our customers, we have significantly increased our internal research and development investment from under $1 million in Q1 2025 to $12.6 million in Q1 2026. We see this investment as accelerating the maturation of our products and solutions to meet current demand, like the recent $1.8 billion Andromeda IDIQ.

Please turn to Slide 19. Turning next to a discussion of liquidity and capital structure. We ended the first quarter of 2026 with record total liquidity of $175.2 million, comprised of $145.2 million of cash, cash equivalents and restricted cash and $30 million in undrawn revolver capacity, a significant year-over-year improvement. Redwire saw a meaningful reduction in net cash used in operating activity on both a sequential and a year-over-year basis to $6.7 million. This improvement is largely related to improvement in gross margin, disciplined cost control and positive working capital contribution. With improvement in quarterly free cash flow of more than $36 million on a year-over-year basis and $17 million on a sequential basis, we have reduced our cash burn.

As mentioned on our previous call, during the first quarter, the company amended its credit agreement, extending the maturity to May 2029 and lowering the interest spread from SOFR plus 700 to SOFR plus 375 resulting in an annualized interest savings of approximately $3 million, contributing to a total estimated annual interest savings of more than $17 million from delevering and refinancing activities completed in 2025 and the first quarter of 2026. Finally, we remain committed to a disciplined approach to responsibly fund growth initiatives like those Pete spoke about earlier. With scalable opportunities for investment, we've entered into another at-the-market or ATM program to allow us to opportunistically fund emerging technologies across our portfolio. We are investing in quality growth.

Please turn to Slide 20. During the first quarter, we saw a continuation of the positive trend in contracts awarded with bookings of $186.5 million, a significant increase on both a year-over-year and sequential basis, resulting in a book-to-bill ratio for the quarter of 1.92 with a book-to-bill ratio of 1.54 on a last 12 months basis. Turning to bookings by segment. Space bookings were $114.6 million, driven by strong demand for Power Solutions, including the first sale of ELSA and an approximate $50 million follow-on production order for ROSA Wings. Defense Tech bookings were $72 million, driven by demand for our Stalker and Penguin aircraft.

Turning to backlog. We once again saw strong growth in the metric as backlog increased by 21.1% on a sequential basis and 71.1% on a year-over-year basis to a record $498.1 million. As of March 31, 2026, space backlog was $359.7 million and Defense tech backlog was $138.4 million. As a reminder, the majority of Defense Tech revenue is recognized at a point in time, whereas in our Space segment, the majority of revenue is recognized over time, driving different backlog profiles. With further line of sight into 2026, we remain pleased with the continued positive change in our trend line of contracts awarded and believe our pipeline of new opportunities across Space and Defense Tech around the globe remains strong. bolstering our confidence in continued growth through the year. Please turn to Slide 21 for a brief discussion of the outlook for the remainder of 2026.

Having achieved first quarter revenue in line with our expectations, plus another quarter of acceleration in our contracts awarded, confidence provided by our record backlog of $498.1 million and a supportive macro environment, we are reaffirming our full year 2026 revenue forecast in the range of $450 million to $500 million, which represents 41.6% year-over-year growth at the midpoint. With more than $350 million in bookings during the last 2 quarters, we expect our revenue to build as we move through 2026. With that, please turn to Slide 22, and I'll now turn the call back over to Pete.

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

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

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

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

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

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

Griffin, yes, thanks for that question. So VLEO, as I mentioned, is one of the areas where we're continuing to ramp up investment. VLEO is probably, I would say, the #1 area where we're going to play strongly in golden dome, in my opinion. I think that particular orbital regime has something unique to bring to the fight in Golden Dome. And I think Redwire is really well positioned there. It can be difficult to talk about some specifics around our concepts of employment there. But again, much like highly maneuverable, refuelable GEO, our moving up the value chain spacecraft strategy is not a me-too strategy. We've specifically picked areas where Redwire can lead where there is no one who's in a dominant position.

And I think VLEO is, in particular, one of those areas where with the award of Otter and other programs over the last year, we have a nice jump start, and we think it has a lot of potential in Golden Dome. So we're investing in maturing the technology with our partners at DARPA, AFRL and others and super excited about that. And again, one of the things I want to underscore, so at the risk of repeating myself, there's a little bit of a pivot happening here. We're excel because we feel like we're so well positioned on these new opportunities and because we've been now able to execute with better cost control and more operational execution, we can go out and we can do a nice ATM raise and start applying that money to these high gross margin, high growth rate opportunities. And so that's our current strategy.

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

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

Austin, so it's an interesting question. The government has not put a lot of information out publicly about the Golden Dome architecture. I think to provide an answer without just saying we can't talk about certain things. At the high level, I believe that Golden Dome is going to be a multi-orbit all of the above type strategy. It's not one space-based interceptor or one killer tap technology, so to speak. So that's exciting for us because there's opportunities for us to participate, I mentioned already in VLEO. If it's going to be a multi-orbit all of the above resilient architecture, VLEO adds another orbital regime where the government can use to enhance the overall Golden Dome capability.

I also think that this maneuverable, highly maneuverable ,refuelable GEO also has interesting areas that can play in the golden dome architecture as well. And I think that I won't speak for the government, but things like increasing the total ceiling on that program to -- from $1.8 billion to $6 billion underscores how important that orbital regime is as well. And for the lay person, when I talk about these orbital regimes, I talk about there's going to be something relevant in VLEO, we believe there's going to be things that are relevant in LEO.

We believe there's going to be things relevant in GEO, right? So Redwire is positioning itself to be a leader in the LEO and GEO and are -- for those who are building large proliferated constellations in LEO, we're acting as a merchant supplier. So prime lead in VLEO, prime lead in highly maneuverable ,refuelable GEO, merchant supplier in LEO, and that's our Golden Dome high-level positioning, if that helps. I answer your question.

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

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

Yes. No, I appreciate the question, and I'm going to give Chris a chance here because we want to make sure he has some airtime. So I'll briefly just say our goal, as we achieved this quarter and our goal for the remainder going forward is to have positive EBITDA net of IRAD. We are in quality growth mode, but we have to invest -- but what we want to show is that we're not funding losses, but that we're actually funding investment. And therefore, if we're positioned that way, no matter what happens in the future macro environment, we can turn that dial on IRAD up or down based on opportunities. Chris, anything you want to add?

Yes. No, we're super excited about where we came in this quarter at 26% which is the impact of a lot of different things. We've had strong bookings the last several quarters that have replenished our order book with higher margin profiles. As we've moved capabilities from development into low rate and full rate production, as we talked about on our last call, that's a contributor. Also excited that we managed the ACs much tighter this quarter with a net $1 million impact, which is a marked improvement. Those 2 points are really helping bolster that gross margin.

And as we -- as Pete said, as we're managing growth, managing that investment without the IRAD, we would have had positive adjusted EBITDA. Now we do see that we will probably have a little bit of modest SG&A growth, but there should be expanded operating margins as we continue to grow the top line revenue this year. We are expecting revenue to scale throughout the year. And as we continue to hold the portfolio in a similar position, that additional gross profit will help cover and expand our profitability at the bottom line, again, managing the IRAD, which could then offset some of that additional gross profit.

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

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

So the first answer to your question is yes. So it's all of those things. It's going to be deployment of the capital in a way that is outlined in detailed plans as part of our execution strategy, and it is a mix of all those things that you mentioned. In terms of the template for going forward, what I'm trying to underscore is that we have a lot of these opportunities that we're well positioned for. And whether it be driving towards the constellation of QKDSat delivering a strong capability for Golden Dome, monetizing the $6 billion roughly, whatever, Andromeda opportunity, all these things, we're going to be dialing IRAD up or down based on how those strategies are playing out.

So it's opportunistic, and it will be market dependent, but I think we're really positioned in these areas, but they're going to take some investment to fully realize the potential. But the potential for each one of these is strong and the demand signal out there is really strong. And we're really excited about how many paths the victory we have on these opportunities that have basically been born of the strategy we've been talking about for well over a year now of moving up the value chain and becoming a multi-domain company. So we're not providing any like future overall guidance for IRAD for the year. But as you can see this quarter, we are ramping. Chris, do you want to add anything there?

I think you got it.

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

I wanted to ask on NASA's accelerated lunar initiatives and the goal of building a lunar base and establishing a permanent presence on the moon. What would you say is the biggest opportunity for Redwire specifically as it relates to the moon base and the lunar economy? I know there's a lot of opportunities there, but curious if there's 1 or 2 things that you're most excited about for the lunar economy.

Yes, that's a great question. And thank you for that. It's really simple. There's two areas that I think we're really well positioned for. One is to be the prime to build the lunar grid. We are a power company. We have I believe, and I'm obviously biased, the best heritage there is out there in space power on the solar side with our ROSAs and now our ELSAs to include being the power provider with our ROSA on the International Space Station. So one of our primary objectives, and I mentioned it as one of the areas we're investing is in positioning to build a lunar grid for this infrastructure that's going to come there with ROSA as the underpinning -- the Roll-Out Solar Arrays as the underpinning technology. So that's super exciting. This pivot to the moon, I think, has incredible opportunities. The second is we don't spend a lot of time, and we haven't in the past talking about the fact that Redwire is in fact, Eclipse Prime and Eclipse, the commercial lunar payload services contract has been a key highlight for NASA administrator, Isaacman recently where he sees that as ramping up, I think he mentioned 1 a month.

So previously, Redwire wasn't really active on clips because we didn't have a baseline where we could achieve the economics that we wanted for the limited amount of launches that were occurring. But now that this is a really big focus for NASA, we're going to start leveraging that prime contract position and investing there because we think there's a bigger total addressable market than there has been in the past, which presents us with the right kind of investment profile we want to go after. So that's -- those are the 2, lunar grid and Eclipse. But we're also obviously a merchant supplier of key things like mating technologies and just space infrastructure in general. So, yes. So I think there'll be other opportunities as well. But those are the 2 big ones.

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

I wanted to turn things to Edge Autonomy, right? You're coming close to a year since the acquisition. I was wondering if you could sort of walk through maybe what's performing as planned or above expectations, things that might be behind schedule? Any synergies you realized that you can note on costs or contracts?

And then I guess, on margins as well, right, sort of Edge seemed like it was hovering around, call it, 30% EBITDA margins when you got it. Defense Tech is printing 12% this quarter. I get it's not 100% Edge anymore, but sort of what's driving the differential there? And how do you see the margins trending from here? Sort of any color there would be really helpful.

Yes. That was a rapid fire. I'll try to make -- correct me if I don't hit every part of that question. The -- so we're really excited about what we've been able to do with Edge, which we don't call Edge anymore. It's fully branded now as Redwire, which for those who have been involved in M&A is a key cultural milestone and culture in many ways drives success in M&A.

So we're excited about how rapidly they've been able to become part of Redwire. As you noted, on the margin side, Defense Tech is not representative of just the legacy Edge autonomy. It includes other defense aspects of our portfolio that were previously part of legacy Redwire space. So yes, we're pleased with the direction that it's headed. As we talked about in previous quarters, they, like everybody else, ran into a government shutdown in the second half of 2025. So -- but the 2026, you can see is starting to ramp again and the government has a budget now, and there's a lot of opportunities now that the Marine Corps, for instance, has a budget, they're adding to our existing 250 spacecraft -- or I'm sorry, aircraft with more.

So are those and others are really bullish signs that the Stalker is an important part of our platform. And in fact, I think in Europe, we're seeing a lot of defense budget scale as well. So Penguin has a really bright future in our eyes as well. And overall, based on the time line, we're really comfortable with the way it's gone so far. Chris, anything you want to add?

Yes. I mean just to echo that, they did have $72 million in bookings this quarter, which was an increase from where we have been, obviously impacted by some of the government budget matters this past year. So happy to see them return to a stronger book-to-bill for the quarter. We do continue to see that product line holding good gross margin, consistent where they have been historically. I think that's important to note that we are continuing to hold quality gross margin.

Similar to what we've talked about earlier today, we have increased the rate of investment into the 3 major product groups there that came along with that acquisition. And that has consumed some of the net EBITDA margin. But again, as we look at the pipeline and the future opportunity set, we are investing in good quality growth there. And the important point is that the gross margins are holding, so.

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

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

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

Greetings, and welcome to the Redwire Corporation Full Year and Fourth Quarter 2025 Earnings Call.

[Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Alex Curatolo, Senior Director of Investor Relations. Thank you. You may begin.

Thank you, Diego. Welcome to Redwire's Full Year and Fourth Quarter 2025 Earnings Call. We hope that you have seen our earnings release, which we issued yesterday afternoon. It has also been posted in the Investor Relations section of our website at rdw.com.

Let me remind everyone that during the call, Redwire management may make forward-looking statements that reflect our beliefs, expectations, intentions, or predictions of the future. Our forward-looking statements are subject to risks and uncertainties that are described in more detail on Slides 2 and 3.

Additionally, to the extent we discuss non-GAAP measures during the call, please see Slide 3 in the appendix, our earnings release, or the investor presentation on our website for the calculation of these measures and their reconciliation to US GAAP measures. I am Alex Curatolo, Redwire's Senior Director of Investor Relations. Joining me on today's call are Peter Cannito, Redwire's Chairman and Chief Executive Officer, and Chris Edmunds, Redwire's Chief Financial Officer.

With that, I would like to turn the call over to Pete. Pete?

Thank you, Alex. During today's call, I will outline our key accomplishments during the full year and fourth quarter of 2025, after which Chris will present the financial highlights for the same period and discuss our 2026 outlook. We will then open the call for Q&A. Please turn to Slide 6.

In 2025, Redwire transformed from a pure-play Space provider to an agile, scaled multi-domain Space and Defense Tech company. We closed our transformational acquisition of Edge Autonomy in June 2025 and have been successfully executing on our integration plan to include the full assumption of Edge Autonomy into the Redwire brand.

During 2025, Redwire moved up the value chain with 5 spacecraft platforms and multiple prime contracts in the US and Europe, and 2 mature, combat-proven airborne platforms. We expanded our customer base to more than 170 civil, national security, and commercial Space and Defense Tech customers, emphasizing our breadth and diversity.

We added approximately 660 employees for an ending headcount of approximately 1,410 employees around the globe. We ended 2025 with a record contracted backlog of $411.2 million, supported by strong bookings and a 1.52 book-to-bill in the fourth quarter, providing confidence as we move into 2026.

And finally, as Chris will talk about in additional detail, we strengthened our balance sheet and simplified our capital structure, ending with record year-end total liquidity of $130.2 million.

Please turn to Slide 7. The result of this major transformation in 2025 is a more balanced portfolio of differentiated products that positions Redwire for considerable scaling in 2026 and beyond. At the core of this transformation is the maturation of our product portfolio from predominantly new development programs to a balanced portfolio that includes mature programs that are scaling into production.

As you can see on the chart on Slide 7, in 2021, when Redwire first went public, the vast majority of our products, almost 75% in fact, were in the development phase with just a few products moving to limited production in small quantities. During this early phase of our growth, we were primarily focused on penetrating the Space market with new development programs, which we often refer to as planting seeds or gaining toeholds. This was deliberate as we were establishing ourselves in a nascent Space market that required new solutions and capabilities that hadn't been invented yet.

At this point in our evolution, this new development often emphasized market share over gross margin and larger exposure to development risk. Moving forward in time to the present, however, through a number of organic and inorganic strategic investments, we have now matured our product mix to a balanced portfolio of development and production programs.

The impact of this transformation to our future growth is often underappreciated and cannot be overstated. At the end of 2025, we now estimate that over 2/3 of our revenue is moving into production, with a large portion of our UAS portfolio entering higher-margin full-rate production. This is a very different Redwire than 5 years ago.

As we look forward to 2026, our portfolio is evolving to a more balanced risk, balanced mix of risk with opportunities for gross margin improvement. Make no mistake, we still plan to invest heavily in advancing critical technologies with high-growth potential, such as VLEO, refuelable GEO, Quantum satellites, and our Stalker Block 40 UAS, but these growth investments are now supported by a broader portfolio and a proven framework for maturing our capabilities into production.

Please turn to Slide 8. As part of this ongoing transformation, in January, we announced that going forward, Redwire will be organized into 2 business segments: Space and Defense Tech. These segments map to the 5 primary value drivers I described on our last earnings call, representing the product areas where Redwire has differentiated intellectual property, first-mover advantage and recognized thought leadership in rapidly growing domains with sizable total addressable markets.

Our Space segment encompasses the next-generation spacecraft, large Space infrastructure and microgravity development value drivers and focuses on delivering for civil, national security and commercial Space customers.

Our Defense Tech segment encompasses the combat-proven UAS and Sensors & Payloads value drivers and focuses on systems, Sensors & Payloads that provide intelligence, surveillance and reconnaissance capabilities for US and allied warfighters across multiple domains.

Notably, this segment not only includes the operations from our acquisition of Edge Autonomy, but also Space -based Sensors & Payloads such as avionics, cameras and RF systems.

We believe this new structure will enable us to maintain strong positioning and continue our growth trajectory across both established and rapidly emerging domains as well as provide greater visibility into our unique positioning in Space and Defense. Next, I would like to briefly touch on a highlight or 2 from the fourth quarter for each of our 5 value drivers.

Please turn to slide 9. Starting with NextGen Spacecraft. During the fourth quarter, Redwire was awarded a $44 million Phase 2 award to advance DARPA's Otter Program. Otter leverages the design of Redwire's SabreSat platform, and this Phase 2 contract provides us funding to complete manufacturing and deliver the spacecraft to launch. Through our work with DARPA, we are strengthening our leadership in this critical domain and accelerating the development of cutting-edge capabilities that will define the future of VLEO.

Please turn to slide 10. During the fourth quarter, Redwire successfully completed integration of 10 payloads for the European Space Agency's ΣYNDEO-3 satellite mission, marking a major milestone as it readies for launch in Q4 2026. The spacecraft is built with our highly versatile Hammerhead LEO spacecraft platform, which has logged 50 years of on-orbit performance. This mission aims to accelerate the development of new technologies and stimulate the European Space ecosystem. As the prime contractor, Redwire is proud to lead these efforts.

Please turn to slide 11. Turning to Large Space Infrastructure, today, I am proud to introduce our Extensible Low-Profile Solar Array or ELSA. Building on the experience, technical expertise and success of our flight-proven ROSA product, ELSA is an innovative, high-performance, low mass power solution that leverages the flexible substrate technology of ROSA in a smaller form factor. Whereas ROSA is our leading flexible array solution for large spacecraft or space stations such as Blue Ring and the ISS, ELSA is our equivalent for high-quantity constellations of small satellites and provides 50% more power by volume than our traditional solar arrays of equivalent size.

ELSA is engineered for volume production and offers a step change improvement in modular, scalable design and rapid turnarounds to drive down costs and improve delivery times. We look forward to announcing key ELSA contract awards in the near future as the industry recognizes the benefits and performance of this new product line.

Please turn to slide 12. Also under our large Space infrastructure value driver, during the fourth quarter, Redwire was awarded an 8-figure contract by the Exploration Company to provide 2 International Berthing and Docking Mechanisms (IBDMs), developed in Belgium for their flagship spacecraft, Nyx. This agreement marks a significant step in supporting Europe's burgeoning commercial Space sector and follows an IBDM award from Thales Alenia Space we announced earlier in the year. This is an exciting example of how our investment in Berthing and Docking product development is now expanding into new opportunities for production.

Please turn to slide 13. Turning to our Microgravity Development value driver, during the quarter, Redwire was selected for a second contract supporting Aspera Biomedicines' research into a cancer "Kill Switch". Aspera is revolutionizing oncology and regenerative medicine, and Redwire was proud to have once again been selected as a trusted implementation partner. Under this follow-on contract, Aspera's second set of on-orbit experiments will use Redwire's PIL-BOX hardware to further understand the crystal structure of ADAR1-p150 with the goal of creating better cancer drugs that improve patient outcomes here on earth.

Please turn to slide 14. Let's turn now to our COMBAT-PROVEN UAS value driver, which falls within our Defense Tech segment. During the quarter, US Army soldiers began training with Redwire's Stalker UAS, representing the first time in years that a new Group 2 UAS was used in support of a US Army course at Fort Rucker in Alabama. As a mature combat-proven commercial technology that is built using a modular open systems approach, Stalker allows for easy integration with third-party technologies and this flexibility drew attention during the training demos. This further reinforces that Stalker is seen by the US Army as a critical part of their force design for long-range reconnaissance training and operations.

Please turn to slide 15. In addition, during the fourth quarter, we announced the grand opening of our new 85,000 square foot facility in Ann Arbor, Michigan to increase production of fuel cells. Our fuel cells are a key differentiator for our Stalker aircraft, allowing for extended range and endurance, silent operations and easily sourced fuel.

This is another great example of our shift from predominantly development to full production capacity in our portfolio. This new facility provides us the ability to scale production as the US Department of War executes on its drone dominance strategy.

Please turn to slide 16. Lastly, moving to our Sensors & Payloads value driver. During the fourth quarter, Redwire received an award for Penguin VTOL aircraft and Octopus Gimbals camera payloads for the Croatian Border Patrol. Funded under the European Border and Coast Guard Agency, or Frontex, this award builds on successful border deployments around the world, and Redwire is proud to have been chosen again to provide these key technologies that are especially effective for border security and European Defense initiatives.

Please turn to slide 17. With that, I'd now like to turn the call over to Chris Edmunds, Redwire's Chief Financial Officer, to discuss the financial results for the fourth quarter of 2025. Chris?

Thank you, Peter. Before turning to Slide 18, I want to highlight the image on this page, which is a photo taken by a Redwire camera during the Artemis 1 mission, the first in a series of increasingly complex missions to explore the moon and build towards the first crude mission to Mars. Artemis 2 is anticipated to launch in the coming months, and Redwire cameras will once again be on board to capture energy from the mission.

Please turn to slide 18. Now diving into our results. Despite delays in the US government budget process impacting both Space and Defense Tech, revenue for 2025 increased by 10.3% year-over-year to $335.4 million, coming in towards the top end of our provided range of $320 million to $340 million.

Please turn to slide 19. Next, I'd like to take a moment to provide some additional details around fourth quarter revenue and profitability. As included in our earnings release yesterday afternoon and in our Form 10-K to follow, we have, for the first time, provided financial details for our Space and Defense Tech segments.

As Peter discussed at the beginning of today's presentation, our Space segment includes next-generation spacecraft, large Space infrastructure, and microgravity development. And our Defense Tech segment includes combat-proven UAS platforms, Sensors & Payloads, both airborne and space-based.

Starting with revenue. As shown on the right-hand chart, during the fourth quarter, we reported total revenue of $108.8 million, representing a 56.4% increase on a quarterly year-over-year basis. During the quarter, our revenue was balanced between our 2 segments, with our Space segment recording revenue of $54.5 million and our Defense Tech segment recording revenue of $54.3 million. I would note that the contributions from the acquisition of Edge Autonomy were the primary driver behind the significant increase for Defense Tech on a quarterly year-over-year basis.

Turning to profitability. While our fourth quarter 2025 gross margin of 9.6% is an improvement on a quarterly year-over-year basis, gross margin improvement is a key focus area as we move into 2026 and drive more programs from development to production. Leaving aside the net unfavorable impacts from EACs of $17.8 million, our gross margin would have been in the mid-20% range, closer to what we believe is representative of the potential of our business going forward, given our mix across the maturation framework Peter spoke about earlier.

Our fourth quarter 2025 net loss was $85.5 million, which was impacted by more than $40 million in nonrecurring activity, including a $34.7 million goodwill impairment, $7.4 million impact from the equity incentive units assumed through the Edge Autonomy acquisition and $1 million related to the early debt extinguishment, which I will talk about a little more in a moment.

In addition, Redwire significantly increased in future technology during the quarter spent on Research & Development from $1.4 million in 2024 to $9.5 million in 2025. Because of our confidence in signals we see with our customers and market, we see this investment contributing to the acceleration of our programs along the maturation framework.

We ended 2025 with fourth quarter adjusted EBITDA of negative $18.1 million, a decrease on a year-over-year basis. Our negative fourth quarter 2025 adjusted EBITDA results was largely due to unfavorable impacts from EACs of $17.8 million.

Please turn to slide 20. Finally, turning to a discussion of liquidity and capital structure. We have significantly strengthened our balance sheet and simplified our capital structure. We ended 2025 with record year-end total liquidity of $130.2 million, comprised of $94.5 million in cash, $35 million in undrawn revolver capacity, and approximately $1 million in restricted cash, a significant year-over-year improvement in total liquidity.

During the year, we significantly de-levered, repaying a net $125.5 million of debt, including repayment of $105.5 million of outstanding principal during the fourth quarter through proceeds from an efficient At-The-Market or ATM program. Our repayment during 2025 will result in an estimated annual interest savings of more than $14 million.

During 2025, Redwire also saw a 57% reduction in Convertible Preferred Stock outstanding through share repurchase and voluntary conversion and an 83% reduction in outstanding warrants through exercise. We note that Redwire's remaining outstanding warrants will expire during the third quarter of 2026.

Finally, in February 2026, the company amended its remaining credit agreement, extending the maturity to May 2029 and lowered their interest spread from SOFR plus 700 to SOFR plus 3.75, resulting in an annualized interest savings of approximately $3 million. Taken together, we estimate total annualized interest savings to be more than $17 million from our de-levering and re-financing activities.

Please turn to Slide 21. Although the delays from the US government shutdown impacted award timing in 2025, we continue to see a positive trend in contracts awarded as we move through the fourth quarter when compared with the first half of 2025. Our bookings during the fourth quarter of 2025 increased substantially, both year-over-year and sequentially to $164.9 million with the fourth quarter of 2025 book-to-bill ratio of 1.52, bringing our 2025 full year book-to-bill ratio to 1.32 and improving backlog to a record $411.2 million.

Looking at key performance indicators by segment. During the fourth quarter of 2025, Space bookings were $110.9 million, driven by the Otter and Mix awards previously discussed. And Defense Tech bookings were $54 million, driven by demand for our Stalker and Penguin aircraft.

Turning to backlog by segment. As of December 31, 2025, Space backlog was $299.8 million and Defense Tech backlog was $111.4 million. As a reminder, the majority of Defense Tech revenue is recognized at a point in time, whereas our Space segment, the majority of revenue is recognized over time, driving different backlog profiles. Although the US government shutdown delayed the timing of awards that had been expected in 2025, with key wins during the fourth quarter and line of sight in 2026, we are pleased with the continued positive change in our trend line for contracts awarded and believe our pipeline of new opportunities remains strong, giving us confidence in continued growth through 2026.

Please turn to Slide 22 for a brief discussion of the outlook for 2026. With continued acceleration in our contracts awarded during the fourth quarter and confidence provided by our record backlog of $411.2 million, we are forecasting full year 2026 revenue to be in the range of $450 million to $500 million, which represents a 41.6% year-over-year growth rate at the midpoint. I would note that given lingering timing impacts of the government shutdown, we expect our revenue to build as we move through 2026.

With that, please turn to Slide 23, and I'll now turn the call back over to Pete.

Thank you, Chris. As discussed earlier in the brief, Redwire's transformation in 2025 positions us to enter 2026 with great momentum as an integrated multi-domain Space and we entered 2026 with confidence provided by our record $411.2 million backlog despite budget headwinds during 2025 and into early 2026.

In addition, we are bolstered by a strengthened balance sheet, simplified capital structure and record end of year liquidity of $130.2 million.

With that, I want to thank the Redwire team for their achievements during 2025. We will now open the floor for questions.

[Operator Instructions] Your first question comes from Brian Kinstlinger with Alliance Global Partners.

Congrats on the improving capital structure. My question is, how is management adjusting its pricing model in response to the abnormally low gross margin throughout 2025? Have you contemplated higher fixed price quoting in Space, a more safer contracting vehicles such as cost-plus or time and materials, especially for new products like ELSA.

Thanks, Brian. Appreciate your question. So, there's a couple of dynamic things there. So, I'll address two parts of this question. Starting with the easiest and the last part first. We basically have to, like all Defense contractors, we have to take our, meet our customer where they are in terms of the kind of contracting that they do. The Department of War has very openly discussed that they are moving away from cost-plus and time and materials and looking for contractors that are willing to take on firm fixed price development.

And it's for that reason that we really took the time and effort at the beginning of this call to understand the portfolio effect that if you want to get market share in this market, you have to be willing to do some investment, whether it be through IRAD, if you want to bear the full cost or through additional development risk if you're willing to take on risk. But take on payments from customers at the same time.

You have to be willing to do that in order to get through the development phase to get to production, which leads me to the first part of your question, where in terms of the pricing model, it's not so much trying to pad our pricing and ultimately losing when we're bidding against more aggressive competitors on the development phase of contract, but it's actually having that balanced portfolio I talked about where you may be taking on a more balanced set of development contracts with higher ADC risks, maybe lower margins as you buy yourself into the baseline in pursuit of a production tail.

But now Redwire is in this position where we're taking on less of that as a percentage of the total portfolio. Now less of it doesn't mean we're bidding less we're still aggressively going after those development programs in order to increase our market share and penetrate the, particularly on the Space side of the market where the winners haven't really been determined yet.

But with the transformational acquisition of Edge Autonomy, our portfolio, as you can see from that Slide 7, is now much more balanced. We have a production level of programs that are supporting that. And it's because of that production tail as the Defense Tech side of the business starts to scale as we anticipate it will in 2026, we expect to see the gross margin improvements that you're looking for.

Your next question comes from Griffin Boss with B. Riley Securities.

I will ask about Edge. So, the 100-plus aircraft to 7 countries post close, that's good to see. But do you have any insight on how many aircraft stand-alone Edge did in 2024? And then along these same lines, you mentioned that included in that 100-plus number or deliveries to the US Army via LRR. Does that mean you've received production orders at this stage? Or is that referring to the software deliveries for the training purposes?

Griffin, thanks for your question. Chris, do you want to take the count one?

Yes. So, 100 aircraft since we closed the acquisition, they delivered about 200 aircraft this year, which is relatively consistent to where they were in the past year. We really leaned forward even Edge prior to the acquisition to build capacity to be able to handle the demand curve as the demand curve comes online.

So, for the production here in the second half of the year at about 100 aircraft, that is right in the middle of their production curve. But with scaled capacity, as we see the growth continue to come in with the order book, as we talked about earlier, we'll have the ability to produce those aircraft as we go into '26 and beyond.

Good example of that is the investment we made in the 85,000 square foot for our fuel cell production in Ann Arbor that we'll be able to see increased aircraft full rate production in '26.

Got it. Okay. And then just the second part of that was regarding LRR and whether those are production orders or referring to the testing.

Yes. That was part of the testing. So, we're still anticipating the full production order here to come later this year.

Yes. One of the things that we're excited about in terms of our ability to accelerate growth in Q4 was, as a reminder, that was still without a fully passed budget. So, some of the things that we talked about in our last earnings call that we were expecting to come online, one of them being orders for the LRR program was not included in that 1.52 book-to-bill. So that's still upside we anticipate in 2026.

And your next question comes from Scott Buck with H.C. Wainwright.

Apologies if I missed this during the prepared remarks, but how much of the backlog is expected to be executed on over the next 12 months or should I say, calendar year 2026? And then are there any large concentrations within that backlog that would drive a materially outsized revenue results in any given quarter or potentially risks slipping into 2027?

Yes. I appreciate it, Scott. So, from a backlog standpoint, we've got about 50% or so of the guide in backlog. And as we look at the risk profile across that backlog, there are no single orders that are binary that would meaningfully move our view one way or the other, pretty balanced across the order book, both with geography diversification across the US and Europe as well as across our various value drivers. So about 50% or so of backlog for the guide.

Yes. One thing I'll add to that is the, although we don't have anything necessarily in our forecast that we're looking at as a big material size value driver in our pipeline, not necessarily backlog; we do have, especially on the Space ties, we do continue to have opportunities like constellation size orders that could materially change our profile. We're just discounting those things in order to make sure that we are focusing on achieving our growth through what's already on the books.

Your next question comes from Greg Konrad with Jefferies.

This is Sara on for Greg. So I guess sticking with backlog, what are you seeing in the broader order environment given some pickup in the 3 months, the 1.52 book-to-bill in Q4? How different are the order cycles between Space and Defense Tech? And what are the expectations for book-to-bill in 2026 supporting growth there?

Yes. So thank you for your question. And so in terms of in the backlog, in that $1.52 billion, what it shows is as we start to close, so last year, we talked about a lot about moving up the value chain. And as we start to close bigger orders like Otter, which was the $44 million opportunity that I mentioned, full VLEO spacecraft order, you can see that the size of our orders are growing over time as part of that moving up the value chain strategy that we executed.

In addition to that, you see another element with the 8-figure IBDM order that contributed to that $1.52 backlog that we closed in the fourth quarter, where we actually got 2 IBDM orders as we start to move into more of a production phase, low rate, but still a production phase for the IBDM. So that was really the characteristic of the fourth quarter backlog build. And those are long programs, year-long or more programs that will be, that gives us confidence in our revenue build over 2026.

In terms of the order cycles between Space and Defense Tech, that's a very interesting question. The order cycles, and this is why it's not really apples-to-apples when you look at backlog between Defense Tech and Space. Space will have a really stronger backlog because it will be a multiyear backlog in many cases, where the conversion cycle for Defense Tech is really fast, especially on orders where we have some level of inventory already on the balance sheet.

So an existing customer that already has a fleet of Stalker or Penguin aircraft can decide that they want to scale their fleet very quickly submit a purchase order. And if we have that available in inventory or even if we have aircraft coming off the production line, we can fill that order quickly. And so the conversion for Defense Tech is a lot faster than on Space. Chris, do you want to add anything to that?

Well, I was just going to point out, from a book-to-bill standpoint in the fourth quarter, we were just over 2x on the Space side, as Pete talked about, and just at a 1 on the Defense Tech, which just highlights that point.

Your next question comes from Suji Desilva with ROTH Capital Partners.

Pete, Chris, congratulations on the bookings improvement. So just quick questions on the mix of Space versus Defense. Just some clarification on Defense. Is there a material part of Defense that's not the Edge Autonomy acquisition? And what is the growth expectation in '26 roughly across Space versus Defense?

So let me address the first part. So yes, the Defense Tech not only includes the legacy Edge Autonomy capability, but it also includes our portfolio of Space optics other payloads and our Space RF systems. The reason for that is because when you go back and you look at part of our early discussion about the synergies that we expected by being multi-domain in Space, a lot of the things like optics or antennas or RF payloads are very similar across both UASs and satellites or spacecraft.

So by putting them in the Defense Tech segment, we're able to achieve those synergies and truly be a multi-domain in the way we go to market in those technologies. So yes, a material portion of Defense Tech is part of the, came from part of the legacy Redwire Space part. Chris, did you want to talk about the latter part of the question?

Yes. I mean, so Suji, we're pretty balanced across the segment in our fourth quarter. We do see the fintech probably driving a little more contribution as we go through '26. Just line of sight on where they are, the growth rate on the DT side probably outperforms the Space side, maybe closer to 20% for line of sight. But as Pete said, on the Space side, what's in the order book is what we're managing to. But there are some really big and interesting opportunities in the pipeline that could really accelerate the growth on the Space side. But again, what we're looking at right now, pretty balanced currently, and we do expect the DT side to start to take a little larger share as we get in the back part of '26.

And we have reached the end of the question-and-answer session. So I'll now hand the floor to Peter Cannito for closing remarks.

Great. Well, thank you all for the excellent questions. With that, we appreciate everyone taking the time to listen today and go Redwire.

Thank you. This concludes today's conference. All parties may disconnect.

Greetings, and welcome to the Redwire Corporation Third Quarter 2025 Earnings Call. [Operator Instructions] Please note that this conference is being recorded.

I will now turn the conference over to your host, Alex Curatolo, Senior Director of Investor Relations.

Good morning, and thank you, Diego. Welcome to Redwire's Third Quarter 2025 Earnings Call. We hope that you have seen our earnings release, which we issued yesterday afternoon. It has also been posted in the Investor Relations section of our website at rdw.com.

Let me remind everyone that during the call, Redwire management may make forward-looking statements that reflect our beliefs, expectations, intentions or predictions of the future. Our forward-looking statements are subject to risks and uncertainties that are described in more detail on Slides 2 and 3.

Additionally, to the extent we discuss non-GAAP measures during the call, please see Slide 3, our earnings release or the investor presentation on our website for the calculation of these measures and their reconciliation to U.S. GAAP measures.

I am Alex Curatolo, Redwire's Senior Director of Investor Relations. Joining me on today's call are Peter Cannito, Redwire's Chairman and Chief Executive Officer; Jonathan Baliff, Redwire's Chief Financial Officer; and Chris Edmunds, Redwire's Chief Accounting Officer and incoming Chief Financial Officer, effective December 1, 2025.

With that, I would like to call -- turn the call over to Pete. Pete?

Thank you, Alex. During today's call, I will outline our key accomplishments during the third quarter of 2025. Chris, our incoming Chief Financial Officer, will then present the financial highlights for the same period and discuss our 2026 outlook, after which we will open the call for Q&A.

Please turn to Slide 5. Now that we have a full quarter of performance from the combination of Redwire Space and Edge Autonomy, I would like to continue to emphasize the major transformation underway at Redwire.

As you will see in our accomplishments and results, the technical, operational and financial positioning of our platform has been significantly enhanced. As part of this transformation, I'm excited to introduce our updated vision statement, reflecting Redwire as an integrated space and defense tech company.

At Redwire, our expanded vision is to pioneer next-generation space and defense technologies that empower scientific discovery, advance global industries and strengthen security, transforming how humanities explores, connects and protects from the skies above to the stars beyond.

Let's now turn to a discussion of highlights from the third quarter of 2025. Please turn to Slide 7. As you can see from the highlights on this slide, the impact of our transformation, including the acquisition of Edge Autonomy was accretive to our financial performance.

During third quarter of 2025, we increased our adjusted gross margin to 27.1% in the third quarter. We also saw sequential improvement of $24.8 million in our adjusted EBITDA.

Additionally, we recorded significant revenue growth of 67.5% sequentially and 57% year-over-year to revenues of $103.4 million during the third quarter. We continue to scale aggressively.

From a growth perspective, we closed a number of key strategic opportunities, adding to our backlog by achieving a book-to-bill ratio of 1.25, resulting in backlog of $355.6 million as of September 30, 2025.

We are greatly encouraged by our growth reflected in our strong book-to-bill in Q3 based on strong customer demand for our differentiated products. However, looking forward, we anticipate some issues with near-term timing of awards in Q4 resulting from the ongoing U.S. government shutdown.

In particular, we have seen delays in the U.S. Army's long-range reconnaissance and similar UAS programs as well as a slow start to Golden Dome. We've ramped production capability to meet these needs, but have not yet seen awards begin to flow.

Therefore, we anticipate the diminished government staff and resulting delay in contracting activity is likely to push a number of our anticipated awards out of the quarter. Notably, however, we do not see a decrease in demand, but rather a temporary near-term timing impact that supports a strong 2026 as the government returns to full strength.

Please turn to Slide 8. As Redwire nears completion of its transformation, expanding from exclusively space subsystems and components to becoming a highly scalable space and defense technology platform, I'd like to reorient investors to our 5 primary value-driving product areas.

These value drivers represent the product areas where Redwire has differentiated intellectual property, first-mover advantage and recognized thought leadership in rapidly growing domains with sizable total addressable markets.

They are differentiated next-gen spacecraft, particularly in VLEO and GEO like SabreSat, Phantom and Mako and others that support next-generation capabilities such as high-fidelity earth observation, quantum key distribution, in-space refueling, AI imaging and maneuverability.

Large space infrastructure, specifically our rollout solar arrays and international berthing and docking mechanisms where we provide building blocks for critical space infrastructure like space stations and Moon to Mars exploration. Microgravity development, where we are a global leader with decades of heritage and hundreds of experiments flown in the areas of biotechnology and advanced materials and manufacturing.

Combat proven UAS, namely the Stalker and Penguin series, where we supply combat-proven autonomous UAS built in the United States and Europe to war fighters in the most challenging battlefield environments.

And finally, sensors and payloads such as optics and radio frequency systems where we support multi-domain missions ranging from airborne ISR to Artemis and the historic commercial moon landings.

To underscore our strategic positioning in each area, I will share a brief description of the differentiators, a highlight or 2 from the third quarter as well as examples of future growth targets as we move towards 2026. Please turn to Slide 9.

Starting with next-gen spacecraft. Redwire's key differentiators are that we have existing funded customers, classified personnel and facilities and a first-mover advantage in VLEO, GEO and space refueling and quantum secure satellites.

During Q3, Redwire announced that we have reached an agreement with Thales Alenia Space to become the prime contractor for ESA's Skimsat mission, a technology demonstration mission for a spacecraft designed to operate in VLEO.

The Skimsat mission leverages Redwire's Phantom spacecraft, an advanced European VLEO platform out of our Belgian facility. With this prime ship, we further establish ourselves as a global leader in VLEO capabilities.

In addition, we signed an MoU with Honeywell during the quarter for QK-VSAT. Under this ESA public-private partnership, we aim to combine Redwire's quantum platform technology with Honeywell's quantum optical payload as we build towards a QKD constellation.

As we look for further growth opportunities, VLEO is a relatively untapped orbit with no dominant provider. Redwire is now executing on 2 prime contracts in VLEO, DARPA's Otter program in the U.S. and ESA's Skimsat mission in Europe. And these funded contracts position us as an early mover and market leader in this exciting orbit.

We are leveraging this funded development to position VLEO for Golden Dome and growing European defense spending. In the future, we are targeting opportunities with the intelligence community, Air Force Research Lab, or AFRL, most notably our current TETRA program, Space Force as well as additional phases for DeepSAT and expanding our Honeywell partnership for QKDSat as just a few examples.

Please turn to Slide 10. Another key value driver is our large space infrastructure, where we are differentiated as a key supplier for products like ROSA and IBDM on funded contracts from customers with significant heritage and protected IP such as our rollout design.

Our unmatched heritage with ROSA on the IFS continues to translate into follow-on orders from customers that need a proven solution. During the quarter, Redwire was awarded a contract to develop and deliver rollout solar arrays or ROSA wings for Axiom's Commercial Space Station.

Power is critical to a sustained presence in low earth orbit and another commercial station provider selecting ROSA further underscores our strong positioning in this key capability.

Building on Redwire's heritage from the ISS, DART, Blue Origin's Blue Ring, Thales Alenia Space GEO satellites, the power and propulsion element of Gateway and now Axiom's Commercial Space Station, Redwire is pursuing numerous follow-on opportunities to scale with our existing customers as their businesses grow.

Additionally, we are aggressively pursuing orders for large space infrastructure such as ROSA and IBDM for other commercial space stations as well as other power-intensive spacecraft programs and Moon to Mars infrastructure like Artemis.

Please turn to Slide 11. With hundreds of microgravity experiments conducted, proven IP like PIL-BOX and existing funded commercial, governmental and international customers, Redwire is at the forefront of microgravity development.

We are decades ahead of many of our competitors. During the third quarter, Redwire launched 14 PIL-BOXes, studying 18 molecules to the International Space Station with 3 different partners: Bristol-Myers Squibb, Butler University and Purdue University.

These PIL-BOXes are expected to return to earth in the coming months. With these, Redwire has now flown a total of 42 PIL-BOXes studying 35 unique molecules as of the end of the third quarter, adding to our extensive heritage in pharmaceutical development on orbit.

In terms of future growth, we see the potential impact is extraordinary. Pharma has less than a 10% success rate from Phase 1 trials to approval and a fast-approaching patent cliff that threatens approximately $350 billion in annual worldwide revenue from drugs losing exclusivity through 2030.

We see Redwire's pharmaceutical development on orbit as offering a potential solution to these challenges as we will take advantage of the unique microgravity environment in space to grow seed crystals using Redwire's flight-proven PIL-BOX technology.

Our subsidiary, SpaceMD, will then sell or license these seed crystals to companies that can use them to create reformulated versions of existing drugs or entirely new therapeutics. We have a template for these commercial agreements and many successes with key partners in the biotech community to build on.

Please turn to Slide 12. Next, let's turn to our combat-proven UAS. First, I'd like to take a moment to discuss a few key differentiators of the Stalker.

The Stalker is a combat-proven UAS that is built on nearly 20 years of heritage with more than 300,000 flight hours, including in highly contested and harsh environments. The Stalker is silent, enabling covert surveillance and reconnaissance and minimizing detectability in contested or civilian-sensitive environments.

The Stalker is also payload agnostic. More than 30 different third-party payloads have been integrated via our modular open systems approach, which enables plug-and-play integration. And finally, the Stalker Block 40 offers extended endurance of more than 18 hours, critical for long-range operations.

We also have significant heritage with our Penguin series built in Regal Latvia, having delivered more than 200 Penguin aircraft to the Ukraine armed forces. European defense spending is growing rapidly and we are one of the few European-based suppliers with proven performance on the battlefield.

During the quarter, we were awarded and delivered Stalkers for the prototype phase agreement of the U.S. Army's Long-range Reconnaissance or LRR program. The Stalker has previously been selected for 2 programs of record, the U.S. Marine Corps Long-Range Long Endurance and the U.K. Ministry of Defense's TIQUILA program.

In total, during the third quarter, we shipped Stalker aircraft to 8 different end customers in the United States and other allied countries, showing the global demand for the combat-proven Stalker platform.

Clearly, Stalker is broadly fielded for a variety of mission sets with multiple countries and U.S. military branches based on our differentiated capabilities.

From unleashing American drone dominance in the U.S. to the European Drone Defence Initiative, the demand signal is strong. With existing production facilities and a broad customer base, we are targeting future growth globally. Redwire is ready with production capacity and fielded aircraft to deliver on key programs like LRR as we move into 2026.

Please turn to Slide 13. Finally, moving to sensors and payloads. Redwire has decades of heritage having delivered thousands of space-based sensors and payloads, including antennas, sun sensors, star trackers and cameras for some of the most high-profile missions.

Redwire now also has significant heritage with UAS sensors and payloads, having delivered more than 400 Octopus gimbals to the Ukraine armed forces, for example. These gimbals are compatible with a wide variety of UAS platforms. These are not just for Stalker and Penguin. We are selling these systems to other platform providers.

During the quarter, Redwire announced a partnership with Red Cat to integrate their Black Widow Small UAS onto the Stalker to support UAS Army Echelon missions. The Black Widow, which was selected by the Army for its short-range reconnaissance Tranche 2 program can be mounted under the center wing of the Stalker as a deployable payload.

By integrating best-of-breed short- and long-range reconnaissance systems, this partnership will provide war fighters on the front lines with mission -- with great mission reach and reliable data for effective decision-making.

Stalker and gimbals are already integrated with controllers such as [ ATT&CK ] and CUDA technologies. And after Q3, we announced an MoU with UXV Technologies to enhance controller interoperability and align with the EU's ambitions to strengthen its defense industrial base through cross-border industrial cooperation. As we look forward, we see significant growth opportunities for airborne and space-based sensors and payloads.

The UAS EO/IR sensor market segment is forecasted to grow from approximately $1.6 billion in FY '23 to approximately $4.8 billion in FY '32, a 12.9% CAGR. Redwire targets future growth both with the U.S. government and other key OEMs around the world for these products.

In space, the proliferation of satellites is expected to continue with an estimated 70,000 satellites expected to be launched over the next 5 years. Further, as capabilities like space situational awareness and airborne ISR become increasingly important, Redwire is positioned for continued growth in this area.

Please turn to Slide 14. Although in the near term we've seen delays from the U.S. government shutdown, which is likely to push key awards into next year, our pipeline of opportunities remains very strong and we saw a positive trend in contracts awarded during the third quarter as compared with the first half of 2025.

Our contract awards during the third quarter of 2025 almost tripled year-over-year to $129.8 million with a book-to-bill ratio of 1.25x, improving backlog to $355.6 million, including contracted backlog from international operations of $128.7 million or 36% of total backlog.

As a reminder, we often see lumpy contract awards from quarter-to-quarter. However, we continue to see a strong pipeline with an estimated $10 billion of identified opportunities across our space and airborne solutions, including approximately $3 billion in proposals submitted year-to-date as of September 30, 2025, inclusive of the year-to-date bids submitted by Edge Autonomy.

Although the U.S. government shutdown is likely to delay timing of Q4 awards into 2026 with key wins during the third quarter and in the intervening weeks, we are pleased with the positive change in our trend line for contracts awarded and believe our pipeline of new opportunities is very strong, positioning us for continued growth for the next 12 months and beyond.

Please turn to Slide 15. With that, I'd now like to turn the call over to Chris Edmunds, Redwire's Chief Accounting Officer. As previously announced, Chris will succeed Jonathan Baliff to become our Chief Financial Officer effective December 1, 2025.

Chris brings deep knowledge of our business and significant finance and accounting expertise, and I look forward to working with him in his new role. Chris will now discuss the financial results for the third quarter of 2025. Chris?

Thank you, Pete. Before turning to Slide 16, I want to highlight the photo on this page of the ribbon cutting for our new 15,000 square foot facility in Albuquerque, New Mexico, adjacent to the Kirkland Air Force Base.

This facility will support a wide range of capabilities from space, missile defense and other emerging war fighter domains as well as support work under the $45 million contract with the AFRL that was previously disclosed.

Redwire is focused on optimizing our operational footprint and smartly investing in locations like Albuquerque, which are key to our nation's defense architecture.

Please turn to Slide 16. Let's turn to the financial results for the third quarter of 2025, starting with revenue. Revenues for the third quarter of 2025 increased by 50.7% year-over-year to a record $103.4 million, with Edge Autonomy contributing $49.5 million.

Turning to profitability. During the quarter, we saw a significant sequential improvement in our adjusted EBITDA from a negative $27.4 million in the second quarter of 2025 to a negative $2.6 million in the third quarter of 2025. This improvement is largely attributed to the 67.5% sequential increase in revenue and adjusted gross margin of 27.1%, offset by the unfavorable impact of VACs of $8.3 million.

Finally, turning to cash and total liquidity. We ended the quarter with total liquidity of $89.3 million, which was comprised of $52.3 million of cash, $35 million of undrawn revolver capacity and $2 million in restricted cash. Although lower sequentially, this does represent a 46.2% year-over-year improvement in total liquidity.

Please turn to Slide 17. I'd like to take a moment to provide some additional detail around third quarter adjusted gross profit and cash used in operating activities.

Starting with gross profit, as shown on the left-hand chart, during the quarter, we reported gross profit of $16.8 million and gross margin of 16.3%. Included within these results was an $11.2 million noncash purchase accounting adjustment related to the Edge Autonomy acquisition.

This represents the amount of the fair value step-up recorded through purchase accounting for the inventory sold this quarter, resulting in adjusted gross profit of $28 million with an adjusted gross margin of 27.1%.

We believe that this adjusted gross margin is more representative of the potential of the combined business going forward as we have now fully recognized the inventory fair value step-up in earnings and it will no longer impact future gross margins.

Second, as shown on the right-hand chart, we saw a significant and expected reduction in net cash used in operating activities during the third quarter of 2025 as compared with the first 2 quarters.

During the quarter, our use of cash from operations decreased significantly on a sequential basis from a use of $87.7 million during the second quarter of 2025 to a use of $20.3 million during the third quarter, an improvement of $67.3 million. Even excluding the impact of acquisition-related costs included in our Q2 2025 operating cash flows, this represents a sequential improvement of approximately $30 million.

Although this quarter represents a sequential improvement, we continue to focus on profitability, expanding revenue and gross margin and driving efficient SG&A as we sharpen execution and we achieve profitability, including positive cash from operations.

In regards to capital allocation, we remain committed to a disciplined approach to fund our growth initiatives and maintain a prudent balance sheet. In line with this long-term capital sourcing strategy, we expect to file a prospectus supplement for a $250 million at-the-market or ATM equity offering program in the coming days.

Please turn to Slide 18, for a brief discussion of the outlook for the remainder of 2025. Although we are benefiting from a diversification in geographical customer mix and despite the improved book-to-bill of 1.25 during the third quarter and the strong bookings we have seen thus far in October, the ongoing U.S. government shutdown has pushed a number of anticipated awards out of the fourth quarter and into 2026.

As a result, for the 12 months ending December 31, 2025, including Edge Autonomy from the date of close, we are adjusting to a narrower expected revenue range of $320 million to $340 million.

In closing, I'd like to reiterate that although impacts from the U.S. government shutdown have necessitated a prudent revision in revenue guidance, we believe that these anticipated orders have been pushed out of the quarter and into 2026. They have not been lost.

With that, please turn to Slide 19, and I'll now turn the call back over to Pete.

Thank you, Chris. The transformation of Redwire with addition of Edge Autonomy has already been accretive to our financial profile, reflected in our year-over-year revenue growth of 50.7%, 27.1% adjusted gross margin and strong book-to-bill of 1.25x.

Finally, before we move to our question-and-answer session, as we announced in early October, our CFO, Jonathan Baliff, will be retiring from Redwire effective November 30, 2025. I'd like to take a moment to thank Jonathan for his leadership and valuable contributions throughout his tenure as he guided Redwire through critical phases of our evolution, both in his role as CFO and as a member of our Board. Thank you, Jonathan.

With that, I want to thank the entire Redwire team for their contribution to our results during the third quarter of 2025. We will now open the floor for questions.

[Operator Instructions] And your first question comes from Sujeeva Desilva with ROTH Capital Partners.

And Jonathan, best of luck with the transition. And Chris, congrats and good luck in the new role here. So starting with the revised guidance, appreciating that you did revise it down. What does that mean for the business looking toward 2026, given what you've seen happening during the second half of '25?

Yes. So I think as Chris emphasized there in the paragraph on the guidance, these are not lost awards. These are just timing issues, particularly, as I mentioned, with the LRR program.

The Army announced publicly right after the award of our prototyping contract that they would be awarding a production capability towards the end of this year and that has not occurred. And we believe the reason that that hasn't occurred is because of the ongoing government shutdown.

So we do expect those awards once the government shutdown ends to start to flow. But unfortunately, we only have approximately 7 weeks or so of production time left in the quarter and that includes 2 holiday weeks with Thanksgiving and Christmas.

So once the government reopens, and we believe the Army will start placing orders for the production element of LRR, we'll start producing those. And that would lead you to believe that -- and we also believe that that is setting us up for a strong 2026. Chris, anything you want to add?

No, I think this is the first quarter we've got the combined results and I think that's a stepping off point as the baseline as we start to go forward, right? So as we think about stepping from today forward and as the government reopens with our diversification geography, we are looking at '26 to be obviously a marked improvement on where we are. And I think we can start to see those trend lines as we're moving out.

Great. And just to understand that, was the EAC in the quarter, was that related to the government shutdown pushouts primarily?

No. The EAC was, again, a market improvement quarter-over-quarter as we continue to sharpen our execution. We put a lot of effort into that, but there remain a few space programs that we're rightsizing in terms of our delivery.

Okay. Great. And my other question here is on the pipeline and bidding activity numbers you provided. And thanks, Pete, for the 5 areas and clarifying kind of the focuses going forward. Which of those 5 areas would you say maybe are the larger emphasis of the pipeline and bidding activity that you have in place today on a relative basis?

Yes. Well, it's a good question and we are trying to -- I appreciate you acknowledging that because we're really trying to point out where the value is being driven at Redwire, so people have more clarity on that.

The good news is all 5 of them are areas with extraordinary potential. Now as we just talked about, the UAS orders, this is something be -- is a major priority for the Army and quite frankly, the Department of Defense in general, our existing customers, the Marine Corps and U.S. SOCOM also have strong needs for UAS.

So in terms of -- ironically, even though this is where we saw a pushout in the fourth quarter into 2026, that seems -- that still remains to be an area that has a strong growth potential. But there's been a bit of a slow start to Golden Dome as well and we think the VLEO orbit, in particular, will have a role to play in that defense architecture.

So we're really excited about that as well. Those can be sizable orders when you order a large VLEO spacecraft. We believe with the now nomination of Jared Isaacman, who has shown in the past a strong disposition for commercial LEO destinations or commercial space stations that funding may ramp up for the commercial -- for the CLD program for those space stations.

And you can see that Axiom is leaning forward. We're obviously in talks with all the commercial space station providers because of our heritage on the ISS. So we think that's really exciting as well.

And over the longer term, we're just getting started. We continue to have a strong drumbeat in microgravity. It's not our largest revenue driver. But in terms of the potential for some of the pharmaceutical molecules that we've been working on, we see a lot of growth there.

And even in sensors and payloads, that's a tried and true element of both the space and airborne market. And because we sell our payloads and not only use them on our own platforms, but sell them to other OEMs, we see strong growth there as not only coming from us selling more Stalkers and Penguins for UASs, but other people selling UASs in different categories that leverage our Octopus EO/IR sensors.

So I guess it's kind of a long answer to your question, but the nice thing about it is we have many paths to victory here. It's just a matter of timing for us.

And your next question comes from Greg Konrad with Jefferies.

Maybe just sticking to one question. I think you had called out the gross margin improvement, which was noted, but you still had some level of VACs. I mean, how do you think about the right level of gross margins as the business comes back?

And then just to reiterate, the fair value purchase adjustment, so that's gone going forward. That is just a 1 quarter adjustment?

That's correct. So starting with the last part first, 27% to 30% gross margins should be our forward runway. The only reason it wasn't reflected to that and why we call it adjusted gross margin is because of that purchase accounting element.

30% is where we have in the past said is our stated goal for gross margins and where we think the business should be run rate forward, inclusive of any EAC adjustments. Now having said that, we are hyper focused on sharpening our execution.

So should we be able to continue to reduce the number of EACs we see on some of these development -- space development programs and as we move out of development and more of our revenue comes from production contracts on the space side, we could do better than 30%, but I think 30% is the right forecasting run rate for us. Chris, I don't know if there's anything you want to add there.

Yes, I think you hit it right. As we're looking at the balance of our product mix, we'll continue to make investments where we see expansion in this gross margin. But based on where we are, as Pete said, with the repeat orders like we've seen recently with the announcement of the rollout solar rays with Axiom, again, repeat product line, we'll continue to see that gross margin profile continue to land around that 30% margin, Greg.

Your next question comes from Scott Buck with H.C. Wainwright.

I just want to ask about the commentary around the cost-cutting. Have you completed that cost-cutting process? And if so, what is the annual cost savings target?

Well, I'll answer the first part, and then I'll turn it over to Chris here. So the short answer is no. We have not completed it. Whenever you do a major acquisition, it's an opportunity to completely review your overall structure.

One of the core principles of our acquisition is that we're able to scale to get operating leverage, particularly around SG&A on a much larger platform.

So we're going to continue to look at that. And quite frankly, we have a lean culture that we've been implementing and we've been moving a lot of our engineering and development operations towards lean principles. And so that will be a part of who we are going forward. In turning of size and scope, Chris, do you have any comments on that?

Yes, playing off of the lean culture. We've gone through -- continue to evaluate all of our processes across the company. And really, the cost control is kind of balanced across all the various elements of the P&L.

We are stepping off and making a commitment to a $10 million run rate savings here across the portfolio. We are seeing obviously investments where it makes sense, but being smart about where we can be more efficient in getting operating leverage as we continue to grow the top end of our P&L.

We will continue to run the lean program that we've invested in. We do see additional cost savings, again, from production efficiencies as we continue to grow the top end. But no, we're happy where we are.

We see margin expansions, as we said on the last comment and we'll continue to see operating leverage with our G&A as we go.

Yes, one other thing, Scott -- yes, Scott, I have to mention [indiscernible] as I retire from the company. This will have -- what Chris has said, will also benefit our cash and cash from operations as we look into the future too.

We saw obviously sequential improvement in cash from ops and free cash flow. But all of the things that Pete and Chris are talking about are really meant to obviously decrease the cash burn and eventually become free cash flow positive.

And we have reached the end of the question-and-answer session. I will now turn the call over to Chris Edmunds for closing remarks.

Well, thank you all for your questions. Before concluding today's Q&A, as we've done the last quarters, we'd like to ask a select question from our retail community.

Government contractors have been inconsistent as to whether they have been impacted by the government shutdown in 2025. Why do you expect to be impacted? Pete?

Thanks, Chris. As usual, a very poignant and observant question from our astute retail investor base. It's a good one. It's interesting. Like the question states, we've seen a lot of different feedback on the government shutdown.

Quite frankly, I'm a little bit surprised that it hasn't impacted everybody in the government contracting sector. But for us specifically, I think it really comes down to the impact on the LRR program.

As I stated earlier, the Army had put out an article that they expected production to occur in the latter part of this year for LRR and that hasn't occurred because the government hasn't passed the budget. So those were not 2025 funds that they were playing off of.

I also think that in many of our programs, we -- it just happened to line up that we were expecting contract awards to happen in the fourth quarter and those contracts didn't come for some key programs.

And for the large defense contractor, maybe I should say, for each defense and government contractor, it probably has to do with where you are in your contract cycle. So maybe some folks that are burning off backlog don't see quite the impact.

But we invested a lot in being ready for production for the fourth quarter to meet the operational demands for the drone initiatives that were out there and I'm confident they're coming. But that didn't materialize in the fourth quarter. And with only 7 weeks left for production, we think it's prudent at this time to revise down for ourselves.

So thank you for that question. And of course, all the engagement we get.

Greetings, and welcome to the Redwire Corporation Second Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Alex Curatolo, Senior Director of Investor Relations. Thank you. You may begin.

Good morning, and thank you, Shamali. Welcome to Redwire's Second Quarter 2025 Earnings Call. We hope that you have seen our earnings release, which we issued yesterday afternoon. It has also been posted in the Investor Relations section of our website at rdw.com.

Let me remind everyone that during the call, Redwire management may make forward-looking statements that reflect our beliefs, expectations, intentions or predictions of the future. Our forward-looking statements are subject to risks and uncertainties that are described in more detail on Slide 3. Additionally, to the extent we discuss non-GAAP measures during the call, please see Slide 4, our earnings release or the investor presentation on our website for the calculation of these measures and their reconciliation to U.S. GAAP measures.

I am Alex Curatolo, Redwire's Senior Director of Investor Relations. Joining me on today's call are Peter Cannito, Redwire's Chairman and Chief Executive Officer; and Jonathan Baliff, Redwire's Chief Financial Officer.

With that, I would like to turn the call over to Pete. Pete?

Thank you, Alex. During today's call I will outline notable items during the second quarter of 2025. Jonathan will then present the financial highlights for the same period and discuss our 2025 outlook. Finally, I will close the call by discussing our creation of a new entity, SpaceMD to advance the commercialization of our PIL-BOX space pharma strategy after which we will open the call for Q&A.

Please turn to Slide 7. On our last earnings call I introduced our 2025 growth strategy which is centered around 5 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 vehicles for critical missions including 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.

Unlocking breakthrough technologies, which means continuing to pursue breakthrough technologies and that could unlock new markets with game changing potential.

And finally, executing accretive M&A which means building on our proven track record of effectively creating enterprise value by acquiring technologically differentiated companies at accretive values, a key competitive advantage that enables Redwire to rapidly scale as a public platform.

Over the next few slides, I will discuss a key win for each growth area to demonstrate how we are executing against them. Please turn to Slide 8. Starting with providing picks and shovels, during the quarter Redwire successfully completed the first deployment test for one of our Roll-Out Solar Array wings for the lunar Gateways power and propulsion element. These next generation Gateway ROSAs will generate an unprecedented 60 kilowatts of electricity, making these the most powerful ROSAs ever built.

In the coming months, the pair of wings will undergo additional testing as we prepare to deliver them to Maxar in the fourth quarter of 2025. We are proud to be delivering our well proven ROSAs to support this key capability. Successful execution on this critical capability continues to underscore our foundational position in advanced power generation.

Please turn to Slide 9. Turning next to delivering multi domain platforms. During the quarter we closed our acquisition of Uncrewed Aerial System or UAS manufacturer Edge Autonomy and we are already seeing significant positive conversion of their pipeline. During the second quarter, our Stalker platform was added to the Defense Innovative Innovation Units, UAS Blue List which contains technology vetted and approved by the Department of Defense for universal use across government agencies. This selection streamlines our ability to deliver combat proven commercially developed UAS technology at scale to meet the evolving mission needs of the U.S. government.

Today I would like to give you an update on a critical U.S. army program called the Long Range Reconnaissance program or LRR. I'll start by providing a high-level description. LRR is a U.S. army program of record to provide maneuver battalions with a UAS designed to support reconnaissance, surveillance and target acquisition efforts. For LRR, systems will have aircraft weight of less than 55 pounds, range of 40 to 60 kilometers, an endurance of 5 to 10 hours, making our Stalker platform well suited to this specific set of requirements.

For fiscal year 2026, the DoD's budget estimate for army aircraft procurement published this last June included approximately $325 million in funding for the LRR program. We believe Redwire Edge Autonomy is well positioned to be a performer on this program.

Please turn to Slide 10. As such, we're pleased to announce the award to Redwire Edge Autonomy of a prototype phase agreement by the U.S. army to develop and deliver Stalker Uncrewed Aerial systems for the LRR program. Under the terms of the contract, we will deliver the Stalker UAS's which will be evaluated by the army and during hands on flight operations in the coming months. This is a strong signal that the U.S. army recognizes the Stalker system as a potential future platform for their UAS architecture. We are proud to support this critical program and are committed to meeting the Army's evolving mission needs.

Please turn to Slide 11. Moving next to exploring the Moon, Mars and beyond. In early June, Redwire announced that our advanced manufacturing technology Mason passed Critical Design Review, or CDC, with NASA participation. Mason is an advanced tool suite designed to operate on the Moon and Mars and will enable the construction of berms, landing pads and roads for future lunar and Martian habitats. This technology can reduce operational risks and protect assets from damage caused by regolith, the material on the surface of the moon, as lunar surface activity continues to increase. This is a critical milestone that brings Mason one step closer to launch in the future and having completed the CDR, engineers at Redwire will begin to focus on fabricating a prototype and conducting functional testing of Mason.

Please turn to Slide 12. Now let's turn to unlocking breakthrough technologies. During the second quarter, Redwire was selected by NASA to facilitate a space microalgae biotechnology experiment developed by the Indian Space Research Organization, International Center for Genetic Engineering and Biotechnology and the National Institute of Plant Genome Research, New Delhi. For this research mission, Redwire will manage mission integration, scientific fulfillment and on-orbit operations. This is but the latest example of Redwire's reputation as a leader when it comes to microgravity research, not only in the U.S. but globally.

Please turn to Slide 13. Finally, when it comes to executing accretive M&A, our acquisition of Edge Autonomy was overwhelmingly approved by Redwire shareholders and closed on June 13, 2025. With Edge, Redwire is well positioned to transform the future of multi domain operations and provide decisive advantages to U.S. and allied warfighters. Integration is well underway and our goal is to achieve commercial, operational and financial integration objectives within 12 months.

Please turn to Slide 14. Next, I would like to discuss the impact of the U.S. and international budgeting environment in the context of the industries we operate in. As we have previously discussed, delays in the U.S. government budgeting process impacted Redwire during the first half of 2025 and in some cases these delays have pushed out awards previously scheduled for the second half of 2025 into the beginning of 2026. Despite these delays, however, we have started to see positive trends from both the U.S. and our allies that will present significant growth potential moving forward.

Starting in the United States, in the Big Beautiful Bill, the U.S. government is funding key programs Redwire could address, including Golden Dome with funding of approximately $24 billion, and NASA Gateway, with funding of approximately $2.6 billion. Further, we see both the July 2025 unleash U.S. military drone dominance memo and recently proposed Ukraine aid as positive indicators for our airborne platforms as we move into the back half of 2025 and towards 2026.

Turning to the international environment, during a Summit in The Hague that took place this past June, NATO allies committed to invest 5% of gross domestic product annually on core defense requirements and defense and security related spending by 2035. Given our long standing existing operations in Europe, we are considered local in multiple countries and are therefore significantly advantaged in our ability to participate in European government programs.

Also in June, Canada announced a plan to increase and accelerate investments in defense, with a cash increase of more than $9 billion anticipated in fiscal year 2025 to 2026. These developments are positive indicators for continued investment in the national security space and defense budgets both in the U.S. and internationally as we move into the second half of the year and beyond and Redwire is well positioned to take advantage of these key trends.

Please turn to Slide 15. Turning to our contract awards and backlogs, our contract awards during the second quarter of 2025 were $90.6 million with a book to bill ratio of 1.47x and backlog of $329.5 million as of June 30, 2025, both an improvement on a sequential basis and inclusive of the backlog from the acquisition of Edge Autonomy.

As a reminder, we often see lumpy contract awards from quarter-to-quarter. However, we continue to see strong and growing pipeline with an estimated $11 billion of identified opportunities across our space and airborne solutions, including approximately $2.5 billion in proposals submitted year-to-date as of June 30, 2025 inclusive of the year-to-date bids submitted by Edge Autonomy.

We continue our efforts to increase the average size of the individual opportunities we are pursuing and as a result we continue to have a pipeline of bids that could result in a substantial increase in backlog and if we land these larger opportunities. Due to the success of our transformational investments building the Redwire platform, we are now positioned to continuously pursue larger opportunities in 2025 and beyond.

Please turn to Slide 16. With that, I'd now like to turn the call over to Jonathan Baliff, Redwire's Chief Financial Officer, to discuss the financial results for the second quarter of 2025. Jonathan?

Thank you, Pete. Before turning to Slide 17, I would like to highlight the photo on this page which is of our airborne flight operations team in Riga, Latvia, and they're preparing for the launch of a Penguin C VTOL UAS. With a vertical takeoff and landing and range of approximately 180 kilometers, this aircraft can be rapidly deployed even in harsh environments like the one shown here.

Please turn to Slide 17. Let's review the results for the second quarter of 2025, starting with revenue. Redwire's recorded revenue of $61.8 million was up sequentially. 2025 is a transition year for our customers and we continue to see movement of revenue to the right on existing contracts and delay in awards across our customer classes, especially in the U.S. during the first half of 2025.

Turning to profitability. During the quarter we saw a sequential decrease in our adjusted EBITDA from a negative $2.3 million in the first quarter of 2025 to a negative $27.4 million in the second quarter of 2025. This quarter's adjusted EBITDA was primarily impacted by net unfavorable EAC of $25.2 million, and this related primarily to a single program in the company's RF system offerings, as this program saw an increase in estimated costs and based on the technical complexity of the work to be performed to meet customer specifications.

Turning to net loss, we saw a sequential decrease to negative $97.0 million and this includes the EACs I just spoke about, as well as noncash expenses, transaction costs and nonroutine activity that we will discuss in additional detail on the next slide.

Looking at our cash and total liquidity, we ended the quarter with a record level of total liquidity of $113.6 million, which was comprised of $76.5 million of cash, $35 million in undrawn revolver capacity, and $2.1 million of restricted cash. This is a 27.4% improvement over the $89.2 million in total liquidity at the end of the first quarter of 2025 and 103.4% year-over-year improvement in total liquidity.

We had an expected increase in year-over-year and sequential use of operating free cash flow in the second quarter, but this is related to transaction and other investments, which again I'll go over on the next slide. We expect these levels of cash use to decrease in the second half of 2025.

Please turn to slide 18. The transformational aspects of the Edge Autonomy transaction, as well as our organic opportunities for growth provide significant benefits including an improved balance sheet and capitalization. So let's talk about some of these. The completion of the transaction had the issuance of approximately $260 million of equity and that repaid $120 million of debt and the repurchase of $61.5 million of the preferred securities, significantly reducing the fixed charges for the company and improved our capitalization ratios while also increasing shareholders equity from a negative $68.1 million in the first quarter of 2025 to a positive $907.6 million in the second quarter of 2025.

However, there have been second quarter impacts associated with these changes which improve the balance sheet and therefore we wanted to provide additional detail of the drivers of these changes specifically on our net loss for the second quarter of 2025, as compared to the second quarter of 2024.

As you can see on this slide, in addition to the EACs already discussed, Redwire's Q2 2025 net loss and cash flow was impacted by significant transaction related and nonroutine activity and the net income was also impacted by some noncash charges. Key among these were first, the $29.6 million increase in equity-based compensation primarily from the acquisition of Edge Autonomy.

Second, a $20 million increase in interest expense from the repayment of debt to finance the Edge Autonomy transaction.

And third, a $16.4 million increase in transaction expenses between the second quarter and 2024 -- between 2024 and 2025 which again primarily relates to the accretive acquisition of Edge Autonomy. We do not expect this magnitude of noncash transaction related and nonroutine activity during the remainder of 2025.

Please turn to Slide 19 for a brief discussion on the outlook for the rest of 2025. Our acquisition of Edge Autonomy closed on June 13, 2025, so we are now for the first time providing full year Redwire 2025 guidance including the Edge Autonomy from the close date again June 13, 2025 through December 31, 2025 and this will be a range of $380 million to $445 million which represents a 30.5% compound annual growth rate on fiscal year '23 to fiscal year '25 revenue at midpoint.

In line with the Redwire post-acquisition range provided today, let's discuss the impacts to the combined forecast range which we had provided before. As part of the announcement, our combination with Edge Autonomy we provided a combined financial forecast for fiscal year 2025 as if the transaction had closed on December 31, 2024. We're now revising our full year combined revenue forecast to be in the range of $470 million to $530 million, which still represents a 43.2% compound annual growth rate from 2023 to '25 at midpoint. This represents less than a 13% reduction to our previously provided combined forecasts at the midpoint.

Please turn to Slide 20 and I'll discuss the drivers of this revised revenue as well as the impact they had on adjusted EBITDA for 2025. First, as we mentioned earlier, Redwire's first half of 2025 was impacted by the uncertain timing of government contracting, including delays in the U.S. government budget process related to a transition in administrations. We have seen some of our projected awards slip to the right and in some cases out of the year for both our space and airborne platforms, products and solutions.

Second, as discussed, our second quarter 2025 saw a net unfavorable impact from EAC changes of $25.2 million, primarily related to a single program in our RF system offering which is a development phase program and I want to spend a moment to double clip on this topic. As part of our moving up the value chain growth strategy, Redwire manages the risk associated with nonrecurring engineering or NRE on development programs. Generally, these are development programs that can anchor Redwire into the production tail for validated requirements from our customers.

An example of these pursuits that we've seen this dynamic in play include moving from providing just antennas to providing full RF payloads and also breaking into emerging markets such as low voltage distribution units. Once the NRE is complete, Redwire generally both owns the intellectual property and is spec'd in on our production programs with high switching costs for our customers, thus resulting in a much lower risk of losses moving forward.

Furthermore, subsequent orders for these products tend to have much more predictable gross margins. At the same time, we recognize the need to manage the risk associated with these programs and are highly focused on minimizing EAC changes that impact our results in the future.

Ultimately, we see such programs as having a short-term negative impact on profitability similar to IRAD while enabling future growth and profitability. So, given these drivers for 2025 and at this time we are withdrawing our previously provided adjusted EBITDA combined forecast for the full year 2025. Despite the revisions to our outlook in 2025, we believe that we are well positioned to capitalize on high growth trends in the future.

It's important also to note that our acquisition of Edge Autonomy lowers the proportion of our business exposed to EAC volatility. Our contracted backlog as of June 30, 2025 as Pete talked about, now includes almost $90 million in remaining contract value from contracts which recognize revenue at point in time instead of percent of completion revenue recognition.

These budgetary movements we have begun to see, combined with the positioning and diversification of our space and now airborne product offerings provide us momentum heading towards 2026.

Please turn to Slide 21, and I'll now turn the call over back to Pete. Pete?

Thank you, Jonathan. For those of you who have been following Redwire, you know that unlocking venture optionality has been a strategic opportunity. On Monday of this week, we announced our next major milestone in these endeavors to drive shareholder value, the creation of SpaceMD as a separate entity within Redwire to focus on commercializing drug development in space by partnering with pharmaceutical companies, scientists and research institutions to develop a novel pipeline of innovative drugs and therapeutics.

Please turn to Slide 22. With decades of experience and 28 PIL-BOXes flown to-date, we continue to establish ourselves as a true leader in microgravity operations, particularly when it comes to pharmaceutical research. Utilizing Redwire's proven PIL-BOX technology, the team will develop a pipeline of new and modified drugs uniquely manufactured in microgravity, accelerating solutions for disease treatment and generating new revenue streams from sale or licensing. SpaceMD represents the evolution of our venture optionality strategy, moving from experimentation to full commercialization with significant upstream revenue potential, unlocking value for our shareholders.

Please turn to Slide 23. I want to emphasize that the technology and processes underlying SpaceMD are proven and we are entering the commercialization phase. During the second quarter we signed an agreement with Aspera Biomedicines, a new commercial partner, to conduct space-based pharma research and analysis to advance the development of a cutting edge cancer treatment, rebecsinib, a small molecule ADAR1 inhibitor.

Please turn to Slide 24. In addition, I am excited to announce that Redwire SpaceMD has executed a trailblazing commercial royalty agreement for space drug research with ExesaLibero Pharma. Under the terms of this agreement, Redwire SpaceMD expects to receive royalties from the commercial sales of resulting pharmaceutical products.

This agreement signals a revolutionary paradigm shift for commercial utilization of microgravity. SpaceMD is translating the benefits of microgravity research into product value for our end customers with the goal of transforming the future of therapeutics while creating value for our shareholders. Through SpaceMD, Redwire has created a new business model for the monetization of critical IP generated by future PIL-BOX missions.

Please turn to Slide 25. In closing, I would like to acknowledge that Q2 was a disappointing quarter for adjusted EBITDA compared to our expectations. We had one project, as Jonathan mentioned in particular that encountered challenges which led to an adverse EAC change with an outsized impact on revenue and profitability for the quarter. Space is hard. The team has taken numerous steps to address the challenges to get the program back on track. We are investing significant focus on operational execution.

Despite this setback, there were also numerous achievements that we discussed that we believe position Redwire for long-term success. Space is a long-term investment. The path to success is not linear. Our strategic horizon is measured in years, not months. There is strength in the diversity of our business and the fundamental foundations of our strategy remain positive.

With that, I want to thank the entire and integrated Redwire team to include our new employees from Edge Autonomy for their contribution to our results during the second quarter of 2025, a truly global effort. We will now open the floor for questions.

[Operator Instructions] Our first question comes from the line of Colin Canfield with Cantor Fitzgerald.

As we think about the work that needs to get done here, how do you think about the balance of work that needs to be done between accounting controls and the complexity of the engineering solution? And then maybe if you could talk about kind of what are the key dynamics that you need to see before being able to reinstate your adjusted EBITDA guidance?

Yes, that's a good question. And it's a good first question because obviously it's a big part of this quarter was associated with the accounting of our acquisition. That has a direct impact, of course on our reported numbers as well as the accounting of our programs. And I think that's why Jonathan took the time to try to articulate just how our developmental programs work in terms of EACs, because it's possible many of our shareholders don't understand what EAC estimate at completion really means and how you account for a program, a development program that's already happening in midstream.

And the fact of the matter is, when you have a large number of development programs like you have in the space industry, EACs introduce a level of volatility during the development phase. Because what you're essentially doing is you are bidding a development program that in many cases has never been done before at a -- on a firm fixed price contract. And that's how our customers buy.

So the result sometimes is as you move through the program, you can encounter technical challenges that affect what you are projecting will be the ultimate cost to the program at any given time based on the percentage of completion of the program. And this is how EACs are calculated. There's an estimate at completion that occurs. Because of this we endeavor to follow obviously the rules and general principles of accounting for these correctly, but that it can add some level of predictability when you have unpredictability, when you have a large portfolio of these first of a kind technologies in their development phase.

As Jonathan tried to articulate, is that in many cases these development programs are moving towards production contracts. So despite the volatility of EACs, we remain optimistic overall on these programs because it's moving towards a production phase that tends to have, where the technological risk has now been significantly burned down and you move into just generating units in more of a production business model. But as we started to look at the impacts of EACs, especially late in the second quarter, and some of the changes that rapidly emerged associated with those, we decided that it would be prudent to do a complete portfolio review to understand this EAC dynamic that we have now seen for 2 quarters in a row before we continue to give EBITDA guidance.

And so I'm going to turn it over to Jonathan to expound on that. But the idea is when you combine some of that variability that we're seeing on these development programs that are in many cases technological firsts, with the uncertainty in the environment associated with things like CRs and delays in budgets, and not having clear visibility into which programs are going to get funded. The idea of there not being a current NASA administrator, full time NASA appointed administrator in place, that's why we decided to remove our EBITDA guidance for the remainder of the year as some of that uncertainty, regardless of the AAC starts to go away, specifically in the budgetary environment, that of course give us a higher confidence to do predictions in the future as well.

Jonathan, anything you want to add?

No, I want to be very clear that you asked how did the team think about our accounting controls? Our accounting controls have improved significantly. On top of that, the issues associated with this one product line or product offering the RF was part of a third quarter review that was completed just recently. We're being conservative. We're taking the EAC in that program in our second quarter queue and disclosure because those controls have significantly improved and I believe that the team is excellent.

As far as the EBITDA and other things that impact that, Pete has just mentioned it. The only thing I would add to what Pete has said and just to repeat, the acquisition of Edge Autonomy brings down the amount of contracts and revenue pretty significantly that's exposed to these fixed price contracts which again we have shown in the past to be both profitable and also free cash flow positive as we move forward and scale the business.

Got it. And then maybe if you could just talk about the due-diligence process that you conducted as part of the Edge Autonomy acquisition, as well as the investor due diligence of that acquisition during your recent raise with regards to the free cash flow profitability. So you discussed free cash flow right now. Is it still fair just considering kind of that due diligence of both parties to expect free cash flow positive next year?

So first of all, it's a company that has unique technologies and has been both growing and also achieving higher levels of gross margin as they are in a more mature production phase with these technologies. And again, the announcement of the LRR prototype contract is proof point of that. It is a company that has been able to achieve free cash flow positive and we expect that to happen in the future especially as we scale the business. We'll, in the future, give more details about that. But that business is providing the financial results that we expected in due diligence.

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

Maybe just to go back to the EACs, I mean sometimes when we hear the word fixed price development there's a negative connotation. When you think about retiring that risk, I mean has there been a shift in just overall mix? I mean when you think about retiring that does the portion of the business that's fixed price development programs go down relative to production? Just trying to get a sense of if some of this is just tied to changes in the mix of development versus production programs.

Well, so no, I don't think it's tied to the changes in the mix. Actually going forward, the mix part of what we believe is one of the financial synergies of Edge Autonomy is the diversification of the kind of contracts we perform on and Jonathan hit that development percent complete programs versus production point in time, which Edge Autonomy brings predominantly production point in time. So our mix going forward will actually be better.

Essentially, we believe that this is just a function of where the space industry is right now. These contracts are let from fixed price. If you want to compete on them, you have to bid a firm fixed price job. In many cases when you look at opportunity that comes up, you're trying to determine, you're comparing it, especially when you're trying to break into new markets with a technology that's never been done before to just purely developing the entire thing on IRAD.

For contrast, I'll give you an example. If you were -- if a customer had a requirement to do something and they were willing to pay a firm fixed price for it, we could essentially build the entire thing on IRAD, expense it, and then once we know exactly how much it would cost, we could set that price for the customer, assuming that price is lower, assuming they want to wait that long, and assuming that that price is lower than what other people would bid, which usually isn't the case.

What happens usually instead in the space industry and again, I think this is just where the industry is right now with a lot of these first of the kind emerging tech programs is you bid the project and with the intent to be profitable but because it's a development project, you try to estimate that variability and include things like MR and other aspects to manage your risk. But sometimes because you don't see many cost plus fixed fee projects anymore, but because they're firm fixed price, you can encounter a technological hurdle that the team didn't anticipate because it's a first of its kind type of development that can impact your profitability on the program.

Our perspective is that latter approach is better than just spending IRAD outright in the vast majority of our contracts. We retain the same level of IP through the contract as if we had done it entirely with our own money on IRAD and we feel that sometimes the impacts that you occur with these riskier development projects in the aggregate is less than the amount of total IRAD that you would have to spend to do more of a develop on your own money first and then sell as a unit price later on. Does that answer your question?

That's helpful. And then maybe just to go back to the Blue List for Edge Autonomy, obviously a lot of excitement around UAS and drones. I mean what does that really mean for Edge Autonomy? How does that change conversations with customers and any read through in the impact of the international opportunity set with the addition on that list?

Yes, I think getting included on the Blue List is kind of table stakes now for competing in U.S. government contracts in the UAS market. So -- although we usually win and we have programs of record with the Marine Corps in particular and other allies at scale that saw the advantages of our UAS platforms regardless, and the differentiation regardless of whether we were on a Blue List or not, this I think gives us additional credibility and makes it easier for the customer to check a box and say that this is a legitimate platform for a federal agency, not only in the DoD, but across all federal agencies to acquire.

So the Blue List and DIU has taken on the initial vetting process and that our presumption is, is that federal agencies go to that list first when they're considering who they're going to include in future procurements.

And then maybe just to sneak one last one on SpaceMD I mean, what changes with that business going forward as a new entity? What was the structure required to capture royalties? And maybe how are you thinking about that opportunity going forward as that gets separated out?

Yes, no, it's a great question. And quite frankly, much of the strategic thinking around this came from questions on earnings calls from you all, as well as investor questions and questions from our own Board about what does this strategic pillar that I talk about in 2024 called "Unlocking venture optionality really mean?" And to be explicit about it, it was how do you unlock that venture potential and take it from being optionality to an actual value creating part of the business? And so as we started contemplating that, and we've had previous questions on calls about the business model and whether there was opportunity for generating royalties, we were working very hard on putting that together.

The ExesaLibero agreement gave us a proof point that this was in fact a viable business model. And there are pharmaceutical companies out there that see the value of it, that they would be willing to sign an agreement of this type. So once we had the proof point associated with the strategy, we looked at some of the ways that competitors were positioning themselves, companies like Varda and the associated valuation and shareholder accretion that were generated by those businesses. And we thought to ourselves, well, perhaps by making it very distinct, we can unlock the venture optionality by putting significant focus and getting the right people with the right story focused on going out to the pharma industry to create the partnerships as part of this separate branding. Because in some cases, when you approach a pharma company as Redwire, they see you as a space infrastructure company less than as a development company. This gives us a vehicle to work inside those markets in the most streamlined and direct way possible.

And again, like I said, the Aspera Biomedicines is a proof point, albeit that's a more traditional model where we're paid to run a facility. But certainly, the ExesaLibero is what we hope is the first of these proof points that show that this kind of model for microgravity drug development has finally come of age.

Our next question comes from the line of Suji Desilva with ROTH Capital Partners.

You guys said I think you're conducting reviews of all your programs for kind of EACs and the assumptions baked in. Is that an ongoing effort right now? And when do you think that review process would conclude?

I mean, let's be clear, Suji and I'll let Pete -- we by nature of our programs, we conduct these reviews very regularly, right? What we're trying to say is we were conducting the reviews as part of after the second quarter was completed in July and as part of those reviews, both operational and financial. This is when the EAC became evident there was work being done as part of that. But again, these are part of the normal reviews that we believe are excellent accounting controls and in partnership with our operations.

Go ahead, Pete.

Yes, no, I'm glad you brought that up because I don't want to be misinterpreted. The reviews are systemic to what we do. This is what we do and we will always do it this way. I think the greater focus is on trying to characterize the whole EAC dynamic in our forecasting and making sure that we have the best processes in place to ensure that we capture any variability as early as possible.

Okay. And I appreciate that clarification. I understand these are first of their kind projects which are fixed fees. So this is a new kind of world for this. And then separately, congrats on the win for the Stalker. I'm curious, as you've been down selected or the prototype has been off awarded, are you the only one providing a prototype? Are there multiple and just remind us the competitive advantage of Stalker that may have helped you get an Edge in this program. I think it's a battery tech, but you can clarify that.

Yes, that's correct. We do not know who has been awarded prototype contracts, so we just don't know. The competitive advantage of Edge is, as you said, the range and duration of flight that we can achieve with our battery intellectual property that gives us best-in-class duration and range and duration for our group category in the UAS Group 2 category.

Yes, I'd probably add to that too, that the combat proven operational performance is a key part of it too. I think sometimes people overlook that the Marine Corps and Special Forces have already been using Stalker pretty extensively. So I can't speak for the Army, but I imagine that they looked at that as well.

Our next question comes from the line of Brian Kinstlinger with Alliance Global Partners.

As it relates to the contract with a large number of EACs, it's still ongoing and if so, how should we think about the margin profile going forward on that if you've already exceeded the cost, will they all be EACs? Will it, now that you've taken the EACs, start fresh and have normal gross margins? Just wanted to kind of understand the impact in the second half of the year if it's still ongoing.

So, Brian, when we talk about taking this large EAC, we have been very conservative as part of this. And in any type of EAC, you have an ability over time to both again, continue to get cash flow, continue to get margin. For this particular contract and without getting into too much detail, contract by contract, we generally want to be very conservative when we take it so that over time, as we perform, both cash flow comes in obviously at a better margin than what we've already taken. And that's kind of the history. That's why as part of most of our EACs, we then work as the project and the program is going to be ongoing to move forward.

Okay. As it relates to the LRR program, that $325 million of initial funding, is that for 1 year for fiscal '26 or is that year marked and it will be $325 million for multiple years.

It's the 2026 1-year governmental budget line. And as I understand it, they budget on a year-by-year basis for the procurement to be spent in that year.

And how long at the valuation period do you think of the prototype?

I don't have any...

Yes. Look, historically in all of these prototype phases, it doesn't go out very long, right? These are meant to then move into an operational phase. That's the way it is.

I think we're thinking about it as if you look at the administration and the Department of Defense position on U.S. drone dominance, I don't think they're being given a lot of time. The sentiment that we understand is that this is a major priority for this administration and they want to see UAS dominance in the near-term. That's how we interpreted the memo. I encourage anybody who is out there who is interested in the UAS market, go and read that memo.

And just for all the investors out there, we plan on obviously coming out after this earnings announcement with more information about our UAS business, which we're really excited about. Tremendous growth wedge as part of the business that some of it we've talked about. Now that the combined companies are there, we plan on giving more information about this in the future. Pretty exciting.

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

So is there anything more you could provide today as to what Edge's results were for the full second quarter and what its proportion of backlog is given that you said you included that in the backlog as well.

Yes. So Griffin, again, to remind everybody that the transaction closed on June 13. So the results that are in the current disclosure and we'll release the 10-Q later today allows you to see a very small amount of results from Edge. For the rest of the year and then into '26, we'll obviously show the full results of Edge. However, as part of our disclosure, we'll disclose revenue and net income loss recognized for Edge from the acquisition 6/30 and pro forma results for the same 3 and 6 month period for June 30, both 2025 and June 30, 2024. As you'll see when the 10-Q is filed, you can calculate the Q2 revenue for Edge, which was approximately $58 million. And so you'll be able to do that as part of when the Q comes out and then we'll be able to talk about that over the next number of months as we disclose more information about this exciting and accretive acquisition.

And then yes, next for me and apologize if this was covered earlier on. But regarding LRR, do you have any idea how many companies could potentially be down selected on that program? And also given that this is a program of record, how soon we could perhaps expect to see any potential award there?

We do not know how many can be selected. We see us being having a purchase by the way, this wasn't just an invite to prototype, they're actually procuring the aircraft as having us well positioned. But whether it's a winner take all or a couple awards, we don't have insight into the Army's plan there.

What was the second part of your question?

It was if you had any potential expectation for when we could see an award given. It's a program of record, so shouldn't be affected by the CRR?

Yes, we don't know so. But we do believe that the DoD has got very aggressive about making drone dominance a priority. So we're optimistic that it's not going to linger for long. I think maybe the most simplistic way I can answer this is that government fiscal years start in October, October 1. So when we talk about it being in budget for 2026, we don't mean after January, we mean in a couple or 1.5 months here or whatever it is will be when the budget for 2026 will be active. But obviously there's been a lot of uncertainty around the timing of government programs associated with the budgeting process as we articulated. So when they will actually get to executing the contracts out of that October 2026 budget start, we're not trying to predict.

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

Just one from me. With the closing of Edge, can you provide us with a little bit of color on what the information share looks like across Legacy, Redwire and Edge today and maybe a bit of a road map on integration through the remainder of the year? That would be great.

Yes. Well, I'll take the second half first and then Jonathan can take the first half. In terms of the road map for integration, obviously the number one thing that we start from an integration perspective is the financial integration for reporting. So that is obviously very well underway, has gone extremely well and has been our initial focus.

As we continue to progress, I would say the next big thing is looking at aligning strategic road maps and the allocation of investment and looking for those combined BD opportunities where multi domain provides a highly strategic differentiator for us. And that of course is also well underway.

And then we have a very robust integration framework as you can imagine, we've done this. This is our 11th acquisition, so we're following our playbook and I think I articulated in the script look to have it completed in about 12 months.

I mean, Scott, I'll just say from a financial information standpoint and consistent with previous, especially the large acquisition that we did 2.5 years ago, the financial community will see and has already seen the information on Edge Autonomy is part of our proxy that we filed about 2 months ago. And so you're able to see that information as part of our 10-Qs and our 10-Ks. You'll also be able to see pro forma information similar to what I just spoke about in answering a previous question in which you'll see full Q2, you'll see that comparison to 2024, and then you'll see the same thing for subsequent quarters and the full year.

So we do expect you to be able to understand that business. It is a higher margin business on a gross basis at this current state because they're mature into production. But just use that as a guide in what we've already shown. And again, a very accretive transaction and again operating the way that we saw already with nice growth, high margins.

And our last question comes from the line of Austin Moeller with Canaccord Genuity.

So my first question, how do you view NASA's new directive on future contract awards for the commercial LEO destinations program? And how do you expect that may impact your revenues versus the restored funding from Congress through the ISS?

Well, I'll take the latter part first. The restored funding for the ISS is obviously good for us. We do a lot of work on the International Space Station that leads to more shots on goal with PIL-BOX and our other microgravity innovations. So we're excited about that and we're excited about the recognition that having a presence in low earth orbit is really important to not only the U.S. but our allies as well. And some of the variability that we've talked about in terms of uncertainty in the timing of things is to put a finer point on it is ESA, which is a very big customer of ours, looking to see what direction NASA is going to go in with some of the programs like the ISS, as well as the longer-term programs associated with Artemis, like Gateway. But I think we're starting to see through the budgetary process that the programs are going to be healthy here going forward.

In terms of CLD, I think it's good that we're seeing additional clarity there. I would point to, as we've discussed previously, Redwire's is positioned to be what we colloquially refer to as the orbital outfitter for government and commercial space stations. So as these space stations come online and the investment goes into building them out, whether it's funded by NASA or funded by individual companies, we're clearly an important subsystem provider for that since we have the proven rollout solar array capabilities on the International Space Station now. And we're of course -- well, it's been through a number of press releases with our associations with VAST and others, it's been well established that we're positioned to be providing onboard capability like our PIL-BOX and other microgravity capabilities for anyone who successfully executes their plan.

Okay. And just a follow-up. Presumably you view the funding opportunity in fiscal year '26 as more favorable than the CR this year. Do you expect any Golden Dome contract awards that you're bidding on to be issued more in the first half or the second half of '26? And are you bidding as a prime contractor, a subcontractor, or both?

So I can't discuss the details of our bidding strategy on Golden Dome other than to say we are actively bidding into Golden Dome in a variety of ways based on the early industry conferences that we have been invited to today. So we're an active participant in the Golden Dome acquisition. In terms of time line for Golden Dome, again, we don't -- part of, I think one of the major themes of the uncertainty in the second half of 2025 is there isn't a lot of insight right now as to when these programs are going to be awarded.

But General Guetlein, who is leading the Golden Dome effort has -- they only have 3 years that they've outlined to accomplish their goals. So I believe they will move out quickly. But again, the -- when that actual -- it's a material. If you look at the fact that sitting in this chair last year, if you had asked me what the number one national security space program opportunity would be, I would have said the SDA tranches coming out of the Space Development Agency. There has been a lot of uncertainty around that. And it seems to be kind of an on again, off again thing that's going on out there. How that -- those funds and the funding and the architecture and all that kind of stuff transitions into a new yet to be defined Golden Dome architecture does introduce an element of uncertainty.

But all I can say similar to LRR is that we are very focused that these are the Department of Defense's priorities. So we're not, fortunately, a business that is -- even though there's uncertainty around it, we're not a business that's focusing on deprioritized trends. We have a lot to offer to these prioritized initiatives.

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

Thank you for your questions. Before we conclude today's Q&A and as we've done the last several quarters, we'd like to ask a select question drawn from our retail investor community. Today's question comes from Reddit. Redwire owns a new domain, rdw.com, are you moving away from redwirespace.com. Pete?

No, it's I'm always amazed by the attention to detail from the retail investor. They really do an incredible job noticing some of these moves. And I think it's an insightful question because we are moving forward as rdw.com, of course we're still Redwire, but Redwire has -- both Redwire Space as well as Edge Autonomy. And perhaps symbolically the move to rdw.com really just underscores that a Redwire is no longer just a pure-play space company. We are a space and defense tech company.

And there's a lot of reasons why that is highly strategic. But I think in the context of the discussion we've had today, the thing I'd like to highlight most is Redwire has always had this position of being diversified across what we call things that are happening today that are generating revenue and profit today, as well as things that are happening in the bold future. And it's a bit of a hybrid because there are some companies who are more towards completely towards the venture side of things. They don't generate much near-term revenue. Certainly, profitability doesn't tend to be a focus area for those kind of companies.

And then there's other companies who have great traditional revenue streams but don't have a bold vision for the future. We're a hybrid and that's what we try. We've always tried to articulate that when we talk our picks and shovels side of the business of providing subsystem components, as well as our unlocking breakthrough technologies part of our strategy in terms of the biotech.

The pivot to RDW is really just an extension of that. We look at the similarities between defense tech and space and we recognize that defense tech in many cases is a much more mature market than the emerging space industry is. And therefore, expanding the vision to include both high tech things in space as well as high tech things like UAS's allows us to continue that tradition of trying to have that portfolio effect via our diversified strategy of things that are being procured now and that have really strong demand in the immediate future with things that have a much longer tail.

And in my closing remarks at the end, I talked about that space is a long-term investment and it has to be viewed that way in terms of how we certainly, I should say view it that way in terms of how things are going to play out. But the pivot to rdw.com underscores that we also see a lot of value in having a strong base in the defense tech area that enables us to be patient to see how some of these programs like SpaceMD and others, play out over the long-term.

So, I appreciate that question. And again, our retail investors have a keen eye for that kind of thing. And I think that question, in particular, was insightful because it was a great way for me to use a symbolic change to underscore a much broader strategic pivot.

So with that, thank you all for the questions. And as always, it's great to engage with the retail investor community as well, as all of you. And with that, we appreciate everybody taking the time to listen today and go Redwire.

Thank you. And this concludes today's conference, and you may disconnect your line at this time. We thank you for your participation.