Redwire at Cantor Fitzgerald Conference: Strategic Growth and Acquisition Insights

On Wednesday, 12 March 2025, Redwire Corp (NYSE: RDW) presented at the 2025 Cantor Fitzgerald Global Technology Conference. The company’s strategic focus was on robust growth initiatives and the transformative acquisition of Edge Autonomy, which promises to expand market opportunities. While revenue growth was strong, some challenges, like flat EBITDA due to EAC adjustments, were also addressed.

Key Takeaways

• Redwire reported $304 million in revenue for 2024, marking nearly 25% growth over 2023.
• The acquisition of Edge Autonomy is set to enhance capabilities in the national security sector.
• Redwire is targeting a total addressable market of over $100 billion in space over the next five years.
• The company anticipates being free cash flow positive in 2025.
• The microgravity research program holds potential for revenue through royalty agreements.

Financial Results

• 2024 Financials:

- Revenue reached $304 million, a 25% increase from 2023, despite flat EBITDA due to EAC adjustments.

- The company reported very positive operating and free cash flow for Q4, with low burn rates.

• 2025 Guidance:

- Redwire expects to be free cash flow positive.

- Revenue growth is anticipated between May and June of 2025.

- Combined EBITDA is projected to range from $70 million to $105 million.

• Growth Rate:

- Edge Autonomy generated 20-30% revenue growth with EBITDA margins above 30%.

- Redwire anticipates combined EBITDA margins above 15%.

Operational Updates

• Acquisition of Edge Autonomy:

- The acquisition is expected to close in Q2, integrating satellite and drone manufacturing for national security clients.

• Market Expansion:

- National security is the fastest-growing sector, with revenue more than doubling in the last three years.

- Europe is the fastest-growing region, with Thales as the largest European client.

• Capital Expenditure:

- CapEx for both companies is less than 2.5%, with expectations of increased capital efficiency.

• Ukraine Exposure:

- Edge Autonomy’s revenue from Ukraine was less than 30% in 2024, with forecasts even lower.

• Pharmaceutical Built in Space:

- $70 million invested over a decade, with 27 flights for pharmaceutical research.

• New Facility:

- The Larry Bird Microgravity Center in Indiana.

Future Outlook

• Total Addressable Market (TAM):

- Space: Over $100 billion in the next five years.

- UAS: Measured in billions over the next five years.

• Revenue Pipeline:

- The pipeline has doubled, now at $7.1 billion over the next five years.

• Growth Drivers:

- Larger TAMs with UAS integration and increased probability of wins.

- Low CapEx expansion rationalization.

• Microgravity Research:

- Commercial viability expected in 2024 and 2025, ahead of initial expectations.

• M&A Strategy:

- Open to future M&A to accelerate growth, focusing on organic expansion.

Q&A Highlights

• EAC Adjustments:

- Less than 10% of programs caused most EAC adjustments, recoverable through price adjustments.

• Investor Focus:

- Confidence in the closing of the Edge Autonomy deal and capital structure adjustments.

• Integration Benefits:

- Strategic benefits of unmanned vehicle and satellite integration recognized by the market.

• Venture Optionality:

- Negotiations for royalty agreements with pharmaceutical companies are underway.

For further details, readers are invited to refer to the full transcript below.

Full transcript - 2025 Cantor Fitzgerald Global Technology Conference:

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: Alright. We’re back from Cantor Fitzgerald’s technology conference. I’m Colin Canfield, Cantor Fitzgerald’s government technology and space analyst. And today, we have the pleasure of hosting Jonathan Bailiff, CFO of Redwire.

Jonathan Bailiff, CFO and Board Member, Redwire Space: Take it away. I know. And my my mic just came off. So hold on a second. Thanks, Colin.

So, Jonathan Bailiff, I’m chief financial officer, board member at Redwire Space. And so I’m just gonna you know, generally, we don’t we’re not slide heavy. We’ve got about, thirty minutes or so. But I did wanna we just released earnings yesterday. We gave some level disclosure and some new disclosure concerning our acquisition.

So currently, we are in the midst of a transformative acquisition. This slide or really the introduction to our investor presentation demonstrates the power of an acquisition of one of the largest Group II UAS systems, developers and constructors in the world called Edge Autonomy. And so this is meant to show why would you combine a satellite manufacturing business with a drone manufacturing business. And the answer is simple. Our clients and our fastest growing part of Redwire is national security represented by the warfighter here.

So the warfighter currently doesn’t have seamless communication between command and control, his kinetic operations represented by the tanks and the armored vehicles, his eyes, which are the UAS’, and the tactical eyes, and then the ability to then seamlessly communicate over line of sight, which is critical given most of the battlefields we participate in in the future will be, have multiple different types of terrain. And so that’s that’s the satellites. Red wire makes all of the things that you see on this page. We, technically, don’t make the helicopters. That’s fine.

I used to be part of that a long time ago. But the bottom line is the OASs and the satellites are part of what we call a joint all domain command and control system, which is where all of the defense departments, but particularly the Europeans, wanna get to this seamless ability between the satellites and the OASs to both communicate with each other and eventually for Redwire to be able to manage their data and analyze their data, eventually for Redwire to be able to manage their data and analyze their data because that’s really where we’re going here as part of the maturity of both the space market and obviously the UAS market. I would just give we we you can look online. We have a ton of information. We’re a very transparent company.

We’re one of the few that gives annual guidance, even though our, you know, our our industries are are less mature than commercial aviation. This is the power of it, not from a client standpoint, but from literally what are we making. That line, think of that line as below the line is Europe, above the line is The US. It’s important because of what you’ve been reading about, export manufacturing, export controls, tariffs. We make, the Hammerhead and Phantom satellites in Europe.

Hammerhead and Phantom have especially Hammerhead have a decades long experience in maneuverable satellites in LEO. Phantom is a very low Earth orbit around a 50 kilometers up. And then now we’ll be adding the Edge Autonomy group two UAS system, which is called Penguin, which is one of the major players in Ukraine. Above the line are our US, orbital drones. And that’s that’s what our satellites are.

They’re orbital drones. They can maneuver quite highly, in high threat environments. We have Mako and GEO, Thresher and LEO, Sabersat and VELIO, and then obviously our newest, when we complete the transaction, the VX3, which we call the Stalker, but is actually going to another, moniker called Havoc. These are all tactical drones, I. E.

They’re meant to be at the battalion platoon level, but now they will be speaking to and seamlessly delivered as part of a strategic. And then finally, from a financial standpoint, we just reported our 24 numbers, $3.00 4,000,000, which is almost 25% growth over 2023. And that includes actually an EAC adjustment that wasn’t insignificant. And then obviously, our EBITDA ended up flat because of that EAC adjustment. Important to note for the EAC adjustments that we took in the fourth quarter, they didn’t really have a cash impact because we reported, very positive operating cash flow and free cash flow for the quarter.

And our burn rates are quite low. Just so you know, when we go to 2025, we are expecting to be free cash flow positive. But we’re also looking at a growth rate between May and 06/2005. So we gave revenue guidance about a month and a half ago, but we’re reiterating that now. It’s it’s really a combined forecast.

We’ll be coming out with our pro form a numbers here in the coming weeks. And then obviously, our combined 2025 number for EBITDA is 70 to one zero five. Again, the company will be conservatively, capitalized. And then we’ll really be one of the few defense tech space companies level of free cash flow to generate, growth. The other thing I talked about, and Colin will ask a few questions about is we did give some disclosure about the growth rate of the combined company on an organic basis.

Edge Autonomy, which has been the more profitable of the two companies because they’re more mature than we are, has generated between 2030% revenue growth and has actually significantly hit its operating leverage so that it has, EBITDA margins, you know, well above 30%. We are still getting to that place. But on a combined basis, we should enjoy, EBITDA margins, well above 15%. And again, free cash flow positive. And so that’s our our combined forecast.

Again, we’ll revise guidance when we close the transaction, which is, as we reiterated yesterday, second quarter. So that’s us. That’s, Redwire is a lot in between what I just spoke about, but Colin will ask the questions, and I’ll be able to answer them. But I do want to kind of stay on this page because it kind of shows what we’re doing.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: Sounds great. Thanks, Jonathan. So I think, well, first off, we’ll focus on strategy and company growth. If you could kind of talk about what the key levers that you think enable Redwire growth that also enable edge autonomy growth and how you view those factors relative to peers. And then maybe we can talk a little bit about kind of how bringing those two sets of capabilities together enables you to grow in a system of systems environment.

Jonathan Bailiff, CFO and Board Member, Redwire Space: Right. So I I let’s go big to small, give three specific numbers. First of all, our TAM for the next five year, what we will be able to compete on in space is, over a hundred billion dollars, if you include all the six product areas that we have in space, which I which is in the in the documents you can see online. So when you look at that and our ability to grow 15 to 25% and that our pipeline has doubled. So what we’ve been on over the next five years is $7,100,000,000 That pipeline, you know, for us is now absolutely, expanded by the UAS TAMs.

Now we have not given what the UAS TAMs are, but they’re measured in billions, and so over the next five years. So, the UAS TAM that, Edge Autonomy, enjoys is a much larger TAM, you know, on an because it’s really they have really two or three product lines. And so for us, that’s a real positive. But the second positive is probably the most positive. Right?

Which is it it brings up their p win rate on their on their pipeline, and it brings up our p win rate. Because, again, the national security has been our fastest growing sector. We had less than $50,000,000 of revenue three years ago, and now we’ve more than doubled that. And in fact, a lot of our commercial revenue, which we tripled in the last three, almost tripled in the last three years, comes from that national security. So that’s by far our fastest growing.

And the fastest growing of the fastest growing is Europe. So we’ve already talked about our largest European client, Thales, has been really a big part of our growth rates, on just a red wire standalone. But they at, Edge Autonomy also see a much higher level of p win in Europe when you then combine it with space. So that it’s number one, the TAMs get bigger. Number two, the p wins get bigger.

And here’s the third one. We can rationalize this expansion by keeping our CapEx quite low. We we did disclose CapEx for both companies as less than two and a half percent. We think we can even be more capital efficient, because their their facilities, have extra capacity. Ours do too.

So to be able to expand, even beyond the 20%, as Europe builds up its defense, posture is something that we can do with a very low capital base. So those are the three drivers, you know, with the acquisition. Obviously, the p win rate number two is is really important for us, and it’s not included in the forecast I gave you. We’re very clear that forecast of May to 06/2005 for 2025, And I would even include the 20% growth rate. Doesn’t include a lot of p win synergies.

We’ve we’ve kept that fairly conservative, and we also kept it very conservative for Ukraine. They had greater they had a pretty high percentage of their revenue coming from Ukraine in ’22, in ’23. In ’24, we publicly disclosed, put an eight k out, that their revenue streams were less than 30% coming from Ukraine. Not to say they can’t benefit from, a Ukrainian peace that will have a demilitarized zone that the stalkers, and the penguins will, in essence, be able to monitor. But we just didn’t put a lot of it in the in the forecast.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: Brilliant. Brilliant. And and maybe just striking a long term balance, how do you view yourself as a competitor relative to other system of system architectures providers? And and maybe talking a little bit to to kind of how you think about defense prime supply chains versus new defense tech players.

Jonathan Bailiff, CFO and Board Member, Redwire Space: Well, we’re gonna be what we try to tell people, Redwire is you do get without and trust me, I don’t wanna oversell this given that we still are not profitable at net income. But we definitely combine the heritage combat proven with innovation. And what that means is that we’re big enough for our defense and commercial and and civil client clients to have reliability. We are well capitalized. We’ll be one of the few that has free cash flow growth.

We’re not waiting for some big revenue train to hit us. We’re the more measured, but most importantly, we have great innovative technologies, our rollout solar arrays, the the Stalker itself, which you see here. It looks like a very simple aircraft, but actually super power system that uses hybrid fuel technology. There it’s a very quiet technology. Once it gets up to five I say this is a former aviator.

Once you get up to 500 feet, you can’t hear this thing. Very, very difficult to detect audibly, which is really important for national security. And then finally, it, it is super simple. It’s called edge autonomy for a reason. They’re very easy to to operate.

And so are satellites. Our satellites are very easy to operate, comparatively. So, you know, for us, we combine the best of both worlds. We’re well capitalized, but we’re very innovative. So we bring the new space, the new defense tech, you know, with an ability to work with the primes and then directly with the government.

I would say for the primes from a a supply chain, a lot of the rebalancing of the supply chain from outside the country, especially in Asia, to is is mostly complete or completing, and we were a part of it. Redwire was founded four years ago, to to redomesticate the supply chain for, very sophisticated space products. And so for us, the the primes have already really gotten that. And our own supply chain is very domesticated. And by the way, it’s very domesticated depending on where we’re where we’re located.

We have operations in Belgium, Luxembourg, Poland, obviously, Latvia, Ukraine. We we we build where we where we sell. So we don’t have a lot of tariff issues, comparatively, But most importantly, in The United States, which is still the bulk of our revenue, we’re seeing a very secure supply chain for what we do. Got it. Got it.

And maybe as you think about kind

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: of your spacecraft components, what edge autonomy and portfolio it brings, if you can just talk about kind of where are you most constructive within that portfolio?

Jonathan Bailiff, CFO and Board Member, Redwire Space: Sure. So just, you know, we have six product lines in space. Right? We have our avionics and sensors, our power systems, RF antennas, structures and mechanics. We have our payloads and our our platforms, which you just saw on a previous page, and then microgravity.

I do I know I said that really, really fast. So just you gotta remember one thing, that in the components piece, you did not hear me say optics. You didn’t hear me say optical anything. Right? In space right now, we don’t have a huge optic program.

They do. They have actual optical gimbals that actually that technology can be applied into space also. And so it’s really exciting for us to start getting an optical capability, which is still very important in space. And so for us, that’s that’s an important, synergy from the standpoint of us being able to sell to the MODs our space equipment, and then being able to sell, you know, into, into other MODs that already take space, they can get to the defense. Just, you know, overseas or really in Europe, you sell your space equipment and your UAS systems to the same people.

In The US, I mean, you gotta kiss a lot of frogs. I mean, you’re even UASs within the Department of Defense, you’re going to the Marines, you’re going to the Air Force, you’re going to the Army. And even within the Marines, you’re going to the Special Forces versus the inventory. And so but in in Europe, actually, it’s a very simple sales cycle. You’re going to the same people.

And, obviously, you’ve seen what’s we’re very excited that that Europe is gonna, you know, re, re energize its defense industries. And we are viewed in Europe as a European business because we are. We’re European in Europe.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: Yeah. We’ll see we’ll see what kind of takes the, we’ll say efficiency efforts take out of European combatant commands versus US combatant commands. But but maybe bridging from strategy to, to earnings. If you just talk a little bit about kind of what the guidance contemplates in terms of, US EU and then specifically Ukraine exposure. I think it suggests that edge autonomy, you know, 30% Ukraine, obviously, you judge that

Jonathan Bailiff, CFO and Board Member, Redwire Space: Less than 30%.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: Less than 30%.

Jonathan Bailiff, CFO and Board Member, Redwire Space: And And in the forecast, it’s even less than that. Again, let us complete the acquisition, and then we’ll give you a bit a bit more data.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: Mhmm.

Jonathan Bailiff, CFO and Board Member, Redwire Space: So we have not broken out in 2025 what the, like, the let’s use the midpoint, the five seventy. What percentage, as much as Colin has been very, instrumental in us thinking about how we wanna talk to our investors, until we close the transaction, we haven’t shown what percentage of the five seventy at midpoint is space versus terrestrial. And the bottom line is is what I’d say is what we’ve been telling investors, just look at our historical. We did give some pretty good historical numbers for both companies and just kind of follow that trend. Right?

I will say from a profitability standpoint, until our business gets more mature, a lot of the profitability is gonna be driven by edge autonomy. But our business can be profitable. We’ve had free cash flow LTMs. We’ve had positive actually, we’ve had positive net income in the quarters. So, we’ve taken an EAC adjustment.

We’re not happy about it. But the truth is that we are on I think we’re more on top of our businesses. Doesn’t mean we wouldn’t take EAC adjustments in the future. And again, I we were if you wanna understand what an EAC adjustment is, go online and you can you can see our our discussion about it. But a lot of space companies have been taking these big adjustments.

The good news about ours is it wasn’t really, it didn’t impact fourth quarter cash because fourth quarter cash was quite good.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: Got it. Got it. And then maybe post earnings, if can just talk through kind of what you view as the most important questions that that investors have been pointing to and maybe a little bit more of the buy side versus sell side. Yeah.

Jonathan Bailiff, CFO and Board Member, Redwire Space: I mean, I think the buy side, you know, was spent a little bit of time on 24. But if I had ten minutes with a buy side analyst yesterday or a buy side investor, I spent two minutes on ’24. Side investor, I spent two minutes on ’24 and eight minutes on ’25. Right? The company has fundamentally changed with the announcement of this acquisition.

So, let’s just talk about the two minutes. Of the two minutes, it’s like, Jonathan, you know, you’ve had some EACs and you took a big one. Are we done? Right? And I would what we’ve said is, you know, we believe that we’ve gotten on top of most of the programs.

It was really less than 10% of our programs caused most of the AC. So they were focused on that. But they were, in the two minutes I discussed about 24, they were very happy to see that our cash position in the fourth quarter was pretty good. And that for the most part for the year, we hit our cash position, which was a use of cash, but much much lower than in past years. Right?

Now on the eight minutes of the 10, we talked about 2025, super focused on when is the deal gonna close and are we on track. And I said we are very much on track for this transaction closing. We have more confidence now in certain approvals that are gonna be happening. And so we feel pretty confident about that. Then they would ask, does the stock price, you know, change anything?

Like, because stock price has moved up 54% on announcement and then back down below, let’s call it, 20% lower on announcement. And we said, look, we have plenty of access to capital to be able to finance this deal. It’s mostly a share exchange anyway of the $925,000,000 in proceeds to the seller. Dollars $7.75 of it is being given in stock. So, you know, for us, we we have the financial wherewithal.

On top of it, the the the last thing we talked about for ’25 is we did release that our warrants. So we did talk about capital structure. We had public warrants outstanding. By the beginning of next month, we will not. The warrants will be, many of them, if not, most of them have exercised will be redeemed for 1p.

So or 1p a warrant. So those warrants are gone, which which helps both from a capital structure standpoint and provides us more cash to close this transaction and do organic growth. So that’s what the buy side has been focused on. They did care about the EACs in ’twenty four. Happy to see that we had cash flow in the fourth quarter, but actually very focused on ’twenty five.

And they’re asking the same questions you just asked, which is what’s the breakout? What are the growth rates? That’s why we gave a combined growth rate that we feel comfortable of 20%, into the future without synergies.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: And if we think about a little bit about kind of going back to the EAC dynamic and making sure we run that to ground, if you can just talk through kind of the dynamics that are going on there. You just mentioned less than 10% of programs, and then kind of your view on how we how we recover that from price or

Jonathan Bailiff, CFO and Board Member, Redwire Space: Yeah. You recover that from your clients. Right? I mean, because EACs are basically dealing with fixed price contracts that you’re either having a planning issue. Either you’re going to go a bit longer in the process to satisfy the client’s product needs or your costs go up.

For us, it has a tendency to be more timing. So usually, we are doing a bit more test. And it’s look. In many ways, there’s a silver lining to EACs in that we are doing more EACs to do generally more tests, which make sure that we our products actually work in orbit, which is hard. Right?

Space is hard. That’s not an excuse. It just shows that other companies that have been doing space for decades took huge a EAC adjustments in ’24. I won’t name them, but you can look them up. They took huge EAC adjustments.

I mean, we’re talking about, you know, 20 to 40% of total, yearly revenue. We took about 5% of yearly revenue, which is not historically historically, it’s been lower than that. But the bottom line is it it also didn’t have a big cash impact. I think we are going to have EAC adjustments in the future, positive, I e favorable and unfavorable. So we’re not saying that’s not gonna happen.

We just think for the projects that we have right now, many of which we inherited, many of which came out of Europe, we feel like we’ve gotten on top of it. Got it. Got it.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: And then just last thing on earnings, if we can talk about kind of what the key focus points that investors are missing and kind of what are the key confusion points on Redwire on edge autonomy. I I think the key,

Jonathan Bailiff, CFO and Board Member, Redwire Space: you know, for to be frank, when when you announce something, I’m not saying your stock should always go up after an announcement of a very accretive deal. But I will say that when the market was a bit more normal to probably more understanding of high growth momentum stocks, they understood this immediately. Like, this picture, people understood. We didn’t even present this picture. They understood that a defense tech company is going to have to be in the fastest swim lanes in defense, whether it be European, US, Asia.

It does not matter. China is a threat. We obviously have the issues in Europe. We have, you know, the wars that we’ve seen in the last, let’s call it, three years, Ukraine, Israel, other hotspots have all needed an integration of unmanned, uncrewed vehicles, whether they be below the water, terrestrial, airborne, they all need satellite configurations, to be effective. And not only that, they need those configurations to be hardened and to be maneuverable.

And so that’s really so they really got the strategic very quickly, much quicker in many ways than I we thought. On the financial side, they they pretty much understood it because if you can give people a sense of historical UAS companies, of which AVAV is a very good comp, you could see that us trading at 40 or 50 times EBITDA, buying a company at 12 times, where their biggest peer trades at 30 times, it kinda made sense. People could see the accretion, you know, very quickly. And so from our standpoint, they really didn’t miss much. Alex, did they miss anything?

It’s the director of my IRR. I don’t think so. We really felt like they understood it. Now what they’re seeing now is a a stock that doubled and then went back. What’s going on?

Let’s face it. A lot of it’s macro. We have not, pulled back at all on our view that this is a high growth, more profitable, more free cash flow driven company. That being said, you know, the market’s gonna be whatever it is, and we can complete this transaction. The only other thing is that people have asked is, they’re not missing it, but they haven’t asked that much is what’s the next M and A deal.

And the answer is, you know, we have lots of companies that want to be part of the Redwire story, for both mostly strategic reasons. If you’re in these fast swim lanes, the people who do this, which are mostly engineers, they wanna see their equipment financed and in orbit, financed and working for the warfighter, and to be part of a bigger company where, you can make a difference, there are a lot of companies that wanna join our cause. That being said, sometimes their valuation expectations aren’t exactly where our valuation expectation but but that’s why we don’t do m and A every day. This is really a company that can do M and A to accelerate growth, but it’s not only about M and A. The company is, as we tell people, it’s a very cool company even as a space company.

So anyway That’s great. And I think just front running that question a little bit,

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: if you can maybe talk about kind of what are the key key capabilities that Redwire looks to add, and how should you think about kind of those desires and rationale around time to market versus developing it organically?

Jonathan Bailiff, CFO and Board Member, Redwire Space: Let’s get to a let’s get to a few slides then. Might as well. We have time. Alright. This is this is a big one.

So, you know, I didn’t even mention pharmaceutical built in space. Right? This is probably one of the largest value creators that we have. Now it’s it’s venture optionality. You know, we have five pillars of our growth.

I’ll go back and talk about it. But our our one of our biggest pillars of growth is we have put $70,000,000 over the past ten years into ten plus years into building out an ability for pharmaceutical companies in microgravity to build out, what is in essence large molecule proteins to help deliver the drugs. And you say, why do you have to do it in space? Well, you have to do it in space because crystals that help deliver large molecule drugs really can’t their their happenstance on the they don’t get built naturally in Earth. You need a microgravity environment to do it.

So we we built the ability. We built this little lunchbox that can do these crystals in space. We had one flight with Eli Lilly last year, and now we’ve had over 24, 20 seven now. So we’ve had 27 with various pharmaceutical companies, including Bristol Myers. What this allows us to do, we get paid to do this.

Right? We make margin on this. We make EBITDA on this. We make cash flow on this. But what we don’t do is take a piece of the royalties on the overall drug as it as it becomes more successful.

By the way, many of the drugs that we’ve taken up are already operational. They’re not through the stage two or stage three. They’re operational. They’re just not effective enough. They need protein crystals for delivery or for side effects.

And so, we are partnering with these companies to do that. But in the future, and I’m talking in near future, we will set up economic structures by which we get a royalty payment. And so this is one of the growth areas that is a major pillar, but this could be measured in billions of dollars, not just tens or hundreds of millions of dollars. It’s also a bit uncorrelated to defense budgets, to other things, and we’re we’re the only ones who have a proven ability to do this. There’s a number of companies.

How do we deliver this value to you? Do we wait till the drug comes online? No. There are ways for us to monetize this in the twenties, right, in the in this decade, as as a way to get the royalty payments and then sell it. Eventually, this business also could be carved out and just be its own business or be bought by another company.

So but it’s really great to see this thing accelerate. When we built this, two, three years ago, we thought we’d start getting commercial viability in the 2030s. We’re getting commercial viability in 2024 and ’25. That’s actually way ahead of what we thought. Anyway, that’s that’s an area that I think we want to talk about.

Our growth strategies have really remained roughly the same. I didn’t talk about them, so I’m stepping back a little bit given we have a little bit more time. We provide the picks and shovels. Those are those six product areas I quickly went through. We deliver multi domain platforms, multi domain platforms, including the new UAS systems, when we get the merger done.

We explore the moon, Mars, and beyond. That’s microgravity research. And then obviously, this advancing venture optionality is very much the pharma business. And then we execute accretive m and a across those other four growth strategies. We’re very proud that since going IPO since IPOing in September of ’twenty one, we’ve never issued equity as part of our organic strategy.

We’ve been able to self fund our organic growth, which again has been between 1525% revenue, and we’ve become much more profitable in the last three years. We’ve only issued equity associated with m and a, and even that, we haven’t done that much. So we’re pretty proud of this, and being able to do this. Now we gotta keep delivering, but hopefully that answers your question.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: No. That’s great.

Jonathan Bailiff, CFO and Board Member, Redwire Space: Look at the pharma. It’s super interesting. We put out a lot of information about it. Hard to value, but there’s a couple companies out there that are that are going, they’re doing their rounds at very high valuations. So Colin will pick up on this and hopefully write a bit about it.

Cancer’s got a great bio practice.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: So That is that is the beauty of our of our platform is that we have a really, really strong healthcare team. When you sit next to people on benches with PhDs, it makes the conversation a little bit easier.

Jonathan Bailiff, CFO and Board Member, Redwire Space: That’s right. And they they can talk protein crystals.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: That’s right. That’s right. So so maybe just kind of following on that vein a little bit, given the kind of level of and maybe extent of the venture optionality within this portfolio, can you just talk about a little bit of kind of how those medical customers or healthcare customers or pharmaceuticals are structuring those contracts, and kind of what duration you typically see on those contracts?

Jonathan Bailiff, CFO and Board Member, Redwire Space: Right. So currently, the contracts are structured under a NASA contract. So in essence, we are, in essence, allowing them to use our pillbox for a fixed fee for a period of time, and we make a bit of margin on it. It’s less than 15% of the revenue of the total company. So we had $3.00 $4,000,000 last year.

It’s it’s not that much revenue. It’s less than 15% of our total revenue. But we do make money on it, and it’s got pretty good margins. It’s got actually much better margins than the overall company from a gross margin standpoint. That being said, we if that drug goes back down to that protein crystal because all we’re making is small amount of protein crystals that then can get replicated on Earth.

The hard part is getting the protein crystal. You can actually replicate it on Earth. The bottom line is they take that protein crystal and they apply it, and then they’ll start, you know, moving it through their system. If anybody has heard of the drug Keytruda, Keytruda actually did this with a nonprofit in which they got Keytruda to be easily deliverable with new protein crystals that were developed in space. Point I’m making is, now what we will structure is either a joint venture or a joint development agreement in which they don’t really have to pay us all that much.

Like, we don’t have to necessarily make that much money on the actual pillbox, which is the piece of equipment. We can instead of leasing it to them, we’ll take a royalty payment on the drug as it becomes commercial. And there are lots of models with CDMOs, which are contract developer and manufacturer operations for pharmaceutical companies. Fisher Scientific has one. There is a very well known economic model to take that royalty payment, which could be, you know, a fraction of a percentage of the total amount.

But if the drug is going to cure cancer or some type of cancer, talking about billions of dollars in the future, we can then take our blank percent and then monetize it.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: Yeah. Incredibly, incredibly important thing to solve for.

Jonathan Bailiff, CFO and Board Member, Redwire Space: The key is to getting many more drugs in space. And there and people always ask, do you have enough room in space? Well, right now, we’re doing this on the ISS, but Khan will you know, if you look at his report, did a great job talking about the new space stations that are gonna be going up. And the the most prolific space station that will be going up in the next three years is gonna be Starship, because Starship will, in essence, be its own space station that we can put more pillboxes on.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: Following on this vein, if you can maybe talk about kind of the healthcare hires that you’ve made, and what impact that has had on your kind of strategic decision making in that sphere?

Jonathan Bailiff, CFO and Board Member, Redwire Space: We I mean, so we have a whole slew of PhDs on staff. It we we do this in Indiana. Right? So our our microgravity, we’re about to, we just broke ground, and we’re calling it we might even call it this, the Larry Bird Microgravity Center in Indiana, just because he’s a well known Indiana. It has nothing to do with health care.

But the point I’m making is, we’re right near Purdue. We’re right near Lilly. I mean, there’s a huge pharmaceutical element to that area of the world. And so we, in essence, either are, kind of have some of the Eli Lilly and others kind of on loan to us as we put these together. But we have, Doctor.

Ken Sabin. We have a number of medical and pharmaceutical PhDs already, with us to that created PillBox. And so we haven’t really had to hire too many new people.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: Got it. Good. Well, if there’s any questions from the crowd in the last hundred eighty seconds here, if there’s anyone that wants to ask one. Justin, please.

Jonathan Bailiff, CFO and Board Member, Redwire Space: Good to see you, by the way. One of the OGs with us. No. No. No.

No. No. It’s a five month plus idea. Right? I mean, we’re we’re we’ve talked about being in discussions already with these royalty agreements and put starting to put them together.

So And

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: what else is there outside of the chemical delivery? Is there stuff like the chemical, the industrial stuff, or are there things like that?

Jonathan Bailiff, CFO and Board Member, Redwire Space: Yeah. So it’s funny because we part of the pillboxes I mean, we know we don’t disclose what’s in all the pillboxes, but we have said publicly, these, crystals can be used in a number of different areas. One that, you know, we didn’t know about, but obviously, it’s a way of developing is fungicides. So we’ve actually created some of these crystals for because, you know, lethal fungus or at least detrimental to your health funguses are very, it’s it’s actually a a a big deal, both in The US and in developing world. And so they’ve done some fungicides.

So there is some industrial applications. I would say the only thing from a venture optionality that we have of that type of TAM is that when we, acquire Edge Autonomy, they actually their the power system on their on their is very lightweight. Actually is a hybrid fuel cell. So it’s actually one of the fuel hybrid fuel cells that actually has commercialized. It’s very light.

It can be used for terrestrial applications. For example, you know, backup power for, you know, street lights and other things like that. We’ve never, they’ve never actually gone out and sold those in that format. That would be a very big venture optionality in a bit of a different format. Right?

But they have received inbounds to see if it could work because they’re very inexpensive to make. Make. That’s another example of venture optionality in the business.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: Thanks, Jonathan. And just just for the benefit of the webcast, the question was whether or not venture optionality was five years versus five months. And then the second question was on chemicals and the flexibility there. I think in the last hundred and or call it ninety seconds here, I have one more question, and maybe talk a little bit about the flexibility of the pillbox and your ability to drive interest from quantum folks and chip making folks.

Jonathan Bailiff, CFO and Board Member, Redwire Space: Yeah. We haven’t talked that much. By the way, I wanna qualify just for the transcript that’s gonna out dealing with the five months. You know, we we don’t wanna give a specific date. I just wanna give people a sense that this is not we have publicly said that when we started working with this company that that then we acquired, we always thought this was gonna be much more five years from now.

It is it is happening now. The negotiations, the discussions are happening now. We just don’t wanna give people too much optimism that it’s gonna happen in five months. So I wanna clarify. Sure.

As far as the pillboxes themselves, I’m trying to understand

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: your question. The concept is essentially that if you remove gravity as a contaminant in the quantum compute world, is Redwire able to service that sort of mission set? Yeah. To be frank, I can’t speak to it. We we have and and it is public,

Jonathan Bailiff, CFO and Board Member, Redwire Space: but be frank, I can’t speak to it. We we have and and it is public that, in Europe, we are building and have built satellites for a quantum encryption company to put quantum encryption through satellites as as part of, in essence, a communication tool for people who are trying to authenticate and reinforce cyber attacks, especially those that could come in from quantum. But anything associated with medical and other things like that. It’s funny because I was talking to our CEO about it yesterday, about how quantum can be an accelerator of some of these compounds, but I don’t think that it’s been connected with our microgravity.

Colin Canfield, Government Technology and Space Analyst, Cantor Fitzgerald: Got it. Got it. Well, thanks, Jonathan. Appreciate you coming on.

Jonathan Bailiff, CFO and Board Member, Redwire Space: Thank you very much. Really appreciate it.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.