Redwire Corporation (NYSE:RDW) Q4 2022 Earnings Call Transcript

Peter Cannito: Yes, no really appreciate you joining the call. The €“ we are absolutely engaged on commercial space stations. If you’ll look at the history of Redwire with 15 facilities, payloads currently operating on the International Space Station, some of the ones that I highlighted in a call today, we’re one of the very few companies that actually have the experience with the outfitting of meaningful content on space stations. So, we are not exclusive to any single commercial space station provider. There are a handful of them that are all very credible out there. We see that as a really excellent trend for Redwire, because again after those stations get on orbit, we’re the ones who have the meaningful content, the microgravity research, the biotechnology capabilities, the materials, the 3D printing that are going to make those space stations successful ultimately.

That’s just on our payload side. In addition to that, I highlighted that we have the ROSAs, the rollout solar arrays on the International Space Station, we’re also actively engaging with the commercial LEO space station providers on key mission enabling subsystems like ROSA to enable the power for their systems, as well as other critical subsystems to make those commercial space stations viable as well.

Griffin Boss: Got it. Excellent. Thanks for that, Peter. And maybe I’ll just sneak one in, apologies if I missed this. Did you guys break out the end customer group for your backlog number? Is that going to be heavily weighted to government customers as well?

Peter Cannito: So, we didn’t break it out, but we tend to have a number of government contractors that’s where a lot of the growth in spaces occurring, I think, Jonathan, you want to add to that?

Jonathan Baliff: Yes, I mean, you obviously see the over 86% in government and marquee client base. I do want to just break out for the full year. You’re talking about almost 40% civil, which is government client base. You’re €“ and I’m talking about revenue here. National security grew smartly to 27.4%. And then the commercial is 34%. And that commercial, even though they’re commercial customers many of the ultimate contracts are with the government. So, we’re excited about these marquee government and customers that backlog you’re seeing that grow. And again, one of the differences with the percentages is you’re only seeing a smaller percentage in the fourth quarter due to Space NV. Space NV, again has a mostly government and marquee client with ESA €“ ESA I’m sorry. And so that, that gives you a sense of how our backlog is developing to that pretty high quality client. Again, even the commercial clients themselves are multi-billion large customers.

Griffin Boss: Got it. Okay. Great. That’s it for me. Thanks for taking my questions. Appreciate it.

Peter Cannito: Thank you, Griffin.

Operator: Our next question is from Austin Moeller with Canaccord. Please proceed.

Austin Moeller: Hi, good morning. Nice quarter.

Jonathan Baliff: Thanks, Austin.

Peter Cannito: Hey Austin.

Austin Moeller: Hi. My first question here, can you talk about what specific products in the revenue mix are expected to drive the gross margin improvement in 2023? And I assume you’ve included inflation costs escalators into the new contracts to improve margins relative to inflation expectations?