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

Jonathan Baliff: No, I gave as percentages on civil, national security and commercial. They’re pretty equal and the nature of our backlog follows that for the most part.

Austin Moeller: Okay, great. Yes, thanks for the details on the strong diversification there. Appreciate it.

Operator: Our final question is from Suji DeSilva with ROTH MKM. Please proceed.

Suji DeSilva: Hi, Peter. Hi, Jonathan. Congrats on a strong 2022 there.

Peter Cannito: Thank you very much, Suji.

Suji DeSilva: Sure. A lot of questions have been asked. I’ll talk €“ let me ask about manufacturing capacity to think about that broadly for your company. Are you expanding that? Do you have sufficient as CapEx going to that? It seems like a relatively light CapEx budget for 2023, but just wanted to get color there.

Peter Cannito: Yes, no, it’s great to have you on the call and I appreciate the question. We continue to make CapEx investments. We opened a very large facility in Goleta, California in 2022. This facility, I don’t know Jonathan, do you have the exact square foot? It’s the largest facility.

Jonathan Baliff: It’s 52,000 square foot.

Peter Cannito: Yes, in Goleta and it’ll house the power and propulsion element wings for the Gateway project. So it’s a massive manufacturing facility for our solar arrays. But we continue to invest too. We’re looking at investing in Longmont. We’re doing a CapEx investment in antenna facility there with a really state-of-the-art RF chamber that’s going to enable us to continue to do the testing for antennas for large constellation programs like the SDA tranches and et cetera. But for the most part, we’re pretty good, because we €“ of the way we grew through acquisition all of the different building blocks of Redwire came with significant facilities already which is great for us because we already have the capabilities in-house and we don’t have to make massive investments in manufacturing expansion in order to execute against our backlog.

Jonathan Baliff: The other thing important is that our clients pay for a large part. We’re not a CapEx intensive company because our contracts pay for a lot of what you consider is the facilities. And getting the facilities prepared for the manufacturing and assembly of power systems and other solutions that we provide. So €“ because we’re €“ we have that greater than 86% government and marquee client, a lot of the contracts end up paying for that, which then again, these are not very depreciated type facilities. And therefore they can be used over and over again that provides that operating leverage that we’re talking about.

Suji DeSilva: Okay, Peter. That’s very helpful. And then maybe last question on the power supply ROSA business. Should we think about any metrics kind of ASP unit metrics like kilowatts, things like that as a way to model the business going forward? Or is that not the right way to think about these large solar array contracts?

Peter Cannito: Correct. That is not the right way to think about the large solar array contracts. The way I would think about the large solar array contracts is in the advantages of the capability associated with having solar arrays that can are flexible enough to be deployed in a small package and then roll out to a much larger package. So when you think about some of the great questions we got about commercial space stations, that’s a key advantage from a logistics and implementation perspective. When you think about things like Gateway and the PPE wings that we’re building, when you think about the win we had with Astrobotic for VSAT and you think about the future of power infrastructure that is going to be required on the lunar surface in order to sustain a human presence there.