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Redwire brought in about 110 million dollars in revenue last quarter, falling short of the 130 million dollars analysts expected. The company explained that the timing of its revenue can be uneven as it builds complex space hardware. While sales were lower than hoped, the company reported a record backlog of nearly 620 million dollars in future work, which is 75 percent higher than this time last year.
The business is becoming more efficient, with gross margins, the profit left after paying for parts and labor, doubling to 32 percent. This suggests that as Redwire moves from custom engineering to building more parts at scale, it is keeping more profit from every dollar it earns. However, the company is still losing money overall and burning through cash, which remains the primary risk for a business that needs to fund expensive manufacturing before it gets paid.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
After Redwire reported its November results, we updated our fair value and raised our projections for profit margins on space hardware. We have added the company's work on drones and uncrewed aircraft to what we track as a growth driver. We also reset our expectations for research spending and cash levels to account for a faster investment in new technology and a larger cash reserve. We have started tracking the total value of signed orders waiting to be completed, which grew to 619 million dollars over the last three months.
Redwire reported a record backlog of roughly 620 million dollars for the third quarter, a sharp jump from the same time last year. The company's book-to-bill ratio, which compares the value of new orders to the amount of work actually billed, rose to 1.73. This means for every dollar of revenue Redwire recognized, it signed nearly two dollars in new contracts.
This growth is a key signal for the company's long-term health because it shows strong demand for its satellite parts and sensors. While Redwire is still in a phase of heavy spending, this growing pile of committed work provides a clearer path toward the higher manufacturing volumes it needs to reach profitability. The stock fell about 5 percent on the day, but the underlying business is winning more work than ever before.
Source: Business Wire
Redwire reports its latest results on Wednesday. Analysts expect a loss of about 11 cents per share. The most important thing to watch is the company's cash burn, which has been high as it builds out its manufacturing for satellite parts. We are also looking for updates on the backlog, which is the total value of signed contracts for future work. For the business to reach a sustainable path, it needs to prove it can turn those orders into revenue and profit without needing to raise more cash from investors.
B. Riley set a $15 price target for the stock on Monday. This is well above the current price of about $7.60 and higher than the average analyst target of $14. While the firm is optimistic, the stock has been volatile recently as the company works toward becoming cash flow positive, which means bringing in more cash than it spends on operations.
Source: B.Riley Financial
Management has consistently missed its own profit targets over the last two years. This pattern suggests the company is struggling to accurately forecast the high costs of its heavy investment phase.
| Expectation | |
|---|---|
| EPS | $-0.09 |
| Revenue | $135M |