Redwire (RDW)2022-04-08 21:53Financial Performance - Revenues for the year ended December 31, 2021, were $137.60 million, compared to $40.79 million for the period from February 10, 2020, to December 31, 2020[402]. - The company reported a net loss of $61.54 million for the year ended December 31, 2021, compared to a net loss of $14.37 million for the previous period[402]. - The gross margin for the year ended December 31, 2021, was $29.38 million, which is 21.4% of total revenues[402]. - Operating expenses for the year ended December 31, 2021, totaled $99.56 million, significantly higher than $13.10 million for the previous period[402]. - Pro forma revenues for the year ended December 31, 2021, were $149,295 thousand, representing an increase from $126,999 thousand in 2020, while net loss increased to $57,766 thousand from $7,902 thousand[529]. Assets and Liabilities - Total assets as of December 31, 2021, were $261.76 million, up from $156.77 million as of December 31, 2020, representing a 67% increase[400]. - The company’s total current liabilities increased to $51.24 million as of December 31, 2021, from $33.56 million as of December 31, 2020[400]. - As of December 31, 2021, total shareholders' equity was reported at $107.22 million, with accumulated deficit amounting to $75.91 million[405]. - Cash and cash equivalents at the end of the period were $20.52 million, a decrease from $22.08 million at the beginning of the period[407]. - Total accounts receivable, net increased to $16,262 thousand as of December 31, 2021, up from $6,057 thousand in 2020, with billed receivables at $14,820 thousand and unbilled receivables at $1,442 thousand[537]. - Inventory balance as of December 31, 2021, was $688 thousand, compared to $330 thousand in 2020, with raw materials at $414 thousand, work in process at $117 thousand, and finished goods at $157 thousand[538]. Research and Development - Research and development expenses for the year ended December 31, 2021, were $4.5 million, focusing on advancing space infrastructure technologies[77]. - Research and development costs are primarily made up of labor charges, prototype material, and development expenses, which are expensed in the period incurred[452]. Acquisitions and Growth Strategy - The company completed eight acquisitions since March 2020, enhancing its technology and product offerings, including notable acquisitions like Adcole Space, LLC and Deep Space Systems, Inc.[410]. - The merger with Genesis Park Acquisition Corp. on September 2, 2021, resulted in gross proceeds of $110.6 million, which were partially used to repay $41.6 million of outstanding loans[411]. - The company is strategically focused on expanding its market presence through acquisitions and innovative technology development in the space sector[410]. - The company aims to capitalize on the commercialization of Low Earth Orbit (LEO) and on-orbit servicing, assembly, and manufacturing as key growth opportunities[70]. Workforce and Talent Acquisition - The company plans to increase its workforce by approximately 33% to support contracted work, with 34% of current employees hired in the past twelve months[87]. - The company has established a talent acquisition team to enhance recruitment efforts in a competitive labor market[88]. - The company offers competitive compensation packages, including short- and long-term incentive programs, to attract and retain talent[90]. - The company is committed to diversity and inclusion, supporting various organizations in the aerospace field[89]. Market and Industry Insights - The global space economy generated approximately $420 billion in total revenue in 2019 and is projected to grow to an estimated $2 trillion by 2040[65]. - The annual number of small satellites (Smallsats) launched has increased almost eightfold since 2012, with 94% of all launches in 2021 including a smallsat[68]. - The emergence of large reusable rockets has reduced launch costs by approximately 95% over the past decade, with costs as low as $2,700 per kilogram for launching satellites to LEO[67]. - Approximately $253 billion of equity investment has been made across 1,694 space companies over the last 10 years, indicating significant growth in the space market[63]. - NASA is a major customer, with the Archinaut One program being the largest revenue-generating contract, focusing on satellite construction in orbit[57]. Financial Reporting and Accounting - The company recognizes revenue over time for long-term contracts, reflecting the nature of the services provided, which include design and manufacturing of spacecraft components[429]. - The company utilizes the acquisition method of accounting for business combinations, recognizing the fair value of all assets acquired and liabilities assumed[420]. - The company recognizes anticipated contract losses as soon as they become known and estimable for long-term contracts[430]. - The company recognizes tax benefits only if it is more likely than not that the tax position will be sustained upon examination by taxing authorities[451]. - The company adopted ASU No. 2021-08, which requires recognizing contract assets and liabilities in accordance with ASC 606 for business combinations[465]. Goodwill and Intangible Assets - Goodwill is assessed for impairment at least annually, with the company performing qualitative and quantitative analyses as necessary[442]. - The fair value of the acquired customer relationships from DSS was estimated using the excess earnings method, contributing to the overall goodwill[474]. - The total intangible assets acquired from the MIS acquisition were valued at $35,000,000, with a weighted average useful life of 10 years for technology[482]. - Goodwill from the Adcole acquisition was recorded at $21,525,000, reflecting potential synergies and market expansion[469]. - The fair value of the contingent earnout for MIS was estimated at $11,500,000, settled as of December 31, 2021[479]. Challenges and Risks - The company has experienced supply chain disruptions and labor shortages due to the COVID-19 pandemic, impacting its operating environment[415]. - Significant changes in unobservable inputs for contingent consideration could lead to substantial adjustments in fair value measurements, emphasizing the inherent risks in valuation[534].