Greetings, and welcome to the Redwire Space Corporation First Quarter 2024 Earnings Call. I will now turn the conference over to your host, Jeff Zeunik. You may begin.

Thank you, Shamali, and good morning, everyone. Welcome to Redwire's First Quarter 2024 Earnings Call. We hope that you've seen our earnings release, which we issued yesterday afternoon. It has also been posted in the Investor Relations section of our website at redwirespace.com. Let me remind everyone that during the call, Redwire management may make forward-looking statements that reflect our beliefs, expectations, intentions, or predictions of the future. Our forward-looking statements are subject to risks and uncertainties that are described in more detail on Slide 2. Additionally, to the extent that we discuss non-GAAP measures during the call, please see Slide 3, our earnings release, or the investor presentation on our website for the calculation of these measures and their GAAP reconciliations. I am Jeff Zeunik, Redwire's Senior Vice President of Financial Planning and Analysis and Investor Relations. Joining me on today's call are Peter Cannito, Chairman and Chief Executive Officer, and Jonathan Baliff, Chief Financial Officer. With that, I would like to turn the call over to Pete. Pete?

Thank you, Jeff. During today's call, I will take you through a discussion of our key accomplishments in the first quarter of 2024. Jonathan will then present the financial highlights for the same first quarter 2024 period, after which we will open the floor for Q&A. Please turn to Slide 6. The first quarter of this year was another excellent quarter for Redwire, during which we continued our positive momentum from 2023. We have now delivered 5 consecutive quarters of positive adjusted EBITDA and revenue growth and 2 consecutive quarters of positive cash from operations. During the first quarter, we achieved $87.8 million in Q1 revenue, a 52.4% improvement over Q1 2023. It was a very strong quarter for revenue. Positive adjusted EBITDA of $4.3 million and a net loss of $8.1 million, free cash flow of positive $0.4 million, a year-over-year improvement of $15.2 million. Cash from operations of positive $2.8 million, a year-over-year improvement of $16.8 million. And finally, we achieved a last 12 months or LTM book-to-bill ratio of 1.11x during the quarter. It's important to note that we achieved these positive financial results by developing and delivering reliable critical innovations for our valued customers throughout the first quarter. These results are directly attributable to the commitment and expertise of our workforce. Please turn to Slide 7. During our previous earnings call, I introduced Redwire's growth strategy for 2024 that is centered around 4 key principles: protecting the core, which means continuing to deliver on our strong foundation of existing products with proven reliability and demonstrated flight heritage. It is about continuing the growth momentum of our successes in 2023. Scaling production, which means winning and delivering on increasingly larger orders by scaling our production to meet growing demand. Moving up the value chain, which means leveraging our proven capabilities in developing and deploying space subsystems and components into next-generation spacecraft and integrated mission payloads. And finally, venture optionality, which means continuing to pursue breakthrough developments on advanced technologies that could create new markets with game-changing potential. On the next few slides, I will discuss examples of successes in each of these key growth areas for the first quarter of 2024. Please turn to Slide 8. Starting with our protecting the core growth area. During the first quarter, Redwire's cameras were onboard intuitive machines IM-1 Lunar Landing mission. These cameras come from our avionics and sensors core offering, which includes spacecraft subsystems and components that are used for navigation, control, and imagery collection. Also, during the first quarter, NASA's solar sail for which Redwire developed deployment mechanisms and 100-foot booms, cleared a key technology milestone with the successful deployment of one quadrant. Solar sail falls into our structures and mechanisms core offering, which includes a variety of space infrastructure that provides critical mechanical functionality for on-orbit operations from launch release mechanisms and deployable booms to berthing and docking systems. Please turn to Slide 9. Looking at our scaling production growth principle, we are excited to announce that we are under contract with Rocket Lab for 18 ship sets of antennas and radio frequency hardware for the SDA Transport Layer Tranche 2 beta variant satellites; the third in a series of spacecraft that will make up the proliferated warfighter space architecture. Our radio frequency systems core offerings include the systems and payloads that enable space-to-space and space-to-Earth communications. Also, in Q1, 2 ROSA wings were successfully deployed on Ovzon 3, which represents the first integration of ROSA technology with a commercial satellite. In addition, Redwire began executing on our $142 million contract award for Power Solutions to an undisclosed satellite manufacturer. These operations fall within our power generation offering, which includes solar arrays and power distribution systems that generate the necessary power for space systems to operate regardless of size or location. Please turn to Slide 10. Turning to our Moving Up the Value Chain growth principle, I'd like to highlight Redwire's U.S. and European operations in very low Earth orbit or VLEO. During the first quarter of 2024, Redwire was awarded a study related to our new U.S. VLE platform, SabreSat. This is a very exciting indicator that the market recognizes SabreSat's potential as a critical capability. We are very encouraged with the reception SabreSat has received since our announcement and continue to pursue meaningful opportunities for this potentially groundbreaking VLEO spacecraft. To continue to aggressively assert ourselves as a technology leader in VLEO, today, we are announcing Phantom, our VLEO platform for Europe and the international market. Phantom is currently being developed in our Belgian office for the European Space Agency Skimsat program, and we will be marketing this platform to other potential customers as well. Thales Alenia Space is the prime contractor for Skimsat, and Redwire EU is responsible for providing the VLEO spacecraft which we are now calling Phantom. Skimsat is a VLEO satellite mission that aims at reducing the cost of Earth observation and telecommunication satellites while increasing performance by operating at substantially lower altitudes. The potential for this transformational program is extraordinary. Notably, SabreSat and Phantom do not share a common technological baseline. They are 2 different platforms with differing underlying technologies and performance parameters. This is important as missions in VLEO are as dynamic as all the other Earth orbits such as LEO and GEO, and different approaches reduce risk and enable us to cover a broader set of customer requirements. As Redwire moves up the value chain, we are very excited that SabreSat and Phantom expand Redwire's offering to full satellite system development and operations that include the Redwire International PROBA satellite as well as our proprietary platform agnostic digital engineering and modeling and simulation solutions that enable rapid spacecraft development and deployment. Please turn to Slide 11. Lastly, I would like to spend some time providing a deeper look into our fourth principle, Venture Optionality by focusing on Redwire's in-space pharmaceutical development to benefit human health on Earth. Pharmaceutical companies are constantly looking to deliver new optimized treatments for patients, and many of those treatments rely on crystals as their active ingredient. The form of the crystals will dictate a drug's properties and as a result, precision matters. Historically, a significant proportion of drugs have not made it to the market as a result of crystal formation challenges. Growing crystals in microgravity could be transformative, potentially yielding a more uniform product with fewer imperfections and improving the drug discovery and development process. As pharmaceutical companies look to deliver new optimized treatments to help patients on Earth, microgravity could be a major differentiator. With the drug discovery market size having been estimated at approximately $80 billion in 2023, growing to approximately $180 billion by 2032, this represents a significant growth opportunity for Redwire. Redwire has already demonstrated the ability to develop crystals in space using our PIL-BOX facility on the International Space Station. Redwire's proprietary PIL-BOX is a proven cutting-edge in-space pharmaceutical manufacturing platform that builds on Redwire's extensive heritage in microgravity and offers pharmaceutical companies and biomedical researchers novel and flexible services to study small batch crystal growth of proteins. Redwire is at the forefront with our microgravity technology built on decades of in-space manufacturing success. Our successful inaugural PIL-01 mission demonstrated that insulin crystals grown on the ISS using PIL-BOX were larger and more highly ordered than terrestrial crystals. Our next step is to execute a production-level cadence of crystal manufacturing using a variety of compounds. Our second PIL-BOX mission has already returned, and the results are promising. We are currently manifested for 16 additional PIL-BOX missions this year. The economic potential for this technology is high and gaining momentum. Recent venture funding for related industry players has revealed a significant valuation premium for pharmaceutical microgravity development, validating that the venture optionality associated with this subset of Redwire's business has real value. Turning to Slide 12. The inaugural PIL-BOX-1 mission launched in November 2023 and returned to Earth in late December 2023 for delivery to Eli Lilly, our research partner. Following closely on the heels of the successful PIL-1 mission, PIL-2, again in partnership with Eli Lilly, and PIL-3 in partnership with Butler University, launched to the International Space Station this past March, just 3 months later. The second PIL-BOX mission is focused on researching widespread chronic diseases, which have massive global demand for treatment. PIL-3 has now returned to Earth in April 2024, and PIL-2 is anticipated to return in the coming months, demonstrating the rapid cadence Redwire can execute with this capability. This tempo is critical to demonstrate the industry model is viable for sustained development in orbit. For the remainder of the year, we have 16 additional PIL-BOX missions manifested and a robust pipeline of interest from commercial entities. As launch costs decrease and commercial space station availability increases, the opportunity for on-orbit development and manufacturing at scale will expand, and Redwire is delivering tangible and useful results, not someday, but now. Please turn to Slide 13. Now turning to our contract awards and backlog. Our contract awards during the first quarter of 2024 were $35.1 million. Our last 12 months book-to-bill ratio was 1.11x for the first quarter of 2024. As we continuously reinforce, we often see lumpy contract awards growth from quarter to quarter, but we are continuing to maintain a positive growth rate on an annual basis. As you can see on the lower right-hand side of this slide, our contracted backlog has increased 10.9% year-over-year to a total of $318 million. The growth in contracted backlog is one of many factors that gives us confidence in our future growth. Finally, we continue to have a healthy pipeline with an estimated $6.3 billion of identified opportunities, including approximately $610 million in proposals submitted year-to-date as of March 31. As you can see on the upper right-hand side of this slide, this represents a 177.3% increase over the corresponding year-to-date period ended March 31, 2023. The momentum continues. Please turn to Slide 14. With that, I'd now like to turn the call over to Jonathan Baliff, Redwire's Chief Financial Officer. Jonathan?

Thank you, Pete. Before I turn to the financial results, I'd like to highlight the photo on this slide, which is of the PROBA-3 satellite from Redwire's Belgium facility slated to launch later this year. Turn to Slide 15. Our first quarter 2024 was an excellent start to the year, as Pete spoke about, as we saw continued positive momentum driven by customer demand. Quarterly revenue was a record $87.8 million. Though we did see a slight decline in net loss for the same period year-over-year, our adjusted EBITDA remained flat year-over-year at a positive $4.3 million. We will discuss the drivers of our adjusted EBITDA on a subsequent slide. The first quarter of 2024 also saw positive cash from operations of $2.8 million and free cash flow of $0.4 million, a year-over-year improvement of $16.8 million and $15.2 million, respectively. And this is after making significant investments in growth capital expenditures and internal research and development to advance our path to profitability. These impressive results are attributable to the capability and commitment of our global team members, satisfying our customers' growing demand for space infrastructure. Please turn to Slide 16. Specifically for quarterly revenue, as you can see from the chart on the right, this quarter's record $87.8 million represented a 52.4% increase on a year-over-year basis and an increase of 38.3% on a sequential basis. During the quarter, more than 90% of our revenue derived from funded government programs or from global marquee customers for delivering in the areas of national security, satellite proliferation, and the exploration of space to name just a few. Finally, we'd like to note that after the completion of the full fiscal year post the Space NV acquisition, our Fiscal Year 2024 will no longer present year-over-year comparable revenues, which excluded the results of Space NV. Please turn to Slide 17. For quarterly adjusted EBITDA, Q1 2024 remained flat at positive $4.3 million compared to the first quarter of 2023, while increasing 151.2% on a sequential basis from the fourth quarter of 2023. Gross profit increased 4.3% from $14.2 million to $14.8 million. Quarterly gross margins over the same period declined to 16.9%. These results were primarily impacted by EAC adjustments during the first quarter, exacerbated by our record revenues. The $3.9 million in EAC adjustments largely resulted from unplanned design and test cycles required to meet customer requirements as we neared completion on discrete projects during the quarter. Offsetting these gross margin declines, our sequential quarter adjusted EBITDA improvement was also supported by excellent cost control and the continued operating leverage being driven by scale as Redwire's SG&A expenses are now below 20% of revenue, a notable drop from the 27.8% in the first quarter of 2023. We continue to drive tens of millions of dollars in revenue increases with single-digit growth in yearly SG&A. That's the benefit of operating leverage and scale kicking in. Please turn to Slide 18. As we have mentioned several times today, throughout the first quarter, we continue to make prudent investments to support growing customer demand, also industry-leading innovation. We're risk-reducing and we're also achieving global business scale. During the first quarter of 2024, we made $2.4 million in capital expenditures, our highest first quarter capital investments since going public, plus we made $1.0 million in investment in internal research and development and $1.0 million in a variety of other corporate investments that mostly flow through the SG&A line. We continue to demonstrate our ability to financially perform now while also making investments for future growth, risk reduction, and profitability. Please turn to Slide 19. Similar to last quarter, on the left-hand chart, we show free cash flow. As a reminder, free cash flow provides a metric based on our U.S. GAAP cash from operations minus capital expenditures. On a year-over-year basis, quarterly free cash flow improved by $15.2 million to a positive $0.4 million for the first quarter, due to a $16.8 million improvement in cash from operations. Credit goes to the revenue growth already discussed, but in addition, we had more efficient and effective working capital management over the first quarter while continuing to invest at record rates as our cash generation now funds our growth. This is due to improving returns on our invested capital as compared to our cost of capital, creating a virtuous cycle that differentiates us in a very capital-intensive industry. On the last 12-month basis, we recorded both positive cash from operations of $18 million. And for the last 12 months, positive free cash flow of $8.1 million, a significant first for Redwire. As you can see on the right-hand chart, this yields higher available cash and cash equivalents, up $32.6 million as of March 31, 2024, with $47.6 million in total available liquidity. Please turn to Slide 20 for a brief discussion on the outlook for the remainder of 2024. Our first quarter was a strong start to the year. And as a result, for 2024, we affirmed full year revenue at $300 million, which represents a 23% year-over-year growth rate. This quarter's revenue achieved 29% of our $300 million annual revenue guidance forecast. And much of this outside quarterly revenue was due to the timing of long lead items associated with large contract wins in 2023. We are not currently forecasting similar large, long lead purchases during the remainder of 2024. Finally, through our excellence in execution initiatives, we continue to focus on improving our program management to reduce EAC volatility while we also create more operating leverage and cost efficiency to continue on our path to profitability.

I will now turn the presentation back over to Pete to provide brief final remarks. Pete? Thank you, Jonathan. Please turn to Slide 21. I want to thank all of Redwire's team for this quarter's excellent results, a total global effort that we will work to continue in the second quarter of 2024 and beyond. We will now open the floor for questions.

We ask all participants in the Q&A session to please limit themselves to only one question and one follow-up. If you would like to ask additional questions, you may rejoin the queue. Our first question comes from Greg Konrad with Jefferies.

You have a good quarter and then people ask why isn't the outlook better, which is kind of what I'm getting at. But I mean, I think you explained some of it on the long lead items. But just thinking about the $610 million of submitted bids year-to-date, can you maybe talk about the dynamics around what type of win rates you see? And how do you think about typical conversion of awards? And then just thinking about the walk for 2024 and the rest of the year, what's kind of in backlog versus assumption of yet to win and just thinking about potential upside for the year?

That was essentially three questions in one, so congratulations on your efficiency. The contracted backlog is documented, and I believe the best way to assess that is by comparing our contracted backlog at the beginning of 2023, our forecast for 2023, and the contracted backlog at the start of 2024. From there, you can evaluate our forecast based on the current contracted backlog. This is how we perceive the contracted backlog and its significance to us. Regarding bidding, it is increasing, driven by two factors: a more aggressive approach to the market and, per our growth principles, pursuing higher-level production contracts with greater quantities and larger contracts where we act as the full systems integrator. This is the main point regarding the rise in the number of bids. Concerning win rates, the market is too variable and the sample sizes are too small, resulting in fluctuating win rates. Therefore, we do not disclose a specific win rate related to that.

I still get a follow-up.

Yes. The contracted backlog is available for review. The best approach to understand it is to compare our contracted backlog at the beginning of 2023 with our forecast for that year and then look at what the contracted backlog is at the start of 2024. This will help you assess our forecast based on the current contracted backlog. This is how we view contracted backlog and its significance to us. In terms of the lumpiness, I think Jonathan did a pretty good job explaining this lumpiness cuts 2 ways. You have a nice lumpy quarter, in the fourth quarter, we have really strong contract awards and then the first quarter is lower. Same thing with like you can have a lower revenue quarter. And then due to the timing of critical subcontracts or long lead items, that number can go up. And it's just the first quarter, it's early in the year. So, we're very pleased with the results for first quarter revenue. But at this point, we're going to hold to our $300 million in revenue forecast for the year as we see the remainder of these quarters play out. Did I get every part of your question, Greg, or did I miss something?

No, that was great. And now for the follow-up. EBITDA momentum, good SG&A rationalization, gross margins kind of bounced around. It was high 16% in the quarter dating back to the first 3 quarters of last year, I think you were more in the mid-20s. You called out the EACs, which is probably one driver. But just a sense of any impact from mix and does the higher long lead items have anything to do with the gross margin? Or is that generally booked at a pretty consistent gross margin?

Yes, I think you have a good understanding. It's great to see you've been following us for a while and really getting to know the company. EACs fluctuate from quarter to quarter. The key for us is to maintain excellence in execution so that these fluctuations even out over the year. Additionally, there will be variations in the contract mix of revenue recognized on a quarterly basis. When we experience more significant material purchases or large subcontracts, it can lead to lower gross margins compared to when performance is primarily influenced by factors like labor utilization. This is part of the overall analysis. It also depends on which products are driving revenue for that quarter; large-scale products may generate high operating income in absolute terms but could show lower percentages. If these products are the main contributors to revenue in a particular quarter, it will reduce the margins. Conversely, in different quarters, delivering higher margin products can impact the results on a quarter-by-quarter basis. And that's why it's so critical that what we focus on as a management team is that overall annual balance in terms of either LTM looking back or what we look to be our future, and that all goes into our forecast. But I do want to add, and I've said this and tried to emphasize this in previous calls, that we're constantly trying to balance between top line and bottom line. And we have a goal or an objective to always be EBITDA positive and to drive towards profitability.

Our next question comes from the line of Griffin Boss with B. Riley Securities.

So, I want to dig into the venture optionality. I'm glad you guys sort of honed in on it in this presentation. You cite this $80 billion to $180 billion drug discovery market size. In the past, you've talked about your specific internal projection for a 5-year TAM of $5 billion to $10 billion for this Explore, Live and Work in Space. So, I guess my question is, are you seeing maybe a bigger near-term TAM for Redwire given that market size for drug discovery and what seems to be a rapidly growing interest in microgravity research?

Griffin, thank you for that question. We are aiming to concentrate on different growth principles each quarter, as part of this call is to help educate investors about the Redwire operating model. This aspect of our business is crucial and sometimes gets overlooked, yet it holds real tangible value, especially considering the current developments in the marketplace. We are seeing significant venture funding and investment activity in this area, which provides interesting comparisons for valuing this venture optionality. Therefore, we want to ensure that investors grasp our positioning in that context. And where we're positioned on this context is the TAMs are pretty much the TAMs that you just articulated. But what we want to do is start to educate investors just how far along we are in transitioning this from what I would call research or experimentation into an actual production-level business. And that's why I tried to emphasize the cadence at which we're starting to do this. Previously, you would spend a lot of time kind of researching and developing. It took quite frankly, many years to come up with the ability for PIL-BOX to work quite frankly. And now it works. And we're transitioning out of that period. That investment has been made. As you look at what we're achieving in terms of the PIL-BOX and the cadence and you compare that to the amount that we have to invest on the slides that Jonathan showed showing our CapEx or IRAD, we're past the heavy investment phase in this capability. Now we have to produce, or we have to demonstrate, that we can reach a production-level cadence. And we have started to do that now by showing that we had a launch, and we were able to do in mere 3 months turnaround another launch, and we have 16 additional launches for the remainder of the year manifested. One of the key questions we get around this technology is, can you get to the production level to really turn this into the business that would satisfy or help you get a large enough share of those TAMs? And that's really what that venture optionality is all about. We didn't explore the technology in depth, but I want to add some details about the production model for the crystals. There are two notable points regarding their value to biopharma companies. First, it's essential to have a basic size called seed crystals. You aren't trying to develop all the required production crystals in microgravity; instead, you're providing a seed crystal. This process is similar to how it's done on Earth, where seed crystals are created before being used in production. Each of the investigations, PIL-1, PIL-2, and PIL-3, is examining as many as 36 compounds within a single study. This means there are 36 different crystals that can potentially be developed into seed crystals. Currently, we have two that are fluctuating, one that should return this summer, and 16 additional ones that have manifested. This indicates that reaching production level seed crystal development on the International Space Station is feasible, addressing concerns about whether this work needs to be done on a commercial space station to achieve the necessary volumes. We are confident that we can demonstrate this capability on the ISS. Our partnerships with Eli Lilly and Butler give us optimism that these efforts will be validated over time. The total addressable markets are essentially the same. What I think is critical is that we're transitioning from a research phase to actually developing these. We are gaining knowledge and making investments to better understand this industry. Creating seed crystals for biopharma is not new, but doing it in space is innovative. We imagine a future where we are in the marketplace and our customers don't inquire about the development location; they simply want the best possible crystal. The fact that it was developed in space becomes irrelevant to our business model. There have been some interesting dynamics in the venture world that I think are important to note regarding how we evaluate venture optionality at Redwire, which is critical to our long-term growth strategy. I perceive venture optionality as something that is still five years away. This is how we distinguish between the current space we operate in, which generates revenue and EBITDA, and what lies ahead. I've previously mentioned our heritage plus innovation strategy, where we are currently creating cash flow and profit on our infrastructure side. This gives us the opportunity to look forward and position ourselves for significant, although less defined, breakthrough technologies that are valuable in the future.

Yes. I would like to add a final financial point to what Pete mentioned. We provided a $5 billion to $10 billion total addressable market estimate before PIL-BOX 2. Pete discussed the acceleration, and it is progressing faster than we anticipated when we estimated the $5 billion to $10 billion range. We will revise this estimate and could potentially bring it forward or maintain it, but we are more confident in that range and will provide an update soon. Additionally, it's crucial to showcase value. We are currently observing tens of millions of dollars in the market raising capital at valuations in the hundreds of millions for companies interested in pursuing this.

Great. That was exactly what I was looking for. Appreciate all the color there. And then just for a quick follow-up. You talked about moving up the value chain. We've seen it SabreSat, Phantom, great progress to see. Can you give some more color on this modified commercial Earth imaging spacecraft that you're developing, I think it's a study contract for NASA's Mars exploration program?

We don't specify the focus of the study contract for the VLEO. However, we did secure a study for the Mars investigation, which are two entirely separate matters. I want to emphasize that. To provide further insight, when we consider advancing up the value chain, we are selective about where we choose to perform full systems integration and aim to avoid being a follower in the spacecraft market. We already engage in full systems integration in Europe with the PROBA satellite and have conducted several missions for decades. Nonetheless, we recognize a significant opportunity in VLEO. The potential of VLEO is compelling; previous experimental missions in VLEO demonstrate that being closer to Earth can lower power requirements, enhance imagery clarity, and improve communication capabilities.

Impressive submissions for the first quarter. As you look at the RFPs available for bidding the $6.3 billion pipeline in the commentary on bidding larger programs, should we expect to see proposal submissions to remain at this elevated level consistently on a quarterly basis? And then did I hear you accurately, you're bidding more as a prime than you have in the past?

Yes, I'll address the last part first. We are indeed bidding more as a prime contractor than we have previously. Regarding the number of bids, our aim is to maintain the current level. However, we must consider that RFPs are released on their own schedules. Many of these are large government procurements, but commercial clients also have their own timelines. So, to answer your question, we are increasing our prime bids and striving to keep our bid rates high. It's essential that we have a strong number of bids under review, but this number will fluctuate from quarter to quarter based on submission timing. For instance, if a bid is due shortly before the end of the quarter or if a submission occurs in the first week of the next quarter, it can lead to noticeable quarterly variations. These fluctuations are more about the timing of submissions than anything else.

It does. And my follow-up in regard to the EAC adjustments, what are the lessons learned for Redwire, and what can they glean on these? Is it price of user contracts and/or accounts for flexibility and changes the program requirements and its contracting?

Yes. It's a great question. First of all, it highlights the importance of capability and operational excellence. You must also be disciplined in your bidding approach. While it may sound clichéd, the saying that space is hard rings true. We submit numerous firm, fixed-price contracts, and there will be times when an estimate at completion comes into play. Although these factors can affect financial performance from quarter to quarter, a well-run operation will typically normalize these impacts over time. Therefore, we concentrate on our long-term profitability rather than the fluctuations that can occur on a project-by-project basis, which may appear significant in the short term relative to a small base. However, these things also indicate that in this particular case, we found something in testing, and we had to move out and fix it. So, what may seem as a large EAC in the near term also underscores the quality of our processes to know that we are testing these things, and we're finding deviations, and we're moving out. As we get better and better at executing firm-fixed prices and some of these are just the result of growing pains in addition to space being really hard, as we get better and better at that, we hope that you see balances. Firm-fixed price contracts also offer the opportunity to overperform where you may have a reserve or you find that you can execute well with more efficiency, where the overall impact can move in the other direction. We've observed this in earlier quarters when we've been able to achieve a profit on certain programs that exceeded our expectations. It's important to highlight that we evaluate our performance on an annual basis. We understand that some metrics may fluctuate from quarter to quarter, influenced by the circumstances of that specific period.

Okay. Our next question comes from the line of Suji Desilva with ROTH MKM.

Congratulations on the revenue this quarter. I want to inquire about the seasonal patterns in your bookings, particularly the tendency for them to peak at the end of the year. Are you noticing this as a consistent trend, and can you provide any insights into why this might be happening, or is it just a coincidence that may not happen again?

It's strange, right? So, I would say it's not a trend. It's a 2 data point trend. So, it just happened to kind of fall out that way. If there is something associated with our underlying maybe the flow of our RFPs or how quickly we respond from Christmas break and all of a sudden start ramping up for the rest of the year, we haven't been able to figure that out yet. So, I don't want to say that 2 times has us looking at it, but I'm not ready to declare it some sort of seasonality or anything like that because I don't think we understand.

Definitely due to the weather. We make light of it because we believe the nature of this is to evaluate our company on an annual basis or a set of annual measures. If you look at the last twelve months, we are executing our bidding strategy and winning contracts as planned. What stands out this quarter is the near 200% increase in the number of bids, along with our disclosure about seeing more of that in the future. The translation of this into quarterly contract wins suggests that we should be viewed more on an annual basis. That's why we are starting to discuss the last twelve months to provide more clarity to you and the rest of the investor community.

I apologize for the interruption earlier. I wanted to follow up on microgravity. With the 16 missions planned, are these new customers, or do they lean more towards existing partnerships like Eli Lilly? Is it entirely commercial, or is there a mix with government contracts? Most importantly, can the customers prepare at the pace you're aiming for in terms of production? Will they be ready for the timelines you are trying to achieve?

We don't reveal the identities of our customers for every mission until the appropriate time. However, there are a variety of customers interested in all of these missions. In some cases, if we don’t have a specific customer, there are opportunities available that are not protected, allowing Redwire to conduct its own projects to generate intellectual property, which is quite exciting. The key takeaway is that we will ensure each of those 16 missions is valuable.

Yes. And it's important to note, these are partner customers, right? And the nature of how we do this. We don't lose money on this, right? The research and development have been put in place. We are now in the development phase. As part of that, the economics start to change and adjust and become more like a contract developer a manufacturing office or organization, which in the biotech world is a very no, Suji. You know this world. It has economics that could create multiples of value for the invested capital that we put in already. And again, we are decades further ahead than many of our competitors. We've been doing this for a very, very long time, and it's starting to come to fruition with the intellectual property being Redwire intellectual property.

Congratulations on the quarter. You know, I think a lot of our questions have been asked by now. But maybe just to follow up on an earlier question on margins. How should we think about gross margins throughout the rest of the year? And I guess, how should we think about those EACs as well for 2024?

So, I'll start us off and then I'll let Jonathan jump in. I think we talked about all the different dynamics that play into gross margins and the strategic decision-making that we have to make on a really a bid-by-bid basis as to whether say, the absolute value of margin contribution from a particular bid or maybe the strategic value of a large win whether in that particular case we're willing to sacrifice maybe an operating margin run rate, if you will, as a result. The opportunities will fluctuate over time. We focus on providing revenue forecasts for the year and avoid giving EBITDA forecasts, although we are actively working towards profitability, as Jonathan has mentioned several times. This approach allows us to make strategic decisions regarding our operating margins. Our philosophy has been evident in our performance in 2023, but we also maintain the flexibility to pursue intelligent options throughout the year at a strategic level. Jonathan can further confirm that product mix and various factors such as EACs are significant considerations. Additionally, I want to emphasize that while our goal includes improving overall margins, managing our SG&A effectively is also crucial for enhancing our overall profitability.

Well, I want to answer your question directly and use a historic basis because, again, number one, we do not give operating margin or gross profit forecasts for 2024. That being said, what have we said before? In FY 2022, we had almost 18% gross margins. In FY 2023, we had almost 24% gross margins. We have said that we will not increase those gross margins as much in 2024 because of the significant revenue growth that we're seeing. 23% organic revenue growth is something that we believe is conservative, but also very achievable. And as we go through the year with our bids and our win rates, we'll be able to talk about that. As far as the gross margins are concerned, on the EACs, we are driving towards low volatility, right? We don't want to see this level of EAC on an absolute basis. But it's really looked at on an LTM basis, not on a quarterly basis. You could see a movement up, but we are really trying to drive towards what great program management looks like, which is 0 EACs. And what, like Pete said, we can actually achieve higher through better performance and some of our contracts allow for that. So going from 18% to 24%, which we did last year, we're not going to see that this year. But that doesn't mean, again, getting to the third point, which is really important is that we are driving towards much higher profitability margins, whether it be EBITDA margins because SG&A now is going below 20% or importantly, because we haven't gotten this question, but we're very focused on it at Redwire, which is cash flow, right? We continue to be able to produce higher returns on invested capital, which then yields better cash flow than funds that growth that Pete's talking about, right, which creates that virtuous cycle.

Got it. That's super helpful. I appreciate all that context. Maybe just to end, can you remind us and maybe investors, what are some of the most important near-term catalysts that we should be highlighting or that we should be monitoring for this year?

I want to direct everyone's attention to the key areas for executing our plan, particularly the near-term catalysts that revolve around our four principles of growth. Our goal is to track our progress on a quarterly basis, which is reflected in the structure of today's presentation. We aim to assure everyone that we have a solid foundation in our core business offerings, which will remain strong. There is significant demand for what we refer to as protecting the core, and it is essential that we keep executing in this area. We have already seen promising growth through our foundational technologies. Additionally, we have several initiatives aimed at demonstrating our ability to scale production, which will ultimately drive higher revenues over the long term. This approach will also enable us to ascend the value chain, contributing to robust revenue growth and allowing us to leverage venture opportunities to uncover some of the hidden potential value within the enterprise. So those are the things that I would track to measure our progress. In terms of the near term in the market, for the space industry as a whole, we need to continue monitoring the budgets and the ongoing growth and enthusiasm surrounding real capabilities, such as participating in FDA programs and being chosen as one of just a few of the top contenders in the industry for Mars exploration. It’s also important to consider who is being selected for upcoming lunar infrastructure projects and whether Redwire's program portfolio aligns well with the strong trends in the industry. If you compare those factors, quite frankly, we appear to be in a good position. I would encourage investors to pay attention to these dynamics, as we are concentrating on the growth trends in the industry, which is where we aim to move forward.

Wonderful. That's very helpful. Appreciate it. Congrats again on the quarter and I'll pass it on.

Thank you.

And we have reached the end of the question-and-answer session. I'll now turn the call back over to Peter Cannito for closing remarks.

Yes, some excellent questions. Thank you very much. I appreciate everybody participating in today's call. And thank you for taking the time to listen. Go Redwire.

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.