Redwire’s second quarter was marked by a sharp revenue shortfall and a significant loss, prompting a strong negative reaction from the market. Management attributed the underperformance to delayed government contract awards and technical challenges in a major RF systems development project, which led to unfavorable cost adjustments. CEO Peter Cannito acknowledged, “Q2 was a disappointing quarter for adjusted EBITDA compared to our expectations,” and emphasized the outsized impact of a single troubled project on profitability. The team is now focused on addressing operational execution issues and stabilizing its development programs.
Is now the time to buy RDW? Find out in our full research report (it’s free).
Redwire (RDW) Q2 CY2025 Highlights:
- Revenue: $61.76 million vs analyst estimates of $80.48 million (20.9% year-on-year decline, 23.3% miss)
- EPS (GAAP): -$1.41 vs analyst estimates of -$0.17 (significant miss)
- Adjusted EBITDA: -$27.39 million vs analyst estimates of -$731,000 (-44.4% margin, significant miss)
- The company dropped its revenue guidance for the full year to $500 million at the midpoint from $570 million, a 12.3% decrease
- Operating Margin: -122%, down from -8.8% in the same quarter last year
- Backlog: $329.5 million at quarter end
- Market Capitalization: $1.36 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Redwire’s Q2 Earnings Call
- Colin Michael Canfield (Cantor Fitzgerald) pressed on the balance between accounting controls and engineering complexity in managing cost overruns. CEO Peter Cannito explained that unpredictable technical risk in development contracts drives volatility, and the company’s controls have improved but inherent uncertainty remains.
- Gregory Arnold Konrad (Jefferies) asked if shifts in contract mix would reduce fixed-price development risk. Cannito responded that Edge Autonomy’s production-heavy portfolio will lower future exposure to volatile development programs and improve business stability.
- Suji Desilva (ROTH Capital Partners) sought clarification on the ongoing review of cost assumptions in projects. CFO Jonathan Baliff noted these reviews are systemic and ongoing, aiming to better forecast and manage project variability.
- Brian David Kinstlinger (Alliance Global Partners) questioned the future margin profile of troubled RF systems contracts. Baliff stated that margins should improve moving forward as conservative loss assumptions are now reflected, and future cash flow is expected to stabilize.
- Austin Nathan Moeller (Canaccord Genuity) inquired about NASA contract changes and the impact of new funding on Redwire’s space research business. Cannito said restored ISS funding should benefit microgravity projects, with Redwire positioned for upcoming commercial and governmental space station work.
Catalysts in Upcoming Quarters
In the upcoming quarters, StockStory’s analysts will watch (1) the pace at which Redwire converts its growing backlog into revenue, especially with new production contracts, (2) progress on integrating Edge Autonomy and realizing expected margin improvements, and (3) early revenue contributions and partnership growth from the SpaceMD venture. Ongoing developments in government funding cycles and contract awards will also be critical to track.
Redwire currently trades at $9.62, down from $13.70 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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