Redwire Q2 2023 Earnings Call Transcript

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Provided by Quartr
August 8, 2023

There are 7 speakers on the call.

Operator

Welcome to the Redwire Space Q2 2023 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Jeff Zunich.

Operator

You may begin.

Speaker 1

Thank you, Shamali, and good morning, everyone. Welcome to Redwire's Q2 2023 earnings call. We hope that you have 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.

Speaker 1

Our forward looking statements are subject to risks and uncertainties that are described in more detail on Slide 2. Additionally, To the extent 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 GAAP reconciliations, I am Jeff Zunick, Redwire's Senior Vice President, Financial Planning Joining me on today's call are Peter Canedo, Chairman and Chief Executive Officer and Jonathan Bailiff, Chief Financial Officer. With that, I'd like to

Speaker 2

turn the call over to Pete. Pete?

Speaker 3

Thanks, Jeff. During today's call,

Speaker 1

I will take you through

Speaker 3

a discussion of our key will also discuss our continuing outlook for the remainder of 2023, after which we will open the floor for Q and A. Please move to Slide 6. I am very pleased to report that the Q2 was another record quarter financial performance at Redwire. Our ability to deliver high quality solutions and products to our customers is in turn enabling us to deliver Tangible financial results for our shareholders. During the Q2 of 2023, we achieved record revenue, gross profit and adjusted EBITDA recognized our Q1 of positive cash from operations and positive free cash flow made multiple strategic investments in the business to drive future growth, expanded our margins and continue to execute and win more leading edge high potential contracts.

Speaker 3

One such leading edge contract is our recently announced award to develop Trailblazing systems to build landing pads, roads and other forms of infrastructure on the moon, a rendering of which is shown on the right of this page. The future lunar economy based on a permanent presence on the lunar surface will bring significant benefit to humanity and we are very proud The Q2 of 2023 was another incredible quarter for Redwire, during which we built on the momentum from the Q1 of 2020 For adjusted EBITDA, I'm very pleased to report that we achieved a second Sequential quarter of positive adjusted EBITDA with an $8,400,000 increase on a year over year basis from the Q2 of 2022 to the Q2 of 2023. Next, we are pleased to report we have achieved a 71.6 1,000,000 year over year improvement in net loss. Also notably in this quarter, we achieved positive free Cash flow for the first time as a public company. In Q2, we achieved a year over year improvement in free cash flow of 6,300,000 to positive free cash flow of $1,100,000 This is an important milestone for Redwire and an outstanding accomplishment on both an absolute and percentage growth basis.

Speaker 3

We also achieved year over year improvement of $7,100,000 in cash from operations to positive $2,800,000 in the Q2 of 2023, That's $7,000,000 in cash from operations improvement. Finally, it's important to note that these positive financial results Due to strong performance in operations, in Q2, we continued our proven track record of delivering dependable, Flightworthy products and extended our already significant flight heritage as we launched 11 solutions on 4 launches in the quarter. Turning to Slide 8. As I just mentioned, our strong financial performance is driven by our proven ability to deliver This is how we know it is sustainable. On the next few slides, we'll share just a few examples of our operational success and investments in the Q2 of 2023.

Speaker 3

During Q2, 2 additional Redwire rollout solar arrays or ROSA wings were installed onto the International Space Station, bringing the total number of ROSA wing deployments and operating in space to 6. In addition, during the quarter, Redwire announced the award of 2 more iRosa wings, number 7 and 8, and a follow on contract from Boeing. Our performance and reliability are leading to follow on contracts. Redwire also continues to advance the ROSA technology to power other Spaceflight platforms and missions such as for the power and propulsion element for NASA's Gateway and for Astrobotic's lunar vertical solar array. Turning to Slide 9.

Speaker 3

During the Q2 of 2023, Redwire provided advanced engineering services and payload deployment expertise For the Bolt Rocket from Crossbow Systems, their next generation launch vehicle. Redwire developed and delivered 4 key components: The launch vehicle structure, separation system, launcher interface and ground support equipment. In addition, Redwire provided vehicle integration, launch and post flight recovery services. The technology supporting this mission was Developed by Redwire's team in Albuquerque, New Mexico, and this is the 2nd successful mission that Redwire has supported with Crossbow Systems and their suborbital rocket. Please turn to Slide 10.

Speaker 3

Also in Q2, Redwire had 3 successful experiments returned from the International Space Station. Materials from our PSMI Ascent, Amplis Spacemaker Health and Plant Habitat 3A investigations will return to the respective researchers on earth for further study. These are excellent examples of the continuous cycle of in space payload development and operations that Redwire is known for. Please turn to Slide 11. Finally, space is a multinational endeavor and Redwire Space is a Global leader in international space missions.

Speaker 3

In the Q2 of 2023, Redwire's International Birthing and Docking Mechanism or IBDM Successfully completed its 1st round environmental testing. The IBDM is the result of an extensive research program and was designed to overcome the limitations of conventional docking systems and to be highly versatile, resilient, high performance and low impact. It is fully computer controlled and designed for use with both large mass and very lightweight spacecraft. The IBDM will soon complete further testing with the goal of having a fully qualified system by the end of the year. We believe that the IBDM is the docking system for the Next generation of space infrastructure and as of the end of Q2, we have over $60,000,000 of identified opportunities Speaking of pipeline, our bookings during the Q2 were $45,600,000 an increase over our contracted awards for the Q1 of 68.3 percent since June 30 last year to a contracted backlog at the end of Q2 2023 of $272,800,000 Growth in contracted backlog is one factor that gives us Confidence in our future growth and stability.

Speaker 3

We continue to have a healthy pipeline with an estimated $3,700,000,000 of identified opportunities, including $512,000,000 in proposals submitted and currently under review by our customers. Please turn to Slide 13. Not only did Redwire achieve positive adjusted EBITDA and free cash flow during the 1st 2 quarters of 2023, We did so while continuing to invest in our future growth. During the year to date period ending June 30, 2023, we have made 2 point $5,000,000 in capital expenditures. Examples of capital expenditures during the quarter include spend on our first of its kind radiofrequency test chamber in our Longmont, Colorado facility to support our rapidly growing space communications business as well as investments in a Trust for solar production in our Goleta, California facility.

Speaker 3

During the same period, we have also made investments in research and development, totaling $2,500,000 including significant investments in the IBDM. In addition, we have made a variety of Corporate investments in systems and infrastructure totaling $1,900,000 that flow through the SG and A line. Next, moving to Slide 14. Redwire recently announced plans for a 30,000 square foot State of the art microgravity payload development facility with a mission operations center at the Nova Park Innovation and Technology Campus in Floyd County, Indiana. Once complete, this facility will support increased demand for commercial companies and academic researchers focused Flight in low earth orbit and beyond.

Speaker 3

Construction is expected to begin in the Q4 of 2023. Clearly, we are demonstrating our ability to deliver in the present while investing in the future. Please turn to Slide 15. With that, I'd now like to turn the call over to Jonathan Balis, Redwire's Chief Financial Officer. Jonathan?

Speaker 2

Thank you, Pete. Please turn to Slide 16. Similar to last quarter, I will help quantify and expand on a number of the themes that Pete just talked about, including key financial takeaways, Starting with the financial quarterly metrics shown on this chart and then continuing with other quarterly, year to date and last 12 month financial information And also a brief update to our financial outlook for the remainder of the year. Important points to reiterate in detail for this quarter's financials. 1, Redwire's excellence and execution initiatives continue to deliver on our growth promises and our differentiated path to profitability As we scale our business with record quarterly and first half revenues, gross profit, adjusted EBITDA and now positive cash from operations and free cash flow.

Speaker 2

So let's discuss the specifics. We achieved record revenue of $60,100,000 in the Q2 of 2023. We achieved our 2nd consecutive adjusted EBITDA quarter since becoming a public company, a positive adjusted EBITDA of 4,400,000 the Q2 of 2023. And as said before, that's an $8,400,000 increase on a year over year basis versus the Q2 of 2022. This record adjusted EBITDA occurred primarily due to a more than doubling of gross profit year over year, which we will detail in a few minutes.

Speaker 2

This excellent progress in gross profit, program management and continued cost controls also contributed to a $71,600,000 Year over year improvement to a $5,500,000 net loss in the Q2 of 2023. 2nd and notably, in Q2 2023, we achieved positive free cash flow for the first time as a public company, and that was $1,100,000 based on a positive $2,800,000 of cash from operations. This is a year over year improvement in cash from operations of $7,000,000 and a sequential $16,900,000 improvement over the last quarter. Please turn to Slide 17. Specifically for quarterly revenue, as you can see from the chart on the right, and as I said before, we had a $60,100,000 Revenue stream for the Q2 of 2023 versus $57,600,000 for the Q1 of 2023, representing an increase of 4.3% on a sequential basis.

Speaker 2

And as said before, this is 63.6% increase on a year over year basis. Excluding revenue contributed by Space NV, our 2nd quarter revenues were $45,900,000 excellent growth of 24.9% on a comparable year over year basis. We were able to achieve this in the U. S. Businesses due to significant growth in backlog.

Speaker 2

More than 85% of our revenue is derived from funded government programs or from global marquee customers who are delivering, for example, Finally, on a Q222 full year last 12 months basis, Redwire grew revenue at 45.6%, An acceleration of revenue growth from Q1 2023's last 12 months of 33.5% talked about on last quarter's call. Turning to Slide 18. For this year to date or first half, Redwire recorded $117,700,000 of revenue, which excluding the revenue contributed by Space NV was growth of 31% compared to the first half of 2022. Redwire's first half of twenty twenty three saw 69.1% year over year revenue growth across all three primary focus areas, Whether it be Space Systems as an integrated space mission enabler or payloads to explore, live, work in space Or with Redwire Europe and our multinational space leadership. The first half revenue percentage by customer type shown on this chart Also shows the strength of diversification of Redwire revenue, adjusted EBITDA and cash flow, With revenue streams 45.4 percent from Civil, 33.5% from Commercial and 21% from National Security customers.

Speaker 2

Of note this half, our first half twenty twenty three commercial customer revenues have seen the largest growth percentage, 103.6 percent year over year and our national security revenues grew year over year by 43.9% in the half versus 9.1% growth in the first half of twenty twenty two, and almost 5 times acceleration of this customer class' revenue. Please turn to Slide 19. Redwire's path to profitability continued successfully in this quarter, As you can see from the progress made on the chart to the right, with a steady march of quarterly financial improvement in 2022, now continuing in 2023 With Q2 2023 adjusted EBITDA improving $8,400,000 year over year to a positive 4,400,000 This record adjusted EBITDA improvement was primarily driven by our improvement in gross profit. Our excellence and execution initiatives are showing results: Better contract mix, the roll off of lower margin contracts, better labor utilization, better program management increased On a year over year gross margin basis from 19% to 26.5% and our year over year gross Profit grew 2.3x higher from $7,000,000 to $15,900,000 The adjusted EBITDA improvement was also supported by cost control with Redwire's 2nd quarter 2023 SG and A expenses at 29 point percent of revenue, a significant drop from the 47.8% in the Q2 of 2022.

Speaker 2

Please move on to Slide 20. Similar to our Q1, 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 CapEx.

Speaker 2

As you can see, during the Q2 of 2023, we had positive free cash flow of $1,100,000 compared with the Q1 of 2023's Use of cash of $14,800,000 a sequential improvement of almost $16,000,000 On a last 12 months basis, free cash flow also improved 16.5% in the Q2 of 2023. Credit for this goes to the revenue growth and profitability improvements already discussed. But in addition, we had more efficient and effective working capital management over the Q2, and our management continues to be laser focused on this through 2023 beyond. And remember, this cash flow improvement is after the almost $7,000,000 of first half investments for growth That's Pete spoke about earlier and is not dependent on any one solution or any one customer class. On the right hand chart, we show our available liquidity as of June 30, 2023, which totaled an ample $36,200,000 A nominal change from Q1 'twenty three.

Speaker 2

This quarter's liquidity is much improved from a year ago, and we continue our path to profitability, and I want to thank All of Redwire's teams for this quarter's results, a total global effort that will continue through 2023 beyond. I will now turn the presentation back over to Pete to provide a brief outlook for the remainder of 2023. Pete?

Speaker 3

Thanks, Jonathan. Please turn to Slide 22. As you can see from our presentation, Redwire continues to deliver now with strong operational and financial while investing in our future, resulting in strong pipeline and future backlog. For these reasons, for 2023, We reaffirm our full year guidance range of $220,000,000 to $250,000,000 which represents 46% year over year growth at the midpoint of the range. With that, I'd like to thank all of the Redwire employees for their hard work on an excellent second quarter and all our customers for trusting Redwire.

Speaker 3

We will now open the floor for questions.

Operator

And at this time, we will be conducting a question and answer Our first question comes from the line of Mike Crawford with B. Riley Securities. Please proceed with your question.

Speaker 4

Thank you. Pete, maybe I'd like to start with your the numbers you gave for the Puzzle submitted and under review. So the deck shows $489,000,000 June 30th, you mentioned $512,000,000 today. Is it that accurate that there is this $23,000,000 increase in the 1st month of the quarter?

Speaker 3

So I think the We'll have to get back to you on that question, Mike. I think it's in that range, and we might be confusing year to date submitted bids As of certain time period versus the year to date, let me see here. But I'm going to pull up the number real quick.

Speaker 4

Okay. Well, maybe more importantly, you have this $3,700,000,000 pipeline. And

Operator

Do you

Speaker 4

have enough experience at this point to characterize like potential win rate or thoughts on How you're going to turn that into a backlog in the coming year?

Speaker 3

Yes. No, it's a really good question. The answer is essentially no. At this point, we don't have a conversion rate that Has enough consistency over time that we're comfortable reporting on. A number of those opportunities, if there's some big swings in there that could, for instance, Change any conversion rate I were to give you anyways.

Speaker 3

So I think the $3,700,000,000 really underscores That's a lot of great opportunities for us to work against and based on the backlog growth You've seen we have a consistent enough win rate to include our growth over time here. Jonathan, did you have any additional comments on the 5 12 versus 489?

Speaker 4

Yes, I

Speaker 2

think that on the 489, it's only those submitted During the year, so 49, we just had a cutoff on the year to date submitted bids, the 5.12 includes a few other bids that have been submitted.

Speaker 4

Okay, perfect. And then, Jonathan, I know you gave a few of the reasons, The drivers of the improvement in gross margin on what your excellence in execution like roll off lower margin contracts, better program management, etcetera. But Was there anything particular in the mix in this quarter and last that led to these really Sizable beats versus forecasted margins and I guess the follow through is, is that More of a new baseline for what we should expect going forward?

Speaker 2

Well, look, Mike, I Always appreciate your question and trying to get at basically a projection of what our current gross margins, which we do not publicly give. But let me help you out Look, if you look at last year and the nature of number of EAC adjustments and some program management, Really what you've seen, it's improvement across all three focus areas, whether it be enabling space missions, live work in space or What we call Redwire Europe and International or Multinational, all three saw improvement in their gross margins And gross profit, but you really saw it in the Space Industries or basically the live work in space focus area. You really saw that year over year improvement and that's just due to some new contracts coming on, better program management, fewer EAC adjustments, All the things that I talked about before, I do have to also mention, when we talk about cost control, we don't just talk about cost control from the standpoint SG and A and operating margin, we also talk about within the contracts themselves. And so being able to operate on time and do better on Time delivery of milestones both helps us from a gross margin standpoint and gross profit and then obviously from a cash flow standpoint.

Speaker 4

Okay. Does that help? Yes, yes. So that was a great job of kind of answering the question, but not really.

Speaker 2

Look, we told you Mike in the past, we're not giving guidance, But we have an intent of getting these margins up, right? We just don't give any guidance, Mike, but we you can tell we're making progress Quarter over quarter, it's Pete's direction to all the management team to continue this. It's not going to be an overnight, But you can see the progress and then you see also the money dropping to the bottom line, which is really operating leverage coming back into the business As a public company.

Speaker 3

Yes, I'll just add that the again, the key factor is, as I mentioned in the pipeline, we have some pretty big swings. Some of these swings may be cost plus fixed fee for instance. And therefore, the gross margin profit could change Based on landing one of these big swings, even though that absolute value of the profit would significantly increase with scale. So there's a number of different trade offs that happens when you're kind of building a complex mix of programs like we are and an outsized cost plus fixed They could be for instance is an example of a one of the reasons we're reluctant to put a mark on the wall for gross profit margin.

Speaker 4

All right. Thanks, Pete. And I guess I have one closing kind of bigger picture question on, if you look at Space Systems, Base Industries, Multinational, is there one of these addressable markets that Is most attractive or are there different potential margin characteristics For any of those 3, I wouldn't call them segments, but areas of focus?

Speaker 3

No, it's really about the portfolio effect in this instance. They each bring something to the table. Obviously, some of the focus areas are growing faster than others. Some have provided more scale, others are really important for the future. Certainly, there's different growth rates Occurring internationally versus the U.

Speaker 3

S. Market. In the U. S. Market, as you saw from the percentages that Jonathan presented, you have A number of different dynamics in civil, national security and commercial as well.

Speaker 3

So what's really I think the important part is that Each area of focus brings something to the portfolio that makes the whole Come together in a really resilient, stable, growing way.

Speaker 4

Okay. Thank you. Thanks very much.

Speaker 2

Thank you, Mike.

Operator

Our next question comes from the line of Greg Konrad with Jefferies. Please proceed with your question.

Speaker 5

Good morning. I'm just going to Greg,

Operator

how are you?

Speaker 5

Good. How are you doing? Just going to follow-up on margins, not expecting an answer, but just Coming at it a different way, I mean, you mentioned some of the variability around mix going forward. But I mean, when you think about the second half of the year, is there at least a baseline to maintain positive EBITDA? And if we do think about the biggest swings, is that more on the COGS line or is there some variability around SG and A, just thinking about OpEx spending?

Speaker 3

Yes. No, in terms of The margin mix, it's or the margins, it's really a function of the product mix and the type of contracts that we win as we scale. In terms of on what I call gross margin discipline, that's an area that we've been putting a lot of focus on and we've demonstrated As part of our excellence and execution initiative, the ability to continue to make great headway there and that is our intention to continue that Going into the future.

Operator

Jonathan, do you want to add anything?

Speaker 2

Yes. The only thing I would add is we continue to See improvement on the SG and A margin line. The SG and A margin line this quarter still much better on a year over year basis. But this quarter more than any other, we had a lot of investments in SOX ERP that find way into that SG and A line. So we really did see on a run rate basis our SG and A margin go down sequentially quarter over quarter, But it looks a little higher, but really we had some specific investments is what I would call them.

Speaker 2

They're one offs, but we include them. We don't Try to say that they're not SG and A and do some adjustments. So that's why you're seeing that. But I think that we're once we Continue to win these bigger projects and revenue, you're going to see that stay fixed on an absolute basis, and that's where operating leverage comes. On the gross margin basis, Again, I know you're asking a specific question about the future.

Speaker 2

We really have an intent to keep this gross margin moving from the standpoint of being able to Continue the past excellent on time delivery, better on time delivery, better programs that have higher margins. So we're going to continue that's an We just don't give a guidance towards it, Craig, but I do hopefully you're getting a sense of what we're trying to do here.

Speaker 5

Yes. No, I mean, there's been great momentum. And then, I mean, just switching to the outlook for the top line for the year, if we kind of take The midpoint of the guide, it's kind of a sequential flat in H2 versus Q2 levels. What is the variability? Is it the supply chain?

Speaker 5

Is it orders that you expect coming in? Is it capacity? Hassane, just how are you kind of thinking about revenues at least near term?

Speaker 3

Yes. So it has to do with the size of Orders and the timing of orders. As you know, in this industry, it can be very difficult sometimes to predict when, for instance, a government award occurs. So I would say that the majority of the uncertainty is about timing associated with awards.

Speaker 2

Yes. And just know, I mean, again, we want to be prudent in our guidance and sticking with that, we're halfway through the year. We're proud of what we've been able to achieve. Team has done a great job executing. But like Pete said, it can be lumpy, but we're just trying to be prudent.

Speaker 5

And then just last one, I mean, in H1 commercial led the increase, not sure if How much of that's organic versus inorganic? But have you seen any broader changes in the commercial Ram, I mean, there was obviously a little bit of volatility around funding before and some other items. Just can you talk about the broader trends in the Commercial business?

Speaker 3

Yes. I mean, I think you hit on it and it talked a lot about in the news. Commercial is growing fast. There's a significant amount of opportunity there, but Redwire is a mission enabler, had some exposure To customers receiving their funding as well, so depending on the funding profile of customers obviously that trickles down to us as well. But overall, there's still a lot of enthusiasm around the commercial Segment of the market and we believe that trend will continue over time.

Speaker 3

We're also seeing a lot of Breakout commercial successes as well that is leading to some tailwind. And then while we're on the topic, I'll just I'll point out and reemphasize one of the areas we're excited about in the national security area, which happens to be the area that's growing Are accelerating the fastest as part of our growth. There's certainly a significant amount of opportunity emerging in national security as well and we think that Redwire Based on some of our security infrastructure and contracts has a real opportunity to capitalize on those trends.

Speaker 2

Thank you. I mean just to emphasize, without Space NV, just to answer a specific question, we saw 31% growth Without Space NV on a first half basis and on an LTM basis, as you know, We saw 45.6% growth. And so we're making progress, the best way I can say. Thank

Operator

you. Our next question comes from the line of Suji Desilva with ROTH MKM. Please proceed with your question.

Speaker 6

Hi, Peter. Hi, Jonathan. Congrats on all the progress here.

Operator

Thank you very much, Lucie.

Speaker 4

Sure. So

Speaker 6

When you submit the proposals, does that give you some level of understanding of the timeframe for the award? Or should I refer back to your Prior comments are, Jonathan, where that is one of the most uncertain parts of kind of running the revenue line?

Speaker 3

Yes. No, we don't control the timing of the award. So it can be highly variable. Government contracts are notorious for being awarded late. It can be a continuing resolution.

Speaker 3

Some it can be a protest. There's a lot of that goes into the timing of these awards. So it's very difficult to predict.

Speaker 2

I'll just make a note, when you compare it to the last quarter, the Pipeline has moved up almost $300,000,000 from $3,400,000 to $3,700,000 So we're seeing more coming through the pipeline. But as Pete said, the timing It's something that we think long and hard about and be prudent about what we can predict.

Operator

Yes. Just to ask a question

Speaker 6

a little more simply. I mean, is it reasonable to expect that the one when you submitted a contract that will be awarded within the next 12 months? Or is that not a reasonable way to think about it?

Speaker 3

So I would just repeat that the government has a number of things that they have to deal with as well as our commercial customers to include They're financing, so it's very difficult to predict. Yes. Fair. Yes. I mean, I would think if I was going to try to focus on something, I'd focus on the backlog.

Speaker 3

We had excellent growth in our backlog. We're very proud of that. Our team has done an extraordinary job In winning the confidence of our customers to increase that backlog and that's where I would look to in terms of That reliable revenue moving into the future.

Speaker 6

That's helpful, Peter. It's been great execution on the backlog. And maybe you can and second question, do you focus on the national security part of the business? There's been a lot of talk to date about launch and about satellites and Earth observation. I just want to understand Redwire's sort of offerings in National Security because that maybe kind of highlight may have been highlighted a little less in the last few quarters.

Speaker 6

So Curious what the opportunities are there?

Speaker 3

Yes. It's we have Interest across our entire portfolio mix from the national security segment of the market, It's not so much I would focus on which products they're interested in, Specific to List offerings because it's pretty much across the board. What I would focus on is that Redwire has Unique security infrastructure and personnel clearances And contracts, quite frankly, that if you follow the government contracting industry, you know that you have to have Contracts that have documentation that allows you to participate in More classified work and we have those elements as part of our business. So when I talk about The accelerated growth and when you see the accelerated growth, I think it's more a reflection of the fact that we're a trusted company that has That barrier to entry, if you will, in terms of the ability to work on Some of the government's most sensitive space programs. Does that make sense?

Speaker 6

Yes, absolutely. It's a very helpful perspective. And then maybe lastly, you cited the 85% government marquee customer data point in the presentation. I'm just curious, is that mix expected to change next 1 to 2 years or stay roughly there? And maybe you could just kind of help us understand the 15%.

Speaker 6

Are there large customers They could cite in that to understand how that can grow or is that diversified across a lot of emerging customers? Thanks.

Speaker 3

I'll ask you to repeat the last part because I didn't totally get that, but let me jump on the first part first. All of our mix, one of the exciting things that I like to talk about Redwire is that We hit above our weight class in terms of the opportunity that we're opportunities that we're pursuing in the pipeline, right. So sometimes you have the potential To have really large wins in a particular area of the business that can have an outsized impact on our base, if you will, which is awesome and really exciting about Redwire because these are these big swings The kinds of things that are fueling our growth. However, at the same time, it makes it difficult sometimes to make bold predictions about A variety of different mixes like National Security. We may be growing or any one of the different segments or even sometimes your gross margins As I referenced in this idea of that a very large cost plus fixed fee win could change our profile there.

Speaker 3

So you might have an instance where you might have an increase in the number of wins In the commercial segment, except for their smaller dollar amounts compared to say a large very large single win in Say the civil or national security space and that could again change these numbers. So we like the mix. I think the most important thing to us is that we're operating across all these different areas successfully and that gives us a lot of resilience and stability regardless So what the market is doing sometimes when the commercial slows down due to maybe access to capital, We have really great stability associated with increases in national security growth. Civil is always there. Europe is One of the areas we're particularly excited about because they are really growing their budgets over there, so that gives us additional Stability and resiliency in that portfolio effect I talked about earlier as well.

Speaker 3

I didn't understand the second half of the question about the 15%. What was that in reference to?

Speaker 6

Sure. Yes, Peter, I think you answered it to some extent. The remaining 15%, whether it's across many smaller customers or whether there's 1 or 2 large customers dominating that portion. I think you already said it was relatively different.

Speaker 3

Okay, yes. Got it.

Speaker 2

Yes. Let me just I mean, I'm going to Bolt on to that, because when you look at the customers that we're doing current bids for, you have 85% that are marquee and government, we're pretty specific about how you get into that bucket. The other 15%, these are actually many of them very, very large customers too, right? And when you look at The $489,000,000 of bids this year, those are submitted to date. The 5.12, there was A little bit of residual coming out of 2022 that adds to that 49%.

Speaker 2

But the bottom line is that 15% are still really quality customers too, right?

Speaker 6

Got it. No, great guys. Thanks. Appreciate the detail.

Operator

And we have reached the end of the question and answer session. I will now turn the call back over to Peter Canedo for closing remarks.

Speaker 3

Thank you very much. I'd like to thank everybody for those outstanding questions. I'd like to really thank the team for another great Thank all of our employees and customers for the exciting work we do every day. Like I mentioned, we're really excited when a customer like NASA entrusts With a really incredible program like the Mason program to build roads and launch pads on the moon. Again, that's what we're all about here at Redwire, and we appreciate everyone's time today, and thank you for listening.

Speaker 3

Go Redwire.

Operator

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

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