Redwire Corporation
02/27/2026 | Press release | Distributed by Public on 02/27/2026 16:16
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management's Discussion and Analysis is intended to assist in an understanding of our financial condition and results of operations for fiscal 2025 compared with fiscal 2024 items. Discussions of fiscal 2023 items and year-to-year comparisons between fiscal 2024 and fiscal 2023 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on March 11, 2025.
The following discussion and analysis is provided as a supplement to, and should be read in conjunction with, the consolidated financial statements and accompanying notes included in this Annual Report on Form 10-K. Certain information contained in this discussion and analysis includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to Item 1A. "Risk Factors" and the "Cautionary Note Regarding Forward-Looking Statements" sections of this Annual Report on Form 10-K. Unless the context otherwise requires, all references in this section to the "Company," "Redwire," "we," "us" or "our" refer to Redwire Corporation and its consolidated subsidiaries.
Business Overview
Redwire is an integrated space and defense technology company focused on advanced technologies including space infrastructure, autonomous systems and multi-domain operations leveraging digital engineering and artificial intelligence automation. Redwire's proven and reliable space and defense technology capabilities include our space and defense technology and platform offerings of
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avionics, sensors, and payloads; power generation; structures and mechanisms; radio frequency systems; airborne and spacecraft platforms and missions; and microgravity payloads. Redwire combines decades of flight heritage and proven experience with an agile and innovative culture.
Redwire's primary business model is providing proven, mission critical solutions based on space and defense technology offerings through both short- and long-duration projects for U.S. and international government and commercial customers. Redwire operates in two business segments: Space and Defense Tech. We organize our business segments based on the nature of the products and services offered.
Redwire's Space segment focuses on delivering next-generation spacecraft, large space infrastructure, and microgravity capabilities to serve civil, national security, and commercial space customers globally. Our core space offerings are flight-proven and have supported hundreds of spacecraft, missions, and operations, including, but not limited to, the International Space Station, the European Space Agency's ("ESA") Project for On-Board Autonomy ("PROBA"), the National Aeronautics and Space Administration's ("NASA") Double Asteroid Redirection Test and the Orion space capsule, and the Space Force's GPS. We are also a provider of innovative technologies with the potential to help transform the economics of space and create new markets for its exploration and commercialization.
Redwire's Defense Tech segment focuses on delivering combat-proven autonomous systems, optical sensors, advanced optics, resilient energy solutions and radio frequency payloads that provide intelligence, surveillance, and reconnaissance capabilities for customers including the U.S. Department of War ("DoW", formerly known as the Department of Defense), U.S. Federal Civilian Agencies and allied governments across multiple domains. Our defense technology offerings include field-proven airborne products and services that have decades of innovation and more than 400 thousand flight hours. Key operations include developing and manufacturing Uncrewed Aerial Systems ("UAS") for commercial, government, and military applications in areas such as surveillance, logistics, reconnaissance, border security, and emergency response. Redwire is committed to delivering innovative space and airborne platforms to help transform the future of multi-domain operations.
Recent Developments
Selected operational developments for the year ended December 31, 2025 are described below.
•Strengthened leadership in Very Low Earth Orbit ("VLEO") with the award of a $44 million phase 2 contract to advance the Defense Advanced Research Projects Agency's Otter mission, which leverages Redwire's SabreSat.
•Entered into an eight-figure agreement with The Exploration Company ("TEC") to provide two International Berthing and Docking Mechanisms ("IBDM") to support autonomous rendezvous and docking capabilities for TEC's Nyx spacecraft.
•Launched 14 PIL-BOXes, studying 18 unique molecules, to the International Space Station ("ISS"); as of December 31, 2025, Redwire had eleven active payload facilities on the ISS.
•Completed acquisition of Edge Autonomy, a leading provider of field-proven uncrewed aerial systems ("UAS") on June 13, 2025.
•Delivered more than 100 Stalker/Penguin UAS to customers in 7 countries around the world subsequent to the Edge Autonomy acquisition, including the U.S. Army (directly and via the Long Range Reconnaissance ("LRR") program), U.S. Marine Corps, NATO and other allied nations.
•Opened a new 85,000 square foot facility in Ann Arbor, Michigan to increase production of critical fuel cells to meet growing demand, reflecting a key investment in a domestic, vertical integration strategy for Stalker UAS production.
Industry and Regulatory Updates
U.S. Budget Environment
On March 15, 2025, the President signed into law the Full-Year Continuing Appropriations and Extensions Act of 2025 (PL 119-4), which extended federal funding (including for the U.S. Department of War ("DoW"), formerly referred to as the Department of Defense) at near fiscal year ("FY") 2024 levels through September 30, 2025, but included an increase of $6 billion to defense spending, with NASA held approximately flat at FY 2024 budget levels of roughly $24.9 billion. Although the full-year continuing resolution offered budget continuity through September 2025, its flat funding and lack of detail on appropriation levels constrained agencies' procurement efforts to make new awards.
In May 2025, the FY 2026 President's budget request ("PBR") proposed reducing NASA's funding from approximately $24.9 billion to $18.8 billion. The proposal included cuts to the International Space Station operations, Lunar Gateway, the Mars Sample Return program, retiring SLS/Orion after Artemis IV, and several space science initiatives. As part of the "One Big Beautiful Bill" ("OBBB") passed in July 2025, Congress included a supplemental appropriations package that restored approximately $10 billion in NASA
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funding. The package provided continued funding for the Artemis missions, Lunar Gateway, International Space Station operations, and infrastructure projects at Johnson Space Center, while leaving certain proposed cuts to science programs in place. On January 23, 2026, the President signed into law $24.4 billion in FY 2026 appropriations for NASA. The combination of both the OBBB and the FY 2026 NASA appropriations enacted into law resulted in a significant increase for a total of $27.5 billion for FY 2026 for NASA. Additionally, on December 18, 2025, Jared Isaacman was sworn in as NASA's 15thadministrator.
On December 18, 2025, Congress passed, and the President signed into law, the National Defense Authorization Act of 2026 ("NDAA", P.L. 119-60), authorizing annual funding levels for the U.S. Armed Forces and setting expenditures for the DoW. The FY 2026 NDAA authorized a total of $900.6 billion for national defense. The bill also authorized funding and updated U.S. national missile defense policy to reflect the goals of the "Golden Dome for America" initiative.
On February 3, 2026, Congress passed, and the President signed into law, the Consolidated Appropriations Act of 2026, that includes full FY 2026 appropriations for most of the federal government, exclusive of the Department of Homeland Security, which remains under a short-term continuing resolution. The bill provided $839.2 billion in total discretionary defense funding, including research and development funding. The bill includes $13.4 billion in funding for missile defense and space programs to augment and integrate in support of the "Golden Dome for America" initiative.
International Developments
In March 2025, the European Commission introduced the Readiness 2030package (previously dubbed "ReArm Europe"), to deploy nearly €800 billion over four years for collective defense, including drone systems, missile defense, cyber and autonomous platforms. The package includes a suspension of fiscal constraints allowing up to 1.5% of Gross Domestic Product ("GDP") to be put toward additional defense spending and launched the €150 billion Safe Action for Europe ("SAFE") loan facility.
The SAFE fund, formally established in May 2025, is a new European Union ("EU") financial instrument that is expected to increase defense spending among member states through common procurement. It will be financed by EU borrowing, with the European Commission authorized to issue up to €150 billion in loans. This funding is intended to strengthen the European Defence Technological and Industrial Base by facilitating joint investments in defense capabilities. EU contracts under SAFE will require greater than 65% of value tied to member-state supply chains. Since October 2025, Member States have continued to prepare and submit SAFE-related plans and requests, and public reporting indicates demand for SAFE financing has exceeded the initial €150 billion envelope, which could result in additional financing mechanisms or follow-on programs.
At the June 2025 North Atlantic Treaty Organization summit in The Hague, member states committed to raising combined defense and security spending to 5% of GDP by 2035-including a 3.5% core defense floor, and up to 1.5% in broader security or industrial base investment - up from the prior 2% target.
The European Space Agency's 2025 budget is approximately €7.7 billion, with continued investment in human and robotic missions, Earth observation, navigation, and telecom infrastructure.
The European Commission formally introduced the EU Space Act in June 2025 as a proposed regulation to harmonize legal frameworks across the EU for space activities. It establishes a single market for space service providers and applies to EU and non-EU operators whose activities impact the EU internal market. The regulatory structure will be focused on three areas: safety (including orbital debris mitigation and space situational awareness), resilience (including space-based cybersecurity), and sustainability (including in-orbit servicing). If enacted by the European Parliament and Council, the regulation is designed to apply from January 1, 2030, with a two-year transition period for existing missions not yet launched by that date. Since October 2025, Council-level work on the proposed EU Space Act has continued, including circulation of updated compromise text. The proposal remains subject to negotiation and may be modified, delayed, or otherwise revised prior to adoption.
In October 2025, the European Commission and European External Action Service announced additional details of the Readiness 2030package mentioned above with the release of the "Preserving Peace - Defence Readiness Roadmap 2030", which is a European Union plan to strengthen Europe's defense capabilities by 2030. The roadmap focuses on increasing defense spending and production, joint procurement efforts, and closing capability gaps. The plan enumerates four flagship projects: the European Drone Defence Initiative, the Eastern Flank Watch, the European Air Shield, and the European Space Shield. The roadmap also aims to establish a unified military mobility area by 2027 to allow for swift troop and equipment movement. Specific funding levels will depend on member state commitments and joint investments.
U.S. and international government spending levels and timely funding thereof may adversely affect our financial condition and operating performance over the short and long term. Please refer to Item 1A. "Risk Factors" included in this Annual Report on Form 10-K, for additional information related to government funding risks.
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Geopolitical Environment
We operate in a complex and evolving global space and defense environment and our business is affected by geopolitical issues. Russia's invasion of Ukraine significantly elevated global geopolitical tensions and security concerns, and following the acquisition of Edge Autonomy, a portion of the combined company's sales are to customers in Ukraine. Those sales have been declining and may continue to decline in the event that the war and hostilities in Ukraine end, decline or change, or as a result of changes in international support for military assistance to Ukraine.
Results of Operations
We manage and assess our business based on performance on short- and long-term duration contracts, which involves the design, development and manufacturing of our offerings and related activities with varying delivery schedules. Therefore, the results of operations for a particular year, or year-over-year comparison may not be indicative of future operating results. Substantially all of our contracts in the Space segment and a portion of our contracts in the Defense Tech segment are accounted for under the percentage-of-completion cost-to-cost method. As a result, revenues on contracts are recorded over time based on progress towards completion for a particular contract, including the estimate of the profit to be earned at completion. The following discussion of material changes in consolidated revenues should be read in tandem with the subsequent discussion of changes in consolidated cost of sales because changes in revenues are typically accompanied by a corresponding change in cost of sales due to the nature of the percentage-of-completion cost-to-cost method.
Net EAC Adjustments
We record changes in costs estimated at completion (net EAC adjustments) using the cumulative catch-up method of accounting. Net EAC adjustments can have a significant effect on reported revenues and gross profit and the table below presents the aggregate amounts for the following periods:
| Year Ended | |||||||||||||||||
| (dollars in thousands) | December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||||||||||||
|
Gross favorable
|
$ | 12,552 | $ | 12,062 | $ | 11,805 | |||||||||||
|
Gross unfavorable
|
(67,005) | (29,758) | (15,327) | ||||||||||||||
|
Total net EAC adjustments
|
$ | (54,453) | $ | (17,696) | $ | (3,522) | |||||||||||
The Company evaluates the contract value and cost estimates at completion for performance obligations no less frequently than quarterly, and more frequently when circumstances significantly change. Changes in contract estimates occur for a variety of reasons including, but not limited to, changes in contract scope, labor productivity, the nature and technical complexity of the work to be performed, availability and cost volatility of materials, subcontractor and vendor performance, volume assumptions, inflationary trends, and schedule and performance delays. We utilize information available to us at the time when revising our estimates and apply consistent judgment across the full portfolio of programs. The net unfavorable EAC adjustments in 2025 were primarily due to a $25.2 million unfavorable adjustment, including a $12.9 million loss reserve related to a program in the Company's Defense Tech segment and $14.1 million unfavorable adjustments related to programs in the Space Europe reporting unit as a result of an increase in estimates made for the programmatic and technical assumptions based on the nature and technical complexity of the work to be performed to meet customer specifications.Refer to Note P - Revenuesof the accompanying notes to the consolidated financial statementsfor additional information.
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Results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024:
| Year Ended | $ Change from prior year period | % Change from prior year period | ||||||||||||||||||||||||
| (in thousands, except percentages) | December 31, 2025 | % of revenues | December 31, 2024 | % of revenues | ||||||||||||||||||||||
| Revenues | $ | 335,381 | 100 | % | $ | 304,101 | 100 | % | $ | 31,280 | 10 | % | ||||||||||||||
| Cost of sales | 318,096 | 95 | 259,646 | 85 | 58,450 | 23 | ||||||||||||||||||||
| Gross profit | 17,285 | 5 | 44,455 | 15 | (27,170) | (61) | ||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Selling, general and administrative expenses | 171,280 | 51 | 71,398 | 23 | 99,882 | 140 | ||||||||||||||||||||
| Transaction expenses | 21,236 | 6 | 9,129 | 3 | 12,107 | 133 | ||||||||||||||||||||
| Impairment expense | 34,685 | 10 | - | - | 34,685 | 100 | ||||||||||||||||||||
| Research and development | 19,761 | 6 | 6,128 | 2 | 13,633 | 222 | ||||||||||||||||||||
| Operating income (loss) | (229,677) | (68) | (42,200) | (14) | (187,477) | 444 | ||||||||||||||||||||
| Interest expense, net | 39,704 | 12 | 13,483 | 4 | 26,221 | 194 | ||||||||||||||||||||
| Loss on extinguishment of debt | 996 | - | - | - | 996 | 100 | ||||||||||||||||||||
| Other (income) expense, net | (18,811) | (6) | 60,648 | 20 | (79,459) | (131) | ||||||||||||||||||||
| Income (loss) before income taxes | (251,566) | (75) | (116,331) | (38) | (135,235) | 116 | ||||||||||||||||||||
| Income tax expense (benefit) | (25,014) | (7) | (2,020) | (1) | (22,994) | 1138 | ||||||||||||||||||||
| Net income (loss) | (226,552) | (68) | (114,311) | (38) | (112,241) | 98 | ||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | - | - | 4 | - | (4) | (100) | ||||||||||||||||||||
| Net income (loss) attributable to Redwire Corporation | $ | (226,552) | (68) | % | $ | (114,315) | (38) | % | $ | (112,237) | 98 | % | ||||||||||||||
Revenues
Revenues increased by $31.3 million, or 10%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The year-over-year increase in revenues was primarily related to $107.1 million of revenue related to the Edge Autonomy acquisition. This increase was partially offset by $41.1 million of net unfavorable EAC adjustments for the year ended December 31, 2025 as compared to $17.7 million of net unfavorable EAC adjustments for the same period in 2024. Please refer to Note P - Revenues of the accompanying notes to the consolidated financial statements for additional information related to the Company's net EAC adjustments. The increase is also partially offset due to timing in the stage of production cycles year-over-year for certain larger contracts for power generation offerings in the Space segment. The foregoing resulted in decreased volume of production and therefore decreased revenue compared to the same period in 2024.
Cost of Sales
Cost of sales increased $58.5 million, or 23%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The year-over-year increase in cost of sales was primarily driven by $70.1 million of costs related to the Edge Autonomy acquisition, including non-cash expense of $13.6 million related to the purchase accounting fair value adjustment to inventory for the inventory on-hand at the Edge Autonomy acquisition date that was subsequently sold, which is non-recurring. The increase is also due to $13.4 million of increases in contract loss reserves recognized during the year ended December 31, 2025 for which there were nominal comparable amounts in 2024. These increases were partially offset by reduced costs due to a shift in the production cycle associated with certain larger contracts in power generation offerings described above.
Gross Profit and Margin
Gross profit decreased $27.2 million, or 61%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. As a percentage of revenues, gross margin was 5% and 15% for the years ended December 31, 2025 and 2024, respectively. The year-over-year decrease in gross margin as a percentage of revenues was driven by a $54.5 million negative impact of net EAC adjustments for the year ended December 31, 2025, as compared to $17.7 million of net unfavorable EAC adjustments for the same period in 2024. Gross profit and gross margin were also adversely impacted by the non-cash expense of $13.6 million related to the purchase accounting fair value adjustment associated with the Edge Autonomy acquisition as described above. Please refer to Note P - Revenues of the accompanying notes to the consolidated financial statements for additional information related to the Company's net EAC adjustments.
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Selling, General and Administrative ("SG&A") Expenses
SG&A expenses increased $99.9 million for the year ended December 31, 2025, as compared with the same period in 2024. SG&A expenses as a percentage of revenues also increased to 51% for the year ended December 31, 2025from 23% during the same period in 2024. The year-over-year increase in SG&A expenses was primarily driven by an increase in share-based compensation of $47.1 million, including $44.4 million related to the Edge Incentive Units, for which there was no comparable cost in 2024. The increase is also due to $48.5 million in SG&A expenses, other than equity-based compensation, related to Edge Autonomy for which there is no comparable cost in 2024. The increase is also partially due to an increase in labor related costs, including severance, intangible amortization and professional fees.
Transaction Expenses
Transaction expenses increased $12.1 million primarily due to costs incurred related to the Edge Autonomy acquisition for the year ended December 31, 2025, as compared with the same period in 2024. Please refer to Note C - Business Combinations of the accompanying notes to the consolidated financial statements for additional information related to acquisitions.
Impairment Expense
The Company recognized impairment expense of $34.7 million for the year ended December 31, 2025, for which there was no comparable expense in the same period of 2024. During the fourth quarter of 2025, the Company performed its annual quantitative goodwill and long-lived asset impairment tests and recorded a non-cash, pre-tax and post-tax impairment charge of $34.7 million. $2.6 million of this amount related to property, plant and equipment, $10.9 million related to intangible assets, and $20.9 million related to goodwill. Please refer to Note F, Note G, and Note H of the accompanying notes to the consolidated financial statements for additional information related to impairment.
Research and Development
Research and development expenses increased $13.6 million for the year ended December 31, 2025 as compared with the same period in 2024 primarily due to $14.9 million of costs related to the Edge Autonomy acquisition.
Interest Expense, net
Interest expense, net increased $26.2 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024. This increase was primarily related to $20.0 million of interest expense recognized related to the repayment of the Seller Note (as defined below). The increase is also partially due to interest on the new JPMorgan Credit Agreement entered into during the year ended December 31, 2025, as well as an increase in borrowings on the Adams Street revolving credit facility compared to 2024. Please refer to Note I - Debt of the accompanying notes to the consolidated financial statements for additional information related to the Company's debt obligations.
Loss on Extinguishment of Debt
The Company recognized $1.0 million as a loss on extinguishment of debt related to the write-off of unamortized discount and deferred financing costs associated with the term loans and revolving credit facility under the Adams Street Credit Agreement as a result of the early re-payment on the related loans. Please refer to Note I - Debt of the accompanying notes to the consolidated financial statements for additional information related to the Company's debt obligations.
Other (Income) Expense, net
Other (income) expense, net decreased by $79.5 million for the year ended December 31, 2025, from net expense to net income as compared to the year ended December 31, 2024. This year-over-year change was primarily due to a gain of $16.1 million recognized as a result of a decrease in the fair value of the Company's private warrant liability for the year ended December 31, 2025 compared to a loss of $52.0 million recognized during the same period in 2024. The change is also due to a decrease in expense of $8.0 million due to a legal settlement recognized during the year ended December 31, 2024 for which there was no comparable activity in the current year. Please refer to Note D - Fair Value of Financial Instruments of the accompanying notes to the consolidated financial statements for additional information related to the Company's private warrants.
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Income Tax Expense (Benefit)
The table below provides information regarding our income tax expense (benefit) for the following periods:
| Year Ended | |||||||||||
| (in thousands, except percentages) | December 31, 2025 | December 31, 2024 | |||||||||
| Income tax expense (benefit) | $ | (25,014) | $ | (2,020) | |||||||
| Effective tax rate | (9.9) | % | (1.7) | % | |||||||
The effective tax rate changed to (9.9)% for the year ended December 31, 2025 ascompared to (1.7)%for the year ended December 31, 2024, primarily related to the Company's realization of deferred tax assets as a result of the acquisition of Edge Autonomy. Please refer to Note L - Income Taxes of the accompanying notes to the consolidated financial statementsfor additional information.
Net Income (Loss) Attributable to Noncontrolling Interests
The Company had no net income (loss) attributable to noncontrolling interests for the year ended December 31, 2025 and a de minimis amount for the same period in 2024.
Business Segment Results of Operations
As of December 2025, we operate in two business segments: Space and Defense Tech. We organize our business segments based on the nature of products and services offered and based on the financial information that is provided and regularly reviewed by the CODM in deciding how to allocate resources and in assessing performance.
Revenues, gross profit and operating profit of our business segments exclude inter-segment sales, cost of sales and profit as these activities are eliminated in consolidation and thus are not included in management's evaluation of performance of each segment.
Business segment operating profit excludes a portion of corporate costs not considered allowable or allocable to contracts, and other items not considered part of management's evaluation of segment operating performance.
Revenues, cost of sales and operating profit for each of our business segments were as follows (in millions):
|
(in thousands)
|
2025 | 2024 | 2023 | ||||||||||||||
|
Revenues
|
|||||||||||||||||
|
Space
|
$ | 209,817 | $ | 255,336 | $ | 194,000 | |||||||||||
|
Defense Tech
|
125,564 | 48,765 | 49,800 | ||||||||||||||
|
Total revenues
|
$ | 335,381 | $ | 304,101 | $ | 243,800 | |||||||||||
|
Cost of sales
|
|||||||||||||||||
|
Space
|
202,482 | 222,927 | 149,298 | ||||||||||||||
|
Defense Tech
|
115,614 | 36,719 | 36,533 | ||||||||||||||
|
Total cost of sales
|
$ | 318,096 | $ | 259,646 | $ | 185,831 | |||||||||||
|
Operating income (loss)
|
|||||||||||||||||
|
Space
|
$ | (49,155) | $ | 16,099 | $ | 27,621 | |||||||||||
|
Defense Tech
|
(93,553) | 8,549 | 9,168 | ||||||||||||||
|
Total business segment operating income (loss)
|
(142,708) | 24,648 | 36,789 | ||||||||||||||
|
Unallocated items
|
|||||||||||||||||
|
Corporate charges
|
65,848 | 57,725 | 52,324 | ||||||||||||||
|
Transaction expenses
|
21,121 | 9,123 | 13 | ||||||||||||||
|
Total unallocated, net
|
86,969 | 66,848 | 52,337 | ||||||||||||||
|
Total consolidated operating income (loss)
|
$ | (229,677) | $ | (42,200) | $ | (15,548) | |||||||||||
Corporate charges mainly consists of corporate overhead costs maintained at the corporate level. These expenses include costs relating to treasury, accounting, consulting, advisory, legal, tax and audit, insurance, financial reporting services and various administrative expenses related to the corporate headquarters.
Space
Redwire's Space segment focuses on delivering next-generation spacecraft; large space infrastructure; critical avionics, as well as microgravity capabilities to serve civil, national security, and commercial space customers. Space's operating results included the
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following:
|
(in thousands)
|
2025 | 2024 | 2023 | ||||||||||||||
|
Revenues
|
$ | 209,817 | $ | 255,336 | $ | 194,000 | |||||||||||
|
Operating income (loss)
|
$ | (49,155) | $ | 16,099 | $ | 27,621 | |||||||||||
|
Operating margin
|
(23) | % | 6 | % | 14 | % | |||||||||||
Space segment revenues decreased by $45.5 million, or 18%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The year-over-year decrease in revenues was primarily related to $28.1 million of net unfavorable EAC adjustments for the year ended December 31, 2025 as compared to $15.3 million of net unfavorable EAC adjustments for the same period in 2024. The decrease in revenues is also due to timing in the stage of production cycles year-over-year for certain larger contracts related to power generation offerings.
Operating income (loss) decreased by $65.3 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024. Operating margin also decreased from 6% to (23)% year-over-year. The decrease in operating income (loss) and margin is primarily due to the increase in unfavorable EAC adjustments recognized during the year ended December 31, 2025 and $34.4 million of impairment expense recognized related to the Space Europe reporting unit during the year ended December 31, 2025. Please refer to Note F, Note G, and Note H of the accompanying notes to the consolidated financial statements for additional information related to impairment.
Defense Tech
Redwire's Defense Tech segment focuses on delivering combat-proven autonomous systems, optical sensors and radio frequency payloads that provide intelligence, surveillance, and reconnaissance capabilities for U.S. and allied nations across multiple domains. Defense Tech's operating results included the following:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
|
Revenue
|
$ | 125,564 | $ | 48,765 | $ | 49,800 | |||||||||||
|
Operating income (loss)
|
$ | (93,553) | $ | 8,549 | $ | 9,168 | |||||||||||
|
Operating margin
|
(75) | % | 18 | % | 18 | % | |||||||||||
Defense Tech segment revenues increased by $76.8 million, or 157%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The year-over-year increase in revenues was primarily due to $107.1 million of revenue related to the Edge Autonomy acquisition. This increase was partially offset by $12.9 million of net unfavorable EAC adjustments for the year ended December 31, 2025 as compared to $2.4 million of net unfavorable EAC adjustments for the same period in 2024.
Operating income (loss) decreased by $102.1 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024. Operating margin also decreased from 18% to (75)% year-over-year. The decrease in operating income (loss) and operating margin is primarily due to an increase of $44.4 million related to the Edge Incentive Units, a non-cash expense of $13.6 million related to the purchase accounting fair value adjustment to inventory for the inventory on-hand at the Edge Autonomy acquisition date that was subsequently sold, which is non-recurring, and a $20.2 million increase in depreciation and amortization as a result of the Edge Acquisition. The decrease is also partially due to $25.8 million of net unfavorable EAC adjustments, inclusive of a $12.8 million increase in loss reserve recognized during the year ended December 31, 2025 as compared to $2.4 million of net unfavorable EACs during the year ended December 31, 2024.
Supplemental Non-GAAP Information
We use Adjusted EBITDA to evaluate our operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources which are not calculated in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP") and are considered to be Non-GAAP financial performance measures. These Non-GAAP financial performance measures are used to supplement the financial information presented on a U.S. GAAP basis and should not be considered in isolation or as a substitute for the relevant U.S. GAAP measures and should be read in conjunction with information presented on a U.S. GAAP basis. Because not all companies use identical calculations, our presentation of Non-GAAP measures may not be comparable to other similarly titled measures of other companies.
Adjusted EBITDA is defined as net income (loss) adjusted for interest expense, net, income tax expense (benefit), depreciation and amortization, impairment expense, transaction expenses, acquisition integration costs, acquisition earnout costs, purchase accounting fair value adjustment related to deferred revenue and inventory, severance costs, capital market and advisory fees, disposal of long-
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lived assets, litigation-related expenses, equity-based compensation, committed equity facility transaction costs, debt financing costs and extinguishment losses, gains on sale of joint ventures, net of costs incurred, and warrant liability change in fair value adjustment.
The table below presents a reconciliation of Adjusted EBITDA to net income (loss), computed in accordance with U.S. GAAP for the following periods:
| Year Ended | |||||||||||||||||
| (in thousands) | December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||||||||||||
| Net income (loss) | $ | (226,552) | $ | (114,311) | $ | (27,264) | |||||||||||
| Interest expense, net | 39,704 | 13,483 | 10,699 | ||||||||||||||
| Income tax expense (benefit) | (25,014) | (2,020) | (486) | ||||||||||||||
| Depreciation and amortization | 32,639 | 11,692 | 10,724 | ||||||||||||||
| Impairment expense | 34,685 | - | - | ||||||||||||||
| Transaction expenses (i) | 21,236 | 9,129 | 13 | ||||||||||||||
| Acquisition integration costs (i) | 2,602 | 609 | 546 | ||||||||||||||
| Purchase accounting fair value adjustment (ii) | 13,645 | - | 15 | ||||||||||||||
|
Severance costs (iii)
|
3,789 | 867 | 313 | ||||||||||||||
| Capital market and advisory fees (iv) | 6,856 | 6,703 | 8,607 | ||||||||||||||
| Disposal of long-lived assets (v) | 647 | - | - | ||||||||||||||
| Litigation-related expenses (vi) | 1,496 | 11,011 | 1,235 | ||||||||||||||
| Equity-based compensation (vii) | 58,990 | 11,326 | 8,658 | ||||||||||||||
| Committed equity facility transaction costs (viii) | - | - | 259 | ||||||||||||||
| Debt financing costs and extinguishment losses (ix) | 1,101 | - | 17 | ||||||||||||||
| Gain on sale of joint ventures, net of costs incurred (x) | - | (1,255) | - | ||||||||||||||
| Warrant liability change in fair value adjustment (xi) | (16,109) | 51,960 | 2,011 | ||||||||||||||
| Adjusted EBITDA | $ | (50,285) | $ | (806) | $ | 15,347 | |||||||||||
i.Redwire incurred acquisition costs including due diligence, integration costs and additional expenses related to pre-acquisition activity. Acquisition deal costs was reclassified as Transaction expenses to conform with current period presentation.
ii.Redwire adjusted inventory in 2025 related to the application of purchase accounting for the Edge Autonomy acquisition and recognized expense for the amount of the fair value adjustment included in cost of sales for the inventory sold after the acquisition date. During 2023, Redwire recorded adjustments related to the impact of recognizing deferred revenue at fair value as part of the purchase accounting for previous acquisitions.
iii.Redwire incurred severance costs related to separation agreements entered into with former employees.
iv.Redwire incurred capital market and advisory fees related to advisors assisting with transitional activities associated with becoming a public company, such as the implementation of internal controls over financial reporting, and the internalization of corporate services, including, but not limited to, implementing enhanced enterprise resource planning systems.
v.Redwire incurred a loss on the disposal of long-lived assets.
vi.Redwire incurred expenses related to securities litigation and settlements of legal matters. Refer to Note M - Commitments and Contingencies of the accompanying notes to the consolidated financial statements for additional information.
vii.Redwire incurred expenses related to equity-based compensation under Redwire's equity-based compensation plan and Edge Incentive Units.
viii.Redwire incurred expenses related to the committed equity facility with B. Riley during 2023, which includes changes in fair value recognized as a gain or loss during the respective periods.
ix.Redwire incurred expenses related to debt financing agreements, including amendment related fees paid to third parties that are expensed in accordance with U.S. GAAP, and losses on debt extinguishments. Refer to Note I - Debt of the accompanying notes to the consolidated financial statements for additional information.
x.Redwire recognized a gain related to the sale of all its ownership in two joint ventures during 2024, presented net of transaction costs incurred.
xi.Redwire adjusted the private warrant liability to reflect changes in fair value recognized as a gain or loss during the respective
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periods.
Key Performance Indicators
The following Key Performance Indicators ("KPIs") are used by Management to assess the financial performance of the Company, monitor relevant trends and support financial, operational and strategic decision-making. Management frequently monitors and evaluates KPIs against internal targets, core business objectives as well as industry peers and may, on occasion, change the mix or calculation of KPIs to better align with the business, its operating environment, standard industry metrics, or other considerations. If the Company changes the method by which it calculates or presents a KPI, prior period disclosures would be recast to conform to current presentation.
Book-to-Bill
Our book-to-bill ratio was as follows for the periods presented:
|
Last Twelve Months Ended
|
|||||||||||||||||
| (in thousands, except ratio) | December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||||||||||||
| Contracts awarded | |||||||||||||||||
|
Space
|
$ | 237,761 | $ | 184,370 | $ | 258,961 | |||||||||||
|
Defense Tech
|
203,717 | 45,419 | 41,081 | ||||||||||||||
|
Total contracts awarded
|
$ | 441,478 | $ | 229,789 | $ | 300,042 | |||||||||||
| Revenues | |||||||||||||||||
|
Space
|
$ | 209,817 | $ | 255,336 | $ | 194,000 | |||||||||||
|
Defense Tech
|
125,564 | 48,765 | 49,800 | ||||||||||||||
|
Total revenues
|
$ | 335,381 | $ | 304,101 | $ | 243,800 | |||||||||||
| Book-to-bill ratio | |||||||||||||||||
|
Space
|
1.13 | 0.72 | 1.33 | ||||||||||||||
|
Defense Tech
|
1.62 | 0.93 | 0.82 | ||||||||||||||
|
Total book-to-bill ratio
|
1.32 | 0.76 | 1.23 | ||||||||||||||
Book-to-bill is the ratio of total contracts awarded to revenues recorded in the same period. The contracts awarded balance includes firm contract orders, including time-and-material ("T&M") contracts, awarded during the period and does not include unexercised contract options or potential orders under indefinite delivery/indefinite quantity contracts. Although the contracts awarded balance reflects firm contract orders, terminations, amendments, or contract cancellations may occur which could result in a reduction to the contracts awarded balance.
We view book-to-bill as an indicator of future revenue growth potential. To drive future revenue growth, our goal is for the level of contracts awarded in a given period to exceed the revenue recorded, thus yielding a book-to-bill ratio greater than 1.0.
Our book-to-bill ratio was 1.32 for the Last Twelve Months ("LTM") ended December 31, 2025, as compared to 0.76 for the LTM ended December 31, 2024. For the LTM ended December 31, 2025, contracts awarded includes $73.7 million of acquired contract value from the Edge Autonomy acquisition, which was completed in the second quarter of 2025. For the LTM ended December 31, 2024, contracts awarded includes $21.9 million of acquired contract value from the Hera Systems acquisition, which was completed in the third quarter of 2024. For the LTM ended December 31, 2023, none of the contracts awarded balance relates to acquired contract value.
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Backlog
The following table presents our contracted backlog as of December 31, 2025 and 2024, and related activity for the year ended December 31, 2025 as compared to the year ended December 31, 2024:
| (in thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Organic backlog, beginning balance | $ | 296,652 | $ | 372,790 | |||||||
| Organic additions during the period | 257,318 | 229,789 | |||||||||
| Organic revenue recognized during the period | (228,267) | (304,101) | |||||||||
| Foreign currency translation | 7,987 | (1,826) | |||||||||
| Organic backlog, ending balance | 333,690 | 296,652 | |||||||||
| Acquisition-related contract value, beginning balance | - | - | |||||||||
| Acquisition-related contract value acquired during the period | 73,716 | - | |||||||||
| Acquisition-related additions during the period | 110,444 | - | |||||||||
| Acquisition-related revenue recognized during the period | (107,114) | - | |||||||||
| Foreign currency translation | 510 | - | |||||||||
| Acquisition-related backlog, ending balance | 77,556 | - | |||||||||
| Contracted backlog, ending balance | $ | 411,246 | $ | 296,652 | |||||||
|
Contracted backlog by segment:
|
|||||||||||
|
Space
|
$ | 299,804 | $ | 263,996 | |||||||
|
Defense Tech
|
111,442 | 32,656 | |||||||||
We view growth in backlog as a key measure of our business growth. Contracted backlog represents the estimated dollar value of firm funded executed contracts for which work has not been performed (also known as the remaining performance obligations on a contract). Our contracted backlog includes $81.0 million and $16.7 million in remaining contract value from contracts which recognize revenue at a point in time as of December 31, 2025 and 2024, respectively.
Organic backlog change excludes backlog activity from acquisitions for the first four full quarters since the entities' acquisition date. Contracted backlog activity for the first four full quarters since the entities' acquisition date is included in acquisition-related contracted backlog change. After the completion of four fiscal quarters, acquired entities are treated as organic for current and comparable historical periods.
Organic contract value includes the remaining contract value as of January 1 not yet recognized as revenue and additional orders awarded during the period for those entities treated as organic. Acquisition-related contract value includes remaining contract value as of the acquisition date not yet recognized as revenue and additional orders awarded during the period for entities not treated as organic. Organic revenue includes revenue earned during the period presented for those entities treated as organic, while acquisition-related revenue includes the same for all other entities, excluding any pre-acquisition revenue earned during the period. The acquisition-related backlog activity presented in the table above is related to the Edge Autonomy acquisition completed during the second quarter of 2025.
Although contracted backlog reflects business associated with contracts that are considered to be firm, terminations, amendments or contract cancellations may occur, which could result in a reduction in our total backlog. In addition, some of our multi-year contracts are subject to annual funding. Management expects all amounts reflected in contracted backlog to ultimately be fully funded. Contracted backlog from international operations was $193.1 million and $70.5 million as of December 31, 2025 and 2024, respectively. These amounts are subject to foreign exchange rate translations from their respective local currencies to U.S. dollars that could cause the remaining backlog balance to fluctuate with the foreign exchange rate at the time of measurement.
Liquidity and Capital Resources
Our operations are primarily funded with cash flows provided by operating activities, proceeds from the exercise of warrants and equity offerings, and access to existing credit facilities. As of December 31, 2025, we had $94.5 million in cash and cash equivalents and $35.0 million in available borrowings from our existing credit facilities.
Our primary requirements for liquidity and capital are for the Company's material cash requirements, including working capital needs, satisfaction of our indebtedness and contractual commitments, investment in expanding our breadth and footprint through acquisitions
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as well as investment in facilities, equipment, technologies, and research and development for our growth initiatives and general corporate needs.
Our ability to fund our cash needs is dependent upon the successful execution of our business strategy and future operating results. Our future operating results are subject to, among others, general economic conditions, including as a result of heightened inflation, rising interest rates and supply chain pressures, competitive dynamics in our target markets as well as legislative and regulatory factors that may be outside of our control. As part of our business and debt management strategy, we continuously evaluate opportunities to further strengthen our financial and liquidity position, including issuing additional equity or debt securities, refinancing or otherwise restructuring our existing credit facilities, or entering into new financing arrangements. There can be no assurance that any of these actions will be sufficient to allow us to adequately service our debt obligations, meet our debt covenants, or that such actions will not result in an adverse impact on our business. In the event that we require additional financing, we may not be able to secure such financing on terms acceptable to us or at all. For further information, please refer to Item 1A "Risk Factors" contained in this Annual Report on Form 10-K.
We believe our existing sources of liquidity will be sufficient to meet our working capital needs and debt service obligations and to comply with our debt covenants for at least the next twelve months from the date on which our consolidated financial statements were issued.
Indebtedness
Please refer to Note I - Debt of the accompanying notes to the consolidated financial statements for additional information related to the Company's debt obligations.
Off-Balance Sheet Arrangements
From time to time, we are a party to certain off-balance sheet arrangements, such as standby letters of credit. Liabilities related to these arrangements are generally not reflected in our consolidated balance sheets. We do not expect any material impact on our cashflows, results of operations or financial condition to result from these off-balance sheet arrangements.
As of December 31, 2025 and 2024, we had $0.7 million and $15.4 million of standby letters of credit, respectively. Our standby letters of credit outstanding generally relate to submitted proposals and performance guarantees, which are secured by our restricted cash. Refer to Note B of the accompanying notes to the consolidated financial statements for additional information related to the Company's restricted cash.
Contractual Obligations
The following table presents our contractual obligations as of December 31, 2025:
| 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | |||||||||||||||||||||||||||||||||||
|
JPMorgan Term Loan
|
$ | 4,500 | $ | 83,250 | $ | - | $ | - | $ | - | $ | - | $ | 87,750 | |||||||||||||||||||||||||||
|
Other Financing Loan
|
662 | - | - | - | - | - | 662 | ||||||||||||||||||||||||||||||||||
| Total long-term debt maturities | 5,162 | 83,250 | - | - | - | - | 88,412 | ||||||||||||||||||||||||||||||||||
| Future minimum operating lease payments | 7,052 | 8,120 | 6,419 | 5,265 | 5,478 | 16,872 | 49,206 | ||||||||||||||||||||||||||||||||||
| Future minimum finance lease payments | 716 | 624 | 429 | 237 | 124 | - | 2,130 | ||||||||||||||||||||||||||||||||||
| Total contractual obligations | $ | 12,930 | $ | 91,994 | $ | 6,848 | $ | 5,502 | $ | 5,602 | $ | 16,872 | $ | 139,748 | |||||||||||||||||||||||||||
During the year ended December 31, 2025, the Company entered into a lease agreement in Huntsville, Alabama, the construction of which is anticipated to be completed during fiscal year 2026. As of December 31, 2025, the lease has not yet commenced but created significant future lease obligations in the amount of $12.3 million. The lease was determined to be an operating lease, whereby the Company is not required to make rent payments prior to the lease commencement dates while construction is being completed on the underlying assets. Due to the nature of the work and the amount of the Company's contribution to the construction period costs for the lease, the Company has determined it is not the owner of the assets under construction as the landlord has substantially all of the construction period risks.
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Cash Flows
The table below summarizes certain information from the consolidated statements of cash flows for the following periods:
| Year Ended | |||||||||||||||||
| (in thousands) | December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||||||||||||
|
Cash, cash equivalents and restricted cash at beginning of year
|
$ | 49,071 | $ | 30,278 | $ | 28,316 | |||||||||||
| Operating activities: | |||||||||||||||||
| Net income (loss) | (226,552) | (114,311) | (27,264) | ||||||||||||||
|
Reconciling adjustments to net income (loss)
|
101,245 | 75,006 | 21,700 | ||||||||||||||
| Changes in working capital | (52,024) | 21,957 | 6,795 | ||||||||||||||
|
Net cash provided by (used in) operating activities
|
(177,331) | (17,348) | 1,231 | ||||||||||||||
|
Net cash provided by (used in) investing activities
|
(175,071) | (7,199) | (8,327) | ||||||||||||||
|
Net cash provided by (used in) financing activities
|
397,496 | 43,716 | 9,060 | ||||||||||||||
|
Effect of foreign currency rate changes on cash, cash equivalents and restricted cash
|
1,018 | (376) | (2) | ||||||||||||||
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
46,112 | 18,793 | 1,962 | ||||||||||||||
|
Cash, cash equivalents and restricted cash at end of period
|
$ | 95,183 | $ | 49,071 | $ | 30,278 | |||||||||||
Operating activities
Net cash used in operating activities increased by $160.0 million year-over-year. The change was primarily due to an increase in cash used by working capital of $74.0 million and an increase of $112.2 million in cash used related to the Company's net loss, partially offset by an increase of $26.2 million in the effects of reconciling adjustments to net income (loss) for the year ended December 31, 2025 in comparison to 2024. The increase in cash used by working capital was primarily due to a decrease of $34.0 million in deferred revenue for 2025 compared to an increase of $3.2 million in deferred revenue for 2024 and a decrease in cash provided by accounts receivable and other liabilities of $17.0 million and $3.4 million, respectively, year-over-year. The decreases in other liabilities were primarily a result of timing of payments and recognition of liability. The changes in accounts receivable and deferred revenue were primarily driven by the timing of billable milestones during the year ended December 31, 2025 compared to 2024. The increase in non-cash adjustments is primarily related to increases in depreciation and amortization expense of $20.9 million, share-based compensation of $47.7 million and recognition of the inventory purchase accounting fair value adjustment of $13.6 million, all of which are primarily related to the Edge Autonomy acquisition. These increases were partially offset by a gain recognized on the change in fair value of the outstanding private warrants of $16.1 million during the year ended December 31, 2025 compared to loss of $52.0 million recognized in 2024 and an increase in the deferred tax benefit of $23.1 million year-over-year. Please refer to Note D - Fair Value of Financial Instruments and Note L - Income Taxes of the accompanying notes to the consolidated financial statements for additional information related to the fair value of warrants and income taxes.
Investing activities
Net cash used in investing activities increased by $167.9 million year-over-year. The change was primarily due to cash used to complete the Edge Autonomy acquisition, and an increase in capital expenditures primarily related to software licensed for internal-use. The increase in cash used in investing activities was also due to proceeds received during the year ended December 31, 2024 related to the sale of joint ventures for which there is no comparable activity in the current period.
Financing activities
Net cash provided by financing activities increased by $353.8 million during the year ended December 31, 2025, as compared to 2024. The change was primarily due to an increase in net proceeds received from the issuance of common stock through the ATM facility, equity offerings, and exercise of the Company's public and private warrants of $518.4 million during the year ended December 31, 2025, for which there was nominal activity for the same period in 2024. The increase was partially offset by net repayments of debt in the amount of $43.0 million during the year ended December 31, 2025, compared to net proceeds of $37.1 million in the same period in 2024, and the repurchase of the Company's Series A Convertible Preferred Stock of $63.9 million, for which there was no comparable activity for the same period in 2024. The change to net repayments of debt was driven primarily by the repayment of all outstanding principal balances of the term loans and revolving credit facility under the Adams Street Credit Agreement and the repayment of the Seller Note which is partially offset by proceeds from the JPMorgan Credit Agreement. Please refer to Note I - Debt of the accompanying notes to the consolidated financial statements for additional information related to the Company's debt obligations.
Page 54
Foreign Currency Exposures
Our operations in Europe conduct transactions that are primarily denominated in euros, which limits our foreign currency exposure. However, changes in exchange rates will affect the Company's consolidated financial statements as expressed in U.S. dollars.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in conformity with U.S. GAAP, which requires us to make estimates, assumptions and judgments that affect the amounts reported in our consolidated financial statements and accompanying notes to the consolidated financial statements. For the critical accounting estimates used in preparing our consolidated financial statements, we make assumptions and judgments that can have a significant impact on net revenues, cost and expenses, and other (income) expense, net, in our consolidated statements of operations and comprehensive income (loss), as well as, on the value of certain assets and liabilities on our consolidated balance sheets. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe are reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions.
We believe the following accounting policies are the most critical to the understanding of our consolidated financial statementsand require the use of significant management judgment. For a summary of our significant accounting policies, please refer to Note B - Summary of Significant Accounting Policies of the accompanying notes to the consolidated financial statements.
Goodwill, Intangible and Long-lived Assets
Overview
The Company allocates the purchase price of an acquired business to the underlying tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at acquisition date, with the excess recorded as goodwill. Identifiable finite-lived intangible assets from acquired businesses primarily consist of technology, trademarks, and customer relationships. The accounting for business combinations requires us to make significant estimates and assumptions, especially with respect to goodwill, intangible assets, and contingent consideration, which can be affected by contract performance and other factors over time. This may cause final amounts to differ materially from original estimates. Adjustments to the fair value of purchased assets and liabilities after the initial measurement period are recognized in net earnings.
Impairment Testing
The Company assesses goodwill and indefinite-lived intangible assets for impairment annually for impairment as of October 1st, or more frequently if events or circumstances indicate the carrying value may be impaired. Such events or circumstances may include, but are not limited to:
•deterioration in overall economic conditions;
•failure to reach our internal forecasts could impact our ability to achieve our forecasted levels of cash flows;
•adverse technological events that could impact our performance;
•volatility in equity and debt markets resulting in higher discount rates; and
•significant adverse changes in the regulatory environment or markets in which we operate.
Our goodwill and indefinite-lived intangible assets are allocated to and tested for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. As of the Company's annual assessment date, October 1, 2025, the Company had six reporting units, Mission Solutions, Space Components, Engineering Services, Space Europe, Airborne U.S. and Airborne Europe, which were determined based on similar economic characteristics, financial metrics and product and servicing offerings. Effective December 2025, in connection with the change in operating segments, the Company reassessed its reporting units and identified six reporting units, Space Mission Solutions, Space US, Space Europe, Space Defense Tech, North America Defense Tech, and Europe Defense Tech. We may use both qualitative and quantitative approaches when testing goodwill and indefinite-lived intangible assets for impairment. In circumstances where a qualitative analysis indicates that the fair value of a reporting unit does not exceed its carrying value, a quantitative analysis is performed using an income approach.
When performing a quantitative analysis, the fair value of the Company's reporting units are generally determined using a combination of an income approach based on a discounted cash flow ("DCF") model as well as a market approach based on guideline public company revenues and earnings before interest, tax, depreciation and amortization multiples. Determining the fair value requires the exercise of significant judgments, including the amount and timing of expected future cash flows, long-term growth rates, discount rates and relevant comparable public company earnings multiples and relevant transaction multiples. The cash flows employed in the DCF analysis are based on the Company best estimate of future revenues, gross margins, operating expenses, and
Page 55
cash flows with consideration for other factors, such as general market conditions, U.S. and foreign government budgets, existing contracted and uncontracted backlog, subcontractor agreements, changes in working capital, long-term business plans and historical operating performance. These estimates and judgments are based upon information available at the time and have been deemed reasonable by management as of the measurement date. The discount rates utilized in the DCF model are based on the respective reporting unit's weighted average cost of capital ("WACC"), which takes into account the relative weights of debt and equity components within the Company's existing capital structure and represents the expected cost of new capital, adjusted as appropriate to consider the risk inherent in future cash flows of the respective reporting unit. Actual results could differ from these assumptions.
During 2024 and 2023, the Company performed its annual impairment tests for each of our reporting units and concluded there were no indicators that the fair value was more likely than not below carrying value. Therefore, no quantitative assessment was performed and no goodwill impairment was recognized during 2024 and 2023, respectively.
During 2025, the Company performed a quantitative assessment for its annual impairment test for each of our reporting units and concluded that the fair value for the Space Europe reporting unit was below its carrying value. Therefore, the Company recognized $20.9 million of goodwill impairment during 2025. Please refer to Note H - Goodwill of the accompanying notes to the consolidated financial statements for further information.
Finite-lived intangible assets and long-lived assets are amortized to expense over their estimated useful life on a straight-line basis or over the period the economic benefits of the intangible asset are consumed. The Company evaluates its intangible and long-lived assets for impairment when events or changes in circumstances indicate that the carrying value of an asset or asset group may be impaired. If events or changes in circumstances indicate that the carrying value of an asset or asset group may be impaired, the sum of the undiscounted expected future cash flows of the asset or asset group are compared to the asset or asset group's carrying value. If the asset or asset group's carrying value exceed the sum of undiscounted cash flows, the Company records an impairment loss equal to the excess of carrying amount over the estimated fair value of the asset or asset group.
During 2024 and 2023, the Company identified no triggering events and therefore, no impairment assessment was performed on its intangible and long-lived assets. During 2025, the Company identified a triggering event related to the Space Europe reporting unit due to margin erosion and declining cash flows. As such, the Company performed an impairment assessment on the reporting unit's asset groups and concluded that the undiscounted cash flows were below the carrying value of the asset group and, therefore, recognized $13.5 million of impairment during 2025. Please refer to Note F - Property, Plant and Equipment, net and Note G - Intangible Assets, net of the accompanying notes to the consolidated financial statements for further information regarding impairment recognized for long-lived assets and finite-lived intangible assets, respectively.
Revenue Recognition
The Company engages in short- and long-term contracts, including firm fixed-price ("FFP"), cost-plus fixed fee ("CPFF") and T&M for production and service activities. Revenue from T&M contracts is recognized based on the number of direct labor hours expended in the performance of a contract multiplied by the contract billing rate. The Company recognizes revenue for performance obligations satisfied at shipment or delivery at a point-in-time and for performance obligations satisfied over time using the cost-to-cost method. Substantially all of the Company's contracts in the Space segment and a portion of its contracts in the Defense Tech segment relate to contracts for performance obligations that create an asset with no alternative use to the Company and an enforceable right to payment for performance completed to date. The portion of the payments retained by the customer or advance payment is not considered a significant financing component because it is used to facilitate inventory demands at the onset of a contract and to safeguard the Company from the failure of the other party to abide by some or all of their obligations under the contract.
Under the cost-to-cost method, revenue is recognized based on the proportion of total costs incurred to total estimated costs-at-completion ("EAC"). An EAC includes all direct costs and indirect costs directly attributable to a program or allocable based on our program cost pooling arrangements. Estimates regarding the Company's cost associated with the design, manufacture and delivery of products and services are used in determining the EAC.
We prepare EACs for our FFP and CPFF contracts and calculate estimated revenues and costs over the life of our contracts. Accounting for long-term contracts requires significant judgment relative to estimating total contract revenues and costs, in particular, assumptions relative to the amount of time to complete the contract, including the assessment of the nature and complexity of the work to be performed. The Company's estimates are based upon the professional knowledge and experience of its engineers, program managers and other personnel, who review each long-term contract monthly to assess the contract's schedule, performance, technical matters and EAC. Factors considered in these estimates include our historical performance, the availability, productivity and cost of labor, the nature and complexity of work to be performed, availability and cost of materials, components and subcontracts, the risk and impact of delayed performance and the level of indirect cost allocations. Changes in estimates are retrospectively applied and when adjustments in estimated contract costs are identified, such revisions may result in current period adjustments to earnings applicable to
Page 56
performance in prior periods. When total EACs on a contract exceed the total revenue, a provision for the entire loss is determined at the contract level and is recorded in the period in which the loss is evident.
Redwire Corporation published this content on February 27, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 27, 2026 at 22:16 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]