Quarterly report pursuant to Section 13 or 15(d)

Business Combinations

v3.23.3
Business Combinations
 9 Months Ended
Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]  
Business Combinations
Note C – Business Combinations
QinetiQ Space NV Acquisition
On October 31, 2022, the Company acquired 100% of the equity interests in QinetiQ Space NV (“Space NV”) for $36.9 million (€37 million) in cash. The acquisition supports the Company’s growth in its offering of satellite technologies, berthing and docking equipment, space instruments and advanced payloads, as well as expanded its global footprint.

The following table summarizes the fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.
October 31, 2022
Cash paid
 $ 36,930 
Less: Note receivable from seller
 501 
Purchase consideration
 $ 36,429 
Assets:
Cash
 $ 3,700 
Accounts receivable and other receivable
 3,606 
Contract assets
 18,830 
Prepaid expenses and other current assets 3,100 
Property, plant and equipment
 5,656 
Right-of-use assets 1,166 
Intangible assets
 13,935 
Equity method investments
 3,000 
Total assets
 52,993 
Liabilities:
Accounts payable
 4,201 
Short-term operating lease liabilities 199 
Short-term finance lease liabilities 279 
Accrued expenses
 18,636 
Deferred revenue
 5,513 
Other current liabilities
 399 
Long-term operating lease liabilities 908 
Long-term finance lease liabilities 563 
Deferred tax liabilities 2,727 
October 31, 2022
Other non-current liabilities 281 
Total liabilities
 33,706 
Fair value of net identifiable assets acquired
 19,287 
Less: Fair value of noncontrolling interests in ROS 215 
Goodwill
 $ 17,357 

The following table summarizes the intangible assets acquired by class:
October 31, 2022 Weighted average
useful life
in years
Technology $ 4,700  7
Customer relationships 7,400  30
Software 235  2
IPR&D
 1,600 
Total intangible assets
 $ 13,935 

The amounts above represent the current preliminary fair value estimates. During the nine months ended September 30, 2023, the Company recorded an immaterial measurement period adjustment to various assets and liabilities, which increased the balance of goodwill to $17.4 million as of September 30, 2023. The above amounts are preliminary and could be revised as a result of additional information obtained regarding the assets acquired and liabilities assumed, including, but not limited to, certain working capital items and residual goodwill. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for the acquisition date fair value of the assets and liabilities. The completion of the valuation will occur no later than one year from the acquisition date.

The fair value of the acquired technology and IPR&D was estimated using the relief from royalty (“RFR”) method. The fair value of the acquired customer relationships was estimated using the excess earnings method. The fair value of the acquired investment in RSS was estimated using the guideline public company method.

The acquisition was accounted for as a business combination, whereby the excess of the consideration paid over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill is not deductible.

Pro Forma Financial Data (Unaudited)
The table below presents the pro forma combined results of operations for the business combinations for the three and nine months ended September 30, 2022 as though the acquisition of Space NV had been completed as of January 1, 2021.
Three Months Ended Nine Months Ended
September 30, 2022 September 30, 2022
Revenues
 $ 51,084  $ 148,227 
Net income (loss) attributable to Redwire Corporation (10,227) (103,639)
The amounts included in the pro forma information are based on the historical results and do not necessarily represent what would have occurred if the Space NV acquisition had taken place as of January 1, 2021, nor do they represent the results that may occur in the future. Accordingly, the pro forma financial information should not be relied upon as being indicative of the results that would have been realized had the business combination occurred as of the date indicated or that may be achieved in the future.

The Company incurred nominal costs during the three and nine months ended September 30, 2023 and 2022, respectively, related to completed acquisitions as of the respective periods. Costs incurred in 2023 related to completed acquisitions were primarily attributable to the Space NV, Techshot and Roccor acquisitions, while such costs incurred in 2022 were attributable to the Techshot acquisition. These expenses are included in transaction expenses on the condensed consolidated statements of operations and comprehensive income (loss) and are also reflected in the pro forma results for the periods presented in the table above.