Quarterly report [Sections 13 or 15(d)]

Business Combinations

v3.25.2
Business Combinations
 6 Months Ended
Jun. 30, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Business Combinations
Note C – Business Combinations
Edge Autonomy Acquisition
On January 20, 2025, the Company entered into an agreement and plan of merger (as amended on February 3, 2025, and June 9, 2025, the “Merger Agreement”) with Edge Ultimate Holdings, LP, a Delaware limited partnership (“Ultimate Holdings”) to acquire 100% of the equity interests in Edge Autonomy Intermediate Holdings, LLC (together with its subsidiaries, “Edge Autonomy”), a leading provider of field-proven uncrewed airborne system (“UAS”) technology (the “Edge Acquisition”). On June 13, 2025, following the satisfaction of all regulatory approvals, including a stockholder vote, the acquisition was completed. Under the terms of the Merger Agreement, a subsidiary of Redwire merged with and into Edge Autonomy Intermediate Holdings, LLC, the parent company of Edge Autonomy, with Edge Autonomy Intermediate Holdings, LLC as the surviving entity and a wholly owned subsidiary of the Company. On the same day merger consideration was transferred, including $160.0 million in cash (“Cash Consideration”) and the issuance of 49,764,847 shares of the Company’s common stock (“Equity Consideration”). Common stock equal to $5.0 million, valued at a price per share of $15.07, was held back from the Equity Consideration to fund post-closing purchase price adjustments, if any. The Company funded the Cash Consideration using cash on hand and proceeds from its indebtedness. Refer to Note I – Debt for additional information on the Company’s outstanding debt.
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.

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.
June 13, 2025
Cash consideration
 $ 160,000 
Fair value of common stock issued(1)
862,561 
Payable to the seller
 7,171 
Purchase consideration
 $ 1,029,732 
Assets:
Cash
 $ 8,209 
Accounts receivable and other receivable
 10,717 
Inventory 57,536 
Prepaid expenses and other current assets 6,303 
Property, plant and equipment
 26,207 
Right-of-use assets 14,822 
Intangible assets
 332,400 
Other non-current assets
 254 
Total assets
 456,448 
Liabilities:
Accounts payable
 5,598 
Accrued expenses
 16,130 
Deferred revenue
 26,111 
Other current liabilities
 19 
Long-term operating lease liabilities 14,973 
Deferred tax liabilities 72,347 
Other non-current liabilities 1,019 
Total liabilities
 136,197 
Fair value of net identifiable assets acquired
 320,251 
Goodwill
 $ 709,481 
(1) Fair value of the common stock issued is based on the Company’s common stock closing price of $19.08 on the acquisition date, June 13, 2025, less the fair value of the Edge Incentive Units of $87.0 million. Refer to Note P – Equity-Based Compensation for additional information on the Edge Incentive Units.

The following table summarizes the intangible assets acquired by class:
June 13, 2025
Weighted average useful life
in years
Customer relationships
 $ 36,400  9
Technology 264,300  13
Trade name and trademark
 31,700  16
Total intangible assets
 $ 332,400 

The amounts above represent preliminary valuation analyses completed necessary to assess the fair values of the assets acquired and liabilities assumed and the amount of goodwill to be recognized as of the acquisition date. These fair values were based on management’s estimates and assumptions; however, the amounts indicated above are preliminary in nature and are subject to
adjustment as additional information is obtained about the facts and circumstances that existed as of the acquisition date. Accordingly, there may be adjustments to the assigned values of acquired assets and assumed liabilities. All values remain preliminary including, but not limited to, intangible assets, including the preliminary assumptions used in their estimates of fair values and their respective estimated useful lives, the valuation of certain tangible assets, working capital accounts, income taxes, and residual goodwill. The final determination of the fair values, purchase consideration, related income tax impacts and residual goodwill will be completed as soon as practicable, and within the measurement period of up to one year from the acquisition date as permitted under GAAP. Any adjustments to provisional amounts that are identified during the measurement period will be recorded in the reporting period in which the adjustment is determined.

The preliminary fair values of identifiable intangible assets were determined by using certain estimates and assumptions that are not observable in the market. The fair value of the acquired technology and trademark and trade name was estimated using the relief from royalty method. The significant assumptions used to estimate the fair value included forecasted revenues, expected royalty rates, expected attrition rates and discount rates. The fair value of the acquired customer relationships was estimated using the multi-period excess earnings method. The significant assumptions used to estimate the fair value of customer relationships included forecasted revenues, expected customer attrition rates, and discount rates.

The results of operations of Edge Autonomy have been included in the Company’s consolidated results of operations since the date of acquisition, June 13, 2025. The table below presents the revenues and net income (loss) of Edge Autonomy included in the condensed consolidated statements of operations and comprehensive income (loss) since the acquisition date, for the following periods:
Three and Six Months Ended
  June 30, 2025
Post-acquisition revenues
 $ 5,946 
Net income (loss) attributable to Redwire Corporation (34,918)

Pro Forma Financial Data (Unaudited)
The table below presents the pro forma combined results of operations for the Company for the three and six months ended June 30, 2025 and 2024 as though the acquisition of Edge had been completed as of January 1, 2024.
Three Months Ended Six Months Ended
June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024
Revenues
 $ 113,444  $ 132,802  $ 210,197  $ 261,311 
Net income (loss) attributable to Redwire Corporation (68,545) $ (28,511) (79,894) (116,553)
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 Edge Acquisition had taken place as of January 1, 2024, 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.

Other Acquisitions
On August 30, 2024, the Company acquired 100% of the equity interests of Hera Systems, Inc. (“Hera”), a spacecraft developer focused on specialized missions for national security space customers. Hera’s primary operations include developing high-performance spacecraft to support the evolving requirements for national security missions operating in contested space. Hera’s advanced platform incorporates cyber-secure communications, resilient power systems, highly accurate pointing, extensive maneuverability and massive on-board computing power supporting mission- and payload-specific machine learning. This acquisition was not material individually to the Company’s financial position nor the results of operations for the periods presented in the Company’s condensed consolidated balance sheets and condensed consolidated statements of operations and comprehensive income (loss), respectively. Therefore, the pro forma operating results and other disclosures for the Hera acquisition are not presented.

The Company incurred acquisition related costs for completed acquisitions of $16.6 million and $20.4 million during the three and six months ended June 30, 2025, respectively, and $0.2 million during the three and six months ended June 30, 2024, respectively. These expenses are included in transaction expenses on the condensed consolidated statements of operations and comprehensive income (loss).