Closing Bell - Manifest Space: Redwire's Transformational Leap: Edge Autonomy Acquisition and the Future of Multi-Domain Defense 6/26/25

Episode Date: June 26, 2025

Morgan sits down with Pete Cannito, CEO of Redwire, and Kirk Konert, Managing Partner at, AE Industrial -- one of the few aerospace private equity firms out there--to discuss Redwire’s game-changing acquisition of Edge Autonomy and how it transforms the company. The conversation explores how drones, AI, and autonomous systems are reshaping modern warfare, the growing investment in defense tech, and the role of space in global deterrence strategies. Cannito and Konert share insights on navigating this dynamic landscape and seizing a trillion-dollar market opportunity. 

Redwire just acquired military drone maker Edge Autonomy in a nearly $1 billion deal. Pete Canito, Redwire's CEO, says it nearly doubles the size of the company and expands the portfolio beyond space infrastructure. By combining the space-borne assets associated with Redwire Space and the airborne assets associated with edge autonomy, we become one of those middle market agile kind of new flavor of defense tech contractors that bring the multi-domain capabilities vertically integrated into a single company. So both on the financial operational side in terms of scale, as well as on the technological side in terms of having these multi-domain platforms all in one agile middle market company. It's pretty transformational.

Investors are on board. Redwire stock has doubled since the start of April, and those shares are up about 160 percent from a year ago. Redwire was stood up through investment firm AE Industrial Partners, which is still the largest shareholder. Kirk Conert, AE Industrial's managing partner, who oversees a portfolio that also includes Firefly Aerospace and York Space Systems, began investing in commercial space and defense tech companies years ago. A niche corner of the startup market is now one of the hottest places to invest

both in public and private markets. Now you're seeing companies that are raising hundreds of millions of dollars of capital, Redwire included, to take advantage of this market opportunity. So it's really exciting to see. I know Anderil topped the CNBC top disruptor list. I would say Redwire is a version of Anderil that's maybe more space focused, but also profitable. So I think we have a really, really unique company in red wire space, but A, industrial broadly, we think this is one of the best opportunities and

best capital from an institutional perspective. On this episode, Kenito and Konert on the state of space where defense is headed and what America's involvement in Israel's war against Iran has meant for all of it. I'm Morgan Brennan and this is Manifest Space. Joining me now, Pete Canito, the CEO of Redwire and Kirk Conert, managing partner at AE Industrial. Gentlemen, it's great to be speaking with both of you. And I want to kick this off with Pete because it's been a big couple of weeks for

Redwire starting with the fact that you closed this Edge Autonomy acquisition. What does that technology bring to the Redwire portfolio? Yeah, well first of all, it's great to be here, so thanks for having me again. Yeah, Edge Autonomy really rounds out Redwire as a, Yeah, Edge Autonomy really rounds out Redwire as a, we're going from a pure place based company to a emerging space and defense tech company. It almost doubles the company in terms of size. So this is certainly a transformational deal, brings us up to about half a billion dollars in revenue at the end of 2024 pro forma. So it's a big deal for us, both as a company overall, but also in the marketplace. If you look at where USDOD and many of our allies, Ministry of Defense are going in terms of their advanced warfighting concepts. No longer do they fight in a way where warfighting is segmented by individual domains like air,

space, land, sea. They really are moving towards a multi-domain architecture. And for Redwire, by combining the space-borne assets associated with Redwire space and the airborne assets associated with edge autonomy, we become one of those middle market, agile, kind of new flavor of defense tech contractors that bring the multi-domain capabilities vertically integrated into a single company. So both on the financial operational side in terms of scale, as well as on the technological side in terms of having these multi domain platforms all in one agile middle market company, it's pretty transformational. And of course, Pete, when we're talking about the air capabilities, we're talking about drones and autonomous systems and the ability to, as you just mentioned, have those systems communicate back and forth between domains.

That's right. That's exactly right. How does that speak to, in fact, that we are seeing more and more autonomy, more and more AI, more and more drone capability in general come into the battlefield and be such a high priority technology for DoD. How does it speak to how warfare is changing? Well, so it's again, it's an incredible change in the paradigm for warfighting overall. In some ways, it could be positive in the sense that rather having just people fighting with each other, more of it is becoming drone on drone warfare and capability. If you look at the exchanges going on in terms of Israel and Iran, although there are casualties and any loss of life is tragic, The idea that you could be replacing that back and forth more attrition warfare, which has really high casualty rates, with more of a positioning for advantage,

diplomatic advantage by using drone assets or positioning yourself to get advantage over the other side without such extensive loss of life could be an interesting change in the way warfare is waged. And Kirk, Redwire was really sort of put together and incubated at AE Industrial, even though I know it has a multi-decade legacy of space work. And it's just one piece of a broader portfolio for you that is focused on things like commercial space and defense tech. You and I have had these conversations for years,

but it does feel like all of this technology, all of this capability and this sort of new subsector, if you will, is becoming very mainstream this year. Am I thinking about that the right way? I think you're thinking, thinking about exactly right. I mean, we're in a moment now where, uh, defense tech is now the hot, one of the hottest areas to invest capital. I, we had this conversation, maybe if we were having this conversation, maybe seven, eight years ago, it'd be completely a different conversation.

That's when we had started having the dialogue around red, red wire, Pete and I are sitting across the table and had this crazy idea of, of founding this company called red wires, red wire space. And, uh, nobody had really, from a private equity or private capital perspective, it taken a big, big, uh, stake in, in, in, in the ground, put a big stick in the ground and say, it's time to invest in new, new technology for the space and defense market. the ground and say, it's time to invest in new technology for the space and defense market. And now you're seeing companies that are raising hundreds of millions of dollars

of capital, Redwire included to take advantage of this market opportunity. So it's really, really exciting to see. I know Anderil topped the CMBC top disruptor list. I would say Redwire is a version of Andrel that's maybe more space focused, but also profitable. So I think we have a really, really unique company in Redwire space, but A, industrial broadly, we think this is one of the best opportunities to invest capital from an institutional perspective.

So Kirk, what are you excited to invest in right now in this market where it does seem like both private markets and public markets have seized onto this idea and are throwing capital at this sector overall? Yeah, I mean, I think the areas that Redwire is in are perfect examples. And I'll add a couple more as well, but I think space is an area where the space force and US government in general has been more, more of an embrace of involving commercial companies, new technologies, because it's a it's a new, new area and a new domain. And you're seeing the space force talk about how space is not a sanctuary anymore. It's a contest environment. It is a It is an area where our

adversaries have capabilities that can take out our assets and things in order that are important to our everyday lives. And they've demonstrated that. They have satellites that are dogfighting in space. So I think that's an area where we see continued opportunity, where the commercial industry has an opportunity to partner with the U.S. government to bring capabilities that are important for deterring adversaries and protecting key infrastructure for the United States. And then drones, as you've seen in some of the conflicts over the last couple of years, drones are paramount to how we equip our war fighters for the battlefield. Because if you don't have the access to reconnaissance and intelligence that these drones can provide,

then you're lacking advantage. So I'd say those are obviously key areas. And the other area I'd mention is cybersecurity. I think that's gotten a lot of, not as much attention as many other areas, but that's an area where when you think about left of launch, when you think about things like Golden Dome and how we impact and defend our homeland, that's an area that I see huge opportunity

for companies to emerge with great technology and investors to really back. Speaking of Golden Dome, Pete, is there opportunity with that program at Redwire? Yeah, absolutely. Yeah. So Golden Dome is the perfect example of this new advanced warfighting construct of multi-domain, joint all-domain capability being brought to bear to solve a very specific problem. And the problem of missile defense is inherently multi-domain. You're going to have

land assets, you're going to have seaborne assets, you're going to have, of course, airborne assets and space assets that are critical to that architecture. So, Redwire has a number of opportunities that we are talking to the relevant decision makers about that play across the multi-domain, particularly space and airborne aspects of Golden Dome. So, we're really excited about the opportunity, particularly one area where we think we're one of the leaders is in very low Earth orbit or what they call VLEO. We announced over a year ago our, what some people call orbital drone, Sabresat, which is currently being funded by US government programs and I think it has a big role to play. I do want to dig into that a little bit more but first Kirk I

mean given everything we've seen with Israel and Iran and the strike by the US over the weekend I mean as of right now as we have this conversation there seems to be a ceasefire in place but when you see a conflict like this unfold and evolve the way it does what does it do to drive demand for these new technologies and push more defense dollars both in the U.S. and internationally to the ability to have these capabilities? I mean you heard Pete talk about it but I think it's important, you know, when you after the right after the morning after the, our successful attack, take out of the Iran nuclear facilities, you heard chairman, General General Dan Kane, get on the podium and talk about how all the different services and command and commands got together to coordinate that,

that, uh, successful attack. And I think that's important from a multi, multi-domain, multi-domain perspective. We're talking about space, uh, air, land, sea, that w w they're, they're all coordinated and they're all working together and space is, is, is a key, key component component of that. Um, but I think it demonstrates that the need for the United States and our allies to invest in defense is paramount because it's a deterrent for our adversaries. It allows us to have our other economic freedoms and prosperity. I think it's an important part where we need to continue to invest and stay ahead from a technology perspective.

This demonstrates that if you have this capability that no other country in the world can pull think, but that is a direct result of our ability as a country and our allies to pull something off like this. And you're going to see continued investment across Europe and the US, I think, for to have this to have the capability to deter adversaries. Yeah. And the defense secretary, Pete, basically saying, this reestablishes U.S. deterrence on the heels of that strike. I also was interested in saying the fact that the vice president came out and put it into

perspective, this idea of dropping 30,000, 14-ton bunker buster bombs on targets the size of refrigerators, it speaks to, perhaps, the role that all of that reconnaissance data, all that space data, and then the ability to analyze that data, which I know AI can play a role in, has in a mission like this. We don't always talk about the space piece of it, but I do want to get your thoughts on that.

Yeah, well, I think it goes back to what Kirk was saying that intelligence surveillance and reconnaissance is absolutely critical to the way we do modern warfare. And really in ancient times, it's always been the side that has the information advantage is the one that is best positioned for victory. And of course, our defense leadership understands that, the European defense leadership understands that, our allies. So it's really, in many cases, less about the actual delivery of steel on target and the impact of the bomb itself, as much as all of those functions that have to occur

to achieve such precision. And that starts with intelligence and reconnaissance gathering and having really the data to understand the adversaries anti-aircraft networks, what their capabilities are, where these places are from a geographic perspective with high precision, and space plays and has played even going back to decades ago when I was a young Marine, and we had the Gulf War with the concept of shock and awe, that was really the birth of this munitions precision warfare. And that's a major strategic advantage for the United States because we have the best space-based ISR capability there is,

and that gives us that asymmetric advantage from an informational perspective. So I want to shift from defense to civil because you also do a lot of civil space work at RedWire, Pete. As we see defense budgets poised to keep growing, we know that the NASA budget here in the U.S. is poised to potentially shrink and shrink aggressively. What does that mean for Redwire? What does that mean for some of these space exploration programs that we've invested so much in as a country and continue to be such a focal point, whether it's going back to the moon or now even the possibility of going to Mars? Yeah, well, so it's an important question. I think from an investor perspective, people have to double click below the headline, right? So if you look at, for instance, Redwire's position with the addition of edge autonomy, 45% of our revenue comes from Europe. So in European

markets actually, civil space investment is experiencing double digit growth. So on the civil side, we're super excited about Europe and actually both on the space and defense side, we're seeing big growth opportunities in Europe as they try to catch up to the US and China in terms of their civil space capability, as well as taking on greater autonomy in space defense. But even in the US budgets, you kind of got to go one step deeper, the vast majority of the cuts in the NASA budget were in the science area. But there are actually growth trends in the exploration area.

So and that's primarily where Redwire operates. less on the James Webb type science-based budgets and more on the exploration side of the house, which is actually a growth area. We're a prime on the CLPS program, which the Commercial Lunar Payload Services program that where you saw Firefly land on the moon and Intuitive Machines land on the moon. And those budgets seem to be protected and in some cases are growing. So we're really excited about that aspect of civil space. Kirk, what are your thoughts about civil space, especially since you have a number of companies

that play in this arena in your portfolio? Yeah, I think it speaks to we continue to have to do more or less. And that means leaning into commercial companies and their technologies. Right. So I think that I think there is a shift in thinking and success over the last decade. I mean, starting with the commercial crew program where, you know, born out of that is space, space access capabilities, and then the clips program that Pete mentioned where, you know, we're taking relatively low cost bets to

put technology on the moon and back to the back to the moon and getting lots of lots of shots on goal, which, which creates a spiral effect of technology development and successes like fire, firefly, what you, what you saw earlier this year, which, which again, you're putting, you're putting, uh, uh, uh, robots on the moon for a hundred million, about a hundred million dollars. That's a frac, you know, a 10th or even less of a cost of what it would take. Um, if we went through a traditional sort of NASA program. So I think that speaks to, yeah, we might have to do more with less because of the budgetary

constraints of what NASA's facing. But I think that forces a more commercial approach to how we contract with industry. And I think it's an opportunity for companies like Redwire contract with industry. And I think it's an opportunity for companies like Redwire and Firefly to really advance their technology. And frankly, we're excited about that opportunity. You think it's a good time for some of these private commercial space companies to go public now? I mean, you saw the success of Voyager Space

and well-received priced above their range, was oversubscribed and traded well in the aftermarket. So I think that's a great signal for these private companies to see if there's a window of opportunity because the public investors obviously see what we see, which is there's a big opportunity, a big addressable market. You're talking about a trillion dollar addressable market in the next five to ten years Who's gonna grab market share and and and and there's an opportunity I think once in a generation opportunity for

Investors to take advantage of that and you saw it with again red wire had a successful offering as well So I think we're I think you'll see a lot of activity this year in the public markets. Oh, you took my question right out of my mouth. Sorry. Because it's true. We've seen it in Redwire stock. We've seen just an incredible rally by public investors. But we also know recently you went to market secondary share sale, raised some more capital.

Where does that money go to work? Is that towards the edge autonomy acquisition or does it get invested somewhere else, Pete? Well, it's a combination. Edge autonomy is certainly a big part of it. And a significant amount of the use of proceeds was used to pay down some M&A related debt to get that closed. So that was really exciting for us to get a low cost of capital and efficient capital

to close that transformational acquisition out. Other parts of it are going towards, of course, internal investment in technology, because as Kirk said, it is a race. This is where space is an emerging industry. So increasing market share is important. But it's also, I think, an evolution from a capital structure for those companies like Redwire that made it through that initial SPAC phase. A couple of years ago, SPACs were all the rage, and then they kind of went through this SPAC winter where everybody was really hard on SPACs, and for good reason, many of them didn't survive. But those that did make it to the other side like us, Rocket Lab, AST Mobile are starting to go to the markets and the markets are rewarding

the winners. And as a result, they're providing a lower cost of capital that can be used to strengthen your balance sheet. And that was a big part of what Redwire did as well, because we're maturing as a company. Like I said, Proforma, Redwire, Plus Edge combined did half a billion dollars. So we're not that small anymore. We got, we're followed by a number of analysts. We got a good coverage. We got real revenue and now Redwire with Edge is adjusting to adopt a positive pro forma. So part of it was also making sure that we're getting the best capital we can get out there. And finally, Kirk, just I, a more macro question for you, because we do have rates that are still elevated.

We've seen some M&A, we've seen some exits by way of IPO, but just your outlook on the investing landscape in general right now and what it takes to get deals done and or invest at some of the valuations we are seeing in the marketplace? Yeah, it's still a healthy ecosystem. I think you've seen a little bit of, at the beginning of the year, everybody was ready to be unburdened and ready to invest capital. And there was a little bit of obviously the, the tariff, um, uh, talks and, and, and, and, and, and, um, some of the exchanges, I think that has sort of, uh, obviously tapered off, um, and the market feels a little more risk, risk

on as it relates to, uh, M and a. Um, so I think you're seeing, again, I think it's plays the same theme where you're going to have, you have these large primes who haven't really done a lot of M&A over the last few years. And they're looking at maybe some of these, some of these companies that are private and saying, if I want to be in the game for some of this new opportunities and new where the defense department's going, and where the Defense Department's going and where the commercial and civil markets are going, then I might need to acquire that capability in that company. So I do think as we've seen the markets sort of come back and settle down in a more friendly

environment as it relates to M&A, at least signaling. I think you will see some more capital markets and M&A activity in the near term. And obviously, the Fed is signaling a couple of rate cuts this year. I think investors are sort of pricing that in and acting accordingly. You know, I just got to ask each of you one more question here before you wrap that up. And I guess the first one is, Kirk, we're also seeing this big push towards re-industrialization of the US and standing up more domestic supply chains and more manufacturing. And I just wonder how you think about that opportunity,

because it seems to me aerospace and defense is ground zero for how that could play out. Yeah, 100%. I mean, that's an area where we at AE Industrial say that's a core competency of ours is to be able to help companies scale their operations and the production and get ready for demand signals. So that's a big part of what we're seeing from this administration, right? Is invest in the U.S., invest for production here in the U.S. And I think we have the ability to be a trusted capital partner for that and the skill set

to help these companies actually execute on it. That's one thing I would say about, hey, we're going to invest here. We're going to do these things. But the actual execution of that is hard. And we've proven it at A Industrial that we can back these companies and help them actually fulfill on those promises and execute on these programs. And finally, Pete, just how you're thinking about that at Redwire, whether it's navigating tariffs, whether it's making sure your own supply chain is resilient,

or the opportunity even that maybe this is providing for you to become a supplier to others. Yeah, absolutely. Well, so first of all, Redwire is a US-based manufacturer. We have 19 locations inside the United States. And when you go to a Redwire facility, it's just not cubes of knowledge workers. we have a manufacturing floor. And you see technicians on the floor doing high-tech development, whether they have a automated line of operating an automated line that is putting out drones

or whether they're manufacturing solar arrays. So the trend towards high-tech manufacturing in the U.S. is a real tailwind for Redwire and we're excited about it. We often get people who reach out to us and are interested even in some things that we haven't thought of because we're part of that small remaining amount of companies that have high-tech manufacturing capability still here in the U.S. And we think that's an opportunity to grow. We're relatively insulated from the global supply chain issues because on the U.S. side

of the house, most of our work is around things that for national security reasons tend to use a US based supply chain. But in the Europe side, we're actually doing the manufacturing in Europe. So we have four sites in Europe with two very large manufacturing facilities. One of them, Edge Autonomy, just did a ribbon cutting on a 100,000 square foot brand new cutting edge manufacturing facility for drones in Latvia. So in those cases, it's European manufacturing to serve European customers. But all around, it's a dynamic environment. We feel like we have a lot of those areas mitigated and we're super excited about the trend towards more manufacturing in some of these advanced countries.

All right. Pete Canito and Kurt Conertz. Great to speak with both of you, the dynamic duo. That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.