Redwire CorpRDW
Redwire Corp Income Taxes Disclosure
Note L – Income Taxes
Income (loss) before income taxes consisted of the following:
| Year Ended | |||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||
Domestic income (loss) | $ | (190,676) | $ | (108,886) | $ | (20,310) | |||||
Foreign income (loss) | (60,890) | (7,445) | (7,440) | ||||||||
Income (loss) before income taxes | $ | (251,566) | $ | (116,331) | $ | (27,750) | |||||
Income tax provision (benefit) consisted of the following:
| Year Ended | |||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | (64) | $ | — | $ | — | |||||||||||
| State | (5) | 67 | (73) | ||||||||||||||
| Foreign | (44) | (284) | 512 | ||||||||||||||
| Total current income tax expense (benefit) | (113) | (217) | 439 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (19,423) | (122) | 48 | ||||||||||||||
| State | (5,135) | 271 | 62 | ||||||||||||||
| Foreign | (343) | (1,952) | (1,035) | ||||||||||||||
| Total deferred income tax expense (benefit) | (24,901) | (1,803) | (925) | ||||||||||||||
| Total income tax expense (benefit) | $ | (25,014) | $ | (2,020) | $ | (486) | |||||||||||
A reconciliation of the U.S. federal statutory income tax expense to actual income tax expense is as follows:
| Year Ended | ||||||||
| December 31, 2025 | ||||||||
Amount | Rate | |||||||
| Income (loss) before income taxes | $ | (251,566) | ||||||
| Federal statutory income tax rate | 21.0 | % | ||||||
| Expected federal provision (benefit) for income taxes at the federal statutory income tax rate | (52,829) | 21.0 | % | |||||
| State and local income taxes, net of federal income tax effect* | (6,685) | 2.7 | % | |||||
| Foreign tax effects: | ||||||||
| Belgium: | ||||||||
| Impairment of goodwill | 5,175 | (2.1) | % | |||||
Statutory tax rate difference | (2,172) | 0.9 | % | |||||
| Changes in valuation allowance | 8,450 | (3.4) | % | |||||
| Other | (33) | — | % | |||||
Other foreign jurisdictions: | ||||||||
Statutory tax rate difference | 59 | — | % | |||||
Change in valuation allowance | 481 | (0.2) | % | |||||
| Other | 438 | (0.2) | % | |||||
Nontaxable or nondeductible items: | ||||||||
| Change in fair value of warrants | (3,383) | 1.3 | % | |||||
| Tax (benefits) / non-deductible expenses related to equity-based compensation | (4,371) | 1.7 | % | |||||
Acquisitions costs | 2,377 | (0.9) | % | |||||
| Non-deductible compensation costs related to the Edge Incentive Units | 9,224 | (3.7) | % | |||||
Effect of cross-border tax laws: | ||||||||
| Global intangible low-taxed income | 1,156 | (0.5) | % | |||||
Change in valuation allowance | 16,449 | (6.5) | % | |||||
| Other | 650 | (0.3) | % | |||||
| Total income tax expense (benefit) | $ | (25,014) | 9.9 | % | ||||
| Effective tax rate | 9.9 | % | ||||||
*State taxes in California make up the majority (greater than 50%) of the tax effect in this category for the year ended December 31, 2025.
A reconciliation of the U.S. federal statutory income tax expense to actual income tax expense is as follows:
| Year Ended | ||||||||||||||||||||
| December 31, 2024 | December 31, 2023 | |||||||||||||||||||
Amount | Rate | Amount | Rate | |||||||||||||||||
| Income (loss) before income taxes | $ | (116,331) | $ | (27,750) | ||||||||||||||||
| Federal statutory income tax rate | 21.0 | % | 21.0 | % | ||||||||||||||||
| Expected federal provision (benefit) for income taxes at the federal statutory income tax rate | (24,430) | 21.0 | % | (5,828) | 21.0 | % | ||||||||||||||
| State income tax (benefit), net of federal tax benefit | (3,159) | 2.7 | % | (1,190) | 4.3 | % | ||||||||||||||
| Change in fair value of warrants | 10,912 | (9.4) | % | 422 | (1.5) | % | ||||||||||||||
| Permanent differences | 314 | (0.3) | % | 136 | (0.5) | % | ||||||||||||||
| Tax (benefits) / non-deductible expenses related to equity-based compensation | (636) | 0.5 | % | 984 | (3.5) | % | ||||||||||||||
| Acquisition costs | 219 | (0.2) | % | — | — | % | ||||||||||||||
| Change in valuation allowance | 16,153 | (13.9) | % | 4,808 | (17.3) | % | ||||||||||||||
| Other | (1,393) | 1.2 | % | 182 | (0.7) | % | ||||||||||||||
| Total income tax expense (benefit) | $ | (2,020) | 1.7 | % | $ | (486) | 1.8 | % | ||||||||||||
| Effective tax rate | 1.7 | % | 1.8 | % | ||||||||||||||||
The table below presents the components of deferred tax assets, net and deferred tax liabilities:
| December 31, 2025 | December 31, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Accrued expenses and reserves | $ | 7,287 | $ | 456 | |||||||
| Capitalized research and development expenses | 8,722 | 4,528 | |||||||||
| Tax credit carryforwards | 618 | 243 | |||||||||
| Deferred revenue | 3,652 | 1,367 | |||||||||
| Net operating loss carryforwards | 80,436 | 38,676 | |||||||||
| Interest disallowance | 18,164 | 10,007 | |||||||||
| Equity-based compensation | 4,430 | 2,643 | |||||||||
| Lease liability | 9,183 | 4,956 | |||||||||
| Other assets | 50 | 62 | |||||||||
| Total deferred tax assets | 132,542 | 62,938 | |||||||||
| Less: valuation allowance | (70,704) | (45,324) | |||||||||
| Deferred tax assets, net of valuation allowance | 61,838 | 17,614 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Right-of-use asset | $ | (8,425) | $ | (4,291) | |||||||
Tax on undistributed profits | (8,741) | — | |||||||||
| Depreciation and amortization | (79,471) | (13,616) | |||||||||
| Other | (3,559) | (217) | |||||||||
| Deferred tax liabilities | (100,196) | (18,124) | |||||||||
| Total net deferred tax assets (liabilities) | $ | (38,358) | $ | (510) | |||||||
In assessing the realizability of deferred tax assets, the Company evaluates whether it is more-likely-than-not that a portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which the net operating loss (“NOL”) carryforwards are available. During the year ended December 31, 2025, and in connection with the acquisition of Edge Autonomy, the Company determined that a portion of its deferred tax assets would, more-likely-than-not, be realized and, as a result, the Company recognized a tax benefit of $25.0 million,
substantially all of which relates to the recognition of deferred tax assets and the corresponding reduction of the valuation allowance.
The table below presents the change in valuation allowance for the following periods:
| Valuation allowance as of December 31, 2023 | $ | (23,821) | |||
| Acquired deferred tax assets | (5,350) | ||||
Income tax expense | (16,153) | ||||
| Valuation allowance as of December 31, 2024 | (45,324) | ||||
| Income tax expense | (25,380) | ||||
| Valuation allowance as of December 31, 2025 | $ | (70,704) | |||
As of December 31, 2025, the Company had $80.4 million of total net operating losses (“NOL”) resulting in deferred taxes assets consisting of U.S. federal, state (net), and foreign NOLs of $54.1 million, $16.1 million, and $10.2 million, respectively. The $54.1 million in U.S. federal net operating loss carryforwards may be carried forward indefinitely to reduce future taxable income for U.S. federal tax purposes, while certain state and foreign net operating loss carryforwards will begin to expire in 2039.
The table below presents changes in reserves for unrecognized income tax benefits for the following periods:
| Year Ended | |||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||
| Unrecognized tax benefits, beginning of period | $ | 1,380 | $ | 1,380 | $ | 1,380 | |||||||||||
| Increase (decrease) for tax positions taken related to a prior period | — | — | — | ||||||||||||||
| Unrecognized tax benefits, end of period | $ | 1,380 | $ | 1,380 | $ | 1,380 | |||||||||||
During the years ended December 31, 2025, 2024 and 2023, the Company did not recognize certain tax benefits from uncertain tax positions within the provision for income taxes. As of December 31, 2025, the Company’s estimated gross unrecognized tax benefits were $1.4 million, of which $1.3 million, if recognized, would favorably impact the Company’s future earnings. The Company believes there will be no material changes to unrecognized tax benefits within the next twelve months. Due to uncertainties in any tax audit outcome, estimates of the ultimate settlement of our unrecognized tax positions may change and the actual tax benefits may differ from the estimates. During the years ended December 31, 2025, 2024 and 2023, the Company did not recognize any interest and penalties in the consolidated statements of operations and comprehensive income (loss).
The Company and its subsidiaries file income tax returns in various U.S. and foreign jurisdictions. As of December 31, 2025, the Company is subject to examination by the IRS for tax years beginning in 2022. The Company is open to state income tax examinations until the applicable statute of limitations expires, generally four years after tax return filing; however, the ability for the taxing authority to adjust tax attribute carryforwards will continue until the applicable statute of limitations expires after tax attribute utilization or expiration.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 11, 2025 | |
| 2023 | Mar 20, 2024 | |
| 2022 | Mar 31, 2023 | |
| 2021 | Apr 11, 2022 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.