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spk01: and rideshare payloads. The diversification of our revenue in lunar access and delivering payloads in orbits beyond the geo area is a strong and growing indication of the long-term success of our business. Next is Lunar Data Services. To support our three NASA-contracted lunar missions, Intuitive Machines established its Lunar Data Services to command and control its spacecraft and communicate with the spacecraft and payloads. In the first quarter, we took the initial steps in commercializing that service beyond internal usage during our own lunar missions. Recent highlights include a proposal submission of our offering to NASA's solicitation for near-space network services in April. This is a 10-year multi-award contract for communication services direct to and from Earth and data relay and navigation services in and around the vicinity of the moon. Intuita Machines has submitted a prime bid for data relay services with Raytheon as a significant subcontractor. This solicitation is structured much like NASA's CLPS, or NASA's Commercial Lunar Payload Services Initiative, which receives task orders over a period of 10 years to provide services in terms of minutes of communications, whether that is standby, critical, or emergency communication services. The solicitation leverages are established in operational ground stations around the globe to give us continuous communication coverage. At the end of 2022, Intuita Machines validated its network by tracking NASA's Lunar Reconnaissance Orbiter and the Artemis 1 mission. During Artemis 1, our communications network tracked the Orion spacecraft out to about 430,000 kilometers, demonstrating our capabilities. In addition, we validated our ground stations against NASA's Lunar Reconnaissance Orbiter, which is orbiting the moon, and did orbit determination from each ground station to demonstrate that we can do navigation services as part of that ground network. All of this demonstrates our strength in the bidding process for the Near Space Network Services contract. We believe we are in a strong position to provide a solid offering to NASA and expect NASA to award the contract in the third quarter of this year. Moving to orbital services now. We invested time and personnel in our orbital services business unit during the first quarter. In the weeks following, Intuitive Machines received its largest single contract award to date, NASA's five-year, $719 million Omnibus Multi-Engineering Services contract. Intuitive Machines is the majority partner in the joint venture with KBR to operate missions, develop technologies enabling services including satellite servicing and refueling, satellite repositioning, and orbital debris removal. This win is of strategic importance, allowing us to support NASA in designing, developing, and demonstrating critical technology required to support the emerging orbital servicing market, and a validation of the company's experience in spacecraft development, autonomous systems, and near-space communications. When we entered our business combination agreement, we said that we were going to start this orbital services business unit. We incubated it and are happy to report that we landed a large prime contract to establish it. The contract was recently protested, but we believe our offer represents excellent value to the customer, and upon adjudication, upholding the award decision should start work in late Q3 or Q4 of this year. Finally, up next is our space products and infrastructure business. Our space products and infrastructure business unit is where we monetize capabilities including developing propulsion systems, servicing engineering contracts, and NASA awards for lunar mobility vehicles, power plants, and human habitation systems. This business made strides in currently contracted work and future opportunities. Today, Intuitive Machines is proud to introduce the MoonRacer team with the intent to propose against NASA's solicitation for lunar terrain vehicle for the Artemis program. Intuitive Machines is the prime contractor in the MoonRacer team with Northrop Grumman, Boeing, Roush, AVL, and Michelin as our teammates. We believe this team of industry-leading professionals is capable of developing large, integrated, and complex systems, including an electric chassis, space-rated wheels, and the operations to support long-duration lunar surface exploration. Intuitive Machines is also advancing the design of our Lunar Fission Surface Power Reactor under contract with NASA and the Department of Energy as part of the IX joint venture between Intuitive Machines and X Energy, with Intuitive Machines as the majority partner. In the weeks following the first quarter, Intuitive Machines briefed the Department of Energy and NASA at the Idaho National Laboratory about its midpoint design cycle. Lastly, I'd like to touch on our Lunar Production and Operations Center. We are completing construction of an over 100,000-square-foot facility with design-build contractor Burns & McDonald and consulting by Griffin Partners. Intuitive Machines is proud to partner with the City of Houston and the Houston Airport System, which are financing the $40 million project that will enable the company to meet growing demands across all four business units. At the end of Q3 2022, Intuitive Machines started operations inside its new engine verification facility, or flame range, located within Intuitive Machines' 12.5-acre lot that also houses the company's lunar production facility. The state-of-the-art testing facility is designed to further develop, test, and vacuum-qualify Intuitive Machines' advanced cryogenic engines and safely execute other elevated-risk testing. to quickly recap the first quarter of 2023 established intuitive machines as a publicly traded company our go public transaction provided us the resources to execute on our business objectives and we are well capitalized to do so we've been awarded nasa's five-year 719 million dollar ohms 3 contract we are continuing to retire risks on our way to a third quarter mission to the moon and we continue to mature our lunar data services in preparation for another prime contractor award. I am extremely proud of the team here at Intuitive Machines for their hard work and dedication as we look to deliver for all of our stakeholders. We are well positioned through the balance of 2023 to deliver on our expectations and drive long-term shareholder value. With that, I'll turn the call over to Intuitive Machines Chief Financial Officer, Eric Selle.
spk04: Thank you, Steve, and thanks to everyone joining us today.
spk02: I'll begin by reviewing our first quarter 2023 results and then discuss our outlook for the rest of the year. We ended the quarter with a contracted backlog of $161.1 million, $107.7 million of which is expected to convert to revenue over the remainder of the year. This backlog does not include the NASA OMES III contract, which was awarded in early April, after the first quarter ended with a contract ceiling value of $719 million. Additionally, some of our services contracts are funded incrementally and not included in firm backlog. $187 million of the anticipated to-go 2023 revenue is either in firm backlog or contracted, with OHMS being the major driver of the latter. We believe our firm backlog, together with other contracted commitments, puts us in a strong position moving forward and shows our continued customer traction within our existing and near-term market segments. Our first quarter of 2023 was in line with expectations. We generated $18.2 million in the first quarter revenue, excuse me, we generated revenue of $18.2 million in the first quarter compared to $18.5 million in the first quarter of 22. The majority of our first quarter revenue was from Lunar Access Services, and specifically our three NASA Commercial Lunar Payload Services, or CLPS, contracts, which generated 12.8 million of the 18.2 million in Q1 revenue. Operating loss was $14 million compared to a $4.5 million operating loss in the year-ago quarter. This was primarily due to public company readiness costs as well as impacts from the launch schedule updates Steve mentioned earlier. Operating expenses were $32.2 million in the first quarter, $2.8 million of which was attributable to expenses associated with our public listing. We do not expect to incur these transaction expenses going forward. We anticipate that this, combined with the volume increase later in the year, should help us achieve positive EBITDA in Q4 of this year. Importantly, We ended the first quarter with a cash balance of $46.8 million, which represents a well-capitalized position and allows us to execute on our business strategy. Additionally, our quarter ending cash balance does not include the $13.6 million we received from warrant exercises in April, which will be disclosed as a subsequent event. We have always been and will continue to be a capital-efficient company. and will allocate capital to the highest risk-adjusted returns in a disciplined manner. As a private company, we were mostly self-funded, so we know how to live within our means. The growth capital from the transaction is being deployed toward incremental investments specifically tied to customers and programs generating near-term revenue in order to achieve our previously stated goals. NSNS and FSP programs that Steve mentioned earlier are three great examples of this. Moving to our guidance for 2023. As we move forward as a public company, we will be issuing guidance utilizing ranges for important metrics in line with many of our public company peers. The protest of OHMS, which only occurred two days ago, will delay the start of this contract by up to 100 days. OHMS represented a significant portion of our projected 2023 revenue. However, this does not impact the overall value of the contract. We continue to feel confident in the value of our proposal to the customer and pending a successful adjudication of the protest in our favor, expect to begin work on ohms in the fourth quarter. Accounting for this recent news, we expect our 2023 revenue to be in the range of $174 million to $268 million and gross margin to be in the range of 5% to 18%. We expect to end the year with a cash balance of approximately $49 million and will seek to manage the business appropriately to achieve this result. We expect our revenue generation to be stronger in the second half of the year given revenue recognition and timing of several events and contracts which we anticipate will occur in the second half of the year and support our projected growth. A stronger second half is in line with previous years and not uncommon within the aerospace and defense industry as a result of the contract nature of the business. For example, in 2022, 56% of our revenue was generated in the second half of the year, and 44% was generated in the fourth quarter. Programs that we expect to ramp up over the next six months include Comet, JETS, Exevas, and Ohms. Significant potential new contract awards later this year include NSNS and LTV. We believe we will be on track to hit our guidance if we achieve key milestones on the expected timelines for this year, including successful lunar landings, OMS execution, and being selected as a winning bidder for NSNS. I will now briefly go over our outstanding equity to help clarify our share count calculations. We have three classes of equity, Class A, B, and C. Class A are the common shares that are publicly traded.
spk04: Equity held by employees prior to our listing were converted into Class B shares.
spk02: Equity held by our three founders were converted into Class C shares. There are 14,771,804 A shares outstanding, 10,566 B shares outstanding, and 68,140,188 C shares outstanding as of the quarter end balance sheet date. Lastly, I will reemphasize we believe our Q1 ending cash balance combined with the additional capital from the warrant exercises in April gives us a strong balance sheet with the resources to execute on our business plan in a prudent manner.
spk04: With that, operator, we are now ready for questions.
spk03: Thank you, Phil. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then 1, no. The first question we have is from Tujita Silva from Roth MKM. Please go ahead.
spk00: Hi, Steve, and hi, Eric. Congratulations on all the progress to date. So for IM1, are there any remaining pre-flight milestones? And it would be great to get an update on timing, expect timing for IM2. It seems like it's kind of come right on the heels of that.
spk01: Yeah, Suji, good afternoon. Yeah, we've made some significant progress, as I mentioned, in terms of our structural modal test, making sure that the structure is ready to go in the acoustic and vibration environment underneath the Falcon 9 fairing. And then we did the cryogenic loading test to demonstrate that we can load successfully when we get to the launch pad and then the the other significant test was the mission sequence test where we put the whole mission control team to work with the ground software interfacing with the flight avionics and the flight software to demonstrate that we could go from launch countdown in transit to the moon and then touchdown on the moon we are now Recovering the vehicle from the cryogenic testing and reconfiguring it for a final configuration getting ready to ship to the Cape we have some functional testing to do and we expect in the Mid to late Q3 to be actually at the launch pad and preparing for liftoff so that's a a little bit of a movement from initial expectations, and so we're currently assessing where Mission 2 will land in terms of the schedule or the calendar, but right now we're on track for that Q3 on Mission 1, and we'll come back to you with an assessment when we get it on the schedule for Missions 2 and 3, which are in the approximate time frame that we had originally scheduled.
spk00: Okay. Helpful color, Steve. And then questions on the OMS contract. Can you first talk about the the protest and just the base on which that protest is being lodged, just to understand it and your opinion there. And also for the $719 million, is that entirely attributable to Luna or is that shared with partners and what's the linearity expected there?
spk01: Okay. For the first question, the protest that occurs at Goddard Space Flight Center through the procurement is fairly frequent, unfortunately, in terms of vendors who apply and are unsatisfied with the outcome. We know from the statistics that less than 10% of those protests are actually overturned, so we have high confidence in our value offering to the government. I don't know the underpinnings of it. Our score was exceptional in the proposal, and we came out of it as a clear winner. So we're confident that once we get through this 100-day Protest period for the GAO that will will the award will stand on that as far as the makeup We are in a joint venture with KBR Intuitive machines is the majority partner at a 51 percent 49 percent split between the partner between the two machines and the partner Eric any commentary on the On the revenue breakdown?
spk02: Yeah, the revenue will be entirely attributable to intuitive machines. So the full $719 million will be attributable to intuitive machines.
spk00: Okay, I appreciate your clarification. And then the other question was on the linearity of that over the five years, whether it's fairly even. And I'll just tack on my last question and move on. The revenue guidance has a big range around it. If you can give us kind of what the high-end versus low-end delta, what some of the factors there would be. Thank you so much, Eric.
spk02: You bet. Yeah, so the revenue on OMS will be fairly linear after the program starts. And then in terms of the drivers, I tried to lay some out earlier, but, you know, the range is broad. We acknowledge that. There's no way around. We do have, you know, three to five significant events that shape the outcome for the year, both from a business and a financial standpoint, Suji. And that's just sort of where the numbers flow once you look at how those could pan out. And not all of them, but some of them are binary. And so that's just where we're at. What they are, it's the lunar landings. I mean, the biggest ones are gonna impact whether we come in on the high side or low side. The lunar landings, our ability to execute on ohms once the protest is over. and the winning in SNS as well, and then executing on that with the high end of the range, also contemplating us winning the LTV prime bid as well later in the year. Thanks. Appreciate you entertaining the questions, and congrats on a strong quarter out of the game.
spk05: Thank you.
spk03: Thank you. The next question we have is from Josh Sullivan from the Benchmark Company. Please go ahead.
spk05: Hey, good evening.
spk06: The expectation to end the year with $49 million, is that the midpoint of the revenue range?
spk04: Yes, correct. That's right.
spk06: And then maybe how should we think about cash burn cadence through the year?
spk02: Yeah, that's what I've always tried to tell our story in a way where I talked earlier about those incremental investments and how we've always been capital efficient. Obviously, you can kind of imply what our cash burn was in Q1, and you'll see it in the financial statements, obviously. But I say, you know, I specifically said, I think, what was it, the terminology we spent some time thinking about, we will manage operations to achieve this result. Some of the cash burn that's anticipated with that in the upside scenario are things we can throttle. if we end up coming down more towards the lower end of the range. And so that's why, regardless of where we come out in the revenue range, I feel good about our ability to manage the business to that cash result, which I think is a great feature of the business and something I personally, I think we as a group, have tried very hard to set ourselves up for is we don't go spend the money until we have it. So we always keep ourselves in a well-capitalized position prudent position. And we can always continue to go after government contracts, as we have in the past, to help self-fund a lot of the development costs. And then as we have the capital, which we do now, accelerate those to use that to put ourselves farther ahead of the competition. So that's how I think about sort of the cash and how we're going to manage ourselves in a to regulate the cash burn in accordance with the volume.
spk06: And then just given the wins, including ohms, how are you tracking against your contract win rate assumptions just relative to some of the longer-term financial outlooks that you provided?
spk02: I think, you know, we had about a 50% win rate in Q1. And, you know, as I said before, our – in the analyst day before we went public and stuff, sort of we had a very gross level. We had a 40% win rate sort of baked into the financials previously. So that should give you an idea.
spk05: Great. Thank you for the time. Yep. Thank you.
spk03: Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then one now. The next question we have is from Austin Mona from Canaccord. Please go ahead.
spk05: Hi. Good afternoon, Steve and Eric.
spk07: Good afternoon, Austin. Just my first question here. If we look at the lunar data services business, what are your thoughts on the competition from Lockheed Martin's Parsec relay constellation in lunar orbit? especially considering that you're the first mover advantage and your satellites will be there first.
spk01: Yeah, thank you for that. What's interesting here is that there's multiple players interested in cislunar space and so that is great in terms of total available market and seeing this nascent market take hold. What's fantastic is that you point out that we have already contracted for the first two data relay satellites, which are scheduled to fly on Mission 2 and Mission 3. They'll be deployed by the end of this year and early next, hopefully. And also we have the ground communications network for direct-to-Earth communications with the spacecraft. And so we have considerable traction in establishing that communication network from Earth and also data relay around the moon, which... gets us there a year or two ahead of any of the competition. So it's interesting and flattering to be copied or imitated, but it's clear that there's a sense that there's an emerging market here and proud to be at the forefront of that. So we'll continue to invest in lunar communication data relay satellites. position navigation and timing to make sure we maintain that lead ahead of our competition. And the near space network contract, we put a solid offering in there with our subcontract major sub in Raytheon to provide the solutions and the heft we might need for more enterprise class systems as we move into that 10 year contract. So we feel really good about our positioning here and fully expected competition in this NSNS 10-year procurement. You know, we expect about three awards there for data relay, and each one may be on the order of about a billion dollars. And so it's a rich target for some of the contractors to go after.
spk07: That's great. And just a follow-up question. How might cash generation and positive EBITDA on Q4 be impacted if either IM1 or IM2 continues to move to the right? And my understanding is that only 10% of the total revenues associated with both of those contracts are related to actual touchdown on the lunar regolith, right?
spk02: So your last statement is absolutely correct, Austin, in terms of how EBITDA will be affected. That depends on the rationale. If they move to the right, I would expect us to be incurring additional costs for the overall mission on the contract. So that would be a headwind to EBITDA. But if the move is as a result of a customer-directed request, then that would also come with a mod, which would increase the total contract price which would be either neutral or maybe positive, depending on how well we do on negotiations to EBITDA, with probably on cash, again, a move to the right would have a similar impact, right? If it's just cost growth from a move to the right on our side, that's going to have the corresponding headwind to cash. But if it's also associated with or at the direction of the customer's they would also then have additional payment milestones as part of that mod that should make it neutral or, again, maybe slightly positive depending on how the actual negotiations go. Does that help give color to that question?
spk05: Yeah, I think that clarifies everything, so thanks for the details there.
spk03: Thank you. There are no further questions at this moment. I would like to turn the floor back over to Intuitive Machines co-founder and CEO, Steve Altomus, for closing comments.
spk01: Well, thank you, everyone, for your interest in Intuitive Machines. Just as a reminder, Intuitive Machines will be speaking at these upcoming conferences and look forward to the opportunity to share news and updates. At the 2023 Cantor Tech Conference, June 14th and 15th, the Roth MKM 9th Annual London Conference in June 20 and 22nd, and the Jefferies Virtual Space Summit on June 27th. We look forward to speaking with all of you soon about the progress of Intuitive Machines' making towards a sustained human presence on the moon.
spk05: Have a good evening.
spk03: Thank you, sir. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.
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