Intuitive Machines, Inc.

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.

Thank you, Steve, and thanks to everyone joining us today.

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.