Momentus Inc.

Good afternoon. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the Momentous Incorporated third quarter 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad. If you would like to withdraw your question, again, press star 1 on your telephone keypad. Thank you. Mr. Daryl Genovese, Vice President and Investor Relations, you may begin your conference.

Thank you, Abby. Hello, everyone. Welcome to Momentus' third quarter 2022 earnings conference call. With me here today are John Rude, Chief Executive Officer of the company and Chairman of its Board of Directors, as well as Jikon Kim, Chief Financial Officer. Each will provide prepared remarks. Following these prepared remarks, we will take questions from analysts. In the interest of time, we would ask that you limit yourself to one question and one brief follow-up. Earlier today, we issued a press release and made a slide presentation available on our Investor Relations website, which provides an overview of our business and financial highlights for the quarter. You can download a copy of the release and presentation slides at investors.momentus.space. During today's call, we will make certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934. Forward-looking statements are predictions, projections, and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this communication. You should listen to today's call with the understanding that our actual results may be materially different from the plans, intentions, and expectations disclosed in the forward-looking statements we make. For more information about factors that may cause actual results to materially differ from forward-looking statements, please refer to the earnings press release we issued today, as well as the company's filings with the Securities and Exchange Commission. Readers are cautioned not to put undue reliance on forward-looking statements, and the company specifically disclaims any obligation to update the forward-looking statements that may be discussed during this call. Please also note that we will refer to certain non-GAAP financial information on today's call. You can find reconciliations of the non-GAAP financial measures to the most comparable GAAP measures in our earnings press release. None of these non-GAAP financial measures is a substitute for or superior to measures of financial performance prepared in accordance with GAAP. With that, I'd like to turn the call over to our Chairman and Chief Executive Officer, John Rood. Thank you, Daryl.

I'm delighted to talk to you about the progress we made during the third quarter and our plans for the future. I'll provide some comments on our activities during the third quarter and the subsequent period leading up to today's conference call, and then I'll spend some time discussing our plans for the remainder of the year in 2023. After I make my comments, our CFO, Jikon Kim, will take you through the Q3 financial highlights and our financial outlook. So turning to slide three, I'd like to reflect on the substantial progress that Momentus has made over the past 15 months since our de-SPAC and emergence as a public company listed on the NASDAQ exchange. As a result of hard work and determination, we're a much stronger company today than we were back then. We've strengthened engineering and operations capabilities. We put in place a truly impressive group of leaders from our technology development, engineering, program management, manufacturing and operations, and supply chain operations composed of industry veterans with decades of experience at companies that are leaders in the space and aerospace industries. We've also recruited outstanding talent below the top of the organization chart down to the individual contributor in our engineering ranks. We streamlined our engineering and development organizational structure to support more rapid development of our spacecraft with greater rigor. We've made substantial progress putting in place more mature, documented engineering processes to develop, assemble, and test our spacecraft and its components, including resolving issues in a disciplined, and repeatable manner. The results of the improvements that we've made are evident as we compare our current experience with the next spacecraft that we plan to fly called Vigoride 5 to our recent past experience with the last spacecraft that we launched called Vigoride 3. I'll speak to the specifics of our Vigoride 5 ground test program in just a minute, but I can summarize by saying we encountered far fewer issues during the assembly and testing of Vigoride 5 than we did during the production of Vigoride III, and we're resolving the issues that we do encounter faster. We've increased our confidence in the reliability of the Vigoride Orbital Service Vehicle. We learned a lot during the first Vigoride mission in May, both from things that went as expected and from areas that didn't operate as planned. While the environment in space is harsh and unforgiving, and operating there is notoriously difficult, Based on lessons learned from our first mission, enhancements made to our integration and testing processes, and improvements made to the vehicle itself, we have higher confidence going into our second mission than we had ahead of our first mission. We are pleased with how customer interest has been trending since our first mission. We're currently negotiating contracts for follow-on missions with two of the customers who flew satellites with us on our first mission in May, and want to establish long-term relationships with them. We've also received interest from new customers since that first mission just a few months ago, where we're negotiating contracts as well. As I mentioned on our last earnings call, Momentus has begun bidding on contracts with the U.S. government departments and agencies, which wasn't realistic until we put our historical regulatory difficulties behind us. We reached baseline compliance with our national security agreement this spring and received all necessary licenses and regulatory approvals to fly to space, which we did for the first time in May of 2022. Going forward, our licensing processes should be more streamlined compared to our first mission. Momentus will no longer need to apply for a separate FAA payload determination before it can fly to space. Momentus also will not need to reapply for NOAA licenses unless we make changes to Vigoride's cameras or planned operations for several more flights, which we don't currently intend to do. The only application that we needed to submit for our next flight was to the FCC for radio spectrum licensing. The simplicity of our regulatory process relative to last time is a reminder of the progress we've made improving the company's relationship with the U.S. government. It took an enormous amount of effort to get here, and so we're glad to have put our historical regulatory difficulties behind us so we can focus on developing our technology. We've improved our IT systems, tools, and processes for better cybersecurity and a better user experience that should improve workforce productivity. We've also improved our finance and accounting tools and processes. With these improvements and more like them, We believe that Momentus is now a sturdier, sounder company than it was at the time of our de-SPAC, and we think the improvements we're making should boost investor confidence over time. To become the stronger space infrastructure company that we are today, we first had to take a focused approach to creating disciplined processes within Momentus as we went from a startup to a public company in a short period of time. Turning to slide four, I'll now discuss operational highlights from the quarter. We conducted our inaugural mission on May 25th, utilizing two ports on SpaceX's Transporter 5 mission that used a Falcon 9 launch vehicle. On one of these two ports, we flew our Vigoride 3 orbital service vehicle, which you can see in the picture just prior to its separation from the launch vehicle. On the second port, we flew a third-party deployer system from a partner. Recall that at the end of the second quarter, Momentus had deployed three customer satellites, including two from Vigoride 3 and one satellite from the third-party system. During the third quarter, we deployed five more customer satellites from Vigoride 3 and recognized a small amount of revenue related to these deployments. Vigoride 3 has now deployed seven of the nine customer satellites it carried to space. When combined with the one satellite deployed from the third-party system, Momentus has now deployed a total of eight customer satellites so far. The Vigoride 3 mission is still underway. While we continue efforts to deploy the last two satellites of nine that were on board, but we're realistic about the prospects given the low power situation on Vigoride 3. As I stated on previous conference calls, while we carried some customer satellites to space, a primary objective of our inaugural demonstration mission was to test Vigoride on orbit. learn as much as possible from any issues encountered, and incorporate lessons learned into future Vigoride vehicles. Turning to slide five, our engineers and technicians have been busy applying lessons learned from Vigoride 3 to our next generation Vigoride 5 vehicle in preparation for our planned second launch in a little over a month. For instance, during the third quarter, the Momentus team worked closely with the producer of our solar arrays to conduct an expanded testing campaign on the array that will power Vigoride 5. Recall that during our inaugural demonstration mission in May, Vigoride 3's deployable solar arrays did not operate as intended and that we quickly identified a mechanical issue with a hold down bracket and connector pin as the root cause of the anomaly. The enhanced test campaign that the team conducted during the third quarter was aimed at avoiding similar issues in the future. In a minute, we'll play a video of the simulated zero-gravity solar array deployment testing that the team conducted this quarter. In addition to the solar array issue, we've also identified the root causes of the other issues experienced during our inaugural mission, and we have made changes to address these issues ahead of our next mission. Vigoride 5 is a next generation vehicle from our Block 2.2 configuration, while Vigoride 3 was part of the prior Block 2.0 configuration. The Block 2.2 configuration was designed to be much more capable compared to Block 2.0 and includes improvements such as a modular payload bay that allows us to swap customer payload capability for additional propellant to enable longer duration missions, a more efficient structural design and enhanced payload hosting capabilities, and our next generation Microwave Electrothermal Thruster, or MET, which is designed to be more capable than its predecessor that flew on Vigoride III. The latest generation MET, or Microwave Electrothermal Thruster, has been through a substantial ground test campaign. For example, in October, we completed a ground hot fire test of the next generation MET propulsion module that will fly on Vigoride V. On the right side of this chart is a photograph of the MET firing during this test. We're looking forward to testing the MET in space. While we have incorporated many upgrades into Vigoride Block 2.2, one thing that hasn't changed is that we continue to use water propellant, which makes our vehicles safer and more environmentally friendly than competitors that use volatile and hazardous chemical propellants. During the third quarter, we also completed ground vibration testing of the full Vigoride 5 vehicle, which simulated the environment that it will encounter on the SpaceX Falcon 9 launch vehicle. Then, a couple weeks ago, we completed thermal vacuum testing, which simulates the environment in space, and concluded our robust Vigoride 5 environmental testing campaign. Customer satellites have been integrated onto VigRide 5, and we conducted our flight readiness review about a week ago. Overall, I'm pleased to report we are on track for our next VigRide launch on the SpaceX Transporter 6 mission targeted for December. We plan to ship the vehicle to its launch site in Cape Canaveral, Florida in the coming days. We're excited to see VigRide 5 travel to space next month and are eager for the opportunity to test its performance on orbit. Turning to slide six, here's a quick video of the simulated zero-gravity solar array deployment testing that the MOMENTUS team conducted this quarter in partnership with our solar array vendor. It's quite difficult to simulate a zero-gravity environment here on Earth and requires specialized test equipment to carefully adjust for gravitational forces. Since we experienced issues with deployment of the solar arrays in May on our initial VIGRAD mission, We added an enhanced test campaign for follow-on missions and installed new, sophisticated test equipment at our headquarters in Silicon Valley in collaboration with our solar array vendor. In the video taken in the clean room of Momentus headquarters, you can see the solar array that will fly on our next mission attached to the Vigoride 5 spacecraft. In collaboration with our vendor, we used the new test apparatus to successfully perform this test with the aim of ensuring that the issue that we experienced on Vigoride 3 with the hold-down mechanism does not repeat on Vigoride 5. During the test, you can see that the array opens cleanly. This is one of several additional tests that we added to our enhanced ground test campaign for Vigoride 5, which increases our confidence that the solar array will function properly on orbit. Under the principle of testing like you fly, we conducted this test with the Vigoride vehicle and solar array that will be launched on our next mission. I would also point out that Vigoride 5 and subsequent vehicles in our Block 2.2 configuration incorporate a different hold down mechanism than was used on Vigoride 3. So the part that was primarily responsible for the low power situation on Vigoride 3 is not part of our future plans.