Rocket Lab Corporation

Hello, and welcome to the Rocket Lab second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Arjun Kapani, Senior Vice President, General Counsel, and Corporate Secretary. Thank you, sir. You may begin.

Thank you. Hello, everyone. We're glad to have you join us for today's conference call to discuss Rocket Lab's second quarter 2022 financial results. Our presenters are Rocket Lab founder and CEO Peter Beck and Chief Financial Officer Adam Spice. After our prepared comments, we will take questions. Before we begin the call, I'd like to remind you that our remarks may contain forward-looking statements that relate to the future performance of the company. And these statements are intended to qualify for the safe harbor protection from liability established by the Private Securities Litigation Reform Act. Any such statements are not guarantees of future performance and factors that could influence our results are highlighted in today's press release and others contained in our filings with the Securities and Exchange Commission. Such statements are based upon information available to the company as of the date hereof and are subject to change for future developments. Except as required by law, the company does not undertake any obligation to update these statements. Our remarks and press release today also contain non-GAAP financial measures within the meaning of Regulation G enacted by the SEC. Included in such release is a reconciliation of these non-GAAP financial measures to the comparable financial measures calculated in accordance with GAAP. Lastly, this call is also being webcast with a supporting presentation and a replay and a copy of the presentation will be available on our website for two weeks. And now let me turn the call over to Peter Beck, our founder and CEO.

Okay, thanks Arjun, and welcome everybody to today's review of Rocket Lab's Business Highlights and Financial Results for Q2 2022, presented by myself and our Chief Financial Officer, Adam Spike. So today's agenda, the presentation outlines our business accomplishments for the second quarter, and it also highlights further achievements we've made since the end of the quarter. Adam will then talk through our financial results for the second quarter and our financial outlook for Q3 2022. After that, we'll look forward to taking questions from the south side and then we'll finish today's call with a reminder of upcoming conferences we will be participating. So care compliments. So with that snapshot of where the company is today, let's look at the specific achievements for this year's second quarter. It was another strong quarter for the company with the successful launch of some really significant missions. as well as continued progress across our space systems business. We'll go into each of these achievements in more detail in the coming slides, but here's a quick snapshot. We launched three successful electron missions, more than all other small launch providers combined for their entire year. One of those missions was our most complex and high-performance mission to date, the capstone mission to the moon for NASA. We continue to see strong demand for electron launches and secured another multi-launch deal This deal will see us launch 15 spacecraft for commercial constellation operator Hawkeye 360. We carried out the first media capture of an electron booster with a helicopter, advancing our rocket reusability program. We also made significant progress towards the development of our neutron launch vehicle, breaking ground on our major production complex in Virginia. Turning our attention to space systems, we were also selected to build the solar panel array for NASA's GLIDE spacecraft. We also surpassed 50 missions with our MAX flight software, and we can commence construction at our Long Beach headquarters on the satellite constellation production line to support the manufacturing of 17 half-ton spacecraft buses for Global Star's constellation under a $143 million contract. So we go to the next slide. Three successful launches. So we had a great quarter for launches, successfully launching three missions. The missions included a mission to the moon for NASA, a dedicated launch for Earth Imaging Constellation Black Sky, and a rideshare mission for a range of US and UK companies. Across the quarter, Electron delivered 37 satellites to precise orbits. The quarter once again cemented Rocket Lab's position as a launch provider of choice for constellation operators, with satellites deployed for four commercial constellation companies. Three out of the four of these were returned customers for Electron. One of the missions in the second quarter was particularly significant, however. This was the Capstone mission to the moon for NASA. It was a monumental and historic mission for Rocket Lab and for NASA. So I'm going to spend a little bit more time going into some greater detail on this one. For those of you not familiar with Capstone, it's a satellite designed to test the near-rectilinear halo orbit around the moon. This orbit has never been flown before and is the same orbit NASA hopes to use for Gateway, a moon orbiting space station that astronauts will live and work in as part of the Artemis program. As an aside, through acquisition of Solero, Rocket Lab is also providing the solar module for the Gateway power and propulsion element. But back to Capstone. In a nutshell, Rocket Lab launched the first mission of NASA's Artemis program to return humans to the moon for the first time since 1970s. So this mission was significant and monumental for all humankind, not just for Rocket Lab, and a real testament to NASA's trust in Rocket Lab as a mission partner. Importantly, the mission was much more than just a launch for us. We provided a complete solution. Capstone was launched to an initial low Earth altitude, a low Earth orbit on Electron, and from there, our in-house designed and built lunar photon spacecraft powered by a hypercurry engine provided six days of in-space propulsion, maneuvering, and communications to Capstone. After a flawless launch on June 28, and after six days of 24-7 spacecraft operations and multiple complex orbit raises, we ignited Lunar Photon's hypercarrier engine for the final time on the 4th of July to set Capstone on a ballistic lunar trajectory. I'm immensely proud of the team for delivering flawlessly on this complex mission. initiating a new era of lunar exploration. NASA awarded the capstone contract to Rocket Lab in February 2020. So in a little over two years, we developed a new in-space propulsion system capable of reaching deep space destinations. We designed and built the highly capable Lunar Photon spacecraft, and we increased electron performance, enabling it to lift over 300 kg. It's generally to be considered an unreasonably short development time, But we do like to take on a challenge and deliver, and I'm happy to say we have done just that once again. Beyond developing and operating the launch vehicle and the spacecraft for this mission, we worked with space exploration engineering to develop a unique energy efficient trajectory to the moon. Unlike the Apollo missions in the 60s and 70s, which basically used an enormous rocket field with a massive amount of fuel to go direct to the moon, we took a different path. After Lunar Photon and Capstone, with Capstone integrated on the top, was launched to an initial low Earth orbit, we used the Lunar Photon spacecraft and its hypercarrier engine to carry several days of orbit-raising maneuvers, essentially igniting the engine periodically to raise the highest point in the orbit until we got far enough away from Earth to escape its gravity and set a course to the moon. This method is exciting because it proves that we can deliver interplanetary missions from a small rocket. making it faster and more affordable to go to places like the Moon, Mars and Venus. Destinations that used to cost billions or hundreds of millions of dollars and take decades to develop are now within reach for tens of millions of dollars in a matter of months. Having successfully deployed the Capstone spacecraft on a ballistic lunar trajectory, Lunar photon is continuing to tour the solar system and is currently around about 1.3 million kilometers away, 800,000 miles for a few very people from Earth. We've used this extended mission time to push the spacecraft to its limits, learning what we can about communications and propulsion systems to inform our up-and-coming missions to Mars and Venus using similar high-energy photons. As I mentioned, the Capstone mission was far more complex than just a standard electron launch. It was our first deep space mission. While we had successfully launched and operated two rocket lab designed and built photon spacecraft previously, this mission was the first flight of our high energy deep space variant of the photon spacecraft. It required the development of new in-space propulsion system in under two years. It was the first time we integrated max flight software into a rocket lab built spacecraft. As you'll remember, Max Flight Software is an off-the-shelf flight software solution developed by Advanced Space, a Colorado-based company we acquired late last year. The Capstone mission is also our first mission planning and executing lunar trajectories. This is a complex precision work that often takes years in planning. In addition to developing Capstone to a perfect trajectory for this mission, which was, of course, the primary goal, we have developed the team and the skills now to be able to deliver on other up-and-coming interplanetary missions, including Mars and Venus. We're very conscious of space sustainability, I think, as everybody knows, and not leaving large rocket stages in orbit with every launch is important to us, which is why we developed the launch system in such a way that Electron's second stage de-orbits within a matter of days. With this mission, we broke our own record. The second stage actually deorbited the same day as launch. It was the first time using the FR light radio, a satellite radio, which Rocket Labs has an exclusive license with John Hopkins University Applied Physics Laboratory to manufacture. And last but not least, the Catstone mission was our heaviest lift to date, with Electron carrying a whopping 320 kgs, or 705 pounds, This is almost triple the lift capacity demonstrated by any other small launch provider. So Rocket Lab satellites are now deep space proven. More than just delivering mission success for NASA, the mission means we have successfully flight proven our lunar photon deep space spacecraft platform. This positions us extremely well for future complex missions beyond LEO. And already we've received a significant amount of interest from new customers in terms of having us develop their mission concepts, design and build their spacecraft, launch it and operate it in orbit. Now onto another major achievement in the quarter. We signed a multi-launch deal with Hawkeye 360, a radio frequency geospatial analytics company. The company will see us deliver 15 satellites to low Earth orbit across three electron missions anticipated between late 2022 and 2024. This mission joins a growing list of vault launch agreements with commercial constellation operators, including those with Inspectors, Kines and Black Sky. Supporting our vertical integration strategy, Rocket Lab will also supply Hawkeye 360 with separation systems produced by Planetary Systems Corporation, Maryland-based hardware company we acquired in December 2021. Excitingly, the first of the three Hawkeye 360 missions has been scheduled to lift off from Launch Complex 2 in Virginia later this year. Scheduled to lift off in December, it will be the inaugural flight from LC2 and the third pad Rocket Lab will have launched from. The key reason we haven't launched from LC2 yet has been delays with NASA certifying the agency's autonomous flight termination unit software. But NASA officials have advised that they are on track to certify it in time for the December launch. In the second quarter, we also hit a significant milestone in our program to make electronic reusable. We successfully caught a returning first stage with a helicopter concerning the concept of operations for future aerial captures. This was a key moment in the program that brought us a step closer to recovering stages dry and refueling them. The next step from here is to not only catch a stage, but fly it all the way back to land under the helicopter. We expect to attempt this later this year, but in the meantime, you'll start to see more and more red striped electrons coming down the production line as we build recovery ready rockets into the standard production flow and process. While the Electron launch program continues to go from strength to strength, we're also making solid progress on the development of a new large launch vehicle, Neutron. In the second quarter, we broke ground on the Neutron production complex near Launch Complex 2 in Virginia. The 250,000 square foot complex will be home to Neutron's production and assembly and is located at just a few miles from where Neutron's pad will be located on the eastern shore. We won't go into too much detail on Neutron today, as we'll be sharing a more fulsome program update during our investor day on September 21st. On to the space system side of business now. I'm pleased to confirm that Rocket Lab has been selected to manufacture the solar array panel for the NASA GLIDE spacecraft. GLIDE is the first mission dedicated to surveying the changes in the exo-atmosphere, the outermost layer of the Earth's atmosphere, which is super important for all of us. The array will be manufactured at a production complex in Albuquerque, New Mexico, which is home to the world's largest production line for space solar cells. On to our space software. As of Q2 this year, Rocket Lab's MAX flight software has successfully flown on more than 50 missions. Developed by ASI, which was acquired by Rocket Lab in October 2021, MAX is an off-the-shelf spacecraft flight software used by leading aerospace prime contractors, the U.S. Air Force, the U.S. DOD organizations, NASA, and commercial spacecraft developers and constellation operators. Further supporting Rocket Lab's vertical integration strategy, MAX software has now been used in 12 spacecraft launched by Electron. In the first quarter of this year, Rocket Lab was awarded $143 million subcontracts by NDA to build 17 half-ton spacecraft buses for the Global Star Constellations. Rocket Lab is also manufacturing spacecraft for Vata Space Industries, Eta Space, and the University of California, Berkeley for a NASA Mars mission. In the second quarter, we quickly got construction work underway on the production facility for these spacecraft at our Long Beach headquarters. Construction is now substantially complete, and the facilities include a state-of-the-art 10,000-square-foot Class 100K cleanroom, This is a significant investment in Rocket Lab's future satellite manufacturing capability. Leveraging our vertical integration, the satellites will feature components and subsystems produced by Rocket Lab's recently acquired companies, including solar panels and structures from Solero, technology software from ASI, reaction wheels from Sinclair and Diplomater, and so on. So with that quick recap of some of our major accomplishments in the second quarter, let's delve into some of the additional achievements between the end of the quarter and now. So since the close of the quarter, we've launched another two successful missions, this time back-to-back launches for the National Reconnaissance Office. These missions took place just over three weeks apart. So we had prepared the launch vehicles and the pad to be able to support a turnaround in just 10 days. Ultimately, the NRO required some additional time to complete a software update on their payload. It was a change in the launch schedule that we could easily support, since Launch Complex 1 is a private launch range, so we didn't have to go around and work around any other launch provider's schedule. The missions were a flawless demonstration of responsive space in action, and I'll talk more about responsive space in some up-and-coming slides. With these two missions, Rocket Lab has now successfully launched four NRO missions on Electron, reliably serving the national security intelligence and intelligence community. Between the capstone launch at the end of Q2 and the first NRO mission at the start of Q3, we actually achieved a new record in launch turnaround time. After a successful mission to the moon for NASA, our team delivered a flawless national security launch in just 15 days later. As you can see, that's the fastest turnaround ever achieved by a small launch provider. Continuing the national security and defense theme, I'm pleased to confirm that since Q2, Rocket Lab was also selected by Lockheed Martin to supply solar power for the Space Force's new missile warning satellite. The deal continues Celera's long-term partnership with Lockheed Martin by powering the next generation of OPIR GEO satellite missile warning systems. And it further demonstrates our successful vertical integration strategy. Since the close of the last quarter, we also officially introduced our responsive space program. From day one, everything we've done has been designed to support responsive space, from manufacturing processes that use 3D printers to print an engine in 24 hours, to operating the first orbital launch site to developing our own modular spacecraft that can be quickly customized and integrated with customers' instruments. When we talk about responsive space, we're talking about the ability to rapidly replace or replenish new assets on orbit. This is a critical and growing need for government and commercial operators alike because the unavoidable truth is that satellites do fail. Whether they age out, experience technical failure, or are disabled through deliberate actions, all satellites are vulnerable. Through responsive launch on Electron, we can replace these assets in a matter of hours or days, not months or years. But we also know that launch is just one piece of that puzzle, which is why we can also have Rocket Lab designed and built satellites on the ground 24-7, awaiting the call to be integrated with the customer's payload and launched rapidly. This is a capability that is increasingly attractive to constellation operators, and we've already seen some customers look at building out their constellations with Rocket Lab spacecraft specifically to have this capability at the ready. While there's a lot of talk about responsive space, Rocket Lab is in the unique position of having the infrastructure, experience team, and proven technology in place to enable it today. This includes three launch pads across two hemispheres. Launch Complex 2 in Virginia was purpose-built with this capability in mind. Proven rockets, payload processing facilities, personnel, launch sites and ground stations capable of supporting 24-hour rapid call-up launch. The ability to receive, integrate, encapsulate and launch spacecraft within 24 hours. Proven spacecraft technology already operating in more than 1,700 satellites in orbit. Streamlined and integrated manufacturing capability to build rockets and spacecraft quickly. The ability to reach a wide range of orbits and meet a broader range of customer requirements. All of this is not necessarily new or a new Rocket Lab capability, but as I've discussed in this presentation and in recent media interviews, increasingly our launch cadence is driven by and in fact slowed down by customers' readiness. This program is about working closely with customers to understand their mission requirements early and get them in a state of readiness so that when the day comes, they can call us up and we'll have them on orbit in a matter of hours. And with that, I'll hand over to Adam to provide a review of the second quarter financial results.