Rocket Lab Corporation

Good afternoon, and thank you for attending today's Rocket Lab fourth quarter 2022 financial results update and conference call. My name is Donyell, and I will be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. It is now my pleasure to hand the conference over to our host, Colin Canfield. and head of investor relations. Colin, please proceed.

Hello, everyone. We're glad to have you join us for today's conference call to discuss Rocket Lab's fourth quarter full year 2022 financial results. 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 hardware 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 that are contained in our filings with the Security and Exchange Commission. Such statements are based upon information available to the company as of the day 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 may 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. This call is also being webcast with a supporting presentation. A replay and copy of the presentation will be available on our website. Our presenters today are Rocket Lab founder and chief executive officer Peter Beck and chief financial officer Adam Spice. After our prepared comments, we will take questions. And now let me turn the call over to Mr. Beck.

Thanks very much, Colin. So welcome, everybody, and thank you for joining us today. Today's presentation will go over our key business accomplishments for the year of 2022, as well as specific highlights from the fourth quarter. We'll also discuss further achievements we've made since the end of the quarter. Adam will then talk you through our financial results for the fourth quarter and full year and also cover the financial outlook for Q1 2023. After that, we'll take questions and finish today's call with the upcoming conferences we'll be attending. All right, on to what the company achieved in 2022. Starting with a quick recap of our launch activity for 2022, it was our busiest year of launches yet. We retained our position as the leading small launch vehicle globally, and once again, Electron held the title of second most frequently launched US rocket annually. Across nine Electron launches, we deployed more than 40 satellites to precise orbits for our customers, including commercial constellation operators NASA and the NRO and more. Across these launches, we had 100% mission success rate for the year, providing our customers with a reliable path to orbit. 2022 was also the year we successfully delivered the Capstone mission to the moon for NASA with a launch plus spacecraft solution using Electron and Photon. We completed two successful ocean recoveries of electrons per stage as part of our rocket reusability program. We conducted five successful missions for constellation operators. We put all three electron pads to use, including our first launch attempt out of LC2 in Virginia in Q4, which was successfully launched in Q1 2023. And we also caught electron with a helicopter for the first time. More on each of these achievements later in the presentation. As mentioned in 2022, we reached our highest annual launch cadence with nine missions, ensuring that Electron remains the global market leader in small launch. With 100% mission success in 2022, Electron is the most reliable dedicated small launch vehicle globally. As of 31st December 2022, we've completed 32 Electron missions and deployed 152 satellites. I'm pleased to say that both those numbers have already increased thanks to another successful mission in Q1 23. 2022 was also the year that Electron sent a mission beyond Earth orbit and for the first time successfully deploying the capstone mission to the moon for NASA. This mission was far from just a standard Electron launch. It was a highly complex mission that showcased a strength as an end-to-end space company, not just a launch provider. In addition to providing the launch for Electron, on Electron, our team developed and built and operated the Lunar Photon, a highly capable interplanetary spacecraft that set Capstone on a course to the moon. And the team developed a highly efficient lunar trajectory to enable such a small rocket to transport a payload into land orbit. Rocket Lab is the only small launch provider to have designed, built, launched, and operated its own satellites in orbit, further expanding our total addressable market. The Capstone mission was the first launch of NASA's Artemis program to return humans to the moon, and we're immensely proud to have enabled this crucial first step. Just 15 days after launching Capstone, most complex mission to date, the team turned around the next launch, which was a dedicated national security mission for the NRO. This rapid launch turnaround not only set a Rocket Lab record, but is by far the fastest turnaround between successful launches for any other small launch provider. Overall in 2022, we averaged a launch approximately every 40 days compared with a launch nearly every 60 days in 2021. And from April to November last year, we successfully hit a launch every month. So far, I've touched on some of the key launch achievements for 2022, but it was also a significant year of growth for our space systems arm of the business. More than 200 spacecraft were launched in 2022 featuring Rocket Lab space systems products, including reaction wheels, star trackers, radios, solar power, flight software, separation systems, and more. Rocket Lab technology was featured in one form or another on 30% of globally addressable launches in 2022, demonstrating the success of our strategy to extract value from the full space chain, not just from our own launches. We delivered space systems products to more than 60 customers globally, spanning commercial and government sectors. In 2022, we built a new space system production lines, including one to support high volume reaction wheel production to serve mega constellation customers. and a new satellite manufacturing facility at our Long Beach headquarters. 2022 was the year that really cemented Rocket Lab's position as a leading spacecraft manufacturer. We had more than 25 spacecraft in development for various customers, including a NASA mission to Mars, a communications constellation for global staff, in-space manufacturing satellites, and orbit fueling devices. To achieve this, we've scaled our space systems team, expanded our manufacturing and development facilities, and of course, integrated our four space system acquisitions into our spacecraft programs. And finally, before we wrap up the four-year highlights and dive into the fourth quarter in more detail, in 2022, we saw backlog more than double from 241 million at the end of 21 to more than 500 million at the end of Q4 2022. The growth driven by a healthy mix of launch and space systems bookings. So with that, let's move on to the key accomplishments of 2022's fourth quarter in more detail. The final quarter of 2022 saw us successfully launch two Electron missions, delivering satellites to orbit for the Swedish National Space Agency and General Atomics. We were also honored to be selected by NASA to launch two dedicated Electron missions to deliver the Tropics mission to orbit to monitor hurricanes and tropical storms. In Q4, we also received the required licenses and approvals for a first mission from Launch Complex 2 in Virginia. It was a long road to bring LC2 into operation, but with those approvals in place, at the end of the year, we were able to launch the first electron mission from U.S. soil early 2023. To top that off, we also introduced Rocket Lab National Security, a new subsidiary to deliver reliable launch services and space systems capabilities to U.S. government and its allies. We found our largest order of satellite separation systems in the company's history, totaling $14 million in hardware to serve the Space Development Agency's Tranche 1 transport layer. It was also the quarter that Capstone reached lunar orbit, signalling final mission success for the NASA mission more than five months after the successful launch on Electron. We also got testing underway at the NASA Stennis Space Center for Archimedes engine hardware and completed construction of the new satellite production line and clean room at our Long Beach headquarters. Okay, let's start off with the key achievements in Q4 for Electron. We rounded out 2022 with two successful Electron launches in Q4. Both missions were from Launch Complex 1 and saw our total launch tally for the year reach nine successful missions. As mentioned, this is a significant increase in launch cadence from six missions in 21. And we look forward to continuing to increase that cadence in 23. Electron is already a trusted launch provider to NASA, having successfully delivered missions to low Earth orbit and to the moon for the agency previously. So once again, we're honored when NASA entrusted Electron to deploy the remaining spacecraft in the tropics constellation across two dedicated missions. This is a constellation close to our hearts because it aims to enable scientists to study hurricanes, tropical storms, and ultimately leading to improved modeling and prediction to help save lives and livelihoods in the path of storms. These missions are scheduled to launch no earlier than May this year, and we look forward to sharing more about them in the lead up to launch. In November, during our final mission for 2022, we conducted another successful splashdown and ocean recovery of Electron's first stage as part of our rocket reusability program. We had initially planned to attempt a helicopter catch for this mission, but not all the requirements were met to ensure a successful capture due to a brief telemetry loss with Electron's first stage during atmospheric reentry. This turned out to be quite a happy turn of events, as it gave us another chance to bring back a stage that had been for swim. You never want to waste an opportunity. Our team put the return stage and components through analysis and testing, and we started to see a bit of a pattern here that we hadn't initially expected. Electron survives an ocean recovery in remarkably good condition, and in a lot of cases, its components actually pass a requalification for flight. In one of our upcoming flights, we're going to attempt another ocean recovery, this time with a few additional waterproofing modifications to the stage to protect some of the key areas and the bits we want to keep dry. Pending this outcome of testing and analysis of the stage, the mission may move us towards sticking with marine recovery altogether and introduce significant savings to the whole operation. In 2022, we proved that it was possible to rendezvous with a returning stage mid-air and get it on the helicopter hook. But if we can save ourselves the extra step by just plucking out of the water, we will. Without the helicopter, if we're able to, to determine that ocean recovery is the most viable and effective path for recovery, this opens up even more flexibility with our launch windows and takes us from around 50% of electron missions being suitable for recovery to anywhere between 60 and 70. We look forward to sharing the developments of this following our next recovery mission in the coming months. Moving on to Neutron achievements for the fourth quarter of 2022. In Q4, we officially opened the Archimedes test complex at NASA's Stennis Space Center in Mississippi. The site will be home to engine testing for Neutron's Archimedes engine, and the team made fire at the site for the first time before the end of the year with the commencement of a pre-burner igniter testing. Q4 saw some major movements at NASA Wallops Flight Facility for Neutron. including the completion of their first Neutron development building, which will be home to some stage assembly and integration activity. The team also started moving dirt at the side of Neutron's launch pad, with construction moving into full swing now that we're in the new year. We also started to see some really exciting hardware developments in Q4, with carbon composite structures for Neutron's first stage and second stages in production. As you can see here, we're working on a much bigger scale than Electron, but we've been able to take that deep composite experience we've developed with Electron and use that knowledge to rapidly streamline Neutron's development. We're designing Neutron to be the world's first carbon composite large launch vehicle with the lightest and highest performance upper stage in history. And when I say light, I mean really light. The vehicle's full tank combined, that you see in the image, two of those halves together weighs about the same as a Harley-Davidson motorbike, some 380 kgs, so incredibly high performance. Rupert Clayton, Moving on to from launched into space systems in the final quarter of 2022 we had some great milestones with faith systems, including Kevin rocket lab hardware on 30% of. Rupert Clayton, All globally addressable launches in the quarter alone more than 90 spacecraft launch to orbit featuring rocket labs space systems technology. Rupert Clayton, One of the most exciting of those was the atom is one launch of NASA sls rocket in November. That mission featured Rocket Lab solar arrays, satellite dispensers, and software, helping support NASA's goal of returning humans to the surface of the moon. In Q4, we were selected to develop the Satellite Operations Control Center, or SOC, for GlobalSTAR's growing low-Earth orbit constellation. The SOC contract builds on the existing relationship between NDA, Rocket Lab, and GlobalSTAR, established in February 2022, when Rocket Lab was awarded a $143 million contract to design and manufacture 17 spacecraft buses for Global Star's new constellation of satellites. These new satellites and SOC will augment Global Star's existing constellation, delivering reliable mobile satellite voice and data services from space. The SOC will provide 24-7 monitoring and management of Global Star's constellation, including continuous satellite control and monitoring using Rocket Lab's MAX ground data system satellite orbit determination, maneuver planning, collision avoidance, orbit maintenance, and propellant management. By designing and manufacturing global spacecraft buses, delivering the flight and ground software solution, and developing and supporting the spacecraft operation center, we're once again executing on our strategy of going beyond launch to deliver complete space mission solutions. And finally, in Q4, our solar team in Albuquerque, New Mexico, delivered the final solar panels for the NASA Gateway Power and Propulsion Element. These solar panels will enable NASA's Gateway Lunar Space Station to be the most powerful electric propulsion spacecraft ever flown, and they're a critical part of returning humanity to the moon. That wraps up Q4 2022, but we've been busy since then, so let's take a quick look at some of the company's key accomplishments so far in Q1 2023. Electron took to the Virginia skies for the very first time in January 23, marking the beginning of Rocket Lab launches from the US. It was a successful mission that delivered three satellites for commercial constellation operator Hawkeye 360. This was a significant moment for us and for the small satellite industry, is the new launch new us launch pad represents even more flexibility and responsive launch capabilities for small satellite operators all three rocket lab launch pads across two hemispheres are now operational and we look forward to many launches from them all with that first lc2 mission successfully launched we're on to the next in fact right now there are Rockets had both Launch Complex 1 and Launch Complex 2 preparing for a launch within a mere few days of each other. From Launch Complex 1 in New Zealand, we're preparing to launch two satellites for Black Sky Global and what will be our sixth mission for the Constellation Company. Meanwhile, at Launch Complex 2 in Virginia, the team is preparing to launch a mission for Capella Space, a cycle installation operator that we previously launched in 2020. Both missions are currently scheduled to launch in March, with launch windows to be finalized in the coming days based on final customer requirements and range status. And while we have one rocket in the pad for Capella Space, we've just signed a multi-launch contract with them to launch another four dedicated Electron missions through 2023. These missions are on the top of our second launch for then coming up in March, so five launches to look forward to this year altogether. We're honoured that they've entrusted us with five missions in 2023 to help build their growing cell constellation. The latest multi-launch deal with Capella Space further cements our leadership position as the trusted small launch provider of choice for constellation operators. We've now launched and signed deals with some of the most prominent constellations and operators globally, demonstrating the value that Electron provides to these customers by offering reliable and flexible launch to tailored orbits. Onto our space systems, and we've started the quarter strong by releasing two new space systems products, a new satellite radio and reaction wheel specifically designed for Constellation-class spacecraft. These products bolster our existing heritage in space system components and provide an entry point to new programs and mission profiles. This quarter, we also formally established a new subsidiary, Rocket Lab Australia, to explore opportunities to support the expansion of Australia's national space capabilities. The Australian government has set a goal to triple the size of the Australian space sector from an estimated $4 billion Australian in 2016 to $12 billion by 2030. To help facilitate this growth, the Australian government has committed more than $2 billion to the civil space sector since 2018 for programs spanning earth observation, satellite infrastructure, high-tech manufacturing and support of NASA's Artemis program. The Australian government has also committed $17 billion above and beyond the civil space investment for the development of defence space capabilities. Rocket Lab has already played a key role in supporting Australia's rapid growth in space through supplying launch and space system products to Australian organisations. By building on our deep expertise and proven heritage in the space sector, we're well positioned to advance Australia's capabilities in space. We have people on the ground already and we look forward to exploring opportunities where they make strategic sense for us as a business and where we can truly strengthen Australia's position as a global space sector. On the neutron front this quarter, we've made investments and progress into establishing manufacturing infrastructure that will support scale production of neutron. This includes composite tank moulds for stage one and two, as well as the installation of large 3D printers and milling machines to enable rapid production of the Archimedes engine. Q1 2023 brought welcome news in the form of a new acquisition strategy for the National Space Security Launch. This is the Space Force's program to launch the nation's most critical and valuable government assets. Under NSSL Phase 3, RFP, which was released earlier this month, new entrant launch vehicles qualify to bid for launches. Neutron is designed with NSSL launches in mind, and we look forward to making Neutron available to meet the national security needs. You know, this wasn't a chance of good luck for us. We actively engaged NSSL on this to introduce this change on the back of our strong relationship with them. The first vote of confidence in Neutron came back in September 2021 when we won a $24 million contract for the development contract for Neutron's upper stage through the Space Forces Assistance Command of Launch Enterprise, which falls under the NSSL program. The contract recognized Neutron's design to maximize mass to orbit capability, orbital insertion accuracy, and responsive dedicated launch for the U.S. government. All key requirements for the highest priority missions awarded through the NSSL. And I'm pleased to see this further strengthening of our relationship with this new path opened up. And finally, before I hand over to Adam for the financial highlights, I'd like to share that David Cohen is wrapping up his time on Rocket Lab's Board of Directors. David is a partner at Bessemer Venture. Our partner is one of our earliest investors and he joined Rocket Lab's board in 2014. Since then, we've been grateful for his leadership and guidance as we grew Rocket Lab from a small startup to a publicly listed company. He was a leading small launch provider and now Global Space Systems firm. I'd like to personally thank David for his support and efforts at Rocket Lab over the past nine years and wish him the very best for this continued work in deep tech. And with that, I'll hand over to Adam to discuss the financial highlights.