Sidus Space, Inc.

Good morning and welcome to the SIDUS Space 2022 Earnings Conference Call. I'll now like to turn the conference over to Carol Craig, Chief Executive Officer. Please go ahead. Thank you and good morning, everyone. As mentioned, my name is Carol Craig and I'm the Chief Executive Officer of SIDUS Space. Theresa Birchfield, our Chief Financial Officer, had a prior obligation and isn't able to join this call, but is happy to field questions at a later date. We are pleased to share this business update 2022 results, and our outlook for 2023, which we expect will be a momentous year for our company. During today's call, we may make certain forward-looking statements. These statements are based on current expectations and assumptions, and as a result, are subject to risks and uncertainties. Many factors could cause actual results to differ materially from the forward-looking statements made on this call. These factors include our ability to estimate operational expenses and liquidity needs, customer demand, supply chain delays, including launch providers, and extended sales cycles. For more information about these risks and uncertainties, please refer to the risk factors in the company's filings with the Securities and Exchange Commission, each of which can be found on our website, www.sideofspace.com. Listeners are cautioned not to put any 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. 2022 is a year focused on expansion of our capabilities and creation of a scalable offering to facilitate commercial space growth. After going public in December of 2021, we expanded our vertically integrated satellite manufacturing capability, solidified our go-to market strategy, expanded our sales team, and established partnerships both downstream and upstream. Building upon a strong foundation of aerospace, defense, and government manufacturing experience, our industry-leading capabilities combine state-of-the-art knowledge, equipment, and facilities to deliver the superior quality and performance required by our expanding global customer base. We boast a unique, one-of-a-kind blend of extensive industry knowledge and experience, along with modern disruptive innovations fueling our ability to participate in high-profile traditional space programs while also competing for business with new and emerging space economy opportunities. In addition to growing our management team and staff, we expanded our manufacturing capability through several space and defense contracts and contracted with SpaceX to ensure access to space in an ever-tightening launch market. We continued to grow our satellite customer pipeline and ended 2022 with over 400% growth in revenue and over 400% growth in gross profits year over year relative to 2021. Although our net loss increased primarily due to costs related to public company operations, underwriting expenses, and increased launch cadence, we expect to reduce our losses over the next year as we look to increase bookings now that we have secured launch capacity for our next nine satellites. The fundamentals to support this growth are tied to our multi-mission satellite constellation business line, which recently gained international momentum with an agreement awarded by the Netherlands organization to support the testing of a laser comm technology for their military. Similar to laying broadband cable to support the internet ecosystem, we are developing the first of its kind multi-mission constellation designed as a flexible space infrastructure to support the growing space economy. Our satellites are currently in production and our existing manufacturing capacity can accommodate building five satellites per month. Our path to profitability is based on our diverse plan for revenue growth while maintaining a lean company structure. Our business model is thoughtfully designed to provide a low-cost, flexible solution that takes advantage of the rapidly changing space technology landscape by accommodating multiple types of customer requirements with the least amount of assets possible. not simply to undercut and underprice our competitors, but to make space accessible to those that were shut out previously due to complexity or high cost. Our flexible space platform allows us to serve a broad base of customers looking for constellations of service, dedicated satellite manufacturing, or space-based data in a single constellation without the extra overhead and infrastructure needed for multiple lines of business. Our unit economics are realistic yet highly profitable. Our planned space-based data service has a raw cost of less than 25 cents per kilometer squared, and our space heritage vertical integration requires less capex while ensuring a high probability of success. Our space heritage manufacturing experience and existing facilities and infrastructure uniquely position us to expand our customer base and revenue related to remote sensing and Earth observation. An example of this is our agreement with the Netherlands. It's a tremendous value for the Netherlands, a great price, and a strong margin for us. given our low manufacturing costs and flight heritage experience. We believe there are many countries like the Netherlands that can benefit from access to satellite and space capability at a reasonable cost. We continue to expand our space and defense manufacturing business while looking ahead towards satellite-related revenue growth. Based on our sales pipeline, which includes domestic and international governments, we believe that business fundamentals remain strong as we continue to work towards achieving our long-term growth objectives. We have seen increased momentum related to revenue, backlog, and pipeline in all areas of our space as a service offerings, but more so related to our satellite services. Our vertically integrated approach with a focus on quality and reliability continues to be superior to our competitors and acts as a discriminator and accelerator to capturing commercial opportunities in the market. We look forward to reporting additional developments in the months to come as we strive to create long-term sustainable growth and shareholder value. Among our peers, we believe we have a unique combination of space manufacturing experience, operational quality, and low-cost structure. Our conservative approach to funding gives us the potential for a significantly higher market value than our public company peers, which positions us strategically in the existing space ecosystem and Earth observation data market to drive expansion. We believe Cite of Space is the only U.S.-founded, owned, and operated vertically integrated space-as-a-service company that providing spaceflight heritage hardware manufacturing and satellite manufacturing and operations for U.S. and international government and commercial customers, and we are prepared to lead the global markets into the space ecosystem. As mentioned, 2022 was a foundational year, and we accomplished many significant milestones and achievements. We signed a multiple launch agreement with SpaceX, reserving launch capacity for nine-sided satellites, nearly doubling the first MLA covering 2023 through 2025 launches. We achieved key certification and licensing milestones, including receiving a NOAA Tier 1 license, allowing Citus to provide global data services from its upcoming LISISAT-1 mission, and AS9100 REV-D certification, which enhances the current AS9100 certification manufacturing scope to include engineering. Other key production milestones were also met, including successful completion of the critical design review for LISTSAT's integrated system architecture of the satellite bus with payloads and sensors, along with the implementation of the mission control center and launch systems required for mission success. We partnered with Exospace, an innovative edge AI company, to leverage their FeatherEdge AI platform to provide near real-time intelligence derived from Earth observation data Processing will occur in space prior to transmitting data back to Earth, and will enable our constellation to learn to prioritize the retrieval of useful intelligence so we can deliver efficient, actionable insights for critical data-driven decisions. We entered into an agreement with Skywatch, an industry leader in space intelligence platforms, to provide end-to-end data management and distribution capabilities. We announced the successful teaming with Collins Aerospace on the 10-year exploration extravehicular activity services contract and began manufacturing hardware in support of the program. We demonstrated our significant flight heritage experience by contributing to the success of the historic November 2022 launch of Artemis I. Cytospace engineered and manufactured hardware for multiple stages and portions of the rocket, including the solid rocket boosters and core stage of Artemis, and also provided ground support for the rocket systems and facilities, mobile launcher, and Orion capsule. We expanded support to Teledyne Marine, a part of the New York Stock Exchange-listed Teledyne Technologies, with increasing scope of work and revenue tied to manufacturing components for Teledyne Marine's Massachusetts facility, in addition to its facilities in Texas and Florida. And we successfully supported Parsons Corporation, the prime contractor responsible for the DOD's small satellite integration efforts through the Launch Manifest Systems Integration Program with the U.S. Air Force, with fabrication of flight cables for Parsons Evolved Secondary Payload Adapter Ring for Tranche 1, a mesh network of 126 optically interconnected space vehicles that will provide a resilient, low latency, high volume data transport communication system and be ready for launch starting in September 2024. Building upon a strong foundation of aerospace defense and government manufacturing experience, our industry-leading capabilities combine state-of-the-art knowledge, equipment, and facilities to deliver the superior quality and successful performance required by our expanding base. Our manufacturing capability is core to the site-of-space offerings and continues to be a meaningful portion of our business. We have a robust track record of successfully supporting multiple major space programs, So developing and operating our own satellites to aggregate much-needed database solutions was a natural evolution. And it's our expectation that our track record of successfully evolving our business will continue. We are pleased with our expanded and new manufacturing relationships, as well as our progress toward launching LizzySat. Paired with securing multiple launches of SpaceX, we believe we can deliver on our future value proposition of providing space-based data to a multitude of industries. We have continued to grow our team, recently adding two more senior executives to our leadership team. Rich Kuby, Chief Production Officer, will oversee our expanding manufacturing business. Rich joined us after acting as VP and Director of Engineering for contracting firms where he was responsible for commercial and government contracts and oversaw the design and development of hardware, supporting multiple space launch providers, commercial and government agencies. Rich's extensive experience in manufacturing spans over four decades and includes 20-plus years as a senior manager overseeing hardware repair, build, and test in support of NASA's Space Shuttle Program. Prior to that, Rich owned and operated a manufacturing facility in Tampa, which followed a tour of duty in the United States Air Force. Eric Gilliamwater also recently joined us as Chief Commercial Officer. Eric most recently supported OneWeb, where he was the Vice President and Business Head, Global Carrier and Enterprise with responsibility for all aspects of global commercial strategy and operations across multiple verticals. His extensive commercial and international experience provides unique insights to further expand our offerings, while also propelling the expansion of Citus' data services revenue stream as we prepare for the launch of our multi-mission satellite constellation. The launch of the first satellite in our LISISAT constellation of smallsats is slated for this year through a multi-mission rideshare agreement with SpaceX. Our agreements with SpaceX and other partners will allow us to develop a consistent launch cadence moving forward to enable us to meet the robust demand for our services. LISI-SAT is a multi-mission satellite platform that supports a suite of custom sensors and customer needs, leveraging space flight proven communications, power, navigation, and computing subsystems to provide domestic and international customers with valuable data from low Earth orbit. Ultimately, we plan to launch a fleet of LISISAT satellites capable of hosting a range of sensors for a variety of customer missions and collecting space-based data from multiple industries. We are building a unique Earth observation infrastructure that reacts and grows with the space ecosystem. A key feature of our space infrastructure or satellite fleet is that it can evolve quickly with advancing technologies. Each satellite can service multiple industries with different types of data, including aggregation or fusion of the data from the various sensors and technologies. We expect to deliver the largest fleet of multipurpose satellites offering AIS data along with multi- and hyperspectral imagery fueled by edge AI capabilities. Nine satellites cover the Earth in just three weeks, unlocking significant opportunity in recurring subscription revenue. As we further develop our sales strategy, we're focused on many industries that see significant opportunity in weather, agriculture, environment and climate change, government and military, and maritime. And as we take additional steps to build our customer base in these areas, it's important to point out that the focus on data and recurring subscription revenue combined with the high margin, low cost data is expected to result in a faster path to profitability. Our low-cost satellites benefit from longer life, five-year lifespan design, and decreasing launch and on-orbit costs. So to recap our financial results, which are detailed in our Form 10-K filed with the Securities and Exchange Commission yesterday, I'm pleased to share the following. Revenue increased to $7.3 million for the year ended December 31, 2022, from $1.4 million in the comparable period of 2021, an increase of over 418%. The increase in non-related party revenue of 692% for the year ended December 31, 2022 to approximately 6.25 million was primarily driven by increased sales staff, which allowed for more aggressive pursuit of customers. During the year, the company has generated a gross profit of 20% as compared to negative 26% for the previous 2021 period. The increase in our gross margin of approximately 1.8 million or 492% for the year ended December 31, 2022 as compared to a gross profit loss of approximately $367,000 for the year ended in December 31, 2021, is primarily attributable to an increase in revenue, the mix of contracts, and an increase in our higher margin satellite as a service business line. The management of supply chain costs combined with a mix of manufacturing contracts and scaling of the higher margin satellite as a service business line resulted in our cost of goods sold increasing at a rate less than the increased in revenue, giving us a higher gross profit margin as compared to 2021. With multiple LISISAT satellites expected to be in LEO by 2026, we believe our state-of-the-art smallsat constellation will make data more accessible for everyone. LISISAT is a multi-mission satellite platform that supports a suite of custom sensors and customer needs, leveraging spaceflight-proven subsystems to provide domestic and international customers with valuable data from low-Earth orbits. Our fleet of LISISAT satellites will be capable of integrating a range of sensors for a variety of customer missions and collecting space-based data for multiple industries. Our team continues to fire on all cylinders as we scale up to meet growing demand while prioritizing progress toward profitability and creating long-term value for our shareholders. Thank you very much. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.