Terran Orbital Corporation

Thank you for your patience we are due to begin shortly. © transcript Emily Beynon Thank you. Hello all, thank you all for your patience and a warm welcome to the James Terrell Alton Law Second Quarter 2022 Earnings Call. My name is Louisa and I'll be your moderator for today. You will have an opportunity to ask the management team a question at the end of the presentation. Please press star followed by one on your telephone keypad if you wish to ask a question. And I have the pleasure of handing over to your host today, John Sigmund, Senior Vice President of Corporate Development. John, please go ahead.

Thank you, Louisa. Good morning, everyone. And thank you for joining Taron Orbital's second quarter 2022 earnings call. With me this morning are Mark Bell, co-founder, chairman, and chief executive officer of Terran Orbital Corporation, and Gary Hobart, chief financial officer of Terran Orbital Corporation. Mark will provide a business update and highlights for the quarter, and then Gary will review the quarterly results. Terran Orbital's executive team will then be available to answer your questions. During today's call, we may be making certain forward-looking statements. These statements are based on our current expectations and assumptions, and as a result, are subject to risks and uncertainties Many factors could cause actual events to differ materially from forward-looking statements made on this call. For more information about these risks and uncertainties, please refer to the company's filing for the Securities and Exchange Commission, each of which can be found on our website, www.terranorbital.com. Readers 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. 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 with the most comparable GAAP measures in our earnings press release. With that, I will turn it over to Mark.

Thank you, John, and good morning. And thank you to everyone for joining our second quarter 2022 earnings conference call. I am excited to share with you our results and operational highlights from the quarter as well as observations on the macro environment, and then look at the year ahead. Gary will provide more detail on our financial results, and then we're happy to take your questions. First, a quick introduction to those of you who are new to us. Terran Orbital has helped pioneer the space industry's small satellite revolution by delivering highly efficient satellite platforms to a broad mix of customers over the past decade. Our customers include NASA, Lockheed Martin, the Department of Defense, the intelligence community, and the European Space Agency, as well as numerous commercial customers. New technologies and the new economics of small satellites have revolutionized our industry. Terran Orbital delivers to its customers in months for millions of dollars solutions that used to take years and carry a price tag in the billions. Our satellites provide higher functionality, persistence, and faster product delivery at a lower price point. Terran Orbital is taking an industrial approach to building satellites at a massive scale. We serve an industry that the U.S. government forecasts will launch approximately 50,000 satellites over the next decade, creating an enormous opportunity for companies with advanced, scalable, vertically integrated satellite and design and production capabilities like us. Let's take a look at our accomplishments for the quarter. We are delighted with our team's performance this quarter and we are happy to report that our business is rapidly expanding. Here are a few highlights on our progress. First, we saw a significant increase in business momentum during the second quarter. Revenues rose 120% of the quarter compared with the prior year period, primarily due to the continued and increased level of progress made in satisfying our customer contracts, including the ongoing and favorable impact from significant contract wins and modifications in recent periods. We continue to increase our intellectual capital, and our headcount rose approximately 20% of the quarter to more than 400 people as of June 30th. And in June, representatives from Lockheed Martin and the Space Development Agency joined us for a tour of our new expanded state-of-the-art facilities in Irvine, California. We are thrilled that with our backlog, which is up 200% to the end of 2021 to $224 million, and our pipeline is comprised of more than 140 identified opportunities representing a value of approximately 16 billion of potential customer revenues as of June 30th, 2022. Second, Our manufacturing execution is on track and we are very proud of the performance of our growing team. We continue to develop and deliver satellites on schedule and operate exciting groundbreaking missions on behalf of our diverse mix of customers. Difficult supply chain conditions persist, but I'm proud of how our vertical integration strategy is proving its merits and we continue to make investments in infrastructure and equipment to expand production capacity and decrease our reliance on outside suppliers. Within the defense sector, we are pleased to have delivered in May the first of 10 satellite buses to Lockheed Martin in support of the Space Development Agency's Tronch Zero for the transport layer. The transport layer is the foundation layer for the national defense space architecture and a secure mesh communications network in space, which will enhance U.S. global defense capabilities. And Terran Orbital remains fully committed and expects to deliver the remaining nine satellites for tranche zero in 2022 and has already commenced work on the next 42 satellites for the SDA for tranche one. Our reliable execution on these tranches enhances our competitiveness for future awards and related to this critical defense constellation, which will consist of hundreds of satellites and low-Earth orbits, and we expect these to be replaced every five years. This showing how the change going from where there used to be geosynchronous satellites that would last 25 to 35 years now goes to satellites that last five to seven years, and our business becomes a recurring revenue business as the business model has changed. As previously announced, we subsequently won a contract to provide an additional 42 buses for Tranche 1, and we expect to begin delivering in 2023. Within civil government sector this quarter, we are also exceptionally proud to have delivered NASA's Capstone satellite to NASA in June as a critical part of the Artemis program to return humans to the moon. Since NASA's launch of Capstone on July 7th, Terran Orbital's mission operations team successfully established communications with the satellite and is now utilizing groundbreaking low-energy navigation technologies to guide the satellite as far as 1.5 million kilometers from Earth before returning it to a near-rectilinear halo orbit. which is basically an elliptical orbit around the moon. This very exciting mission not only verifies the dynamics of the orbit, but also proves Ternorbitals reliability and speed in delivering technological breaking satellite solutions for our customers. Additionally, within the civil and commercial sectors, we supported the launch of six customer satellites on a single SpaceX launch in Q2, all of which are successfully operating for a diverse mix of satisfied customers. The diverse missions of these satellites demonstrate the expanding end markets and use cases enabled by the technologies and economics of small satellites. Turning to the macro environment, small satellite demand remains positive. In the defense community, for example, we are seeing increased urgency in demand for space solutions in response to a variety of factors, including Russian and Chinese development of new military technologies and capabilities. We also saw the real-time utility of satellite imagery, coverage, and resilience in the midst of geopolitical crises demonstrated in Ukraine. In Congress, there continues to be broad bipartisan support for the National Defense Authorization Act, which has been passed every year since 1961, and it's one of the few programs to have such bipartisan support. In July, both houses advanced the bills, proposing a significant increase in the 2023 defense budget and prioritizing research and development for space programs. Two weeks ago, the Senate advanced the bill with a $63.6 billion increase in DOD spending versus fiscal year 2022, versus fiscal year 2021. The Senate a marked $2.2 billion for development of resilient space capabilities, including low earth orbiting satellite systems. Early in July, the House of Representatives provided an even bigger year increase in funding, including for tactically responsive space programs and a mandate to integrate commercial-based capabilities related to space situational awareness, imagery, and communication. Such solutions are right in Terran Orbital's warehouse, right wheelhouse. Outside of the U.S., other countries are responding similarly to military and environmental threats by increasing budgets for space systems and seeking to harmonize and integrate their space requirements with those of the United States. For example, both the UK and Australia have recently announced new military space investments and expanded cooperation with the United States. Finally, looking ahead, we expect the second half of this year to be very exciting. Firstly, we look forward to delivering the rest of Tron Zero. Second, we have over 20 programs in-house and we are ramping production capacity to execute on our backlog and future opportunities. We continue to be on track to open our new Irvine California production facility in the fall of 2022. We continue to vertically integrate our production in order to provide the highest value proposition to our customers. And finally, we continue to be excited about our pipeline and achieve engagement we have with our customers. We continue to see increasing customer demand for constellations and satellites. And this, as I said before, is the future of space, which is a recurring revenue business. In sum, our results from the quarter demonstrate the strong growth in our business, and I could not be prouder of our team's execution or validation of our market opportunity and business strategy. With that, I now turn it over to Gary for an overview of our financials for the quarter. Gary.