Terran Orbital Corporation

You can ask a question by pressing star or by 1 on a telephone keypad. Thank you for your patience. I muted this mic, right? Ladies and gentlemen, welcome to the Terran Orbital Q2 2023 earnings call. My name is Glenn and I'll be the operator of today's call. If you'd like to ask a question during the presentation, you may do so by pressing star 1 or tap on keypad. I will now hand you over to your host, Jonathan Sigmund, Senior Vice President of Corporate Development, to begin. Jonathan?

And thank you for joining Terran Orbital's second quarter 2023 earnings. 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 past quarter, and Gary will review the quarterly results, and Mark will finish with closing remarks. Terran Orbital's executive team will then be available to answer your questions. During today's call, we may make Ford certain looking statements. These statements are based on our current expectations and assumptions and, as a result, are subject to risk 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 filings with 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 a reconciliation 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.

Great. Thank you, John. And thank you to everyone for joining our second quarter 2023 earnings call. Let's start with an update on our largest program, the $2.4 billion contract with Rivada Space Networks. I am pleased to report we are steadily ramping up the program. Our team is currently executing on the design phase of the program, which represents $460 million of the $2.4 billion contract. This portion of the contract kicked off in earnest in July, with our successful completion of the first milestone, the System Requirements Review. The System Requirements Review defines the design and system requirements for the space and ground elements. The next significant milestone, the Preliminary Design Review, or PDR, is planned for the fourth quarter. In regards to payments from Rivada, Rivada remains current on all payments to Terran Orbital. Material milestone payments are expected in the second half of this year as the design phase of the program continues to ramp up. In addition to payments related to preparing and delivering the PDR, payments are expected for the sourcing of long lead materials and critical vendors. Overall, we are anticipating invoicing and collecting approximately $180 million from Revata in the second half of 2023. Please note that our June cash balance and receivables do not include material amounts from the Revata program as more meaningful activity only started in July. I would also like to publicly congratulate Revata on the successful conclusion of their previously announced regulatory process. Last month, as expected, Revata Space Network announced that the ITU's Radio Regulations Board approved their waiver request which was a major regulatory milestone. I am excited with our increased backlog year to date. As of June 30th, our backlog is $2.6 billion, representing orders for over 370 satellites, including the 300-satellite order from Rivada, which we believe is the single largest commercial constellation award ever, and the company's third largest award ever, a previously announced $87 million 16-satellite order with a new customer we signed in May. Additionally, we received a contract extension from our fourth largest active space program, a confidential mission in the national security space. For this program, we're not just supplying the satellite bus, but also integrating our own internally developed payload. Our combined awards with the current total order book to over 30 programs. We estimate that approximately 80% of our $2.6 billion backlog will be converted to revenue by the end of 2025. We believe this increase in backlog will drive revenue growth this year and beyond. Operationally, we are also delivering on our commitments to our customers. We demonstrated this with our successful on-time delivery last year of our 10 transport layer Tronch Zero satellite buses to our partner Lockheed Martin for the Space Development Agency. We look forward to the expected launch of the completed Tronch Zero satellites in the coming weeks. In addition, we are on track to begin delivering the first batch of the SDA's transport layer Tranche 1 satellites in 2023. The balance of the 42 satellites will be delivered by the end of 2024, which will bring in approximately $65 million of additional cash. Additionally, I am pleased to announce that our Runner 1 satellite launched successfully on June 12th on a SpaceX Falcon 9 rocket from Vandenberg Air Force Base in California. This multipurpose remote sensing satellite, Terran Orbital's first microsatellite, was jointly developed with ImageSat International. We have successfully completed the spacecraft bus commissioning on July 31st. Our next upcoming step is payload commissioning. Congratulations to the ImageSat team for the great progress so far commissioning this newest satellite. As of June, our identified pipeline represents over $20 billion of opportunities. The expansion of our pipeline is due in part to increase in commercial engagements following the Revato Award announcement earlier this year. We are also harvesting benefits from our investments in broadened product offerings, expanded capacity, and strengthened business development team. To support our backlog and pipeline opportunities, we are continuing to increase production capacity with our continuing investments in our design and manufacturing capabilities. We are investing in a world-class production system to support the execution of over 370 satellites in backlog and over 5,000 satellites identified in our pipeline. Our new 50-tech facility in Irvine, California, is now open, adding 50,000 square feet of floor space, bringing our manufacturing capacity from 10 satellites to 20 satellites per month, a 100% increase. Critically, this includes additional testing equipment, our new printed circuit board assembly lines, and automation that we expect will vastly improve throughput, quality, and speed. Since the spring, we've been moving employees and equipment and now have our certificate of occupancy for all floors. We expect our now operational 50-second facility will be a key facilitator in completing the majority of the planned work for the 42 Tranche 1 buses. In addition, we are progressing and developing another 94,000 square foot facility in Irvine, which we expect to increase our capacity to multiples of our current capacity after commissioning in 2024. Importantly, this new capacity includes 36 foot high bay for assembly and immigration of larger satellites. To help successfully manage this steep ramp in sales, we hired Tony Gingas, and aerospace and defense industry veteran as the company's new chief operating officer. Tony is based in Irvine, California, and brings more than 30 years of aerospace and defense experience in design, production, operations, and leadership to Terran Orbital. We are thrilled to have Tony on board. He brings an innovative and experienced mind to Terran Orbital as we expand our facilities and execute on customer programs. Also in the second quarter, Terran Orbital, and Saffron Electronics and Defense announced the signing of a memorandum of agreement to study and validate the prerequisites for the production of a new generation of election propulsion systems for satellites in the United States. This system will be based on Saffron's PPSX100 plasma thruster. We believe this agreement reflects Saffron Electronics and Defense faith in the value of Terran Orbital's industry-leading products and innovative personnel. while adding to our strategic investments to create more scalable, automated, vertically integrated production systems. Now, let me turn it over to Gary to review our financial performance in the quarter and provide a financial outlook for the full year. Gary?