Maxar Technologies Inc.

Good afternoon. My name is Savannah, and I will be your conference operator for today. I'd like to welcome everyone to the Maxar Technologies Q4 2021 earnings call and webcast. All lines have been placed on mute to prevent any background noise. And after the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, please press star one. Thank you. I would now like to turn your conference over to Jason Gursky, Vice President of Investor Relations and Corporate Transfer. Please go ahead.

Good afternoon, and thanks, Operator. Welcome to Maxar's fourth quarter 2021 earnings conference call. I'm joined today by our company's Chief Executive Officer, Dan Jablonski, and Chief Financial Officer, Biggs Porter. Both will make some opening remarks, after which we're going to open up the line for your questions. We're shooting to wrap up the call in about an hour. Before we get started, I'll refer listeners to the accompanying slides for today's presentation, which can be found on the company's website at maxar.com. Once there, please turn to slide two, where I would like to remind you that part of today's discussion, including responses to various questions, may contain forward-looking statements which represent the company's estimates, future plans, objectives, and expected performance at today's date. These statements are based on current assumptions that the company believes are reasonable, but are subject to a wide range of uncertainties and risks that could lead actual results to differ materially from the forward-looking information. You referred to the advisory regarding forward-looking statements contained in our quarterly earnings releases, earnings call slide decks, and the company's most recent MD&A section found in our Form 10Q, excuse me, 10K, on the company's website at maxar.com. With that, I'm going to hand the call over to Dan. Dan, go ahead. Thanks, Jason, and good afternoon, everyone. Today, I'm going to review the key highlights of our performance in 2021 and provide an update on the Legion build. as well as the Electro-Optical Commercial Layer Program with the National Reconnaissance Office. I'll then discuss our priorities and outlook for 2022 and beyond, and wrap up by discussing an important ESG topic, Maxar's product impact on the world. FIGS will then take over with a review of fourth quarter and full year results, as well as our guidance. Please turn to slide three for a review of key highlights. We had a very solid year, generating top-line growth, margin expansion, and positive free cash flow. Without the effects of EV deferred, revenues grew 8% and margins expanded over 300 basis points. Importantly, we generated $60 million of free cash flow from continuing operations and look forward to growth in this metric as work on the Legion CapEx program wraps up later this year. Total company book to bill ended the year at one times. with Earth intelligence tracking above one and space infrastructure slightly below after experiencing solid bookings in 2020. We had key wins across a diverse set of customers, including the NRO, the NGA, the U.S. Army, Intel agencies, several key U.S. allies, and a multitude of enterprise customers representing the who's who of large technology companies. Importantly, we continue to see increased government and enterprise adoption of our 3D and other advanced geospatial products, which helped to drive 9% revenue growth in the Earth Intelligence segment without the effect of EV deferred. That's roughly $100 million of growth using existing data sets and constellation capacity, demonstrating the company's robust ability to sell products and data as a service, as well as the strong demand we're seeing from a broad set of customer verticals. I'm very pleased with the foundation we've set with our product and enterprise go-to-market strategies, and I expect both to be key drivers of revenue growth in the future. We also made some key hires across the organization. Chris Johnson is an experienced leader now running our space infrastructure segment. Dan Nord came from Amazon in the gaming world and is now driving our product and enterprise efforts in earth intelligence. Colleen Campbell has a wealth of expertise in global and digital marketing and is serving as our CMO. And Tom Wayne, who is a space industry veteran with 20 plus years of experience, is serving as our chief strategy officer. All four of these executives have made an immediate impact on the company and will help to drive our growth strategy in the future. And finally, we continue to improve our capital structure and financial flexibility with the results we just reported and with the proceeds of an equity issuance in the first quarter that was used to retire debt. We continue to see significant cash generation in the years ahead, which should drive debt and leverage levels lower. Please turn to slide four for an update on the Legion program. Last quarter, I walked you through the various phases remaining prior to the first launch, and I'm happy to report that we continue to make progress. The integration of the hardware and initial performance testing of the first two satellites is now complete, and we've moved on to environmental testing, which again includes thermal vac, acoustics, and vibration, all of which are designed to simulate, as much as we can, the extreme temperatures and the environment the satellites will see in space, and the vibration and acoustics the satellites will go through during launch. In the slide, you can see the first of the satellites entering the thermal vac chamber and ops for the second satellite before it was transferred to Palo Alto from our San Jose metal lab. In addition to all of this, we're also in the process of software validation. Once these steps are complete, we'll begin launch campaign activities, including the shipment of the satellites to the launch facility down at the Cape. And lastly, of course, on-orbit testing and the beginning of revenue generation. We continue to progress through these steps with no significant exceptions to date. However, we did lose critical testing personnel to COVID quarantine and contact tracing protocols in late December and January when Omicron was spiking. This absorbed our timeline margin for the May 15th to June 15th launch window. While we're still working to make that window, assuming no major issues arise, the more likely range for the first launch runs from June through July at this point. We have also made the decision to add a third launch to the manifest with each launch carrying two satellites. Although higher cost, we believe it is in the best interest of mission assurance to reduce the concentration of risk associated with the program. This approach also provides an opportunity to get to our targeted full run rate revenue more quickly on the second set of satellites, as we'll be able to better position them in orbit with the launch vehicle. At this point, We expect the second and third launches to follow the first within three and six months respectively. Please turn to slide five. I won't dwell on this slide as I presented it on the third quarter call back in November, but I did want to remind listeners that the Legion satellites we'll be launching this year represent both replacement and growth capacity that support our guidance for 2022 and beyond. Importantly, Legion and the existing Constellation assets are broad area collectors that allow for monitoring type missions and that would combine with our existing Constellation will provide revisit rates of up to 15 times per day. This type of high resolution, highly accurate collection capacity feeds wide area AI and ML modeling, sensor to shooter applications, and is a key enabler of our ability to drive highly accurate and lifelike 3D models. which we believe positions Maxar well to continue to be an industry leader as customers transition from 2D to 3D to address critical missions such as GPS guide navigation, simulation and training, autonomy, and network planning. Please turn to slide six for a quick update on the EOCL program, which we expect will replace the enhanced view follow-on program later this year. As a reminder, we have been a trusted partner of the U.S. government for over 20 years, delivering commercial capabilities with superior quality, cost, security, and reliability. And as you've heard me discuss on prior earnings calls, we continue to hear from our government customers that demand for geospatial data and analytics is as robust as ever. Our customers at the NRO, NGA, and military services seek to leverage the capabilities of the industrial base to better understand what's going on in every corner of the planet. Importantly, they are increasingly looking for answers to tough questions in technology solutions, not just data. We believe the investments we've been making in our constellation assets, secure ground infrastructure, data platforms, 3D capabilities, AI and ML analytical tools, and technology to support relevant sensor-to-shooter timelines position us well to deliver significant value to our customers. We are very proud to support the U.S. government mission and look forward to continuing to work with the NRO as they increasingly adopt commercial geospatial data sources through the EOCL program. Please turn to slide seven for a discussion of our priorities for 2022. In Earth intelligence, we are going to be focused on getting the Worldview Legion satellites completed and launched and successfully winning an award on the EOCL program with the NRO. We'll also be focused on further developing our product roadmaps and enterprise strategies. In fact, we're investing an additional $30 million back into the business this year to improve our SAS and DAS offerings, double our precision 3D coverage, and accelerate our mission to be the reference globe for the immersive 3D applications of the future. We're also making strategic investments and recently established a partnership with radio frequency, or RF, data and analytics firm Aurora Insight. The company observes the RF environment with both terrestrial and satellite-based sensors. using machine learning algorithms to build continuously updated mapping products for government and commercial customers. By combining Aurora Insight's RF spectrum capabilities with high resolution imagery, advanced AI analytics, and 3D capabilities, Maxar will be able to offer its public sector and enterprise customers more comprehensive and accurate geospatial solutions and insights. Importantly, this transaction provides a path for Maxar to take control of the company in the future much the same way we brought Vricon fully into the Maxar family back in 2020. We're excited about the prospects for this technology and about the ability of our team to both source and execute these types of transactions. And space infrastructure will be focused first and foremost on execution. It's going to be a busy year for the team out in California as they look to finish building 15 satellites, including the six World View Legions. On the business development side of things, we'll be looking to capture our historic share of commercial communication satellites, where we continue to see a stable market from a unit volume perspective. We'll also be focused on diversifying both our products and our customer mix. On the product side, we are making investments in proliferated LEO platforms and technologies. And on the customer side, we remain focused on civil and national security pursuits. As a reminder, We've had some demonstrated success with civil programs like Artemis and continue to believe we'll be successful with national security programs over time. And lastly, financial flexibility. We'll be looking to take care of upcoming maturities, maintaining sufficient liquidity to support our growth initiatives, and setting ourselves on a path to generate cash to further reduce debt and leverage to our targeted ranges. Please turn to slide eight. I thought I'd also provide a reminder today of the journey we've been on here at Maxar. As you know, 2019 and 2020 were about resetting and stabilizing the business. We recovered from the loss of a satellite and a cyclical downturn in the geocom set market, and we sold some assets to reduce indebtedness. 2021 and 2022 is the growth inflection period, with this year's results a very positive proof point that we're executing on our strategy. I am particularly excited about the growth we were able to generate in the Earth Intelligence business from our product portfolio, demonstrating solid demand for the unique capabilities we bring to both government and enterprise customers. As we look out to 2023 and beyond, we see an acceleration of growth as Legion provides more capacity and we benefit from the investments we're making today in product and go-to-market strategies across both earth intelligence and space infrastructure. In the future, we expect to see margin expansion for mixed and operating expense leverage, higher levels on higher returns on invested capital as we reduce the capital intensity of the business with assets like Legion, and a more optimized capital structure from solid pre-cash flow that's used to reduce debt and leverage. Please turn to slide nine. As you recall, each of the last several quarters, I've taken a few minutes to double-click on some of our capabilities and product offerings, including the technologies we're developing in space infrastructure, our AI and ML capabilities at Earth Intelligence, and most recently, our burgeoning enterprise business in Earth Intelligence. Today, I wanted to spend a couple of minutes to highlight the impact these products have on our customers and broader communities with an ESG lens. We think of our impact in four main categories, data philanthropy, climate and sustainability efforts, customer impact, and community outreach. I'll be focusing on the first two today. Please turn to slide 10 where we highlight one of our largest data philanthropic initiatives, the work we do with our purpose partners. Our purpose partners are nonprofits whose work aligns with our corporate values to make the world a better place. These organizations have deep relationships with Maxar and their staffs understand how to harness the power of geospatial data to further each of their respective efforts. We've shared detailed stories about our partners and how they utilize Maxar capabilities in blog posts and previously published impact reports And today I'd like to share a recent experience we had with one of them. Please turn to slide 11. The Amazon Conservation Team supports indigenous people's reserves in the Amazon region to protect non-contacted tribes, return lands to indigenous communities, and protect the rainforest. We've historically supported the team by providing pro bono access to our satellite imagery through the SecureWatch platform, which includes both our 20-plus year archive as well as recent tasking. However, we recently upped our game and helped them with a complex problem. Illegal gold mining is widespread in the Amazon, including in Colombia, and it can have a negative impact on the environment as the toxic chemicals used in the activity threaten local food sources. Since the pandemic, local enforcement agencies have been forced from these areas under threat from illegally armed groups, leaving the riverways even more vulnerable to illegal mining. The Amazon Conservation Team reached out to Maxar to explore potential solutions, and we were able to task our high-resolution satellites to generate imagery that identified illegal mining barges. This evidence was then shared with the Colombian government, who in turn executed a raid to arrest the illegal miners, seize their chemicals, and destroy the barges. On slide 12, you'll find some of the high-resolution imagery we tasked that was used as evidence presented to the Colombian government. This is a perfect example of the power of our capabilities and how they can be used to protect both vulnerable communities as well as one of the most cherished natural resources on the globe, the Amazon basin. You can find video of the rate plus more on this story in a blog post on our website. Please turn to slide 13. Our open data program, launched in 2017, helps first responders during natural disasters, and it plays a significant role in our data philanthropy initiatives. Our collection planning team, works to task our industry-leading constellation in affected areas to generate geospatial data that provides invaluable insights and enables first responders to arrive more quickly, rescue teams to know precisely where to deploy as they look to save lives, and governments to have a source of truth to support coordination and recovery efforts. Please turn to slide 14. The Maxar News Bureau is our partnership program with respected and trusted media organizations. And our team is in regular contact with hundreds of journalists, both here in the U.S. and abroad, investigating stories, providing high-resolution satellite imagery to supplement good journalism, and working to increase global transparency. Whether it's the Wall Street Journal, New York Times, or the Associated Press, if you've seen high-resolution satellite imagery published in connection with an important story, that image was more than likely taken by a Maxar satellite. The next four slides provide examples of the types of imagery and analysis that the News Bureau has provided to journalists, including the recent buildup of Russian troops around Ukraine. Slides 19 through 21 highlight our climate and sustainability efforts, with slide 20 focusing on how our offerings help to understand the globe at scale, including mapping land and water use, monitoring the Arctic, and understanding the effects of conservation efforts. Slide 21 highlights examples of how our offerings enable our U.S. government customers, allies, and enterprise customers to timely respond to events that have the greatest impact. And finally, on slide 22, highlights how Maxar's capabilities facilitate Earth science and deep space missions, starting with the robotic arms we've built for every Mars rover, including the sample handling assembly on the most recent mission. Our 1300-class platform is being used for Tempo, a NASA mission that will monitor air pollution across North America on a commercial geostationary communications satellite. And lastly, we're currently running a campaign with the World Wildlife Fund and the British Antarctic Survey to detect and count walrus in the Arctic using our imagery and crowdsourcing products. The resulting data will inform broader conservation efforts as walrus habitats change with warming global temperatures. All that I've shared here today is important not just to the partners we work with, but to every Maxar employee. We are a passionate, mission-driven team, and we believe in utilizing the technologies we're privileged to work with every day to provide better outcomes for the Earth and the most vulnerable amongst us. It's my sincere hope that these efforts are of value to our investors as well. With that, I'm going to stop and hand the call over to Biggs for a discussion of our fourth quarter and full year results, as well as our guidance for 2022 and beyond. Biggs? Thanks, Dan.

Please turn to slide 23, where we present your of your comparisons for the fourth quarter. Our net income for Q4 was $71 million, including a $49 million gain recognized in Q4 from the reversal of an overall receivables allowance, given the improved financial positioning of one of our customers in the space infrastructure segment. Revenue was roughly flat year-over-year for the quarter and was up 3% for the full year on a reported basis, as growth in Earth intelligence was offset by programs maturing in space infrastructure. Excluding the effects of the enhanced view contract deferred revenue burn-off, Total company revenues increased 8% for the full year, driven by recent wins in space infrastructure and product growth at Earth Intelligence. For the full year, excluding the effects of EV-deferred revenue burn-off, the adjusted EBITDA grew 24%, with margins expanding 320 basis points. Please turn to slide 24, where I'll discuss Earth Intelligence results without the effects of EV-deferred. Revenue increased 12% year-over-year in the fourth quarter, driven primarily by increases from international defense and intelligence and commercial enterprise customers, while revenue from U.S. government customers held constant. Adjusted EBITDA grew 23%, with margins expanding 390 basis points, driven by the mix of revenue growth. On a full year basis, revenue increased 9% year-over-year, also driven by international defense and intelligence commercial enterprise customers, and adjusted EBITDA grew 14%, with margins expanding 170 basis points. Please turn to slide 25. Space infrastructure revenue decreased 11% year-over-year in the fourth quarter, as several US government programs near completion. Margins expanded 270 basis points, driven by the profitability of recent awards offset partially by an increase in SG&A. Full-year revenue increased 3%, driven by an increase in revenues from commercial programs, as well as lower EAC growth. The full-year results include the charge taken of the XSM-7 satellite, which adversely impacted revenue adjusted by $33 million. Excluding this charge, revenues would have increased 7%, and adjusted EBITDA margins would have expanded to 10.2%, driven by solid execution and the profitability of recent program awards. We are pleased with performance in the segment outside of the charge, which demonstrates the ability of the team to drive margins to industry standard levels when supported by good mix and adequate business base. Please turn to slide 26. The company generated $108 million in operating cash flow from continuing operations in the fourth quarter and invested $78 million in CapEx. For the full year, the company generated $294 million from continuing operations and invested $234 million in CapEx, yielding $60 million in pre-cash flow generation for the year. Please turn to slide 27. I would just note quickly that we had roughly $519 million in liquidity at the end of the quarter. And now please turn to slide 28 for discussion of our 2022 guidance. We expect revenue in the earth intelligence segment to be between $1,155,000,000 and $1,235,000,000, which implies 9% growth at the midpoint, similar to the 2021 growth rate, excluding EV deferred. The range is driven by a mix of factors, including our continued product and 3D growth efforts, the EOCL award, as well as our ability to ramp Legion sales once the satellites come online. We set this range a little wider than normal, given primarily our expectations for the potential for more upside than downside on EOCL. I should note, we believe the customer can award EOCL contracts under the continuing resolution but may not be able to increase the total awarded as much as they can after a budget is passed. Once the OCO is awarded, we will consider tightening the range. In space infrastructure, we expect 22 revenues to be roughly $700 million, or a 5% decrease from 2021, as several larger U.S. government programs near completion. Roughly $600 million of the guidance level is already in backlog, which stands at $865 million at 12-31-21. As a reminder, we remain focused on diversifying this segment further into civil and military and intel verticals. Adjusted EBITDA for earth intelligence is expected to be between $505 million and $570 million, implying 45% margins at the midpoint. Recall we had some good book shipped business in 2021 and our continued product growth will continue to drive margins higher earth intelligence, but this growth will be tempered in part by the $30 million we're investing back into the business that Dan mentioned earlier to drive further product growth in later years, $20 million of which flows through expenses this year. The Just Even Dodd space infrastructure is expected to be in the range of $45 million to $60 million for the year, implying roughly 8% adjusted EBITDA margins for the year. This includes $10 million we are investing in IRAD to take advantage of the near and long-term upside we see in proliferated LEO opportunities on both the commercial and national side. This $10 million is on top of our base spend. Corporate and other expenses are expected to remain largely consistent at approximately $85 million per year. On a consolidated basis, This all leads to 2022 revenue guidance at a range of $1.79 billion to $1.87 billion. At the midpoint, this implies consolidated growth of 3% in line with the consolidated growth levels we've achieved each of the last two years. But keep in mind that there's 9% growth at the midpoint in the higher margin earth intelligence business. Total adjusted EBITDA is expected to be between $440 million and $520 million, with total margins increasing modestly due to a shift in the business mix between Earth intelligence and space infrastructure. At the midpoint, this is 13% growth. Note this includes the $30 million of incremental investments we're making back into the Earth intelligence and space infrastructure segments this year. Normalizing for that, the growth is 20%. In terms of quarterly cadence, both 2020 and 2021, Earth intelligence had strong fourth quarters, with a drop-off in Q1 of the subsequent year. This has been driven largely by the timing of book-ship business. We expect a similar drop-off in Q1 2022, then for revenues and adjusted EBITDA to grow sequentially through the year. At space infrastructure, There will be some skewing toward the first half of the year, but this is not likely to affect the consolidated results materially. Operating cash flows for 2022 are expected to increase from 2021 to a range of $340 to $420 million as we continue to improve the cash flow profile of the business. Capital expenditures are expected to be between $300 million and $320 million including capitalized interest, implying year-over-year growth and pre-cash flow generation at the midpoint. As with prior years, the precise timing of cash flows and capital expenditures can vary throughout the year. Importantly, CapEx is expected to be higher in 22 than in 21, given the cadence of work on the Legion program and the cost associated with the third launch we added to the manifest, as Dan discussed earlier. Please turn to slide 29. Turning now to our 23 targets. These remain largely unchanged from the outlook we provided a year ago. At this point, we expect 110 million in adjusted dog growth from the earth intelligence segment versus 2021 results, driven by increased capacity as Legion comes online and continued growth from our product portfolio. As a reminder, we generated roughly 100 million in product-related growth in 2021 and we're making investments this year that we believe will allow for solid performance in the years ahead. Our 2023 performance will have multiple drivers, including revenue from Legion, continued product growth efforts, as well as the EOCL award. In space infrastructure, we expect 35 million in incremental adjusted EBITDA over 2021 levels, which includes 25 million in mix shift from intercompany work. Representing a slightly more conservative view than the target we provided last year for this segment, given the dependency on and anticipated mix of new business needed to be awarded this year. Our 2022 guidance for space infrastructure implied adjusting the DOM margins of roughly 6% to 9%, with a midpoint of 7.5%. In 2023, we expect revenue to space infrastructure to yield margins in line with the top half of that range. Altogether, we expect roughly $570 million of adjusted EBITDA in 2023 versus the previous target of $580 million. Please turn to slide 30. For free cash flow, our 2023 target is $340 million. Last year we published a target of $325 million. As subsequently noted, there would be an additional $35 million expected in interest savings from the equity raise completed after that guidance was published. The modest change in free cash flow is driven in part by the slightly lower adjusted EBITDA target, as well as a slight increase in CapEx investments for 2023. As we look out beyond 2023, we see continued growth. Demand for geospatial data, products, and services remains robust from both our government and enterprise commercial customers, as Dan discussed earlier. I commented earlier that we were making investments in 2022. primarily in earth intelligence, to fuel future growth. While those investments may continue in 2023 and beyond, they are anticipated to be more than self-funded by the growth we expect from those investments. Prospects over the long term in space harbor continue to look promising as governments focus on military and intel capabilities, as well as earth science and exploration missions, and commercial customers look for new ways to exploit the opportunities in this domain to provide communications and business intelligence applications. We feel very positive about the number of opportunities in the pipeline. Overall, we remain very constructive on the outlook for our industry where we see mid to high single-digit growth for the customer verticals we address. Our goal is to outgrow those rates as we continue to make investments to bolster our industry-leading technologies and products. At this point, we expect long-term growth in both of our segments but higher growth earth intelligence segment, which from a mixed perspective would be margin accretive. Combine this with OpEx leverage, and we would expect margins to expand beyond 2023. And finally, on cash flow, we expect operating cash flow growth to be driven by adjusted EBITDA growth and lower interest expense, recognizing working capital swings can always have pluses and minuses in any given year. We continue to expect CapEx to step down to 23 after the Legion launch and remain in a relatively tight range thereafter, barring a significant new win requiring additional capabilities. To wrap up, we're pleased with the business growth and margin improvements experienced in 2021, and we are on course to our 2023 targets. And importantly, we don't think we'll be done once we get there given the very positive backdrop the industry is seeing and the investments we are making to further our offerings and position ourselves in the expanding marketplace. With that, I'd like to hand the call back over to the operator to begin Q&A.

Thank you. And as a reminder, if you would like to ask a question, please press star 1, and we'll pause for a moment to compile the Q&A roster. And our first question will come from Seth Seisman with J.P.

Morgan. Please go ahead.

Hey, Kyle, can you hear me? We can hear you. Oh, great. Okay, cool.

Thanks very much, and good afternoon. I guess just to start out, a quick question on the 2023 targets and, you know, the change in the Legion launch schedule. And whether that had, it seems like that had very little or no impact on the outlook for 2023. Is that, you know, A, is that fair? And B, should we then, you know, think that the full impact of Legion is kind of recognized in the 2023 guidance or, you know, to the extent that there is a further kind of ramp up period beyond that?

Yes, Legion will be ramping up during 2023, so it's certainly not at a run rate in terms of revenue and margin and cash impact, the creative impact it will have when it does reach a full run rate. And as we've said before, there's capacity to grow in Legion, and so irrespective of even if we were fully engaged you know, operable, if you will, at the start of 23 and at a full year in there, we'd still expect it to grow in 24. So there is growth coming. There was a, you know, an impact on 23 in our guidance and the fact that we are launching later than we originally anticipated. But as I think I noted in the last call, our growth on the product side has really made up for that. And so Legion isn't the only way to get accretion in the business. we still have so much we can grow from a product standpoint as we've demonstrated from the 3D products and otherwise.

Great. Thanks.

And then maybe as a follow-up question, when you think about the decline in CapEx that's coming in 2023 and beyond, where will investment be focused um you know after the legion uh constellation is is fully built and i guess what are the you know what are the major opportunities that you think about post legion and and maybe even specifically um for for the space infrastructure business you know will there be investments to make at some point to kind of you know drive uh future future growth there yeah absolutely um

You know, when we look at the business and we think about growth and the smartest place to invest money to create shareholder value, the first place we look is organic growth. Those opportunities where we know we've got good customer contact, good adoption of our products, and continued acceleration of how they're using them. I think 3D and the success we've had with Vricon is a really good example of that. But other earth intelligence products have been growing as well. So we're really pleased to see the investments we've been making there as well as our secured infrastructure and our direct access program with international customers as we've gone out into those markets as well. We'll look, you know, as we get to continue to de-lever and we get to that nominal sort of two to three times as big as talked about before. We'll look at inorganic opportunities. We'll continue to pay down debt along the way. And we'll continue to look for different ways to return value for shareholders. On the space infrastructure side, we're seeing some really good positive trends with PLEO constellations and some of the study contracts we've been winning and some of the business we're chasing there. You know, nothing to announce today, but things are are going well, and we've been increasing our IRAD to support that type of business. We've got really solid robotics and propulsion characteristics for our spacecraft, and so we'll continue to think about smart investments there. And then we're also making investments as we continue to pursue the U.S. government business, transitioning not just in the civil programs but into the defense and intelligence programs for secured infrastructure like we've had on the earth intelligence side of the business. secure protocols for facilities and people with clearances to be able to do that kind of work as well. We're finding a lot of uptake on our bus design and the spacecraft heritage that we've got in that market. Is there anything to add on that?

I think that pretty much covered it, Dan. I think one thing we might add in, I don't know if you commented on it, we are seeing a lot of opportunity to partner with others. and space infrastructure as well as we pursue new business and it's not solely dependent upon our own capabilities, but we bring some significant capabilities to play that others don't have and so the teaming opportunities seem to be going up.

Great. Thanks very much, guys.

Our next question will come from Robert Spinger with Milius Research.

Please go ahead.

Hi, good afternoon. Dan or Biggs, I want to just get an idea if we can figure, think about space infrastructure post-Legion build. I figure you're running a fair amount of that through the P&L now. And, you know, billion-dollar revenues down to about 700. What does this business look like once that's done and finished and you win some of the things you're talking about? Is there a new normal here that we should think about?

Well, we gave guidance in 23, which is after the Legion program is complete. So you can look at that as, you know, what a fairly near-term outlook is. But beyond that, you know, because of all the things that we're pursuing and the opportunities we see, we do see it as a growing business now. And as I noted, the margin rates on it are lower and will be lower than Earth intelligence business. Earth intelligence is, in all likelihood, going to be the much greater driver of consolidated results, but we do expect space infrastructure to be contributing on an increasing basis as we go at the time as we succeed in growing a business and diversifying it as we've talked about. Probably the thing I'd add to that is

We're most focused on being able to grow in those businesses where we've demonstrated some more specialized capabilities because that gives us a better chance to compete there. And a handful of those are power, like the power propulsion element, Jupiter 3, those types of very large satellites at the higher kilowatt levels. That's a pretty good platform for us. We're building some of the biggest satellites in the world in the high throughput side there. Propulsion. robotics, and then the Peleo bus design. We're finding a lot of derivatives of Legion and some other stuff we've been designing here that have gotten some good customer uptake so far.

Okay. Just switching over to thinking about the Legion build-out, what are the pinch points that are remaining? You've gone through some of this in the monologue, but if we could get a little bit more specific about you know, as to whether it's supply chain, hardware testing, software? How do you think of those relative to one another?

Yeah, so on the first – I'll just segregate them a little bit between launches here. But on the first launch, we have all the hardware in. That one's within our control. So getting through testing is the major feature we've got to get done there. And, you know, we talk about thermal vac, vibration, jitter, acoustics, all of those kind of things. I think I'd note, it wasn't in the prepared remarks, but we've been in thermal vac for the better part of a month now. The testing process is going as expected with no major issues so far. And that's a really important step for us. So we're excited about that. And, you know, you've got to finish software testing, those kind of things. But those satellites are fully integrated. They have the instruments. They've got all the hardware they need. They're going through the testing protocols, and when they complete the testing protocols to our satisfaction, that's when we'll shift to the launch range and do launch ops. On the other satellites, again, we're doing three launches now, not the two, we expect those to be on about three-month center lines after the first launch goes up. Don't have any red flags right now. We've got three of the six instruments in. We expect all the remaining ones to come in through the spring. No red flags right now, you know, depending on COVID, that's slowed different parts of the supply chain down. But we do expect to have all the hardware for the second launch by the April timeframe, and all the hardware for the third launch in time to be able to complete launches this year. That's not a given. There's some risk in that, but that's what we're driving for, and we'd like to accomplish that in this calendar year.

Okay. Biggs, forgive me for going back to the first question, but just a clarification. How much of the space infrastructure revenue and EBITDOT in the 23 guide is under firm order right now and what still needs to be awarded?

We're not going to give stats out there. We want to get it for the instant year. And if you look at next year, we're pretty much in line with what we've historically been at with about, as I said, 84% of what we have in backlog is covered for 2022's revenue. If you look at what that leaves us with is about a little less than $300 million of backlog remaining going into 2023. Okay? Okay. That's pretty close to where we were coming out of last year. Last year, we were around $320 million of opening backlog left going, projected to be left going into 2022. So not a big difference here in terms of what we have in backlog going into the next year. So, you know, all I can say is it's, Like every other year, it's important for us to go in new business. There is new business in the pipeline, and we expect to succeed at getting that in support of 23 and beyond.

Right, right. Thank you both for all the help. You're welcome.

Our next question will come from Thanos Mishopoulos with BMO Capital Markets.

Please go ahead.

Hi, good afternoon. Hi. Dan, there's obviously a lot happening geopolitically. Can you try to color us to what that does for the bookship business? I mean, are most of your defense customers simply covered through their existing contracts, or is that a key driver of incremental bookship business?

Well, as you know, Faust, it's not just bookship business, but there's also access business layered on top of that. In the past, we have seen benefits from geopolitical events of the type we're seeing now heating up, and we may see some from that, but we're also fairly capacity constrained right now, so we'll have to see how that plays out. We've been, as with the assets, the way they're designed, they've been in very high demand in this type of activity, and I think that's a good signal for us that we're doing the right thing for our customers, both with the assets we have on orbit, which are the best constellation in the world right now, as well as the capacity and type of capacity we'll be adding with the Legion constellation. But I guess beyond that, the products that we've also been, we do have some upside from the types of products we've been developing. So the 3D sensor-to-shooter applications have been in very high demand, and we've been ramping up production there. So we could see some upside there, even as we don't have satellite capacity to benefit the current situation.

Okay, great. And just to update us on the services business, has that been kind of constrained for growth, just given it's a kind of a headcount kind of business where you might be hiring constrained, or what kind of growth are you seeing in that part of business?

Yeah, that's been a little more challenging lately, and it's had less to do with it being related to headcount, although I think all services companies face that to some extent. It's been more impacted, I think, across the board by the fact that we're in a continuing resolution, It's harder to get the new programs up and running going there. But I guess what I'd say is we've been really successful, and even as revenue has been a little light there, the types of business we're winning, which are architecturally right in line with our strategy, especially as that relates to some of the other big programs we've got, like One World Terrain and those kind of analytics programs, have been really, really positive. And, again, it's a low-margin business, so as revenue goes up and down there, it doesn't impact the bottom line as much as you'd see in the rest of the earth intelligence side of the business.

Okay, great. And finally, on the timing of the EOCL contract, is that going to be dependent, to a large extent, on the timing of the overall U.S. budget, and if and when that gets passed, or any critical comment you can provide on that?

Yeah, so I'll talk about our understanding. You know, with everything, we're not in the government, but our understanding is that the extension of the current program is not a new start, so that the continuing resolution that's underway now is not impactful if people wanted to continue at those levels. or the budget amounts that they're working with now. So we're, you know, the award could drop at any day. We're not aware of any holdups. Now, we do believe we're well positioned for potential upside scenarios, and those are probably more dependent on the full appropriations bills being passed to be able to fund at those levels. And the numbers that have been put into the budget by the House and the Senate are very, for commercial imagery, for the commercial aspect of this, are very, you know, we're very positive about that. We think the investments we've made, you know, not just in the current constellation, but what we're doing with Legion, our secure operations, and our long track record of performance are very positive. And so we'll, you know, nothing holding up right now, but upper, you know, positive scenarios might depend on the full budget for that.

Great. Thanks for that, Brian.

Our next question will come from Peter Arment with Baird.

Good afternoon, Dan. Yep, good afternoon, Dan Biggs. Hey, Dan, maybe just to circle back on, just make sure we understand the Legion kind of the move here and obviously Omicron, but just maybe if you could just go through the adding the third launch to the manifest, kind of the de-risking, just kind of the key points on why you did that and why it's so ultimately, I think, probably going to be helpful. Thanks.

Yeah, you know, we continue... We assess all of our programs here at the company, and we continually assess what impacts could be on our customers of downside-type events happening. And as we took a look at that, we thought, you know, we want to further de-risk the program. These are critical assets for our customers, national security intelligence customers, as well as technology customers that rely on this for their business case and their product development. And we thought it was appropriate to further de-risk the program at this point. This provides better mission assurance for shareholders and our customers, better mission assurance for us. And the cost is in the numbers that we gave out. So, you know, it's all contemplated in the 22 and 23 guidance we've given. We think the business supports it, and we think it's the right thing to do.

That's helpful. And then maybe just quickly – Maybe if you could just give us further update on how bright the growth is going as we think about 2022. I know you've had a lot of success with kind of rolling that out.

Yeah, we're really excited about that being part of our product portfolio. It's being integrated into many of the other things we're doing. And that was obviously a very strong contributor to the $100 million of product growth we saw this year. And a big reason we think it's appropriate to be investing back into the business for our product suite. for the 3D type capabilities for the enterprise customers as well as the government customers that are coming to rely on that. So we're excited about it, and we don't see anything slowing down. In fact, part of those investments are to double the amounts of 3D production we've got going into our base case this year.

Terrific. Thanks so much, Dan. Thank you.

Our next question will come from Ken Herbert with RBC. Please go ahead.

Hi, good afternoon, Dan. I wanted to see if I could just follow up on that, on the growth you saw in the products business. It seems like that was a source of upside and maybe better than expectations as you headed into this year. What should we think about in terms of the opportunity for similar type of upside or growth in that business here in 22? And how are you seeing pricing or margins in the products evolve here as you start to capture more growth?

And I'll let Biggs chime in on this as well. He's got a lot of the details behind the numbers. But look, the $100 million of product growth, the 26% CAGR growth we saw on the enterprise side of the business are being driven by the investments we've made in the high quality of the products. We've had margin expansion throughout the year. So I think as you're seeing that, we've held up pricing power pretty well as we've rolled those products out into the market. And As Biggs gave out the 22 and the 23 guidance, we do expect to see product growth continuing strongly into the future, which is why we're making the decision to keep investing into it for our customers.

Yeah, so it is possible to have the same kind of growth in product in 22 that we had in 21. So that's certainly one of the potential drivers in our overall range. So, as Dan says, it's very worthy of the investments we're making, and we have high expectations over time for having that continue to be a big driver of long-term growth.

You know, I think one thing I'd note on top of that was it was really broad-based growth as well. It wasn't just sector-specific. It was across the U.S. government, international defense and intelligence, our enterprise customers, which really are who's who of technology. And we saw a really solid adoption of that 3D type of technology and increased usage of it. You know, a great proof point that we've talked about before is the One World Terrain Program with the U.S. Army that's underwriting a lot of the types of technology we've been developing, but also where we see the future of this propagating across a very important customer like the U.S. government.

Yeah, the $100 million is more than just 3D, so it's not the only thing that we're working on and that customers are, you know, relying upon and showing greater demand for.

That's great. I appreciate all the color there. If I could, on space infrastructure, as you continue to push diversification and civil and maybe national security customers there, can you just talk about how the pipeline of opportunity is changing, maybe what we should watch out for in the next few quarters, either in terms of bookings there or other ways we can think about better monitoring your your progress and success as you look to diversify the space infrastructure segment?

Yeah. And, you know, we've got a very solid commercial business to start with, and there's a replacement CAPEX cycle going on. So I don't want people to not think about that as part of how we're thinking about our space business as well. Really important commercial customers. And we've been developing the, you know, technology speed and efficiency, including high throughput and other types of satellites to be able to continue to compete there. When we started talking about how we were moving into the defense and Intel market, we talked about it as building on the success of our similar programs, and we always said it would be a three to five year story. We're a couple of years in at this point. We've been booking really good study contracts. We've been getting really good feedback from customers. And we've also really importantly, I think, been getting noticed by the other primes. So we will see, as part of this, more partnering with other prime contractors going forward. and that will help as we underwrite IRAD and continued investment in that side of the business. In terms of milestones and when we get to that nirvana of one-third, one-third, one-third, I think, it's going to be a little lumpy as we get there, but we do expect to see some wins this year, and hopefully we'll be able to announce those in the near future.

Great. Nice quarter, and good luck with Legion. Thanks, sir.

And our next question will come from Matt Sharp with Morgan Stanley. Please go ahead.

Dan Biggs, Jason. Good afternoon, gentlemen, and nice quarter. Hey, thanks, Matt.

Good afternoon.

Biggs, I just wanted to talk a little bit about the cap stack and how you're thinking about that at this point in time. You've got an inflecting cash flow profile now, and there's probably some opportunity here to refi or reduce debt potentially in 2022. But just overall, what's the strategy at this juncture, and could there be some upside here in 2022 as a result of it?

Yeah, so actually I'll let Jason chime in here. As Dan's already commented, we're still focused on, you know, delevering first and foremost over time and getting the leverage down to the two to three turns kind of level. There is, you know, opportunity continuously to improve the cap structure as we go through time. Other than that, I'll let Jason do that. Yeah, thanks, Diggs.

As you can expect, we can't really comment on the timing of such things, but I think it's pretty clear if you're looking at some of our debt securities that are out there today, our notes are trading pretty tight, suggesting that there's an opportunity here for us to improve our cost of capital. And I suspect, given what Dan had to say at the outset of the call here, that we're going to be looking to shore up some of these near-term maturities, particularly given the higher coupon rates that we see on some of those and afford ourselves an opportunity to reduce our overall cost of capital. And as we look out to the future, that two to three turns is a big focus item for us at this point. We've all committed to getting to that level. And then you know, coming back to you all and assessing where we go from there and looking at our both, you know, our organic and inorganic opportunities at that point. So more to come. It's certainly a big focus item for us and, you know, something we put in, you know, in our own internal expectations to go get some work done on that.

Got it. That's very helpful. And then, Dan, you've made some nice progress here on signing customers up for Legion and preparing the ground infrastructure ahead of the launch of the Constellation. Just given that progress, how should we think about the speed at which you can ramp revenue on the first two satellites? And is there any sort of indication of how much capacity is needed either sold or sold out at this juncture for those satellites?

Good question. You know, we try not to give too much specifics about which customers and exactly what the size of those contracts are, but we did announce we've had already two capacity sales with other countries, and many more have been upgrading their ground infrastructure. Huge kudos to our team here, but Our ops teams got ground infrastructure work done even during COVID. They traveled to a lot of places around the world and got everything ready for Legion. So that's been on track and a really important piece of work we got done last year. We're seeing strong demand signals. The sales and marketing teams are, of course, at work. And some of that's modeled into the 22 and 23 numbers that Biggs gave. But assuming some level of Legion-derived growth this year, That's why the guidance range is probably just a little wider than normal. But we're seeing some really, really positive signals here. We've got to complete the programs, get them checked out on orbit, and get them producing revenue as expeditiously as we can at this point.

Got it. Thanks. Thanks, Matt.

Our next question will come from Pete Osterland with Truth Securities.

Hey, good evening. Thank you for taking our question. In state infrastructure, in the past, you've referred to a target of potentially getting to a level of 10% margins in the segment. Is that still the goal? And where do you see additional opportunities to expand margins in the segment beyond the expectations you set for 22 and 23?

Yeah, that remains the goal. Obviously, depending on the program mix we get and the timing of it and how well the business is performing, it's a a little bit lumpier going through. You know, we always said the first piece in the turnaround was to get to break even. And then we drove from there. I think we had some good program mixes as newer programs have come in and some harder performing programs have started rolling off. And so that we've seen some of the margin expansion there. We're going to be watching that really closely as we've gotten to the future here, particularly as we think about what types of programs we bid for and how aggressively we work on on what we want to do there. But, you know, a 10% business is pretty close to what our competitive set does out there. We think there are some great trends in our favor with the investment space, both on the commercial side and in the national security infrastructure. And that should provide a, you know, sort of a nice back wind as we look to capture more business and increase the performance of the business.

Rick, I think we showed, as I said in my comments with, you know, with good business base and mix, we can be at 10%. But we've also, in the guidance for 22 and 23, talked about being under that, driven by a little lower volume, especially in 22, and some mixed shifts. So it is going to vary with volume and mix. But as Dan says, getting to 10% stays the objective. That's what we think the long-term target should be, 10% or better. And I'd also note that in 2022, we're investing $10 million back into the business that's flowing through finances this year.

Yep, makes sense. Thanks. And then just one more, you know, in the current geopolitical environment, it just seems like there's been a lot more press lately involving satellite imagery, including specifically calling out the provider, whether it's NACDA or a competitor, So just wondering, have you seen any meaningful change in the competitive landscape as a result of this? And, you know, have there been any new opportunities or benefits potentially on the commercial side for Maxar, just given the increased visibility?

Well, you know, first, kudos to Colleen Campbell, our chief marketing officer and the news bureau team, as I mentioned in my remarks, and that's led by Steve Wood here. They've been doing an awful lot of, you know, around-the-clock work helping answer people's questions, help do analysis, help explain what's going on and why the satellite imagery, you know, what's contained in that. And they've been doing a lot of mission update reports. And so that's been really helpful. You know, it has, I think, done a great job of continuing to highlight the importance of the types of services and products we provide, as well as the quality and accuracy of the data that we're doing. And, you know, it matches really well into our ESG initiatives, providing transparency in the current situation. So, It's been, you know, while the situation itself is tough, I'm really proud of the way our team's been responding there and helping solve those kind of hard questions.

Great. Thanks for taking the questions. Yeah.

And our next question will come from Chris Quilkey with Quilkey Analytics. Please go ahead. Good evening, gentlemen.

Good evening, gentlemen. Hey, Chris. And Jason. Put me back at a queue again. A question on the Legion program cost. I know you gave CapEx for next year, which is helpful, but obviously there's a lot rolled into that. We had a $30 million plus up that's already been added to the program just due to COVID delays. And now the incremental SpaceX launch cost, which, you know, list price is $50 million for a reused one. Should we assume that that's the increment on top of the overall CapEx program, which I think when we initially started it, Legion was sort of positioned as being a third less CapEx intensive than the legacy worldview programs. Is that still the goal or we can't get quite there? And maybe just as an add-on on the launch, is it fair to assume since you're going to I think a 53 inclination that, you know, you can probably do ride share on that, maybe with some Starlinks or somebody else to mitigate costs.

Why don't I take the back part of that first, and then I'll let Biggs answer the CapEx piece. One feature of de-risking the program is we actually get to revenue orbitology faster with the mid-inclination launches. So that's an important feature here. And so we're excited about that. That helps us solve customer problems faster. There are rideshare opportunities here. We'll be the primary customer on our own launches. We like to handle them that way. And there's enough mass of the two leads and satellites to be that prime spot. But if we have some other things or we're working with some partners, kind of like sometimes we've traded imagery for value in the past, trading some capacity on launches in terms of other third parties we're working with where it makes sense for us strategically. That's much more exciting to us than just a monetary transaction. The other, you know, probably just kind of P-side note there as you talk before Biggs talks about CapEx levels is, you know, these are the first six legions and programs and NRE and the first of its kind space program always take a little, you know, a little more up front. But for future legions, We don't have to repeat the NRE. We don't have to repeat software development. We've got test equipment procured and in operation. And so the future costs of the Legion Constellations will be much more in line with what we originally thought as we move forward here. But overall, yeah.

Okay, there's probably a few different things to say around the question you had. first off in terms of total you know program cost with the third launch and uh you know a little bit further delay here the total program cost is over 700 million uh excluding capitalized interest uh having said that though it doesn't change what we think recurring cost would be for additional legions of the future i think it's just a very important point to make so we talk about the efficiency of producing legions and what that means for the long term. That still stays intact. In terms of the cost growth and how it's affecting our guidance, if you want to look at it this way, there's I think about $80 million increase in 22 over 21 in terms of CapEx. About $60 million of that be associated with the timing on Legion, the shift from 21 to 22 and combined with the third launch cost. Another factor on CapEx growth is the additional product CapEx that I think I referred to we would have in 22 as a result of our investments. Sarah talked about 20 million hitting expense, but there's 10 million in CapEx. And then We haven't talked about it, but there's another $10 million we're spending on long lead for Legion 7 and 8. We've talked previously about having spares on the ground. We're not going that route of having spares on the ground for future growth, but we did think it made sense to go ahead and invest long lead in the event that demand would be there for 7 and 8 sooner than we anticipate, but it's efficient overall to go do that. So that, if you will, is the combination of things driving CapEx and 22. I'll just note one more thing before I stop talking, and that is that there's a little bit of CapEx trickle over on Legion into 23. So even if the launches all occur this year, there's some trailing cash in 23 that has uh really been the reason why 23's capex is a little bit higher than what we had said before so that hopefully that's the whole waterfront that i covered there uh in that answer good thanks thanks for the detail i wanted to switch back over to the space infrastructure business um

you've got a big nut in the C-band satellites moving through the satellite. And, you know, as those exit on a pretty defined schedule that your customer needs to hit, can you give us a sense of what that looks like in terms of the roll off of that program, both, you know, when it happens and, you know, magnitude of roll off. And when you think about filling the pipeline, obviously you're investing more in small sats, but on the geo side, You know, it's a lot more challenging from the perspective that most of the traditional geo operators aren't really buying many geo satellites anymore. And the one that has been, Intelsat, one of your best customers, has made their last four orders from your European competitors in part because you lack a digital payload. So is there some point at where you need to make that investment in a digital payload or do you shift more of your effort into the Leo game where there's arguably a much bigger open field?

Hey, Chris, this is Jason.

I'm just going to start it off on the timing of C-band and some of the dynamics around backlog. We addressed that with the first questioner, I believe, and Biggs walked through some numbers. I'd certainly refer you back to that. The amount of backlog that we're going to use on the guidance this year is in line with what we've seen historically. The amount of backlog that we're carrying outside of the current year is in line with what we've seen here over the last couple of years. And, you know, the business development team here is pretty focused on, like they have over the last couple of years, making sure that they are continuing to build up backlog throughout the year. So there's I don't think we ever want to give you a date certain or a quarter certain on the delivery of a group of satellites. We'll just kind of give you that backlog and keep that in the back of your mind. This year is shaping up pretty similar to what we've seen here over the last couple of years and go back to the details, the specific details that I gave with that first question. I'll hand it back over to Dan for some of the other questions. Yeah, and there's a lot to unpack there, so if I missed something, happy to come back at it. But I kind of remind everybody from my remarks that we are working 15 satellite programs through the facilities in Palo Alto this year. And that's everything from the Sixth Legion through the Sea Bands through NASA programs and big stuff like Jupiter 3. And beyond that, we've been winning. We've got to keep winning to keep the facilities at capacity the way they are this year. Things are humming there. It's standing room only in a lot of places, and the test equipment, everything's running pretty hot right now, which is good to see. You know, I think maybe just kind of talking about the future of that, you talked a little bit about recap of current constellations versus software-defined payloads versus PLEO. or those types of constellations or other defense-type missions. And we're continuing, I think, to invest in where we have discriminating capabilities. We've got solutions that are through our partner ecosystem for software-defined satellites. But we're seeing some continued customer demand as the replacement CapEx gets done for the power platforms they need and the efficiency of current technology as well. I think it'll continue to be kind of a mix of stuff. And I don't think it's going to, you know, everybody over on one side of the field versus the other side of the field. We're going to continue to make the investments where we think it best supports the business case and the value for our customers and shareholders.

Fair enough. And if I can throw one final question, two of your emerging competitors in the EI side of the business have recently scaled back on their Constellation plans. When you look at your future business model, do you have any concerns around the demand environment that would cause you to look at your capacity requirements, or do you see all full steam ahead?

Boy, I'd say from our chair here, the demand environment remains very strong. And that gives us a lot of confidence in the Legion constellation plus future constellation ideas that we might have going forward. And there's growth capacity. There's always some replacement capacity as well. I think the most interesting thing we're seeing off that, Chris, is not just the satellite capacity itself, image by image or strip by strip or broad area collect by broad area collect, but how that's feeding the product investments we've been making. analyst and AI-ready data, the global AGD and SecureWatch-type platform infrastructure, the 3D modeling and the point clouds. And they're not just pretty pictures, right? These are the hyper-accurate global solutions for 3D point clouds that are unique to Maxar right now. And all of that satellite data is feeding that engine and then the analytics that come out the other side of it. We're really excited by that. The data quality and accuracy and timeliness of that very much matter. And so where we're seeing the satellite capacity questions, it's mostly, like, how does that feed that chain and get answers to people on a more timely basis to solve mission or commercial needs?

Great. And I won the office pool on the Walworths reference, so thanks for that. Yeah.

Operator, we've exhausted our time for questions. So at this point, I'm going to thank both you and the listeners and participants in the call today for joining us. Certainly look forward to interacting with all of you on our next earnings call. And if we have the opportunity to cross paths between now and then, obviously look forward to that as well. Operator, back to you to wrap it up.

And that will conclude today's conference. Thank you for your participation, and you may now disconnect.