New Bus Designs and Rapid Response Pave the Way
for the Future
- Record revenue of $43.9 million in 3Q23, up 58%
year-over-year
- $136.2 million LTM revenue, up 87% versus prior 12-month
period
- Gross profit of $9.7 million compared to $37 thousand in
3Q22
- Gross margin improved to 22.1% in 3Q23 from 0.1% in 3Q22
- Announced over $160 million in new awards since June 30,
2023
- Consolidated cash balance in excess of $70 million as of
October 31, 2023
- Introduced seven new standard bus designs, spanning multiple
classes of small satellites
- Launched new Responsive Space Initiative to deliver standard
buses in 30 days, with integrated payloads in 60 days
Terran Orbital Corporation (NYSE: LLAP) ("Terran Orbital" or the
"Company"), a leading manufacturer of satellite products primarily
serving the aerospace and defense industries, today announced
financial results and operational highlights for the three and nine
months ended September 30, 2023.
Third Quarter 2023 Highlights
- Generated record revenue of $43.9 million, up 58%
year-over-year
- Gross profit of $9.7 million compared to $37 thousand in
3Q22
- Adjusted gross profit of $12.0 million compared to $3.2 million
in 3Q22
- Net loss of $26.4 million compared to a net loss of $27.4
million in 3Q22
Marc Bell, Co-Founder, Chairman, and Chief Executive Officer of
Terran Orbital said, “I am pleased to report our company’s
continued growth in revenue, which highlights the confidence and
trust our customers have in us. In addition, we are seeing
improvements in our gross profit and adjusted gross profit margins.
I am a big believer that if you control your supply chain you
control your destiny. We are still in the early stages of
leveraging our enhanced capabilities from our investments in our
supply chain such as machinery, equipment, and automation. We
believe these investments will help us position ourselves to win
major customer awards while improving our operating metrics.
Finally, we are excited to have recently announced $160 million of
new awards, including our selection to be a satellite bus provider
for the Space Development Agency’s Tranche 2 of the Transport Layer
Beta award. This award represents a continuation of our involvement
on Tranche 0 and Tranche 1 of the Transport Layer, and we believe
this is a prime example of how early-stage awards can blossom into
larger awards over time.”
Results for the Third Quarter 2023
Revenue for the third quarter of 2023 was $43.9 million, up 58%
compared to $27.8 million for the same quarter in 2022. The
increase in revenue was primarily due to continued and increased
progress made in satisfying our customer contracts and reflects the
ongoing favorable impact from significant contract wins and
modifications in recent periods. Third quarter revenue was
negatively impacted by an estimated $1.8 million of EAC adjustments
on certain firm fixed programs during the period. EAC adjustments
represent net changes during the period in our aggregate program
contract values, estimated costs at completion and other program
estimates and changes and include the cost of overruns and
recognition of loss reserves.
Cost of sales for the third quarter of 2023 was $34.2 million
compared to $27.8 million in the same quarter in 2022. The increase
in cost of sales was primarily due to an increase of $4.6 million
in labor, materials, third-party services, overhead, launch costs,
other direct costs, $2.2 million in inventory reserves, and $0.9
million in depreciation and amortization partially offset by a
decrease of $1.8 million in share-based compensation expense. Cost
of sales included an estimated positive impact of $3.2 million due
to EAC adjustments on certain programs and non-recurring changes in
estimates related to inventory during the third quarter of
2023.
Gross profit was $9.7 million in the third quarter of 2023,
compared to $37 thousand in the same quarter in 2022. Excluding
share-based compensation and depreciation and amortization included
in cost of sales, Adjusted Gross Profit(1) in the third quarter was
$12.0 million, compared to Adjusted Gross Profit of $3.2 million in
the same quarter in 2022. Gross profit and Adjusted Gross Profit
included an estimated positive impact of $1.5 million due to EAC
adjustments and non-recurring changes in estimates related to
inventory during the third quarter of 2023.
Selling, general, and administrative expenses were $29.0 million
in the third quarter of 2023, compared to $24.7 million for the
same quarter in 2022. The increase was primarily driven by
increases in labor and benefits, sales and marketing, and business
development, partially offset by a decrease in share-based
compensation expense and business insurance expense.
Our net loss for the third quarter of 2023 was $26.4 million
compared to a net loss of $27.4 million for the same period in the
prior year. The decrease in net loss for the quarter was primarily
driven by improvements in our loss from operations and a decrease
in other expense, partially offset by higher interest expense.
Adjusted EBITDA(1) was $(13.0) million for the third quarter of
2023, compared to $(13.9) million in the same quarter of 2022. The
increase in Adjusted EBITDA was primarily due to an increase in
Adjusted Gross Profit, partially offset by an increase in selling,
general, and administrative expenses as a result of our growth
initiatives.
Capital expenditures totaled $6.1 million in the third quarter
of 2023 and $18.5 million in the nine months ended September 30,
2023.
Balance Sheet and Liquidity
As of September 30, 2023, Terran Orbital had $38.7 million of
cash on hand and approximately $313.0 million in gross debt
obligations. The Company’s debt includes $18.8 million in
connection with an obligation under one of its PIPE investment
subscription agreements, all of which is payable in cash or equity
at the Company’s option, subject to certain requirements.
Subsequent to quarter-end, the Company had over $70 million of cash
on hand as of October 31, 2023.
Backlog
Backlog represents the estimated dollar value of executed
contracts, including both funded (firm orders for which funding is
authorized and appropriated) and unfunded portions of such
contracts, for which work has not been performed. Although backlog
reflects business associated with contracts that are considered to
be firm, terminations, amendments or contract cancellations may
occur, which could result in a reduction in our total backlog.
Our backlog totaled $2.6 billion and $170.8 million as of
September 30, 2023 and December 31, 2022, respectively. As of
September 30, 2023, our backlog included $2.4 billion related to
our contract with Rivada, which is subject to uncertainty with
regard to the timing of performance.
Including the October award announcements mentioned, our backlog
increases to an estimated $2.75 billion on a pro forma basis.
Outlook
Due to the delay and uncertainty regarding the timing of
performance related to our contract with Rivada versus our original
expectations, we are removing any further revenue contribution from
this contract in our current year forecast but continue to expect
revenue contribution in future years. As a result of this removal
and other factors, we now expect 2023 revenue to be in excess of
$130 million, a reduction from our prior expectation of generating
revenue in excess of $250 million in 2023. Additionally, our
year-to-date adjusted gross profit margin of 16.5% is now in line
with our previously disclosed year-end targets, and we expect
gradual improvement in future periods. However, the pace and
magnitude of margin improvement may vary depending on program mix
and execution. Our capital expenditures for the year 2023 are
expected to be less than $30 million.
(1) Non-GAAP financial measure. Definitions of the non-GAAP
financial measures used in this press release and reconciliations
of such measures to their nearest GAAP measures are included
below.
Conference Call Information
As previously announced, Terran Orbital’s third quarter earnings
call is scheduled for November 14, 2023 at 11:00 a.m. ET. The live
webcast will be accessible on the Terran Orbital Investor Relations
website at investors.terranorbital.com. The call can also be
accessed by dialing 833-470-1428 within the U.S. and by dialing
404-975-4839 outside of the U.S. The passcode for both is 057763. A
replay will be available by accessing the same link as listed
above.
About Terran Orbital
Terran Orbital Corporation is a leading manufacturer of
satellite products primarily serving the aerospace and defense
industries. Terran Orbital provides end-to-end satellite solutions
by combining satellite design, production, launch planning, mission
operations, and on-orbit support to meet the needs of the most
demanding military, civil, and commercial customers. Learn more at
www.terranorbital.com.
Forward-Looking Statements
This press release contains, and the Company’s officers and
representatives may from time to time make other public written and
verbal announcements that contain, “forward-looking statements” for
purposes of the federal securities laws. We intend such
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities and Exchange Act of 1934, as amended. All statements,
other than statements of present or historical facts, contained in
this press release, regarding our expected future financial
results, including for the fiscal year ending December 31, 2023,
our business strategy, future operations, results of operations and
its impact on our shareholders, our ability to execute,
expectations regarding key customer contracts, and expectations,
plans and objectives of management are forward-looking statements.
Forward-looking statements are typically identified by such words
as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,
“estimate,” “forecast,” “project,” “continue,” “could,” “may,”
“might,” “possible,” “potential,” “predict,” “will,” “should,”
“would” and “could” and other similar words and expressions, but
the absence of these words does not mean that a statement is not
forward-looking. These forward-looking statements involve a number
of risks, uncertainties (many of which are beyond our control), or
other assumptions that may cause actual results or performance to
be materially different from those expressed or implied by the
forward-looking statements contained in this press release,
including, but not limited to: Rivada’s ability to obtain
additional funding to continue to finance its operations and fund
future installments of our manufacturing contract; the status of
Rivada’s regulatory approvals for its constellation and business
operations and continuing ability to receive and maintain required
regulatory approvals to conduct its business; Rivada’s right to
terminate our contract for convenience or default; our ability to
scale-up our manufacturing processes and facilities in order to
meet the demands of the Rivada program and other programs; our
ability to regain compliance with the listing standards of the New
York Stock Exchange; our ability to execute on programs and collect
from customers in a timely manner; our ability to finance our
operations, the ability to implement business plans, forecasts, and
other expectations, and to identify and realize additional
opportunities; anticipated timing, cost, financing and development
of our satellite manufacturing capabilities; limited access, or
access on unfavorable terms, to equity and debt capital markets and
other funding sources that will be needed to fund operations and
make investments; and the other risks disclosed in our Annual
Report on Form 10-K filed with the SEC on March 23, 2023, the
prospectus supplement dated September 18, 2023 related to our
Registration Statement on Form S-3, as amended (File No.
333-271093), which was declared effective by the SEC on April 18,
2023, and in our Quarterly Report on Form 10-Q filed with the SEC
on August 14, 2023.
These forward-looking statements are based on management’s
current expectations, plans, forecasts, assumptions, and beliefs
concerning future developments and their potential effects. There
can be no assurance that the future developments affecting us will
be those that we have anticipated, and we may not actually achieve
the plans, intentions or expectations disclosed in our
forward-looking statements, and you should not place undue reliance
on our forward-looking statements. New risk factors and
uncertainties may emerge from time to time, and it is not possible
to predict all risks, nor can we assess the impact of all factors
on our business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from
those contained in any forward-looking statements we may make. You
should read this press release with the understanding that our
actual future results may be materially different from the
expectations disclosed in the forward-looking statements we make.
All forward-looking statements we make are qualified in their
entirety by this cautionary statement. The forward-looking
statements contained in this press release are made as of the date
of this press release, and we do not assume any obligation to, and
we do not intend to, update any forward-looking statements to
reflect events or circumstances after the date they were made,
whether as a result of new information, future events or otherwise,
except as required by law.
TERRAN ORBITAL
CORPORATION
Condensed Consolidated Balance
Sheets (Unaudited)
(In thousands)
September 30, 2023
December 31, 2022
Assets:
Cash and cash equivalents
$
38,676
$
93,561
Accounts receivable, net
15,298
4,754
Contract assets, net
4,748
6,763
Inventory
34,045
24,133
Prepaid expenses and other current
assets
11,772
9,710
Total current assets
104,539
138,921
Property, plant, and equipment, net
47,090
24,743
Other assets
18,608
18,990
Total assets
$
170,237
$
182,654
Liabilities and shareholders'
deficit:
Current portion of long-term debt
$
11,632
$
7,739
Accounts payable
31,379
21,188
Contract liabilities
13,439
27,228
Reserve for anticipated losses on
contracts
1,013
2,860
Accrued expenses and other current
liabilities
15,770
11,721
Total current liabilities
73,233
70,736
Long-term debt
164,257
142,620
Warrant and derivative liabilities
32,416
39,950
Other liabilities
19,108
20,769
Total liabilities
289,014
274,075
Shareholders' deficit:
Preferred stock
-
-
Common stock
19
14
Additional paid-in capital
351,203
269,574
Accumulated deficit
(470,172
)
(361,168
)
Accumulated other comprehensive income
173
159
Total shareholders' deficit
(118,777
)
(91,421
)
Total liabilities and shareholders'
deficit
$
170,237
$
182,654
TERRAN ORBITAL
CORPORATION
Condensed Consolidated
Statements of Operations and Comprehensive Loss (Unaudited)
(In thousands, except share
and per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue
$
43,885
$
27,830
$
104,315
$
62,314
Cost of sales
34,194
27,793
95,221
68,784
Gross profit (loss)
9,691
37
9,094
(6,470
)
Selling, general, and administrative
expenses
29,003
24,696
90,265
84,283
Loss from operations
(19,312
)
(24,659
)
(81,171
)
(90,753
)
Interest expense, net
12,657
7,147
35,320
17,007
Loss on extinguishment of debt
-
-
-
23,141
Change in fair value of warrant and
derivative liabilities
(5,503
)
(6,001
)
(7,534
)
(2,325
)
Other (income) expense
(59
)
1,496
24
2,367
Loss before income taxes
(26,407
)
(27,301
)
(108,981
)
(130,943
)
Provision for income taxes
22
54
23
58
Net loss
(26,429
)
(27,355
)
(109,004
)
(131,001
)
Other comprehensive income, net of
tax:
Foreign currency translation
adjustments
37
138
14
327
Total comprehensive loss
$
(26,392
)
$
(27,217
)
$
(108,990
)
$
(130,674
)
Weighted-average shares
outstanding
Basic and diluted
178,624,492
143,276,708
159,856,355
123,317,997
Net loss per share
Basic and diluted
$
(0.15
)
$
(0.19
)
$
(0.68
)
$
(1.06
)
TERRAN ORBITAL
CORPORATION
Condensed Consolidated
Statements of Cash Flows (Unaudited)
(In thousands)
Nine Months Ended September
30,
2023
2022
Cash flows from operating
activities:
Net loss
$
(109,004
)
$
(131,001
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
5,031
2,612
Non-cash interest expense
23,047
8,581
Share-based compensation expense
17,529
40,354
Provision for losses on receivables and
inventory
2,568
295
Loss on extinguishment of debt
-
23,141
Change in fair value of warrant and
derivative liabilities
(7,534
)
(2,325
)
Amortization of operating right-of-use
assets
873
1,003
Other non-cash, net
198
1,000
Changes in operating assets and
liabilities:
Accounts receivable, net
(10,784
)
(1,565
)
Contract assets
2,158
(12,370
)
Inventory
(11,756
)
(9,338
)
Accounts payable
7,975
11,532
Contract liabilities
(13,911
)
17,156
Reserve for anticipated losses on
contracts
(1,846
)
572
Accrued interest
8
(2,289
)
Other, net
(771
)
(1,491
)
Net cash used in operating activities
(96,219
)
(54,133
)
Cash flows from investing
activities:
Purchases of property, plant, and
equipment
(18,455
)
(15,013
)
Net cash used in investing activities
(18,455
)
(15,013
)
Cash flows from financing
activities:
Proceeds from long-term debt
1,409
36,856
Proceeds from warrants and derivatives
47,445
42,247
Proceeds from Tailwind Two Merger and PIPE
Investment
-
58,424
Proceeds from issuance of common stock
22,172
14,791
Proceeds from issuance of common stock
under the Committed Equity Facility
-
1,795
Repayment of long-term debt
(6,319
)
(30,958
)
Payment of issuance costs
(5,308
)
(45,746
)
Proceeds from exercise of stock
options
460
269
Net cash provided by financing
activities
59,859
77,678
Effect of exchange rate fluctuations on
cash and cash equivalents
(70
)
(34
)
Net (decrease) increase in cash and cash
equivalents
(54,885
)
8,498
Cash and cash equivalents at beginning of
period
93,561
27,325
Cash and cash equivalents at end of
period
$
38,676
$
35,823
TERRAN ORBITAL CORPORATION Non-GAAP
Measures
To provide investors with additional information in connection
with our results as determined in accordance with GAAP, we disclose
the non-GAAP financial measures Adjusted Gross Profit and Adjusted
EBITDA. These non-GAAP measures may be different from non-GAAP
measures made by other companies. These measures may exclude items
that are significant in understanding and assessing our financial
results. Therefore, these measures should not be considered in
isolation or as an alternative to net income or other measures of
financial performance or liquidity under GAAP.
TERRAN ORBITAL CORPORATION
Reconciliations of GAAP to Non-GAAP Measures (Unaudited)
(In thousands)
Adjusted Gross Profit
We define Adjusted Gross Profit as gross profit or loss adjusted
for (i) share-based compensation expense included in cost of sales
and (ii) depreciation and amortization included in cost of
sales.
We believe that the presentation of Adjusted Gross Profit is
appropriate to provide additional information to investors about
our gross profit adjusted for certain non-cash items. Further, we
believe Adjusted Gross Profit provides a meaningful measure of
operating profitability because we use it for evaluating our
business performance, making budgeting decisions, and comparing our
performance against that of other peer companies using similar
measures.
There are material limitations to using Adjusted Gross Profit.
Adjusted Gross Profit does not take into account all items which
directly affect our gross profit or loss. These limitations are
best addressed by considering the economic effects of the excluded
items independently and by considering Adjusted Gross Profit in
conjunction with gross profit or loss as calculated in accordance
with GAAP.
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Gross profit (loss)
$
9,691
$
37
$
9,094
$
(6,470
)
Share-based compensation expense
919
2,715
4,942
10,057
Depreciation and amortization
1,433
486
3,131
1,529
Adjusted gross profit
$
12,043
$
3,238
$
17,167
$
5,116
TERRAN ORBITAL CORPORATION
Reconciliations of GAAP to Non-GAAP Measures (Unaudited)
(In thousands)
Adjusted EBITDA
We define Adjusted EBITDA as net income or loss adjusted for (i)
interest, (ii) taxes, (iii) depreciation and amortization, (iv)
share-based compensation expense, (v) loss on extinguishment of
debt, (vi) change in fair value of warrant and derivative
liabilities, and (vii) other non-recurring and/or non-cash
items.
We believe that the presentation of Adjusted EBITDA is
appropriate to provide additional information to investors about
our operating profitability adjusted for certain non-cash items,
non-routine items that we do not expect to continue at the same
level in the future, as well as other items that are not core to
our operations. Further, we believe Adjusted EBITDA provides a
meaningful measure of operating profitability because we use it for
evaluating our business performance, making budgeting decisions,
and comparing our performance against that of other peer companies
using similar measures.
There are material limitations to using Adjusted EBITDA.
Adjusted EBITDA does not take into account certain significant
items, including depreciation and amortization, interest, taxes,
and other adjustments which directly affect our net income or loss.
These limitations are best addressed by considering the economic
effects of the excluded items independently and by considering
Adjusted EBITDA in conjunction with net income or loss as
calculated in accordance with GAAP.
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net loss
$
(26,429
)
$
(27,355
)
$
(109,004
)
$
(131,001
)
Interest expense, net
12,657
7,147
35,320
17,007
Provision for income taxes
22
54
23
58
Depreciation and amortization
2,323
911
5,031
2,612
Share-based compensation expense
3,774
9,204
17,529
40,354
Loss on extinguishment of debt
-
-
-
23,141
Change in fair value of warrant and
derivative liabilities
(5,503
)
(6,001
)
(7,534
)
(2,325
)
Other, net(a)
174
2,134
1,747
6,755
Adjusted EBITDA
$
(12,982
)
$
(13,906
)
$
(56,888
)
$
(43,399
)
(a) - Represents other expense and other
charges and items. Non-recurring legal and accounting fees related
to our transition to a public company and financing transactions
are included herein.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231114452717/en/
ir@terranorbital.com 949-202-8476
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