Terran Orbital First Quarter Revenue Soars as Company Trims Net Loss
Terran Orbital (NYSE: LLAP) reported a 115 percent year-over-year increase in first-quarter revenue on Monday as the satellite manufacturer trimmed 24 percent off its net loss.
The company’s revenue was $28.2 million in the first quarter, up from $13.1 million during the same period in 2022. The company’s gross loss after subtracting the cost of sales fell from $2.8 million to $1.4 million year over year. Net loss fell 23.7% from $71.4 million to $54.4 million.
Terran Orbital Q1 2023 Key Statistics
(In thousands of dollars)
| First Quarter 2023 | First Quarter 2022 | Change | |
|---|---|---|---|
| Revenue | $28,198 | $13,120 | +114.9% |
| Cost of Sales | $29,597 | $15,953 | +85.5% |
| Gross Loss | $1,399 | $2,833 | -50.6% |
| Net Loss | $54,445 | $71,372 | -23.7% |
| Net Loss Per Share | $0.38 | $0.85 | -55.3% |
| Adjusted EBITDA | $22,552 | $14,717 | +53.2% |
Terran Orbital ended the quarter with cash and cash equivalents totaling $57.4 million, a $36.1 million or 38.6% reduction from the $93.6 million the company had on Dec. 31, 2022.
Adjusted EBITDA increased by 53.2 percent from $14.7 million to $22.6 million. Terran Orbital has been expanding its production capability to meet customer demands. The company is scheduled to break ground on a 94,195-square-foot production facility in Irvine, California, on Wednesday, May 17.
“As of March 31, 2023, the Company’s backlog totaled over $2.5 billion, driven primarily by the Company’s $2.4 billion contract with Rivada Space Networks,” reads the Terran Orbital earnings report. “The Company’s first quarter backlog includes over 360 satellites of which the majority are expected to be completed in the next 3 years.”
Terran Orbital said it received a milestone payment from Rivada last month for the 300-satellite constellation, which is being built by its Tyvak Nano-Satellite Systems subsidiary. The company did not disclose the amount of the payment.
Terran Orbital also said it had received an $87 million order to manufacture 16 satellites from a new customer since the end of the first quarter on March 31.
“I am excited to announce our record recent awards and solid operational progress,” Chairman and CEO Marc Bell said in the company announcement. “Our momentum in new constellation awards and over 30 programs on contract today sets the stage for us to harvest the benefits of our strategic investments in capacity ahead of the market’s explosion of demand.”
“We are building a new satellite production system that will have a level of scale, vertical integration, and automation not available today,” Bell added. “Our production system is designed to deliver satellites at mass scale at the speed and quality our customers desire, at a price point to stimulate new markets, and at margins to reward our shareholders. Our newest expansion will be coming online in the next few weeks and our next capacity increase is on schedule for a fall 2024 opening.”
There has been some concern among Terran Orbital investors as to whether Rivada has the funding for the satellite constellation, which must be deployed by mid-2026 under the approval the company received from the Federal Communications Commission (FCC). However, Rivada officials have said the company has secured both funding and launches to meet the deadline.
Irish businessman Declan Ganley founded Rivada and serves as its chairman and CEO. Silicon Valley venture capital Peter Thiel is financially backing the company. Republican political consultant Karl Rove and former Speaker of the House Newt Gingrich have lobbied Congress for Rivada, according to Wikipedia.
Terran Orbital’s Financials
Terran Orbital’s first-quarter financials, as well as excerpted disclaimers from the company’s press release, are below.
TERRAN ORBITAL CORPORATION
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
| March 31, 2023 | December 31, 2022 | |||||
| Assets: | ||||||
| Cash and cash equivalents | $ | 57,427 | $ | 93,561 | ||
| Accounts receivable, net | 2,836 | 4,754 | ||||
| Contract assets, net | 5,383 | 6,763 | ||||
| Inventory | 28,576 | 24,133 | ||||
| Prepaid expenses and other current assets | 10,068 | 9,710 | ||||
| Total current assets | 104,290 | 138,921 | ||||
| Property, plant, and equipment, net | 31,192 | 24,743 | ||||
| Other assets | 21,327 | 18,990 | ||||
| Total assets | $ | 156,809 | $ | 182,654 | ||
| Liabilities and shareholders’ deficit: | ||||||
| Current portion of long-term debt | $ | 9,815 | $ | 7,739 | ||
| Accounts payable | 26,357 | 21,188 | ||||
| Contract liabilities | 19,191 | 27,228 | ||||
| Reserve for anticipated losses on contracts | 1,137 | 2,860 | ||||
| Accrued expenses and other current liabilities | 16,642 | 11,721 | ||||
| Total current liabilities | 73,142 | 70,736 | ||||
| Long-term debt | 148,042 | 142,620 | ||||
| Warrant and derivative liabilities | 49,405 | 39,950 | ||||
| Other liabilities | 21,545 | 20,769 | ||||
| Total liabilities | 292,134 | 274,075 | ||||
| Shareholders’ deficit: | ||||||
| Preferred stock | – | – | ||||
| Common stock | 14 | 14 | ||||
| Additional paid-in capital | 280,095 | 269,574 | ||||
| Accumulated deficit | (415,613) | (361,168) | ||||
| Accumulated other comprehensive income | 179 | 159 | ||||
| Total shareholders’ deficit | (135,325) | (91,421) | ||||
| Total liabilities and shareholders’ deficit | $ | 156,809 | $ | 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 March 31, 2023 | Three Months Ended March 31, 2022 | |||||
| Revenue | $ | 28,198 | $ | 13,120 | ||
| Cost of sales | 29,597 | 15,953 | ||||
| Gross loss | (1,399) | (2,833) | ||||
| Selling, general, and administrative expenses | 32,530 | 30,217 | ||||
| Loss from operations | (33,929) | (33,050) | ||||
| Interest expense, net | 10,934 | 2,923 | ||||
| Loss on extinguishment of debt | – | 23,141 | ||||
| Change in fair value of warrant and derivative liabilities | 9,455 | 11,853 | ||||
| Other expense | 109 | 403 | ||||
| Loss before income taxes | (54,427) | (71,370) | ||||
| Provision for income taxes | 18 | 2 | ||||
| Net loss | (54,445) | (71,372) | ||||
| Other comprehensive income, net of tax: | ||||||
| Foreign currency translation adjustments | 20 | 47 | ||||
| Total comprehensive loss | $ | (54,425) | $ | (71,325) | ||
| Weighted-average shares outstanding | ||||||
| Basic and diluted | 144,062,103 | 83,643,940 | ||||
| Net loss per share | ||||||
| Basic and diluted | $ | (0.38) | $ | (0.85) |
TERRAN ORBITAL CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
| Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | |||||
| Cash flows from operating activities: | ||||||
| Net loss | $ | (54,445) | $ | (71,372) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
| Depreciation and amortization | 919 | 846 | ||||
| Non-cash interest expense | 7,053 | 1,215 | ||||
| Share-based compensation expense | 10,166 | 17,335 | ||||
| Provision for losses on receivables and inventory | 3 | 169 | ||||
| Loss on extinguishment of debt | – | 23,141 | ||||
| Change in fair value of warrant and derivative liabilities | 9,455 | 11,853 | ||||
| Amortization of operating right-of-use assets | 279 | 305 | ||||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable, net | 1,992 | (15,002) | ||||
| Contract assets | 1,423 | (928) | ||||
| Inventory | (3,990) | (1,550) | ||||
| Accounts payable | 1,009 | 2,134 | ||||
| Contract liabilities | (8,021) | 6,708 | ||||
| Reserve for anticipated losses on contracts | (1,723) | 79 | ||||
| Accrued interest | (88) | (4,803) | ||||
| Other, net | 3,145 | 570 | ||||
| Net cash used in operating activities | (32,823) | (29,300) | ||||
| Cash flows from investing activities: | ||||||
| Purchases of property, plant, and equipment | (3,162) | (4,030) | ||||
| Net cash used in investing activities | (3,162) | (4,030) | ||||
| Cash flows from financing activities: | ||||||
| Proceeds from long-term debt | – | 35,942 | ||||
| Proceeds from warrants and derivatives | – | 42,247 | ||||
| Proceeds from Tailwind Two Merger and PIPE Investment | – | 58,424 | ||||
| Proceeds from issuance of common stock | – | 14,791 | ||||
| Repayment of long-term debt | (518) | (27,171) | ||||
| Payment of issuance costs | – | (41,681) | ||||
| Proceeds from exercise of stock options | 339 | 135 | ||||
| Net cash (used in) provided by financing activities | (179) | 82,687 | ||||
| Effect of exchange rate fluctuations on cash and cash equivalents | 30 | (28) | ||||
| Net (decrease) increase in cash and cash equivalents | (36,134) | 49,329 | ||||
| Cash and cash equivalents at beginning of period | 93,561 | 27,325 | ||||
| Cash and cash equivalents at end of period | $ | 57,427 | $ | 76,654 |
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 March 31, 2023 | Three Months Ended March 31, 2022 | |||||
| Gross loss | $ | (1,399) | $ | (2,833) | ||
| Share-based compensation expense | 3,245 | 2,113 | ||||
| Depreciation and amortization | 466 | 513 | ||||
| Adjusted gross profit (loss) | $ | 2,312 | $ | (207) |
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 March 31, 2023 | Three Months Ended March 31, 2022 | |||||
| Net loss | $ | (54,445) | $ | (71,372) | ||
| Interest expense, net | 10,934 | 2,923 | ||||
| Provision for income taxes | 18 | 2 | ||||
| Depreciation and amortization | 919 | 846 | ||||
| Share-based compensation expense | 10,166 | 17,335 | ||||
| Loss on extinguishment of debt | – | 23,141 | ||||
| Change in fair value of warrant and derivative liabilities | 9,455 | 11,853 | ||||
| Other, net(a) | 401 | 555 | ||||
| Adjusted EBITDA | $ | (22,552) | $ | (14,717) |
(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.
Leave a Reply
You must be logged in to post a comment.