Terran Orbital Reports First Quarter 2024 Financial Results
Terran Orbital (NYSE: LLAP) reported its Q1 2024 financial results, highlighting a new contract with Lockheed Martin for 18 space vehicles and total awards exceeding $100 million for Q2 2024.
As of March 31, 2024, the backlog was $2.7 billion, expected to rise to over $2.8 billion, including $400 million in non-Rivada programs.
Q1 2024 revenue was $27.2 million, a 3% decline from Q1 2023 due to supply chain issues. Costs rose to $33.4 million, leading to a gross loss of $6.2 million.
Net loss improved to $53.2 million from $54.4 million in Q1 2023, driven by reduced selling, general, and administrative expenses. Adjusted EBITDA worsened to -$28.2 million from -$22.6 million. The company holds $43.7 million in cash with $316.7 million in gross debt obligations.
A strategic review is ongoing, including options like remaining independent. The special committee continues to evaluate potential value-maximizing opportunities.
- New contract with Lockheed Martin for 18 space vehicles.
- Q2 2024 awards exceed $100 million.
- Backlog expected to exceed $2.8 billion, including $400 million in non-Rivada programs.
- Net loss improved to $53.2 million from $54.4 million in Q1 2023.
- Selling, general, and administrative expenses decreased to $28.3 million from $32.5 million in Q1 2023.
- Q1 2024 revenue of $27.2 million is down 3% from Q1 2023.
- Gross loss of $6.2 million in Q1 2024, compared to $1.4 million in Q1 2023.
- Adjusted Gross Loss was -$3.4 million compared to $2.3 million in Q1 2023.
- Adjusted EBITDA worsened to -$28.2 million from -$22.6 million in Q1 2023.
- Increased cost of sales to $33.4 million from $29.6 million in Q1 2023.
- The company holds $316.7 million in gross debt obligations.
- Cash on hand is $43.7 million.
Insights
The financial results for Terran Orbital for the first quarter of 2024 show a mixed bag of outcomes. While the revenue declined by
The increase in the cost of sales and the resulting gross loss should raise some concerns. A gross loss of
Net loss was slightly better, at
Liquidity is another concern, with
The contract with Lockheed Martin for 18 space vehicles is an important milestone for Terran Orbital. This deal not only provides immediate revenue but also strengthens the long-term strategic relationship with a major player in the aerospace and defense industry. The estimated
The backlog of
The mention of vertical integration to counter supply chain issues is a forward-thinking approach. This move can significantly impact the company's ability to deliver on contracts more reliably and possibly reduce costs over time. This strategy aligns well with trends in the aerospace industry where supply chain reliability is crucial.
Terran Orbital's financial results highlight a company in the midst of growing pains but with significant potential. The
From a market perspective, the company's proactive approach to vertical integration can serve as a competitive advantage. This strategy can mitigate risks associated with subcontractors and supply chain disruptions, which are common industry challenges. The ongoing strategic review process introduces a degree of uncertainty, but it also opens the doors to potential mergers or acquisitions that could unlock significant shareholder value.
Given the mixed financial results, the company's strategy appears focused on long-term gains rather than short-term profitability. Investors should consider the strategic plans and the robust backlog as indicators of future performance, while also being mindful of the current financial constraints and operational challenges.
- Expanding collaboration and commitment from Lockheed Martin, awarded a new contract for 18 space vehicles for the Space Development Agency (SDA)
-
Second quarter 2024 awards exceed
to-date$100 million -
As of March 31, 2024, backlog was
; and, as of today, is estimated to be over$2.7 billion , inclusive of$2.8 billion of non-Rivada programs$400 million - Review of strategic alternatives still ongoing
Marc Bell, Co-Founder, Chairman, and Chief Executive Officer of Terran Orbital prefaced the release by saying, “Our team was selected by Lockheed Martin to build 18 space vehicles for the SDA’s Tranche 2 Tracking Layer. We value Lockheed Martin’s partnership and look forward to continued collaboration under our Strategic Cooperation Agreement, which runs through 2035. We remain committed to exceeding customer expectations and delivering cutting-edge satellite solutions while our strategic review is still ongoing. This process includes a range of options, including staying independent.”
Results for the First Quarter of 2024
Revenue for the first quarter of 2024 was
Commenting on the first quarter, Mr. Bell said, “We expect the delayed revenue from this single program to be recognized by the end of the third quarter of 2024. This supply chain disruption underscores the importance of our vertical integration strategy. By bringing more aspects of the manufacturing process in-house, we can become less reliant on external factors and ensure on-time delivery for our valued customers.”
Cost of sales for the quarter was
Gross loss for the first quarter of 2024 was
Selling, general, and administrative expenses were
Net loss was
Adjusted EBITDA(1) was
Capital expenditures totaled
Balance Sheet and Liquidity
As of March 31, 2024, Terran Orbital had
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. The unfunded portion of enforceable contracts is accounted for as variable consideration and is reported at our estimate of the most likely amount to which the Company is expected to be entitled. Although backlog reflects business associated with contracts considered to be firm, terminations, amendments or contract cancellations may occur, which could result in a reduction in our total backlog.
As of March 31, 2024, backlog was
Ongoing Review of Strategic Alternatives
As previously announced, a special committee of Terran Orbital’s board of directors composed solely of independent and disinterested directors, consistent with its fiduciary duties and in consultation with its financial and legal advisors, has engaged in an ongoing proactive process to evaluate strategic opportunities that are or may be available to the Company, including maintaining the status quo and continuing to operate as a standalone, independent publicly traded company, to determine the course of action that it believes will maximize value for the company’s stockholders.
Regarding the previously announced and subsequently withdrawn non-binding proposal from Lockheed Martin to acquire, in a merger transaction, all of the outstanding shares of the Company’s common stock not owned by it for a price of
The special committee does not intend to provide any updates regarding the company’s ongoing strategic review process, unless and until it deems further disclosure is appropriate. There can be no assurance that the strategic review process will result in any transaction or strategic alternative, or any assurance regarding its outcome or timing.
Conference Call Information
Terran Orbital’s first quarter earnings call is scheduled for 11:00 a.m. ET today. 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
(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.
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 the timing of revenue recognition, our business strategy and future operations, strategic review and potential resulting transactions, our results of operations and its impact on our shareholders, our ability to execute, expectations regarding key customer contracts, and other 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 maintain compliance with the listing standards of the New York Stock Exchange; our ability to operate as a going concern; 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 April 1, 2024 and 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.
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) |
||||||||
|
||||||||
|
March 31, 2024 |
December 31,
|
||||||
Assets: |
||||||||
Cash and cash equivalents |
$ |
43,701 |
|
$ |
71,663 |
|
||
Accounts receivable, net |
|
1,642 |
|
|
14,735 |
|
||
Contract assets, net |
|
26,370 |
|
|
21,390 |
|
||
Inventory |
|
34,680 |
|
|
33,348 |
|
||
Prepaid expenses and other current assets |
|
22,129 |
|
|
14,843 |
|
||
Total current assets |
|
128,522 |
|
|
155,979 |
|
||
Property, plant, and equipment, net |
|
48,356 |
|
|
46,449 |
|
||
Other assets |
|
16,020 |
|
|
17,885 |
|
||
Total assets |
$ |
192,898 |
|
$ |
220,313 |
|
||
Liabilities and shareholders' deficit: |
||||||||
Current portion of long-term debt |
$ |
12,839 |
|
$ |
11,740 |
|
||
Accounts payable |
|
24,791 |
|
|
22,850 |
|
||
Contract liabilities |
|
111,549 |
|
|
103,924 |
|
||
Reserve for anticipated losses on contracts |
|
620 |
|
|
977 |
|
||
Accrued expenses and other current liabilities |
|
35,719 |
|
|
14,408 |
|
||
Total current liabilities |
|
185,518 |
|
|
153,899 |
|
||
Long-term debt |
|
179,421 |
|
|
171,033 |
|
||
Warrant and derivative liabilities |
|
17,283 |
|
|
34,462 |
|
||
Other liabilities |
|
17,756 |
|
|
18,555 |
|
||
Total liabilities |
|
399,978 |
|
|
377,949 |
|
||
Shareholders' deficit: |
||||||||
Preferred stock |
|
- |
|
|
- |
|
||
Common stock |
|
20 |
|
|
20 |
|
||
Additional paid-in capital |
|
358,981 |
|
|
355,144 |
|
||
Accumulated deficit |
|
(566,255 |
) |
|
(513,011 |
) |
||
Accumulated other comprehensive income |
|
174 |
|
|
211 |
|
||
Total shareholders' deficit |
|
(207,080 |
) |
|
(157,636 |
) |
||
Total liabilities and shareholders' deficit |
$ |
192,898 |
|
$ |
220,313 |
|
||
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, |
|||||||
|
2024 |
2023 |
||||||
Revenue |
$ |
27,235 |
|
$ |
28,198 |
|
||
Cost of sales |
|
33,391 |
|
|
29,597 |
|
||
Gross loss |
|
(6,156 |
) |
|
(1,399 |
) |
||
Selling, general, and administrative expenses |
|
28,308 |
|
|
32,530 |
|
||
Loss from operations |
|
(34,464 |
) |
|
(33,929 |
) |
||
Interest expense, net |
|
13,696 |
|
|
10,934 |
|
||
Change in fair value of warrant and derivative liabilities |
|
5,043 |
|
|
9,455 |
|
||
Other (income) expense |
|
(11 |
) |
|
109 |
|
||
Loss before income taxes |
|
(53,192 |
) |
|
(54,427 |
) |
||
Provision for income taxes |
|
52 |
|
|
18 |
|
||
Net loss |
|
(53,244 |
) |
|
(54,445 |
) |
||
Other comprehensive (loss) income, net of tax: |
||||||||
Foreign currency translation adjustments |
|
(37 |
) |
|
20 |
|
||
Total comprehensive loss |
$ |
(53,281 |
) |
$ |
(54,425 |
) |
||
|
||||||||
Weighted-average shares outstanding |
||||||||
Basic and diluted |
|
201,442,209 |
|
|
144,062,103 |
|
||
|
||||||||
Net loss per share |
||||||||
Basic and diluted |
$ |
(0.26 |
) |
$ |
(0.38 |
) |
||
TERRAN ORBITAL CORPORATION |
||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) |
||||||||
(In thousands) |
||||||||
|
Three Months Ended March 31, |
|||||||
|
2024 |
2023 |
||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ |
(53,244 |
) |
$ |
(54,445 |
) |
||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Depreciation and amortization |
|
2,391 |
|
|
919 |
|
||
Non-cash interest expense |
|
9,581 |
|
|
7,053 |
|
||
Share-based compensation expense |
|
3,816 |
|
|
10,166 |
|
||
Provision for losses on receivables and inventory |
|
511 |
|
|
3 |
|
||
Change in fair value of warrant and derivative liabilities |
|
5,043 |
|
|
9,455 |
|
||
Amortization of operating right-of-use assets |
|
378 |
|
|
279 |
|
||
Other non-cash, net |
|
77 |
|
|
- |
|
||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable, net |
|
13,072 |
|
|
1,992 |
|
||
Contract assets |
|
(5,017 |
) |
|
1,423 |
|
||
Inventory |
|
(1,309 |
) |
|
(3,990 |
) |
||
Accounts payable |
|
2,844 |
|
|
1,009 |
|
||
Contract liabilities |
|
7,676 |
|
|
(8,021 |
) |
||
Reserve for anticipated losses on contracts |
|
(357 |
) |
|
(1,723 |
) |
||
Accrued interest |
|
(49 |
) |
|
(88 |
) |
||
Other, net |
|
(8,228 |
) |
|
3,145 |
|
||
Net cash used in operating activities |
|
(22,815 |
) |
|
(32,823 |
) |
||
Cash flows from investing activities: |
||||||||
Purchases of property, plant, and equipment |
|
(2,498 |
) |
|
(3,162 |
) |
||
Net cash used in investing activities |
|
(2,498 |
) |
|
(3,162 |
) |
||
Cash flows from financing activities: |
||||||||
Repayment of long-term debt |
|
(2,551 |
) |
|
(518 |
) |
||
Payment of issuance costs |
|
(44 |
) |
|
- |
|
||
Proceeds from exercise of stock options |
|
21 |
|
|
339 |
|
||
Net cash used by financing activities |
|
(2,574 |
) |
|
(179 |
) |
||
|
||||||||
Effect of exchange rate fluctuations on cash and cash equivalents |
|
(75 |
) |
|
30 |
|
||
|
||||||||
Net decrease in cash and cash equivalents |
|
(27,962 |
) |
|
(36,134 |
) |
||
Cash and cash equivalents at beginning of period |
|
71,663 |
|
|
93,561 |
|
||
Cash and cash equivalents at end of period |
$ |
43,701 |
|
$ |
57,427 |
|
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, |
|||||||
|
2024 |
2023 |
||||||
Gross loss |
$ |
(6,156 |
) |
$ |
(1,399 |
) |
||
Share-based compensation expense |
|
941 |
|
|
3,245 |
|
||
Depreciation and amortization |
|
1,791 |
|
|
466 |
|
||
Adjusted gross (loss) profit |
$ |
(3,424 |
) |
$ |
2,312 |
|
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, |
|||||||
|
2024 |
2023 |
||||||
Net loss |
$ |
(53,244 |
) |
$ |
(54,445 |
) |
||
Interest expense, net |
|
13,696 |
|
|
10,934 |
|
||
Provision for income taxes |
|
52 |
|
|
18 |
|
||
Depreciation and amortization |
|
2,391 |
|
|
919 |
|
||
Share-based compensation expense |
|
3,816 |
|
|
10,166 |
|
||
Change in fair value of warrant and derivative liabilities |
|
5,043 |
|
|
9,455 |
|
||
Other, net(a) |
|
11 |
|
|
401 |
|
||
Adjusted EBITDA |
$ |
(28,235 |
) |
$ |
(22,552 |
) |
(a) - Represents other expense and other charges and items. Non-recurring legal and accounting fees related to our financing transactions are included herein.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240514904938/en/
ir@terranorbital.com
949-202-8476
Source: Terran Orbital
FAQ
How did Terran Orbital perform financially in Q1 2024?
What is Terran Orbital's backlog as of Q1 2024?
What is the significance of the new contract with Lockheed Martin?
What were the key reasons for the revenue decline in Q1 2024?
What are the current liquidity and debt levels of Terran Orbital?
How did Adjusted EBITDA perform in Q1 2024?
What strategic alternatives is Terran Orbital considering?