Terran Orbital Reports Record Third Quarter 2023 Financial Results
- Record revenue and gross profit in 3Q23
- Announcement of over $160 million in new awards since June 30, 2023
- Introduction of seven new standard bus designs and a Responsive Space Initiative
- Net loss of $26.4 million in 3Q23
- Decrease in 2023 revenue forecast from over $250 million to in excess of $130 million
New Bus Designs and Rapid Response Pave the Way for the Future
-
Record revenue of
in 3Q23, up$43.9 million 58% year-over-year -
LTM revenue, up$136.2 million 87% versus prior 12-month period -
Gross profit of
compared to$9.7 million in 3Q22$37 thousand -
Gross margin improved to
22.1% in 3Q23 from0.1% in 3Q22 -
Announced over
in new awards since June 30, 2023$160 million -
Consolidated cash balance in excess of
as of October 31, 2023$70 million - 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
Third Quarter 2023 Highlights
-
Generated record revenue of
, up$43.9 million 58% year-over-year -
Gross profit of
compared to$9.7 million in 3Q22$37 thousand -
Adjusted gross profit of
compared to$12.0 million in 3Q22$3.2 million -
Net loss of
compared to a net loss of$26.4 million in 3Q22$27.4 million
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
Results for the Third Quarter 2023
Revenue for the third quarter of 2023 was
Cost of sales for the third quarter of 2023 was
Gross profit was
Selling, general, and administrative expenses were
Our net loss for the third quarter of 2023 was
Adjusted EBITDA(1) was
Capital expenditures totaled
Balance Sheet and Liquidity
As of September 30, 2023, 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. 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
Including the October award announcements mentioned, our backlog increases to an estimated
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
(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
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,
|
|
|
December 31,
|
|
||
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
|
|
|
Nine Months Ended
|
|
||||||||||
|
|
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
|
|
|
Nine Months Ended
|
|
||||||||||
|
|
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
|
|
|
Nine Months Ended
|
|
||||||||||
|
|
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
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Source: Terran Orbital
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