Terran Orbital Posts Record Revenue, But Declining Cash Supply Raises Concerns
Terran Orbital recorded record revenue of $28 million in the first quarter of 2023 and a new 16-satellite deal, but the company is burning through cash quickly. The manufacturer announced its Q1 financial results on Monday, news of a new $87 million award to manufacture 16 Low-Earth Orbit (LEO) satellites for a new, unnamed customer.
Revenue of $28 million was a 115% increase over the same time period last year, as Terran Orbital fulfills more orders and received a milestone payment from Rivada Space Networks for its constellation deal. Financing on the Rivada deal is under an NDA, and Terran cannot share the amount of milestone payment.
The full Rivada deal is described as 300 satellites worth $2.4 billion, and of those, 25 satellites will be built and commissioned in the first “design phase,” CEO Marc Bell said on a Monday call with investors.
Bell also said the new unnamed 16-satellite customer takes Terran Orbital’s backlog to about 30 programs.
Yet the cost of sales at $29.6 million was greater than sales themselves. Net loss was $54 million, however net loss narrowed compared to $71 million in the same time last year. One investor raised questions if Terran Orbital’s cash on hand is sufficient to keep the company afloat to realize its future revenues. The company had $57 million in cash on hand at the end of Q1, and the investor noted the company could face a cash crunch in about six months.
Bell said the company has about $100 million of capacity available on a committed equity facility from B. Riley that it can access.
“We have lots of options in the capital market, but we’re going to be smart as we move forward,” Bell responded. “We’re trying to be smart as we raise capital. Eventually, you’ll see very quickly as these new facilities come online and these new programs start filling, that things turn very quickly in terms of revenues, profitability, and cash.
Terran Orbital is in the midst of building a 60,000 square foot facility in Irvine, California set to open later this year that will have the capacity to build 20 satellites per month. The company is also developing a separate 90,000 square foot facility in Irvine set to open in late 2024.
CFO Gary Hobart said Terran Orbital is working on a path to reach profitability on both an EBITDA basis and a free cash flow basis during 2024.
He said the company anticipates more than $250 million in sales in 2023, and fourth quarter sales could be “four times” first quarter sales.
“The exact timing of execution on our new contract work is the primary variable affecting our projected full-year 2023 results. But these contracts are the building blocks for what we believe will be a substantially higher sales base in 2024,” Hobart told investors.
Terran Orbital’s stock $LLAP dropped after the results were released from about $1.90 to about $1.60.