Welcome to the Jefferies Virtual Space Summit. I'm Greg Konrad from the Aerospace and Defense Equity Research Team at Jefferies. Very excited to have Terran Orbital with us today, and Marc Bell, Chairman, CEO, and Co-founder, and Adarsh Parekh, CFO. Thanks, guys, for being here today. Maybe just to begin, if you can give a little background on Terran Orbital, for those who aren't as familiar with it and the history behind the company. Sure. Thank you for having us today. I'll try to be real short. Terran Orbital started over a decade ago. We acquired a company called Tyvak Nano-Satellite Systems, which was the inventor of the CubeSat. We focused predominantly on CubeSats for the first decade. A little over three years ago, we signed a strategic cooperation agreement with Lockheed Martin. Lockheed Martin owns a little less than a third of the company. That agreement goes through 2035. We have went from a CubeSat manufacturer; today we're predominantly a defense and intelligence manufacturer of satellites. We build space vehicles for Lockheed, for the Space Development Agency. We're on SDA's transport layers, Tranche 0, Tranche 1, Tranche 2 Beta. We're now on the Tracking Layer for the Space Development Agency, and we do other work as well for the DoD and the IC, in addition to our new commercial business as well. And then how do you think about the competitive advantage and differentiation versus other manufacturers? Why do you win? You know, it's, you know, I always say, control your supply chain and control your destiny. Unlike most primes, we control our supply chain. We make over 90% of our components and modules in-house. We own our own machine shops. We own our printed circuit board assembly facilities, our own harnessing, torque rods, et cetera. So we do everything in-house versus a traditional prime, you know, goes to hundreds of subcontractors to buy components. By controlling our supply chain, we also guarantee interoperability and guarantee that our satellites work every time when they're launched, and we're able to do it for a fraction of the cost. Thinking of it, you know, not too long ago, it used to cost $1 billion to take a decade to build a satellite. Today, we could do it for millions and do it in months, not years. And, you know, it's Tactically Responsive Space. It's... It's... The world's changing very quickly. And then, I mean, you mentioned the partnership with Lockheed, but how does that contribute to the success, and how do you think about the opportunity with that over time, given, you know, the Transport Layer Tranche 2 win? You know, how much opportunity is there maybe outside of the SDA with Lockheed? Lockheed has been a tremendous partner. You know, the original plan when we started with Lockheed was to turn us into a prime, which we have now done. Their idea was for us to stand alone on our own two feet, which is what we're doing. Lockheed's been a fabulous customer, giving us a lot of work, and we appreciate that. We also have access to a lot of their technical resources, which has been great, but, you know, we've matured as a business, and now we're bidding as a prime on not just SDA work, but on work around the world, for different governments, all over the planet. And then maybe just transitioning to the largest contract with Rivada. You know, how do you think about the ramp in that contract and maybe any details around timing? What's the latest on that? Listen, we've all been disappointed with how long it's taken, but they're getting there. We're just wrapping up PDR now. We had told people that PDR was gonna be done by the end of this quarter, and we are days away from hopefully wrapping up PDR. And that takes us to the next phase of getting us to start building satellites. So, we're excited to see Rivada get moving. And then you, you do also prime, you know, outside of the, the Lockheed work. I mean, what is the transition or, or where should we think about LLAP as, as priming versus partnering? You know, where there may be more opportunities to, to partner. How, how do you make that decision? So we look at it as, you know, co-opetition. It's a word we coined years ago. It's, you know, we work with people, and we're also competing against people at the same time. We're forming many relationships with many different primes, people like Safran, and others that we're working with on different programs, different primes around the world. And you'll see more and more announcements over the next few months of us signing strategic deals with different primes around the world, as we look more global for our business, 'cause every country wants to build a Transport Layer, every country wants to build a Tracking Layer. And so for the allies of the U.S., you know, we wanna be supportive of those programs, but we're able to do the whole satellite, not just do the bus. So we're migrating from... We still provide buses to anybody who wants them, and we'll happily do that, but we'll also prime as well, where we think it's appropriate. I think on the last call, you sized a $25 billion pipeline. How many more opportunities are there in terms of the size and scope of Rivada or the SDA? I think you've mentioned more than 140 programs. Any particular areas that you're seeing the most opportunity? It is mind-boggling. I mean, ever since the Ukraine war started, you know, the U.S. showed at the beginning of the war that it wasn't necessarily a trusted partner in the beginning of the war, not providing them any intelligence, any assistance. Of course, the U.S. has stepped up, but it got everybody thinking: "Well, you know, we need to have our own satellites. We need to control our own destiny." So we're seeing people from all over the planet looking to buy satellites, ISR, comms. It's really just incredible. There's a huge space race going on right now. Think of it, the U.S. alone, there are over applications in the FCC for over 50,000 satellites to get licensed, and that's just from the U.S. Now, imagine the other 190 countries in the ITU and how much total, the total has got to be enormous. And it's a, you know... SpaceX made it cheap to get to space. We're making it cheap to put satellites in their rockets. ...And then how do you think about that, that mix going forward between commercial versus Intel versus DOD? I mean, do you see any, you know, that trending any particular way over time? You know, it all depends. We have lots of commercial work we're bidding on that's, you know, huge, very, very large billion-dollar constellations, and there's lots of DoD and customer work around the world. I think it's too early to say which way it's gonna go. We prefer the military work 'cause it's guaranteed money, and it's recurring revenue business guaranteed. So for every satellite we build, five years from now, we've got to go build another one to replace it. So as we start to build that business, and that book of business will only continue to multiply as these satellites get deorbited and need to be replaced. So the more programs we get on, the better off we'll be for the long term. And that's actually a good transition to the next question. I mean, with that, how much can you leverage prior work? I mean, what's the typical commonality around these satellites when it comes to some form of non-recurring engineering? Where does that maybe create an advantage, you know, for off of past work? So if you look at our existing satellites today, we just announced in September 7th new buses that are new standards and everything up to 1,000 kg. But almost all the components and modules in these buses are universal. So it's the same 66-volt battery, whether you need 10, 20, or 30 batteries, whether you need 5, 10, 15 reaction wheels. Whatever it is, it's just the same components, and they're guaranteed to be interoperable with each other because they all use our own software. So everything works every time, but we're able to make them very quickly using robotics. We have a very big... we're building more and more robots to build and assemble the components and modules and soon to assemble the satellites, and that reduces any error when we build stuff. So we're seeing a large transition from manual engineering to manual assembly to robotic assembly. But what we've learned in the past, every time we fly something, we learn, we try to do it better. We are continuing to evolve our components and modules. You know, we're now doing redesigning everything for conformal coating and redesigning everything for radiation tolerance, redesigning everything for Ethernet, getting rid of harnessing. You know, trying to not do things the way they used to be done, but to do it the way they should be done. And that'll... So So the goal is to eventually lower the mass of a satellite, increase the functionality, and lower the cost, giving the customer more value for their money and speed up the schedule. That's also the real kicker to all this, is the amount of schedule gain we get. I mean, and just following on that, I mean, what do you view as the competitive advantages from vertical integration? Just thinking about development process and integration of satellites. And then, you know, when you think about the portfolio, how do you look at maybe advancing technology for each part of the satellite that you produce? And when we think about the investment, like, is there a crossover volume where that becomes even more effective? Yeah. So on the, on the vertical integration, it helps a lot. So what happens is, so if a customer, you know, we're able to prototype a part literally overnight. So if we design a new part, we can, we can make it on a PCBA machine, we can make the metalwork in our CNC shop. If there's something we don't like, we literally can replicate it overnight. We don't have to issue purchase orders, find a vendor, negotiate with that vendor, send it out, get it back, and we also own all our own testing equipment in-house, our own TVAC chambers, shaker tables, Thermotrons, everything's in-house. Able to test things and do a lot of experimentation in order to continually evolve our products. We continue to evolve our flight computers, evolve all the software, our the accuracy of our star trackers, the size of our reaction wheels. We're continuing to evolve by increasing our... You know, the military industrial base of the United States has really declined over the past few decades as we used to ship everything overseas. So we're bringing those trades back here to America and, and doing it, paying, giving people a living wage, and producing a very high-quality product, in doing so. And then, I mean, you mentioned more than 90% in-house. Where has there been some lag, and what's next in terms of the evolution? I mean, specifically, I'm thinking about propulsion and some of the issues and some of the solutions that you have there. Yeah. Propulsion has definitely been a problem. We had a huge problem with Astra not delivering that we counted on. We have pivoted now to other propulsion providers, but we are bringing propulsion in-house. We're doing it a number of different ways. We announced a deal with Safran to make their engines in-house here for them, and be able to sell them here and in the U.S. But we're working with companies like Busek in Boston, who've been great. But we will announce in Q3 our new propulsion assembly facility, that'll be open in Q3, and we're very excited about that. And so we'll be able to assemble all the propulsion units in-house, and we're also starting to be able to fabricate things in-house for propulsion. But some of our designs will be licensed from other people, some of them will be built, or will be homegrown, but it's a very key component that we're able to do in-house, and that's probably next on my evolution list. And then we've other things we're gonna be adding after that, so we can get from 90% to 100% of that satellite in-house. And then we were talking about it a little bit before, but can you maybe just talk about broader capacity, given the new capacity coming online? You know, what's the timing on that, and how does that contribute to production capabilities and costs? Just thinking about, you know, infrastructure, different infrastructure and production capacity. So, so currently, we're at capacity. We have a high-class problem, and our new facility we just opened early this year, or end of last year, I should say, which is great. We just call it 50 Tech. We got 40+ satellites on the floor right now being built, and it's wonderful. And those will get shipped out, and more will get, will get built, more will start getting built. The new facility will be opening in Q1 of 2025. It'll take us from 20,000 sq ft of assembly space to 80,000 sq ft. We'll be moving all our assembly there, and the existing facilities will focus just on modules and components. And that's just around the corner from where we are now. It's minimal capital investment. It's just a giant clean room. So we have a great arrangement with the builder of the building for TI work, so we're very pleased. And it will help us a lot. That'll bring us up to about 96 space vehicles a month capacity out of that facility, versus about 20 today. And then, you know, when that capacity comes online, I mean, how quickly does that ramp? Just thinking about the incremental capacity, and then, you know, tying that to backlog, how do you think about, you know, being able to fill that capacity utilization? So, so it's very funny. When we were building our, the facility that we just moved into last year, everybody told us, "We don't need it. We don't need it. We have 2,000 sq ft. That was enough. 20,000 sq ft is too much." Now, hindsight being 20/20, within eight months, or nine months, we filled that place to capacity. You know, people wanna be able to see where their satellites can be built, and that's especially with getting the bigger constellations. So we anticipate that facility will fill up very quickly. Especially with our pipeline being so large, because some potential customers wanna see that we have the capacity to build their satellites, and we're able to move schedules. So now, people tell us we need—we had a call this morning, people say we need it in 24 months. And I'll be like: "Can you take it to 12-18 months?" And they're like, "Why?" "'Cause it'll be done." And they're like, "Wow," because no, no one's doing that. And, you know, we're pushing it back. We're making it, pushing everything to the left, making it faster and faster and faster. And then, having been to the facility and maybe not recent enough, as I know a lot's happened over the last year, but it, it's very clean with a high level of automation integrated. You know, how do areas such as automation and AI contribute to the business and how you picture that trending over the next couple of years? You know, automation is critical to what we're doing. I mean, our headcount has been fairly stable the past few months as we add more and more robotics to what we do. You know, eventually, all the components and modules will be assembled robotically. By the end of 2025, all components and modules will be assembled robotically, and about a third of the satellites will be assembled robotically. And so we are definitely gearing up for, you know, high volume, but it'll continue. Our business is a business with a very high fixed cost and a very low variable cost for each incremental satellite, and that's what we're seeing happen. The cost of the components, 'cause we control the cost of those components, with the exception of chips, we're able to continue to reduce the cost and we're continue to, you know, increase functionality at the same time. But it is, you know, but we've a high fixed cost being a public company. And, that's probably our biggest attractor is just, you know, the amount of money it costs to be public. So we have a very- but that says our SG&A, if we go from $100 million of revenue to $1 billion of revenue, that SG&A remains almost pretty stable the whole time along. So, it'll become a smaller and smaller percentage of our overall revenues. As we grow in size, we get to EBITDA positive, we get to net income positive, and free cash flow positive. And then, you know, with that, you, you've talked about being EBITDA positive in 2024. You know, what are the biggest drivers of that? How do you think about volume benefit versus mix, you know, versus some of the supply chain improvement that you've called out? You know, we went from zero margin to 16% margin. We're now pushing 20% margin. We just saw a program come in at 34% margin. So, you know, we'll start seeing over the next 12 months, dramatic margin improvements. And part of it also is just a matter of, you know, it's a volume game. The more volume we push through, the higher margins we could do, but we're also delivering a lower cost to the customer. So we'll be able to continue to lower the cost to our end customer while increasing the functionality. More importantly, we'll keep adding more and more to our gross profit. 'Cause we don't add more people as we add more volume. That's where the automation and the AI comes into place. But we're gonna, we're gonna make some announcements about AI and what we've been doing the past few years, probably sometime in Q3. And then, I mean, just in terms of the economics of satellite manufacturing, just from investments and, and working capital, and, you know, I think you've been, you know, added some clarity around cash in from customers. Does the EBITDA commentary correlate with, you know, free cash flow, just looking at working capital and, and CapEx needs? Yeah, I mean, we see. We look at it as like it's revenues, then gross margin, then EBITDA, then net income, and then getting to free cash flow positive. It's, you know, and we toggled it from the top down. You know, we continue to see our backlog grow and grow—it's growing significantly. As our backlog grows, we're getting more and more things at a better margin, 'cause we're able to produce things cheaper and at a lower cost, and that eventually will drive our EBITDA. We are very, always very conscious about our overhead and trying to keep our overhead low. So we continue to reevaluate how we spend money as a company to see, to do it as frugally as possible to get us to where we need to go. Then I might, if you don't mind, we kind of went through those fast. I might ask a couple of audience questions. Sure, absolutely. You said I talk fast. There you go. And then I'm gonna filter that then out, you know- No, ask the tough questions people want. I love the tough questions. It makes it more fun. I'll ask one on debt then. I mean, how do you consider, you know, managing the debt going forward and, you know, kind of capital structure? I mean, right now, the debt going forward, you know, we have—it's not due until, I think, 2026. And, you know, our intention is to, you know, either refinance the debt or pay it out as we get, as we become free cash flow positive. So we are not... And we, our lenders obviously have a large equity stake here. The largest—one of the largest lenders is Lockheed, as you all know. So they're, and, you know, we're very important to the Lockheed ecosystem, for Lockheed Space. So we'll either refinance the debt or we'll just pay it off, one or the other. But at these interest rates, we're only paying—we're paying a very low coupon compared to what we'd get today, so we're very happy with the debt as it is. So we're gonna leave it alone. And then could you maybe speak to recent news regarding the company joining the Mobile Satellite Services Association, and what kind of future products the company is expecting to obtain by being part of that community? ...So, you know, it's great to participate in all these different communities as we start looking at more projects with direct-to-handset, Internet of Things. We're, you know, we're bidding on lots of work in that area, around the world. There's a lot of people who wanna do direct-to-handset, a lot of people who wanna do IoT, and different derivations of that. So we are very, we felt participating in these associations and the standards that are being driven, we wanna help drive standards, just like we did with the CubeSat. It helped very well. Even with our new buses, we're starting to drive standards, and we think it's important for the industry to drive standards, and we think we're uniquely positioned to help guide people to what standards are practical and buildable, and buildable at affordable rates, and that can be built quickly. And then, are you expecting to win any other big constellations? Maybe one with Gen2. I mean, back to kind of the pipeline commentary. You know, what, what do you see out there in terms of, you know, other types of constellations? Well, I hope we win big constellations. I probably wouldn't be here if we weren't thinking we're gonna win. So yes, we are constantly bidding on lots of things all over the place. And, you know, we are... From a pricing perspective, we know we're very well positioned, and from a delivery perspective, we're very well positioned. And it's, you know, still educating customers about Terran. You know, we're not, we're not Airbus, we're not Lockheed, we're not Northrop, we're not a household name. So a lot of it is just- but, but once people come out here and see what it looks like, people get it very fast. It's visiting our facility is the best-selling tool we have because when they see the robots at work and they see how fast we could do things, it's just completely different than how the industry operates. I'm not gonna ask you to provide guidance for the year. I'm gonna skip that question. How comfortable do you feel with cash position and, you know, in terms of the debt covenants kind of going into the end of the quarter? We feel very comfortable about our covenants going into the end of the quarter. No issue on our side. And then, you mentioned PDR already taking or gonna happen over the next couple of days. How do you think about the payment schedule? Are there milestones tied to the different milestones tied to the Rivada contract? Yeah, I mean, as the contract moves, the payments continue. You know, it's a constantly ever-changing conversation, because they have, you know, as you get closer to where their delivery, launch needs are and their delivery dates, you know, it changes the economics of what we need to do. But we're in constant conversations with Rivada of, you know, how much it costs, depending how far things slip, as we can build things quickly, and we get better and better at building things quickly. So we're not overly concerned, but we are concerned. But we are, right now, so far, well, look, we gotta get through PDR first. That is, that's priority one. Any way to kind of... and I'm not gonna, for many reasons, I'm not gonna ask anything about the strategic review. Well, I will say it is ongoing, and there's a special committee on the board. We're isolated from it, but it is an ongoing process. It is definitely, it definitely has not stopped. Then, any way to kind of frame the value of the Lockheed contract for Tranche 2 tracking satellites? No. We've been asked by the customer not to disclose the values. And then, status of the Goodyear production facility. As I mentioned earlier, it'll be opening in Q1 of next year. We had a delay out here in Irvine—the contractor had a delay building the building. As a place that it's not supposed to rain, it rained a lot for three months. And, Irvine sits on what's, clay, not like sand in Florida, so it doesn't dry. So they had a very hard time getting concrete, settled. That said, we are expected to take occupancy, sometime before—in over the summer, and then we can start our interior build-out. So, we're just waiting for them to get their C of O, so they can give it to us. And, so it's about a three-month delay, give or take. I'm gonna tie my last question with an investor question. I always like to ask to wrap it up, but, you know, what, what, what are the top three takeaways for investors? What's most misunderstood? And I'm gonna combine on a investor question, which is, you know, what are your goals going forward to bring value to the shareholders that have continued to support the company? Well, I mean, the most misunderstood thing is, you know, unfortunately, we keep being called a SPAC, and a SPAC is how we got public. But, you know, other than that, you know, we try to avoid it. It's a four-letter word, and it doesn't, you know, there are lots of SPACs out there. There's good SPACs, bad SPACs, just like there are good companies, bad companies. We think of ourselves as not a new space SPAC. We think of ourselves as a new prime, and we are a new prime, and that's how we are referring to ourselves going forward, so no longer being a SPAC. And that is, we think that's the biggest problem we have, is people think of SPACs, they don't think of us being a prime, and that's probably one of the biggest takeaways. And our goal is, you know, it's all about execution, just like any company out there. You know, we are, we are executing, we are delivering. You know, with that, we execute, we become profitable, we become cash flow positive, and hopefully, the stock will respond. And, but at the end of the day, we have our heads down, focusing on execution right now, and, you know, if we deliver profits, the stock will respond. That's how, that's how we look at it. Correct me if I'm wrong. That, that's the key. Marc, Adarsh, you know, really appreciate the time today, and, you know, I'm sure we'll talk soon. Great. Thank you very much, everybody, for joining us. Thanks. Appreciate it.