Welcome to Viasat's FY 2021 fourth quarter earnings conference call. Your host for today's call is Rick Baldridge, President and CEO. You may proceed, Mr. Baldridge. Okay. Thanks for joining us today. We released our shareholder letter earlier today before the market opened. Hope you have all had a little time to review that. On today's call, we'll do a little bit of just brief opening remarks and spend the rest of the time on Q&A. First, let's have Robert provide our safe harbor disclosure. Thanks, Rick. As you know, this discussion will contain forward-looking statements. This is a reminder that factors could cause actual results to differ materially. Additional information concerning these factors is contained in our SEC filings, including our most recent report on Forms 10-K and 10-Q. Copies are available from the SEC or from our website. With that said, back to you, Rick. Okay. Thanks, Robert. Hello, everybody, and welcome to our fourth quarter and year-end call. In addition to Robert, joining us on the call today is Mark Dankberg, our Executive Chairman, our CFO, Shawn Duffy, Paul Froelich from Corporate Development and Investor Relations team, and a new addition here, Peter Lopez that's joined us that's focusing on IR, Investor Relations right now. Before getting to Q&A, we'll just go cover a few highlights. First thing to note is we're really, really proud of what we achieved in our fiscal year 2021 performance, especially in light of all the challenges I'm sure a lot of companies had, but associated with COVID-19, and obviously hit us right from the beginning. A combination of our diversified business mix and early and very decisive cost actions, prioritization along the year, alongside the really hard work and adaptability, flexibility of our employees allowed us to achieve really stellar financial results for the year, including records for adjusted EBITDA operating cash flow of over $700 million and record awards. We finished the year on a strong note with a fourth quarter that is stronger than normal, 23% year-over-year growth in Q4 adjusted EBITDA. Our business segments are performing well with really strong momentum going into 2022. In Satellite Services, we saw strong demand with stable churn and record ARPU for fixed consumer services. Our IFC business was severely affected by COVID-19 the whole year. We've seen some steady improvements each quarter since the beginning, but we're still well below the level of pre-pandemic business. The trend continues towards normal travel patterns, with consumers leading business travelers in that area. Government Systems had good revenue and EBITDA performance, especially in light of the procurement challenges created by the pandemic. We had another year of over $1 billion in awards, marking the third year in a row for that milestone in our government business and adding to our backlog. Commercial Networks had a strong performance year in our antenna systems business specifically, partially offsetting the COVID-related impact in IFC mobile terminal shipments. Beyond the numbers, we achieved other really important execution milestones and wins that are worth noting. The first one's completing the payload integration of the first of the three ViaSat-3 payloads, the one that's going to go over the Americas at our Tempe, Arizona facility. We're currently preparing the first payload for shipment to Boeing, which is imminent. Our target launch date of early calendar 2022 remains on track. We added Delta Air Lines as a new very important customer in our IFC business, now with over 530 aircraft under contract. If you saw the press release we sent out today, that added another 230 aircraft to what we already had. We convinced Inmarsat and another new customer, KLM Royal Dutch Airlines, and we kept our eye on long-term strategies and opportunity sets with the acquisition of RigNet and the other half of our European joint venture. We closed them actually on the same day. These achievements reflect our continued focus on execution ahead of ViaSat-3 as we grow our global footprint and expand into new geographies and new vertical markets. They also support our long-term financial targets. Despite the challenges of COVID-19, we believe we've kept Viasat on track to double revenue and more than double EBITDA by FY 2025. We're still targeting turning free cash flow positive two to three quarters after the launch of our second ViaSat-3 satellite. With that, let's go ahead and jump into the first questions. Operator? Thank you, sir. As a reminder to all participants, if you have a question, please press star one on your telephone keypad. Again, that's star one on your telephone keypad. However, if your question has been answered and you wish to remove yourself from the queue, please press the pound key. Please stand by while we compile the Q&A roster. Our first question is from Ric Prentiss with Raymond James, your line is open. Good morning. Good afternoon, everyone. Hi. Great. A couple questions. First question, just want to talk on the schedule. You mentioned the ViaSat-3A over the Americas on track for calendar year 2022 early launch. Any issues with COVID-19, supply chains, construction stuff? Can you lay out the thoughts then on when the 3B over EMEA and 3C over APAC are on track for launching and in service? Well, I can't predict that there won't be any other COVID-19 impacts. It has definitely hit us pretty hard this last year on that payload. Generally speaking, we're pretty well coordinated. The supply chain, most of everything's there for that first one. Boeing, I'll let those guys speak for themselves, but we've got a lot of confidence. They understand the schedule. The bus is ready. We don't expect anything, but anything can happen. The second payload, as we've said before, is about six months behind the first one. The only thing that's happened here is the third payload right now, which used to be a year behind the second one, is more like in the six- to nine-month range behind the second one. It's moved up. That's the current schedule. Great. How long until rising into orbit? How long should we think about in-service versus launch dates? Well, I don't think we've officially announced our launch providers for each one of them, and it varies by launch provider. We'll give you a better idea as we get a little bit closer to the launch because each one has a different orbit raising profile. The test after we get on orbit is probably about the same, and that's probably a little longer for the first one than it is for the second and third ones. Makes sense. Obviously a big year for government, $1 billion in awards. When you think about those awards and the bidding, how many of those contracts are you guys going in on a solo bid? How many are you joint bidding with someone else? Who are your bigger partners or your competitors as we think about those awards that you keep putting up on the board? Well, in most cases, we're the prime. We do partner with other people. Obviously, we had a partnership on an Australian bid with Northrop. We'll partner where it makes sense. We do work with Harris on our MIDS product. They're, in that case, a supplier to us. We provide components to them, too, and others. Most of our awards, we're prime. A lot of them are competitive, so we're competing against others, big primes as well as others. Obviously the MIDS thing is we compete with BAE, and we compete with that joint venture, Data Link Solutions, between BAE and L3Harris. That's competitive on every cycle. Tactical terminal, we're not really competing. We're competing, in any case, with potentially an alternative solution or an alternative way to do it, but we're the only ones with that product. That was a non-development item. We invested our own money and developed that. It really was competitive with a piece of the old JTRS, the Airborne, Maritime, and Fixed Terminal that didn't make it through the JTRS profile. That's really where that terminal competes. Nobody else has a handheld L16 product like ours, the BATS-D. In a lot of these cases, it's the sole source product that's out there, and we're the prime contractor. We might go into an F-16 or an F-18, so we're not the ultimate source, but they're procuring this from us. Makes sense. Last one from me. Ric called out the acquisitions that you made on April 30th, I think it was, the RigNet and the European JV. How should we think about what that means as far as additive revenue and added EBITDA once you fold it into your systems now you've had them for going on just about a month now? Chad? Yeah. Hey, Ric, I can jump in on that. I'd probably think of them combined, top lines maybe next year contributing another $230 million or so. On the EBITDA line, maybe about $40. Okay, that's for 11 months in? Around there, yeah. The other thing to think about is this year, there's synergies in each of these transactions, but there's also implementation costs and the integration costs. The way we're looking at it, pretty much offsetting each other's first fiscal year. Right. Are they going to go into SAT Services or is there some mix between the different segments that you guys report? The majority of it's going to go into SAT Services. There is a bit on the product side from RigNet that will go over into Commercial. You could think of it as less than or around the 10%-15% of that number. Perfect. Thanks. Appreciate it, you guys. I'll say well. Thanks, Richard. Our next question is from Simon Flannery with Morgan Stanley. Your line is open. Great. Thank you so much. In the shareholder letter, you talked about a significant growth opportunity in recurring service revenues as the ViaSat-3 and Constellation enter service. Could you give us a little bit more color about what your visibility is on that opportunity? In terms of sales conversations or traffic you're going to be moving across, how do we think about that ramp in recurring service revenue as the three satellites come on, and how much of that is sort of in backlog or pretty firmly circled at this point? Simon, unlike a lot of the big satellite service guys that sell their bandwidth out and get contracts before they launch, we don't do that. Mostly, it's not that we don't do some of that. We've done that, for instance, with Xplornet in Canada. Was an example previously. Telesat before, we've done some of that stuff with, not Telesat, but other operators. This comes from getting consumer subscribers and getting small business subscribers, and Aero winning in-flight connectivity in platform markets in that space, ground vehicles, maritime. It's signing up those subscribers as we go. We, in most cases, are direct. When we get outside of the U.S., there will be areas where we make some wholesale deals, and those might be areas where we sell some capacity, but these satellites are built to what we see as a demand in the marketplace. It always starts with a market area where we see demand and where we think we can increase the market share by bringing something that's quite a bit better than what's been there before. It's not like, I'm not going to mention the other operators, but they may pre-sell two thirds of their satellite before they ever launch. That's not what we do. Yeah. On the other hand, the good thing though is we have over 2,500 aircraft that are signed up. We have government contracts. A lot of those are generally predictable. That's what we're looking to do is to capture source of revenue that are predictable, and that's what helps us forecast what our growth will be. Yeah, that `makes sense. I guess part of it, you do have a backlog of IFC, and you added to that today with Delta. What sort of timeline do you think you will see those planes coming online? I think we deliver about a little over 400 of those aircraft over the next 12 months. Sure. Yeah. Yeah, something like that of the Delta aircraft. Okay. Then the balance the year after? Yeah. Great. Perhaps any color on, we heard many of our companies talking about things got a lot better in March and then continued to improve. We see the latest TSA data. Is it fair to say that activity in IFC is continuing to accelerate through the current quarter from the levels of Q1? Yeah. I kind of identified that in my opening remarks. We're definitely seeing month-to-month increase in the number of aircraft that are actually in service and the number of passengers that are flying. Most of it is in consumer. They're seeing a very slow return in business travelers right now. Right. Are you seeing more evidence that consumers are starting to have higher take rates or use more bandwidth than maybe in the past? We're seeing similar take rates than what we had seen, just if you think of the percentage of the passengers. Remember that business people travel for leisure also. Just because they're not traveling for business doesn't mean they're not doing business while they're traveling. Yeah. Okay, great. Many thanks. Okay. Our next question is from the line of Sebastiano Petti with JPMorgan. Your line is open. Hi, guys. Thanks. With the payload of the first ViaSat-3 shipping soon and the next two getting toward completion, remind us how we should think about CapEx in the next year. Sure, I can take that one. A couple things. One is to remember that this year I would say we had a little bit of our capital shift to the right, just trying to purposely map that up against the launch schedule. I think that's one thing to keep in mind. We're in that last year before launch. The capital in 2022, I would think of it as the quarterly rate around $300 million, but it's going to start to tee up on the back half. That's probably a good range. Okay. Second, if you can talk about the sales headwinds you've seen in the Government Systems business over the last year, are those easing that we can start seeing that business really take off? Most of them were related to simple physical things. People couldn't get access to some of the networks that they needed to utilize to review and issue contracts or to accept contracts or those types of things. Given what's happened, and given that the CDC has now come out and a lot of people have been vaccinated, and now they're saying that if you have been fully vaccinated and had the adequate time, that you don't have those precautions. We would expect that things are returning to normal over the next few months and certainly the remainder of the year. We still see quite a bit of awards, obviously. We got over $1 billion. It was more difficult than in previous periods, for sure. Right. That's just logistics of signing contracts and getting there. Yeah. I know it's been a big headwind, but it seems like not quite normal yet, but getting toward normal in the next few months? I think that's a good characterization. Is there a real backlog of things that need to be signed and are sort of ready to go that we see picking up, whether it's this quarter or next quarter? Or is that going to be more gradual? The government awards are always pretty lumpy. I would expect that's going to continue. If you look at this year, we had really good front-end orders in that area because there was some contract timing. Those things were ready to go. I think we'll see it continuing to be lumpy. Okay. Last one. There was a headline recently that you may consider splitting the business or selling the business. Pretty clearly, you aren't getting the multiple for the defense business in the market that you deserve. Can you help us think about anything you can do on how that makes sense, or what the synergies are of having the government and civilian businesses under a single roof? Thank you. Sure. Yeah. We think there's significant synergies in having both the government and the commercial. It comes in multiple different form factors. One is the government is typically a complicated user of these types of broadband services because they will have concentrated demand in certain areas that'll move around. What you have to think about is if you want to fulfill your contracts, you have to have bandwidth available in all the places where they might need it. If they are a large fraction of the total amount of bandwidth that you're delivering, then the actual utilization of that can be really low. You have a very large base of commercial business, and it's a lot easier to blend that government contract in and still get really good efficient use of your resources. That's one of the sources of synergy, and we've seen that over and over in the government contracts that we already have, which are the ones that use our own bandwidth or primarily in the Americas. That's extending with ViaSat-3. We'll get the same effects on a more global basis. The other area that's really important is that from, especially if you look at the way that networks are evolving, government satellite networks are often an augmentation of what's done terrestrially. Having this really interesting blend of the important terrestrial tactical networks, plus a lot of the satellite networks that are used alongside those, gives us an opportunity to optimize them both. Again, it's a really good way for us to compete more effectively in the defense market than someone who doesn't have access to a combination of broadband capabilities and organic defense capabilities that we do. We find real advantage in those in the market. The only other thing I would add there is, there have been times when we have had a lot of credit for our government business, and there's times when it seems like we don't get it, and I think those are transitory. I don't like it when it's like this, but I think it's transitory. Okay. Thanks, guys. Yeah. Our next question is from the line of Mike Crawford with B. Riley Securities. Your line is open. Thank you. On Satellite Services side, we saw that you got the landing rights in Nigeria. What about progress in other regions where we should be looking for continued extension of your landing rights globally? Mike, you want to talk about that? You want me to? Right now, what we're doing on a global basis is a lot of times we're using partnering bandwidth in entering markets. The example in Nigeria is one where we set up a specific network for that. I think that you'll see us getting landing rights in more areas as we get our own coverage in those areas. That'll be the main factor that'll drive that. That'll be Americas will be the first place because we can do some of that with ViaSat-2 and also some with partner with Viasat capabilities coming. We're not always going to make announcements around landing rights. It'll really depend on the specific market. Okay. Thank you. On the Commercial Networks, can you talk about for this current FY 2022, how much of that would be antennas and OneWeb and others versus, say, satellite payloads and satellite equipment for your own users of broadband this year, how that's going to shift over the next couple of years once ViaSat-3 starts to dominate a little bit more? One of the biggest areas where we had really strong awards last year, we see this continuing, is in full motion antennas, which are essentially ground segment for different forms of Earth observation satellites. When it's about new space or that new space buzzword, a fair amount of it's in communications and a lot of it is in things that relate to Earth observation. There's a lot more demand for the ground networks for that. Some of that are custom orders that we've received for those types of products. Another area that's a little bit small, it's been growing pretty well are components that are used in space systems. A lot of that's government, there's opportunities for both government and commercial in there as well. Those are the two fastest-growing parts of the Commercial Networks. In the coming year, in-flight connectivity equipment is going to be a contributor to the growth there as well. I think overall, Mike, over the next two years, Mark's right that from an external standpoint, you can look at that. Over the next two years, I'd say well over half of it is ViaSat-3 related payloads and ground segment deployment that's going to occur through that segment, just from a cost standpoint. Okay, thank you. Just a couple more. One, back to RigNet. You said the integration costs are going to offset synergies this year, but can you quantify that for this year? Yeah. I think what I would think about, if you look longer out, there's some further opportunities, bandwidth and so forth, as we get to ViaSat-3 constellation. On the near term, it's really going to be what I would associate with all the traditional public company costs, those kind of elements in D&A. It's probably in the $10 million-$15 million range. Yeah, that's a good range. Mike. Okay. Thanks. Last question from me. If you just looked at your data links business, which I think would be mostly, if not all Government Systems, what is the order of magnitude of revenue generated from that business today and profitability compared with Government Systems as a whole, in case that was one that could potentially be carved out? Well, it's hypothetical. I think that right now, that's not the plan. We have an integrated business that, like Mark said, utilizes all of that stuff. We've talked before about roughly having something pretty close to a third, in that kind of area. A third to a little bit higher in that area than our services business and our cybersecurity stuff, and then satellite modems and that kind of stuff in the rest of the area. It's split kind of like that. Really, no, it's closed to pieces. Okay. All right. Thank you very much. Great. Thanks. Once again, ladies and gentlemen, if you have a question, please press star one on your telephone keypad. Again, that's star one on your telephone keypad. Okay. Why don't we take one more. Oh. Yeah, one more call. One more question. Thank you, sir. Our last question is from the line of Chris Quilty with Quilty Analytics. Your line is open. Thanks. I want to follow up on just a couple of points that were in the commentary. One of them indicated that the margins in the Satellite Services business will likely be pressured towards the back end of the year as you start to roll out some of the costs associated with ViaSat-3. Shawn, should we expect that mostly around the fourth quarter, or should we see the margins pressuring down before then? What I would think about it, Chris, is those costs, the startup costs coming on for ViaSat-3, what they do is scale or ramp as we bring up the network. They trickle in earlier and then, yeah, you're right, get a little bit heavier on the back end. They've already started. They've already started. I think Shawn described it exactly right. It's like a ramp. The fourth quarter will be the biggest quarter by far. Certainly, it accelerates in that timeframe as we get closer to launching the satellite and getting that up and going. We can't wait till the last second to start. We've already started. We've got lands, and we're putting satellite access nodes in. We're running tests. We're lighting some of the fiber rings up. That will just ramp as we go throughout the year. The fourth quarter will be definitely way heavier than the other quarters. Understand. I think, also at the start of COVID, you had a layoff of a couple of hundred people on the IFC side. Presumably, you're going to be bringing back some of those people also as the business scales. Does that also play into the margin compression? No, I don't think so. Just because one area gets hit, that's not the only area. I'd say well over half the employees that left were in administrative functions. We try to preserve the people that are actually in the operating space as much as possible. It was well over half. I think it was more like 70%. Add back in those areas will definitely lag the business. The plan would be to, as we go forward, to get as efficient as we can. We will be at employees. We're definitely hiring. That's good to know. On the government side, the SDA has made some pretty favorable comments around the role that Link 16 will eventually play in the Space Force's whole proliferated LEO. Can you kind of give us an update on where you're at in that program in terms of timing or other new developments? Timing and other developments around Link 16? Is that the question? Yeah, specifically the Link 16 LEO effort and how that might fit into the SDA's plans. Yeah. Just on interesting in space in general, I think different, as usual, different parts to the DoD and military perspective. From the SDA perspective, what they're looking for is really to provide fundamental transmission capability, which can be used for multiple applications. What you're seeing with them incorporating Link 16 into that is the recognition of the demand that there is for Link 16 connectivity, and especially for new applications of Link 16 that are more like on all over the horizon as opposed to short communications. Then there's other organizations that are more Link 16 user side also see specific applications as opposed to just having be part of the kind of a transition portfolio. We're working with, I would say, both sides of that, and there's definitely opportunities for innovation on the application side where the space component can be more than just a relay or just one element of a broader portfolio. That is still to be determined. I think one of the things that's really interesting about Link 16 is that we've talked about in the past is a rapid growth in the number of network participants to Link 16. Those include things like sensors and weapons and as well as people aircraft. I think that broad array of participants creates new, interesting applications for each of the participants in there, and that I think is going to drive fully Link 16 out in space. Does that help? Is that your question? Yeah. I wanted you to give me a number. No, I'll give you a number. I'm just being honest. Okay. Let me ask one final question, which is, the Government Services revenue, I think was a record at $80 million in a quarter. You also had some commentary around that being a big driver once ViaSat-3 comes online. I guess my question is, I think most of the stuff that you do today is Ku-band ArcLight. Do you need a new contract vehicle or new hardware to migrate aircraft from legacy Ku-band ArcLight network onto new ViaSat-3 Ka-band? Yeah. I will say a lot of the programs that we won over the last couple of years, especially maybe even a bit further than that, are really connecting platforms. I think a lot of our customers understand the benefits of Ku-band and the standardized capability and the global capability that that brings. All those contracts, most of those contracts explicitly contemplate migration to Ku-band. Some already include the hardware components of that. Some of them include a requirement that was integrated to block Ka-band as well. I'd say the road's well-paved for that for the existing customer base that I have. Got it. Mark, I assume you're calling in on an Inmarsat or Intelsat network because you've got a bad connection. It's not a ViaSat-3 call. Oh. Sorry about that. No problem. I'm not going to names. All right. Thank you. Thanks, Chris. I guess that was the last call, thanks everybody for joining. We appreciate it. Again, I'm definitely proud of our people and the performance this year. I think the hurdle was a lot higher than what may have been obvious to everybody. It was a really tough year, the team did a fantastic job. Things are accelerating. We look at a growth year in our fiscal year 2022, and we're really confident in both achieving the outlook and getting these satellites launched. We'll see you next quarter. Ladies and gentlemen, this concludes today's conference call. Thank you.