Q3 2021 Rocket Lab USA Inc Earnings Call
Complishments for the third quarter of 2021, and Adam will be coming off financial highlights and outlook sharing at the company.
Up and coming conference schedule and of course, we have time for Q&A.
Yeah.
Okay.
So I think the end of the second quarter, we've seen significant growth in our backlog at June 30 backlog was 141 billion and ending the September 30 quarter at $183 million.
Today, our backlog stands at $237 million.
Representing nearly $100 million in backlog growth since the end of the second quarter.
We're seeing bookings strengthened across every major product in the company, including New Elektron launch contracts government study contracts into planetary fudge on fertilizer overall.
Debris removal programs NASA demonstration includes electron launch vehicle rocket led components and software and numerous components out spending a global customer base that includes government foreign government universities and commercial customers.
I've never been more excited or proud of all the use cases with funding for a technology and high value missions, we're enabling with athlete of products and services. Many of these programs will enable and provide a transformative technological breakthroughs that will have a long lasting impact on our planet, which will vary.
Proud about.
Personally there are many vendors industry, leading technologies and strong mission heritage can be seen in our strong repeat customer bookings since the end of Q2 2021, we have seen over doesn't repeat customers for additional business with rocket led with none of these customers listed on the slide as we continued to broaden our portfolio.
Spikes based products and services, our ability to cross sell and integrate technologies, who will lead to even reach the customer engagements and relationships.
Okay.
On September 27th we announced an agreement with the U S by schools under the National Security space launch program or <unk> with $24 million to advance development of the neutron rockets up a stage.
This development will support National security and defense launch capabilities scientific and experimental satellite to the world's most critical national security payloads, we're really honored to be partnered with the U S space Force and view this as a vote of great confidence from the U S government.
Another proof point in our ability to deliver low cost responsive next generation launch that will transform space access across constellation deployment and this is a really big deal. If you look at the other players that.
They also won contracts you will see we're in very good company.
Yeah.
And it will lift our previously announced escapade mission pasta Anessa critical mission with you.
Following the mission to mixed phase, where the target won't trading the site of 2024.
In September we finalized the phase B of the contract and also completed a kickoff meeting in November.
This mission in partnership with UC, Berkeley, Spiced science archery will put two five tonne spacecraft into orbit of months study, making it SPN.
Obviously not be more excited.
With the progress the team is making on those really complex high value.
Critical missions to explore other planets and ask all those systems.
So that covers the key business highlights of the third quarter, but are also I'd like to touch briefly on some of their key achievements since the third quarter.
So we achieved a key program milestone with Vanessa demonstration mission with their partner ETF space. This mission is very very unique in two different ways looks at one is the first cryogenic oxygen fluid management demonstration mission.
For NASA in its history.
This will prove out the usage on orbit fueling systems the satellites on orbit and thus developing critical technology that can keep pressure satellites monitoring gas emissions monitoring.
But extending their logs.
For a longer period.
This was the first mission, we have Robert Ladd one box.
The launch and the spacecraft design and build in a complete integrated solution, ensuring a faster more cost effective and seamless development programs for this particular message illustration.
On October 12, we signed and completed the acquisition of Advanced Solutions, Inc, or ISI and industry leader in mission critical software and GNC for space vehicles. The ASI team brings with him over 20 years of fly heritage more than 30000 now the vulnerable operation and are growing.
Team are 57 members located in Middletown, Colorado.
The acquisition of ASI further positions rocket landed into its based company as we desire.
To provide the complete mission solutions to our customers.
We're already integrating the next flight software into a functional and space systems solutions for Alere and independent Aerospace vehicle mission with more than 137 cumulative years of mission operations and heritage and more than 45 missions on with the next slot software solutions. We believe that this provides a clear.
A differentiator in the marketplace.
Lastly, I'm excited to have a footprint in Colorado, the second largest aerospace economy in the United States with a strong base of research institutes universities to bolster rocket laser workforce.
And there is a big day I'm very excited to announce the signing of a definitive agreement to acquire a planetary systems Corporation gold PSC.
Industry leader in space craft separation system.
Frankly, a company I've worked with and admired for many many years.
<unk> and his team have built an extraordinary business based.
Based on best in class products that are reliable and have had a 100% mission success.
On over 150 machines.
Viewed as the premier supplier.
The U S government on small machines with the matter of odd lot Vance advanced lot band and cannot sterilize genlyte distinctive and separation systems.
At PSA each of the rocket let team to continue the execution of our stated strategy of expanding our product portfolio with best in class product offerings.
We're excited about the cross selling opportunities in combination these leading space craft separation system with our existing electronic services and other types of craft components of software and service offerings and believe there are meaningful synergy service offering.
Before.
Cool.
Looking forward into the rest of <unk>.
Q4, as we've already announced we're planning to launch two black Sky dedicated launches in this quarter with the first launch schedule schedule for no sooner than November 17th to U T cells.
Spartan, which agreement signed earlier this year with spy slot to deploy but Scott Jean to set a lot of comfort.
Relation.
Appreciate Blake and trusting us with their satellites.
For these upcoming launches.
Coming slide 22, with <unk> global will be introducing helicopters into the.
The operations of our recovery program for the very first time.
<unk> helicopter and the recovery zone, and trek and visually observed at the <unk> stage.
We won't be attempting to catch up media. This particular mission. This is really the last step in our program will test all the communications and tracking feature electronic <unk> veneer, you'll catch it.
This is really a key milestone for the electron recovery program and as we work to make elektron, the very first reusable asthma launch vehicle.
Okay.
So with that.
I'll turn it over to Adam Spice CFO Adam.
Thanks Pete.
First review, our third quarter 2021.
Results and then further discuss our outlook for Q4 2021.
Our third quarter 2021 revenue of $5 $3 million slightly above the guided range of 4 million to $5 million.
With COVID-19 impacting our ability to launch in later parts of Q3 revenue was largely driven by space systems, which I'll pick and has grown by 698% year on year for the nine months ended September 32021.
Our launch revenue was impacted by both Covid restrictions and legacy overtime revenue recognition policy for the successful space Force launch that occurred on July 29.
This was the last current launch contract for which revenue was being recognized overtime.
Going forward, all off contract or contracts or expect to be recognized as point.
Point in time at the time of launch.
Revenue for the nine months ended September 32021 is up 79% year on year with growth being contributed across both launch and a broadening of our space systems products and services.
Our GAAP and non-GAAP gross margins for the third quarter of 2021 were negative, 236% and a negative 84% of revenue respectively.
This compares to GAAP and non-GAAP gross margins of negative, 18% and negative 14%, respectively in the third quarter of 2020.
GAAP and non-GAAP gross margins were significantly impacted by nonrecurring <unk> related stock based compensation charges and as Zealand COVID-19 restrictions that impacted production and launch operations overhead cost absorption and launch cadence.
We view all of these are nonrecurring events and as such are indicating a significant upswing in profitability in the Q4 guidance, which we'll get to shortly.
GAAP operating expenses for the third quarter 2021 were $39 9 million up $28 $9 million versus the third quarter of 2020 significantly impacted by nonrecurring destock related stock based compensation charges, hitting both R&D and SG&A.
In addition, Q3 2021, so a meaningful step up in nonrecurring acquisition related deal expenses and from the impacts of public company costs when compared to the prior year results.
Net of the stock based compensation charges the growth rate in R&D investment is nearly double the growth rate of SG&A on a year on year represent a continued aggressive prioritized investments the tam expanding opportunities.
Q3, 2021, adjusted EBITDA loss was $17 $5 million at the low end of the guidance range of $17 million to $20 million loss.
Q3 saw several unique onetime charges related to the leaseback with vector acquisition Corporation, which included the mark to market.
First full quarter impact of our Hercules loan.
Interest expense of $3 million.
Depreciation and amortization expense of $2 $6 million and.
Cost of.
A $700000 offset slightly by an income tax provision benefit of $1 7 million.
GAAP R&D expense was $14 2 million for the third quarter, which included stock based compensation of $6 million in amortization of purchased intangibles of approximately $400000, yielding $7 9 million of non-GAAP R&D expense for the third quarter of 2021.
As previously referenced the growth rate in R&D investments year on year is outpacing the growth rate in SG&A spend by more than two X is driven largely by increased staffing and prototype expenses related to our space systems products and services neutral in development and continued spend on our launch vehicle automated flight termination systems development efforts.
GAAP SG&A expense was $25 7 million for the third quarter, which included stock based compensation of $17 6 million in acquisition cost of $700000, yielding approximately $7 $4 million of non-GAAP SG&A expense for the third quarter of 2021.
The year on year step up of $1 $9 million in SG&A was primarily due to increased head count related labor expenses.
Directors and officers insurance and other new public company costs.
Our cash flow consumed from operating activities was $13 3 million for the third quarter of 2021 versus an operating loss in the quarter of $88 million.
Which reflects an increase in cash consumed a $4 million versus the third quarter of 2020.
This increase in cash consumption was driven by a $6 $9 million increase in inventory and a $4 $7 million increase in prepaid and other current assets.
These were offset somewhat by noncash expense add back.
Tax of $56 $4 million, largely driven by the aforementioned stock based compensation warrant expense and accretion and amortization charges as well as $9 million of cash generation from accounts receivable and $2 $20 million of cash generation from deferred revenue.
Cash consumed from investing activities was $5 7 million in the third quarter of 2021 compared to cash consumed $2 2 million in the third quarter of 2020 with its year on year period increase in cash consumed driven by several large capital projects, including investments in our expanding our lab facilities at our long Beach headquarters investments in our second launch pad.
Launch complex, one and our new consolidated propulsion test complex in New Zealand.
The combination of cash consumed from operating activities and investing activities was more than offset by the $704 4 million net.
Net cash generated from financing activities in the period, resulting in $793 $8 million in cash and cash equivalents and restricted cash as of September 32021.
This cash generation was driven by $735 million in proceeds from the leaseback with Becker acquisition Corporation and the related pipe financing. In addition to collecting $2 million in proceeds from the exercise of employee stock options and $2 $3 million related to the deferred transaction costs, which were somewhat offset by $34 million repurchases of shares.
And options for management.
We believe liquidity resources of the company enable the execution of our strategic development roadmap, including the development of our neutron launch vehicle and continued investments targeted at expanding our total addressable market for strategic space system solutions.
With that let's firmer guidance to Q4 2021.
We currently expect revenue in the fourth quarter of 2021 to range between $23 million and $25 million.
This revenue guidance does not include any partial quarter contribution from PSC, which was announced earlier today and is expected to close during the month of November.
We expect Q4, 2021, GAAP and non-GAAP gross margins of 13% and 27% respectively.
The 249% anticipated increase in GAAP gross margin was driven by a favorable mix of higher margin space systems revenue.
Increased absorption of manufacturing overhead with increased launch cadence and a step down in stock based compensation and after the nonrecurring Q3 catch up related to the <unk> spec transaction and related accounting treatment of restricted stock units.
We expect Q4, 2021, GAAP operating expenses to range between $24 million and $26 million.
Non-GAAP operating expenses to range between $19 million and $20 million as we continue to fund strategic development programs targeted at delivering strong top line growth in 'twenty, one and beyond across launch and space systems, and our goal delivering operating leverage within the business.
Please note that this guidance does not include impacts from the purchase price.
Accounting of ASI any impact of stock based compensation related to the employee stock purchase plan that we rolled out. The first time later this month and again does not include any contributions or purchase price accounting impacts from the pending acquisition of PSC announced earlier today.
We expect Q4, 2021, GAAP and non-GAAP interest expense to be $2 $8 million.
Given the requirement to fair value the publicly and privately held warrants assumed in the record acquisition Corp merger, which is based on the end of quarter stock price. We cannot estimate these below the line GAAP other income and expense items at this time.
We expect Q4 2021, adjusted EBITDA loss to range between $9 million and $11 million.
And with that I'd like to open up the call for questions operator.
Thank you very much if you would like to ask a question. Please press star followed by one on your telephone keypad now if you wish to withdraw your question from the queue. Please press star followed by chain.
Turn to ask a question. Please ensure that your device is likely.
Our first question today comes from Erik Rasmussen from Stifel. Erik Your line is open.
Yes, thanks for taking the questions and congratulations on the progress in the quarter.
Yes.
Maybe just in relation to your.
So your acquisition of ASI.
The revenue contribution comes from them could you maybe and then maybe you could just comment on the strategic rationale and then maybe just how we should think about the types of acquisitions, you just announced planetary systems.
Types of acquisitions you are targeting.
If you look to expand the business.
Yeah, Eric Thanks for the question Adam.
On the revenue side.
The revenue run rate of approximately $10 million per year at the point of acquisition. So I'll, let Pete speak to the strategic nature of the deal in future deals.
Yes.
Similarly the.
The acquisitions, we're looking to make here are ones that.
Technologies that we've used and we trust in the Super well and that our best in class that's fundamental.
And then as we think about how we're going to build that business out in the future and how are we going to deliver on now ultimately building our own infrastructure and all but what we're looking to do here is compile all of the pieces.
And pieces that are best in class to really.
Kind of think of it like a cabinet of capability that we can deploy not just on our own systems, but on.
Others as well so this is.
This is really important for the ultimate longer term guidance of the business.
Regarding inventory.
<unk> solutions in sight.
Okay. Thanks, and then.
So and then maybe just in relation to the black Sky and the two launches that are upcoming.
Obviously, we saw that that got pushed from November and it looks like Thats on track for.
The 17th.
But.
Any other sort of impacts that could potentially I think you had mentioned there was an opportunity for further missions.
And maybe even December.
Is that still be possible.
Yes.
Here is to touch on the north slope to Blake Scott, Michigan.
Rounding out yes.
And.
Bye bye.
But those machines have the vehicles at the launch site and some of the sites graph. We moved the launch a few days a couple of days ago couple of reasons.
When we saw athene through reading on the ground that we just did likely subsequently reviewed it includes nothing minerals side again, it's more time to prepare.
For the helicopter industry.
But at this point in time those are the two missions that we're planning.
This quarter end.
We will be unlikely to push up the admission in this quarter.
Okay, and then maybe just on the outlook for Q4, 23% to $25 million.
It looks like your overall for the year increased by $5 million, how much is that from.
Si and acquisitions versus just business outperformance.
Yes, Eric it's really kind of a there is some contribution in the quarter some partial contribution in the quarter.
From from ASI, we have not baked anything in for PSC into the guidance that we provided so if you think about maybe kind of low single digit millions contribution from from ISI and the rest really is coming from the core organic business I would say, obviously launches stepping up with the two launches in the quarter, obviously versus versus Q3. So if you will.
Yes.
So a majority launch but space systems as quickly kind of closing that gap.
In no small part because of contributions from Sinclair acquisition that we did last year, that's really paying off big dividends and their business is looking very very strong.
Great. Thanks, I'll jump back into the queue.
Our next question comes from Collyn Gilbert from Barclays.
Your line is open.
Hey, Adam Peter Thanks for the question.
So do we think about your helicopter intercept can you just talk a little bit about how that's impacting your cost recovery for electronics.
Yes sure.
The vast majority.
Alrighty or the cost of an electron launch vehicle resides at this stage.
Because obviously non engines on the stage, one and the bulk majority of the systems.
We successfully Spanish down multiple per stages, now and we've got that point.
We can reach the stage.
And and receive it down in the ocean in good condition.
The helicopter intercept.
Enables us to not supply shut down in the water obviously.
Rocket engine.
Opportunity seawater.
With us to capture that.
And the return that back to land for refurbishment and.
That obviously reduces.
And quite a large amount of work there is going to be some rework of course, but really isn't.
Amanda.
Work.
And it's fair to say that.
We haven't been baking any of that.
Debt environments, we get from reusable systems too.
Joining me event numbers.
Fuel cream on the top of the guidance.
Got it got it and then we think about.
Neutron reusability and kind of material and fuel preferences that youre thinking for your next stage of your vehicle.
Can you just discuss kind of how.
Youre thinking about that if you have a preference in anyway.
Yes, sure wishing him well make a neutron announcement here in <unk>, but it's <unk>.
<unk> net.
The experiences we've gained from reentering electron.
And it has just been absolutely critical and inform us how to design and develop new trunk.
Going into a reasonable launch vehicle program without actually having successfully reentered a rocket as it would be difficult.
So all the <unk> thermal data.
And all of the procedures.
Okay.
You can actually bring that will go through the warm atmosphere in one place.
It's just being absolutely critical missions and knowledge have been transferred directly to the neutral program in fact more than that.
Got it and then last question for me, but maybe if you could talk a little bit about pricing and capacity trends that youre seeing in the small sat launch market and to the extent that customers are fully utilizing our rocket light vehicle or something along the lines, where it's a partial.
Capacity utilization for your vehicles.
Apologies, everyone essentially have lost connection TP Tibet, Please bear with us while we regain connection can.
Yeah, Kevin I'll take that question and interim Peter rejoins so.
I think if you look at our emissions, we really do have a pretty pretty good mix of what we call. Just a dedicated mission where you expect for example for U S government customers. It is primarily dedicated launch for some of the commercial customers. We are seeing the opportunity to basically pull together, what we call kind of a primary rideshare, where theres a primary.
Microsoft that anchors the launch and then we fill the remaining capacity with <unk> or other small spacecraft. So I'd say right now it's probably about.
I'd say, it's probably a little bit more than half of the business are pure kind of dedicated one satellite per launch.
One single customer if you will for example on the Blackstone emissions, we put two <unk> satellites per launch. So if you think about that single customer launches are still probably a little bit more than half of it mix and then where we do the primary rideshare and mix it with other other other payloads is little bit less than half of that.
I hope that helps and then as far as the pricing trends I would say that we're seeing relative stability in the pricing out there in the market one thing thats, probably the most encouraging.
Kind of trend in our business and you've probably seen that coming through some of our announcements is the fact that we are getting multi launch deals. So we are seeing kind of early in earlier in the company's life. We were seeing a lot of pathfinder kind of one off missions now we're starting to see recurring mission. If you talked about it earlier in the conference call about how we're seeing recurring customer.
Well, we're seeing those recurring customers also sign up for multi launch agreements. So I think thats, an encouraging sign that the market is continuing to build overall and that we're continuing to kind of follow through with repeat business from those customers.
So I think all of that is very is very supportive to this because of the pricing and kind of volume trends right now that we're seeing.
Got it I appreciate the color.
Apologies, we are still trying to regain connection <unk> line. Our next question comes from Edison <unk> from Deutsche Bank.
Thanks for taking our questions.
Ralph.
<unk> financial one while we're trying to get.
<unk>.
Can you maybe go over the the contribution.
<unk>.
Terry deal.
In terms of what you can provide there and also on the ASI was the same.
Thinking about the margin.
Okay.
Yes.
Yes, so we're not providing any color right now on the margin for the various pieces within our space systems business, we kind of want to keep that more of that at that macro.
Segment level, where we talk about revenue and gross margin at that at that higher level, but the contribution from a revenue perspective on an annual run rate basis or about the same between ASI in PSC. So each business kind of roughly in that $10 million kind of run rate range.
And I would also say that the overall the margins across the businesses are pretty consistent as well so they're about the same size. They have similar gross margin profiles.
No.
I would say that the the growth rates are maybe a little bit different across the two businesses and the ultimate kind of.
I would say margin contribution to the bottom line is a little bit different because one requires a little bit more investment than the other.
But overall I think they're they're somewhat similar so again, if you think about the combination of the two on an annualized basis running around $20 million combined of revenue contribution.
And the margins again are very that we talked about the margins in space systems are theyre north of 60 points. In these businesses are kind of consistent with that overall profile.
Okay.
Good afternoon.
Sorry, my apologies.
Mike.
Phone dropped.
Yes.
Sure.
Second question.
Second question about the I guess the launch cadence.
You had a push out some launches I think you would have liked to have done in the fourth quarter came.
Can you maybe talk about if that sort of means you can launch.
More or recover some of that in the first quarter or in the first half kind of your ability to.
Maybe launch more than you would've expected in the first half than before because of <unk>.
Because of the.
The Covid lockdown kind of push everything out as their ability to do that.
Yes, I'll take a first pass that in Pekin can add on so I would say that it is a fair statement and say that we have a pretty healthy manifest.
Going into the first half of 2022, so I think the challenge from US is we're really going to be not on the demand side is really just.
We've got to continue to to increase our production rates and support manifest from that perspective, but I would say there is certainly we certainly expect.
Our business to be on the launch side cadence to increase as we progress into into 2022. So again, we're not giving specific guidance for 2022, all of the indications and bias right now are to certainly to an increased launch cadence in 2022.
Yes.
Thank you Robert.
There's a lot of product on the floor right now.
Lucerne and Dayton.
New Zealand Covid Lockdown, certainly enter there, but I think some of the more next quarter.
The thing to always remember of course isn't the lunch business.
Sometimes it will more often than not.
Subject to the customers' readiness side.
It's one thing to have a launch vehicle inspection.
Medium targets, but of course quite often we find that customers often.
The teacher moves around too so it's always a little bit of a manifest tons to get everything alone, but certainly there is a lot of product from a fuel that will be pushing through.
Yeah, and I would say also that.
The customer request circle launched sooner.
The bias right now is to is to pull in launch date.
So I think thats.
Other kind of indication of where we see the business going and kind of to your point of.
Could we see some of that pent up demand kind of manifest itself in launches and as we head into 2022, we certainly expect that'll be the case.
Great.
Last question for me longer term one.
Neutron.
Could you maybe discuss the potential.
You've had to have discussions about <unk>.
Human missions.
What could that kind of look like.
Or what have you maybe discussed with customers any color there.
Yes.
This is Russell.
Sub segments of customers and talking with human spaceflight on a substantial being the biggest.
In.
While total net customer.
Machines.
And nothing different lending, including humans slot that focus.
Although we have the vehicles.
Thanks, a lot rather than at this point in time are focusing on those particular machines.
Priority is getting the vehicle all depend and making sure that it is ready to be.
Okay.
<unk> and rifle.
Alright, great. Thanks.
Our next question comes from Cai von <unk> from Cowen.
Please go ahead.
Yes, thank you so much and good quarter.
A number of others larger space companies and aerospace companies.
Mentioned supplier delays and <unk>.
Impact of the Vacs mandate on while I know you launch from New Zealand.
Assume that could have some impact on your domestic customers.
Give us some color on that if you might.
Yes.
We're managing supply chain issues.
But we do carry a lot of stocking.
We've been fairly successful in late August.
One of the challenges.
Yeah.
The ability to get customers into the country.
We managed our lessons in some of these.
It would be.
Cisplatin.
Karen.
Our spot customers through working differently.
Bob.
Okay.
Thank you.
Experiencing this year.
A supply chain issue.
Yes.
Perhaps you can comment on that.
The commission mandated net impulsiveness.
Yes, sorry, you were breaking up a bit there pizza I'll recap a little bit of what of what you were saying so.
So.
So far we've been pretty fortunate that we haven't had any real call make significant supply chain constraints or issues.
As he was indicating that we also carried a lot of a lot of inventory raw materials inventory, so kind of we've been able to absorb any impact that otherwise would've would've been an impact.
Yes, probably the biggest issue has really been as Pete was saying is getting getting people into New Zealand right to support the launches. So we were fortunate that the two black sky missions that are that are going off this quarter or do you have the space craft in country. They were already integrated.
So there's really no risk from a from a COVID-19 related.
If you will kind of space Scott readiness from that perspective.
And now as we get through kind of where we're out of that level four alert in New Zealand.
We're able to have full production and launch cadence support there. So I would say we've been very very fortunate. We haven't had any of those issues I would say that you were but we're very much looking forward to making it much easier for our customers to come support their spacecraft in New Zealand with the Covid restrictions easing.
As a as a backstop to that as well of course, we're very anxious to get operational and out of our wallets facility.
We're right now we've been we've been waiting on certification of our automated flight termination hardware on naphtha software has been it's been quite delayed.
<unk> some time ago. The current expectation is that it could be done as early as the end of the year, which would allow us to commence.
Flight operations out of out of LC too and while ups in the first half of 2022 and that's what our current expectations are so that will be kind of enables us further mitigate the issues around kind of restrictions on travel and so forth now as far as the overall vaccine mandated mandate again, we've seen some push outs to those things from the various elements of our supply.
But again, we're not we're not getting any indication right now from any of our supply chain partners that that's that's going to present, an issue to supporting our manifest.
Our next question comes from Austin <unk> from Canaccord Austin Your line is open.
Good evening, Great quarter guys. My first question is for Peter would you argue the pairing the lepton was plants or systems lightweight satellite dispenser products make the elektron, even more competitive as a constellation launcher.
Hey, yes.
Okay.
For granted.
Yeah, and I agree on it.
And so to speak with them.
The electronics.
If I deal with very small constellations.
The one off.
Early development of constellation.
Having the portfolio into system products.
Enact.
<unk>.
It gives us the ability to do very interesting things with that cross selling and.
In bundling.
Products and services as well and.
And also that gives us exposure to sunlight.
<unk> launched on Elektron.
Nancy.
<unk> system.
Is used on <unk> properties.
Great.
Just wanted to accomplish in each vehicle across the industry.
Okay. Good.
And then.
How much additional capital do you envision having to invest in the three launch sites. The two New Zealand.
One in Virginia to sort of get those too.
Capacity, where they could support the 132 launches that you have.
As discussed in the past is it.
Pretty much close to that now or is there a lot of additional capital still to be invested.
So on the <unk>.
Got it.
Is activated.
And the LTE one P in one eye.
<unk>.
Yeah.
Which line items, obviously completely H b.
We are nearing completion.
That will give us sufficient.
Capacity.
Four.
All balance sheet.
Yes.
Any additional capacity to bring it up to that really high number.
Additionally, and as required.
Those three pads really gives us a tremendous amount of launch capacity and that won't be constraining our CFO.
Yeah, Austin, we're almost complete on on all the investments in at for those large pads I would say youre, probably looking at capital to go.
Less than a couple million dollars. So its really quite small in the grand scheme of things and that's really too to finalize the operational of the <unk>.
<unk> had in my head, but the Virginia pad is up and ready to go it's been ready for over a year again, just awaiting the software certification with ASUR.
So yes, we've got all of that launch infrastructure in place that we need to support that.
<unk>.
Okay.
Very helpful and then.
Mike Washings like the Washington Government in particular has had plans to try and catch.
Falling rocket boosters with the helicopter in the past. So can you sort of talk about what makes your plan.
For booster recovery different from those prior plans for our helicopter boost the recovery in and how you plan to achieve a higher success rate there just given the.
Challenges of catching of rocketed midyear with the helicopter.
Yeah absolutely.
This is somewhat.
Misconception actually catching the walk on the ceiling.
<unk> acquired it.
Okay.
When the helicopter bought Intermune assignment is not not that physical impact we've done a lot of things in China.
China dropped testing has been nearly 100%.
<unk> gone out with two helicopters promptly simulated vehicles and the other helicopter checking was down and catches up.
And it sounds like the hardest part, but actually the hardest part is reentering it to reviews atmosphere controlling a trajectory and making sure it stays in one piece.
Sure.
The last part of the target here is it's a rendezvous good morning, we can maybe which we need.
Okay.
I shouldn't should be it should be my problem.
Im wondering speaking.
Typical run off to that and we think the hydroponics and behind us.
Okay, great. Thank you for all the color.
Next we have a follow up question from colon cancer from Barclays. Colin Your line is open.
Hey, Adam Thanks for the follow up question.
From a high level could you just talk a little bit of a cash flow walk and the cash that youre going to need for engine development in new channels, and new development with neutron and constellation brands.
Kind of where do you expect the biggest contribution to come from split between organic debt and potentially equity.
So.
I'll, let Pete talk to the technical milestones and so forth to drive it but we.
We forecast all of this when we are going through our <unk> process and related pipe raise and so forth and we believe we over we overcapitalized ourselves to execute on our neutron in every aspect and really also raised enough capital as dry powder to go execute on things like ASI in PSC and other opportunities. So.
As you can imagine you're a propulsion is well within our wheelhouse I mean, we've put.
We put 200 electron.
Weatherford engines on orbit so.
It's whenever you're dealing with with rocket science, obviously, nothing is ever trivial, but we particularly well scoped the capital investment required. So we don't believe that for neutron or anything else. We have in our roadmap that would require us to go back to the equity equity markets debt markets or have you. So again, we think we're fully funded to execute what we need to do and then I'll, let I'll, let Pete jump.
Can you talk maybe a little bit more about timing.
Yes.
I'm sorry.
The way, we're approaching neutral thing.
It's not really antibody in conjunction as an area.
One of the reusable launch vehicles, you don't want an engine that.
Completely distressed.
<unk> propulsion.
The margin on that.
It wouldn't be thinking about.
Okay.
Mutual net that's really been a focus and as a result.
I think.
When it comes to innovation within Egypt cycles in <unk> and in.
And stretches and the union niche that's not an area, we will be carrying a lot of risk.
The other area that we were innovating with a much much bigger payoff.
<unk>.
We feel like we're in a good position.
Executed function Permian.
And it seems like neutral program.
Got it and then if you could just talk about the investments that youre, making today for your future constellation plans, whether you guys are bidding on spectrum kind of a bunch of talent you've put in place or our other intellectual property assets that you are going after it.
Yes, I mean look we want to we want to build infrastructure and all that.
We are perfectly clean in place.
This record.
We'll do that in the very beginning of life and all of that at this point.
<unk>.
Mike can be it on the particular application that we may go after.
In terms of the timing.
Got it.
We're obviously watching with interest.
Everybody else is doing.
<unk>.
Perhaps the most important thing right now is to methodically build.
All of those capabilities.
We get to contribute into our people.
Thank you.
Information.
<unk> supply.
And we'll continue to work on what we think is.
Our disruptive.
The opportunity in the future.
Got it thanks for the color.
And finally, we have another follow up question from Cai von <unk> from Cowen Your.
Your line is open.
Yes. Thanks, so much so I might have missed it but what did you pay for ASI and also.
As you know.
RPX in addition to buying Blue Kenyan bought.
Software company in Colorado.
Would you look at that and are.
Are there any competition to you when you go out and look at acquisitions, I would guess not but love your perspective on that.
So I'll comment on the purchase price of ASI ASI is a $45 million cash purchase.
And then I.
I can't speak to the to the other acquisition that Youre referencing.
Raytheon, obviously, we're familiar with the <unk> acquisition, but im not familiar with every software company.
I would say that in general the environment for deals, we're finding pretty receptive to the rock about platform and I think that's really what it's coming down to if we find that we're a very attractive place where entrepreneur entrepreneurial engineers want to call home.
I think there are no knock on some of the larger potential acquirers out there, but it's a very different.
Twice right.
To a large well established prime or you want to be part of something that's a little bit smaller than perhaps you could have a greater impact.
Through your efforts. So I think it's kind of an apples and oranges choice for for sellers and so this is this is a seller's market Theres no question about it.
There is competition for deals.
We're being very selective I think we do have a healthy pipeline of opportunities that we're always evaluating in this case and you're executing on the left are the most recent acquisitions of ASI in PSC.
But again I think that.
We don't really we don't really see it seems like we're both looking at different types of assets I would say that we don't necessarily see head on competition and a lot of stuff that we're looking at but there is certainly more broadly speaking competition for for the assets that we're bringing into the into the into the family.
And Andrew on occasions.
I think we can see part of it.
Of the acquisitions that we make.
Thank you very much.
Try before you buy.
Using continuous reaction moving their projects and products using any thoughts.
Using we've been using PSC progression continues.
These are companies in there.
That we know well and.
Are the leaders in the areas.
Otherwise it's strong.
The link to the acquisition.
Yes, and I think <unk> taken that further.
Yes, I think you should you can also start to see the acquisition strategy really start to play out and the fact that if you look at some of our upcoming missions Youll see obviously, if we're providing launch services in many cases, we're providing.
The satellite components in the form of where actual star trackers for Sinclair in many cases the satellites are using ASI software in many cases satellites are deploying are being deployed on our PSC separation system and Youll start to see again that theme start to continue to play out where we're starting to get more and more content and we really view this as a platform it's not one off.
<unk> launch services are one off at this really is how do we bring all the pieces together and offer truly end to end solutions that bring down the cost increases shorten the time to market and again I think when you start to put all the pieces together when you see from the missions that we're executing on its kind of undeniable kind of how the how all the pieces are coming together and how that leads to just increase the amount of revenue provision.
And that we service so.
We're all very very excited about kind of what the culmination of these deals represents and how it is providing a lot of revenue diversity to our model and some margin uplift as well and again just the scaling of the business. So I think this is an exciting part of our road map right now.
Thanks, so much.
We currently have no further questions I will now hand back to Peter for any closing comments.
Thanks very much.
Before I wrap up I'd like to thank everyone, who participated in today's call.
We'll be having the opportunity to provide further updates on our business, including.
While participation in GB.
<unk> Aerospace Vista.
In the Montney.
Trust Securities industrial controls and the mobile gaming space and that of course in New York.
And mechanical and all new space.
Taking this into the loan.
Thanks, again, and we look forward to speaking to you again soon.
We're planning target bonds available for Tonight. Thank you very much.
Yes.
This now concludes today's conference call and you May now disconnect. Your lines. Thank you everyone for joining us today.