Q4 2021 Rocket Lab USA Inc Earnings Call
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Good afternoon. Thank you for attending today's rocket lab fourth quarter 2021 financial results Conference call. My name is EMEA and I will be your moderator for today's call.
Lines will be muted during your presentation portion of the call with an opportunity for questions and answers at the end of you would like to ask a question. Please press star one on your telephone keypad.
Now I'd like to pass the conference over to our host Gideon Massey financial planning an analyst manager. Please go ahead.
Thank you operator, good afternoon, everyone and thank you for joining us on today's conference call to discuss rocket last fourth quarter and full year 2021 financial results.
Today's call is being hosted by our founder and CEO , Peter <unk>, and our Chief Financial Officer, Adam Spice.
After our prepared comments, we will take questions.
Our comments today include forward looking statements within the meaning of applicable security laws, including statements relating to our guidance for the first quarter of 2022.
Including revenue in our principal target markets, GAAP, and non-GAAP gross margin GAAP and non-GAAP operating expenses interest and other expense and adjusted EBITDA.
In addition, we will make forward looking statements relating to trends opportunities and uncertainties in various products and geographic markets, including without limitation statements concerning opportunities arising from our launch services and space systems markets and opportunities for improved revenue across our target markets.
These forward looking statements involve substantial risks and uncertainty, including risks arising from competition global trade and export restrictions.
The impact of the COVID-19 pandemic, our dependence on a limited number of customers average selling price trends and risks that our markets and growth opportunities may not develop as we currently expect.
Assumptions concerning these opportunities may prove incorrect.
More information on these and other risks may that may affect the forward looking statements as outlined in the risk factors section of our 2021, 10-K filing which will be filed on or before March 31, 2022, and the documents incorporated therein.
Any forward looking statements are made as of today and rocket lab has no obligation to update or revise any forward looking statements.
Fourth quarter and full year 2021 earnings release is available on the Investor Relations section of our website at rocket lab USAID Hong Kong.
To supplement our unaudited consolidated financial statements presented on a basis consistent with GAAP, we disclose certain non-GAAP financial measures, including gross margin and operating expenses.
These supplement measures exclude the effects of stock based compensation expense amortization of purchase intangible assets and other nonrecurring interest at other <unk>.
Income expenses.
Is that attributable to acquisitions non.
Noncash income tax benefits and expenses and performance reserve escrow amortization.
We also supplement our unaudited historical statements and forward looking guidance with the measure of adjusted EBITDA were.
Our adjustments to EBITDA include share based compensation warrant expense related to customers and partners.
Third party expenses related to mergers and acquisition activities.
Foreign exchange gains or losses performance reserve escrow and other non operating income and loss, excluding interest expense related to debt and other non recurring gains or losses.
We encourage investors to review the detailed reconciliation of our GAAP to non-GAAP presentations in our Investor update updated presentation available on our website.
We are not we do not provide a reconciliation of non-GAAP guidance for future periods because of the inherent uncertainty associated with our ability to project certain future charges, including stock based compensation and its associated tax effects and the effects of warrant expense related to customers and partners.
non-GAAP financial measures discussed today are not in accordance with and do not serve as an alternative for the presentation of rocket last GAAP financial results.
We are providing this information to enable investors to perform more meaningful comparisons of our operating results in a manner similar to the management's analysis of our business.
We believe that these non-GAAP measures have limitations and that in that they do not reflect all of the amounts associated with our GAAP results of operations.
These non-GAAP measures.
Should only be viewed in conjunction with corresponding GAAP measures and lastly, this call is also being webcast with the supporting presentation and a replay and copy of the presentation will be available on our website for two weeks.
And now let me turn the call over to Peter Burke founder and CEO .
Thank you very much getting in before I get going here I, just want to confirm that what 24, which we launched earlier today.
It's followed emission.
Thank you.
So today.
Im.
And joining me via recommend business highlights and.
Financial results in fourth quarter, and 2021 year joining me on today's call is.
Chief Financial Officer, Paul and Scott.
So the agenda today I'll be taking you through our key business accomplishments for the fourth quarter and full year 2021, and Adam will be covering the financial highlights and outlook during the upcoming conference schedule and of course, we'll continue to ask for some Q&A.
So firstly, let's start with a bit of a recovery.
The review of our key accomplishments in 2021.
Okay.
I think this slide speaks for itself.
I will touch on a key point.
All the challenges created by the ongoing pandemic, including stringent border restrictions in taking up operations at <unk> in particular.
We still managed to launch.
Missions in 2021.
Elektron retained the title of the taken most recently launched its Robert.
Beyond launch the break and Scott today achievements across geographic region space application and customers very encouraging to me.
Much more to come.
So Q4 highlights in Q4, I'm very pleased that we're able to welcome advanced solutions ankle ISI and penetrates tactical operational PSC into the market like family and portfolio of solutions and announced the intent to acquire <unk> technologies, which ultimately closed in Q1 2022.
So let me do the teams provide decades of industry experience and industrial leading technology.
These companies have great leadership team that will provide value to rough it led to needs to term.
All of this was happening we still had a business around and were able to launch single rockets complete a recovery of elektron data inching closer to full reusable electron launch and signing some.
Some significant contracts in achieving.
Good project milestone.
Thanks log this.
This is the best slide so in 2021.
We're a significant uptick in our backlog and then its continued into 2020.
At December 31, 2020 backlog stood at $83 million and we ended December 31st 2021 at $241 million and today, our backlog stands at over <unk> $1.545 billion, representing a $463 million increase in their total backlog.
Since the end of 2020 and.
Backlog to us.
And customers and contracts on.
Think bookings strengthened across every major product in the company, including electron launch contract government study contracts independent Python said a lot.
Over the debris removal programs Mr demonstration missions that employees back on satellites and numerous broker led satellite components and sub without spending a global customer base.
These customers include the U S government foreign governments universities, and commercial customers and constellation operated.
I want to take a moment to state how incredibly proud I am to see all of the use cases, we are funding for a technology and high volume machines, we are enabling with a suite of products and services.
<unk> had many years ago that it would become it into insights company delivering best in class technology and services spanning the entire based economy while.
While <unk> is still in the early stages of this strategy, it's very exciting to see that strategy start to be expert.
As I mentioned in the <unk> Q4 2021.
Two successful electron launches sorry.
As mentioned the product on 'twenty to 'twenty, one for statistical electron launches putting a title.
For 2021.
It is now deployed 109 satellites across 23 electrons.
Electrons launched and can do you want to include that as well with 110% and 24.
Yes.
Sorry.
The part of its strategy after entering the public markets would be that further expand our vertical integration and display system manufacturing and credit space system supply chain ecosystem.
We are executing on that strategy.
And while the acquisition of ISR PSC and Leroy.
As a quick refresher.
Based in Littleton, Colorado, the nation's second largest.
Economy and developed industry, leading off the shelf.
Software and Garden litigation and control system.
Mix.
Has been operating across more than 45 spacecraft for accumulative of 135 years.
I guess I'll ask customers include leading aerospace prime contract as the used vehicles Skus tid organizations, NASA and commercial spacecraft developers.
In Q4, we also acquired PSC, Maryland based provider of Mechanicals Depression system, and said lots of pieces with 100% mission success Heritage Tonight across more than 100 mesh.
Moving onto <unk> technology based in Albuquerque, New Mexico, Soliris as a premier supplier by solar power products and precision aerospace structures for the global aerospace market.
According to <unk>, both the worlds largest production line of high performing sites they'll sell into the local lab business.
It's volatile solar panels and pumps that structural products has supported more than one thousands of seats with space mission with once again, 100% reliability and mission success to date.
Over the past two decades Soliris products have played key roles in some of the industry's most ambitious bison.
Mission.
Including supply path to nested Parker solar project and Mars Lander largest dollar EBIT.
EBIT to be deployed on this business model and favorable Cygnus cargo resupply mission to the international space station to mention disappeared.
These three strategic acquisitions joined simply independent Terry, which we acquired in April 2020 later in the presentation I'll spend some time discussing the positive impact of these acquisitions and the type of capabilities that we have now in hand.
Okay physician strategy all of this slide as it highlights the breadth of rocket latest capabilities and we have.
We rapidly developed over the past few years spanning nearly the entire space ecosystem and proving that <unk> is a leading provider of <unk> solutions.
<unk>, both organically and Inorganically allow rocket led to capture value from almost equally active mission and one of the plays the mission.
We're seeing this in their internal business development meetings as we.
Can be seen in the backlog growth we have experienced in 2021 and that has continued into into 2022.
From the James Webb telescope to Ice's resupply mission Mega constellations or cutting edge defense.
Industry set of lots of <unk> products and services can be seen almost everywhere in 'twenty to 'twenty. One at technology was included in the 38% of all launches in 2021.
And we have out of the 220 missions in development through the launch and Spice Scott programs across almost every sector of the rapidly growing space of fundamental missions include NASA European Space Agency, Japan, Aerospace exploration agency or <unk>.
<unk> commercial constellation operate as a prime contractor.
In addition to Rocco led to expanding products and services and technologies related footprint.
Now expanded with the recent acquisition close Robert led now has locations across five different states in the United States as well as three locations and you're done and one location in Toronto, Canada.
This expanded footprint has enabled <unk> to attract and recruit some of the smartest people in the space industry to help guide and shape a program and I think this is a really strategic long term differentiated from that period.
It seems like years ago that <unk> completed the successful leaseback merger with their partner Victor acquisition Corporation, but it was such a watershed moment in <unk> history, and is and will continue to enable considerable growth into the future.
We could not be happier with that.
We're convicted and it really turned out to be the perfect partner for rocket Ed. This is unlocked considerable amount of opportunities for rocket lab and we continue to do so.
And I could not be happier with really happens upon in the last six months.
We also fund and continues on a large number of multiple which agreement sorry election electron really continues to distinguish itself in the industry.
Meaning small launch vehicles.
Multiple multi launch deal signed across commercial customers choosing electronic and the reliable dedicated launch solution that replace near assets automobiles and.
And when they need them to ensure the highest long term value and quickest, possibly then you have a world changing technology.
It remains on track rocket led.
Remains committed to becoming a launch provider for the national security by coach or any CSL program.
Which launches the users are critical missions as well as becoming the constellation building where it goes.
Across a broader government and.
And commercial taken off right at this stage recovery successfully completed in 2021 and the foundation moving light for the first media launch recovery team.
Sure.
Look a very soon in 2023.
Full stage, one recovery is important to enabling greater launch cadence and also lowering.
Electronic copies of emissions.
In August 2021 area.
Program Pasta kinase mission reviewed moving the Michigan to the niche sites with target launch reading the side of a tie between <unk> 24.
This mission is in partnership with UC, Berkeley spy sites largely.
And it will put two sides, one spice crops into the atmosphere above two two study is making this via.
The mission will leverage frankly, PSC by Alere and Robert maybe we'll get it products and services, helping provide a really low cost solution with considerably if supply chain risks than traditional programs.
Lastly for 2021 accomplishment, it's important to highlight the diverse and high quality, new and repeat customer base that rocket lab is establishing and supporting across equally diversity of product and service offerings.
So now I just wanted to discuss a few additional accomplishments that rocket lab has achieved post the in the fiscal year 2021 .
While this week, we announced in collaboration with MDI and Globalstar $143 million contract to design and manufacture 17 satellites for globalstar with the option for non mall.
This contract with flicks deliberate and well reasonable strategy to grow rocket lab space.
Business and deepen our value proposition beyond launch into complete intimate space mission solutions.
Look at Labor was awarded this contract.
<unk> tier one.
<unk> contracted in a highly competitive bid prices.
So these are not cube sets. These are large complex 500 kilograms vice crop.
Meeting the stringent customer requirements for designing and building this.
<unk> required demonstrating that <unk> has the expenses.
<unk> expertise and embedded supply chain capabilities to deliver on such a complete submission.
To deliver these spacecraft and establish long term capabilities.
<unk> manufacturing at scale, we are building out state of the French.
Flexpath manufacturing facilities at our long Beach headquarters and production complex feeding into this antibody rocket led to recently acquired companies.
This deep level of vertical integration of their customers' future security and really.
Pricing.
When we first announced plans to become a public company, we understand despite system strategy with one simple advice should have a rocket laid logo on it today, we've made great progress on that strategy with organically with with our organically developed technology and of our acquisition.
<unk> now delivered multiple part of the launch and settle out supply chain, enabling us to attract approximately.
We operate in stead of the facilities.
1200 strong global now in place to deliver spacecraft and component manufacturing at scale to meet growing demand. The India contract is just one example of that strategy now in place.
Since the end of the fiscal year 2021 rock related but also things like the <unk> to be part of the beta program, which unlocks up to $300 million in potential loan services and <unk>.
Across 12 different launch providers of which rocket labors one of them.
We began the development of new <unk>.
I said some completions on last month, we announced a genetic expansion.
Our new spy systems compared to some lift from it doesn't from Colorado to support the growing customer demand for slot.
Question for emulation.
<unk> gotten some navigation and control services.
We when we made the decision to acquire the <unk>.
Liquids from Colorado location was viewed as a strategic geographical location and this investment signifies abbvie.
Last week, we announced bringing on a third launch pads to operational status and today, we will im truly.
Representing the second launch pad launch complex one.
Essentially doubles, our launch capacity and allows us to meet the growing demand for elektron launch that.
After considerable deliberation, we're excited to have chosen the site of the agenda for a neutral wont slot and production complex.
The Commonwealth of Virginia came forward with a very attractive offer that we can turn them and with.
With considerable investment in <unk>, both in infrastructure and an operational system improvement at the mid Atlantic regional spaceport to enable future on launch and production needs.
Neutrolin has officially.
Basing itself at Wallops Island, Virginia.
Some of that.
I'll hand over the call to Adam.
<unk> Chief Financial Officer, Adam.
Great. Thanks Pete.
First review, our fourth quarter and full year 2021 results and then discuss our outlook for Q1 2022.
Fourth quarter 2021 revenue was $27 5 billion with $1 $7 million of revenue contribution coming from a partial quarter of POC, which was not included in the guidance for Q4.
Net of this revenue was $25 8 million slightly above the high end of our prior guidance range.
Revenue in the fourth quarter included two success.
Space systems, Australia.
And Claire components as well as partial quarter.
Contribution for ASI in the aforementioned PSC acquisition.
Full year 2021 revenue was $62 2 million.
53% or $39 million coming from launch services, and 37% or $23 2 million coming from space systems.
Overall, our revenue grew by 77% year on year with launch services growing 18% year on year and space systems growing 14 fold year on year.
GAAP and non-GAAP gross margins for the fourth quarter of 2021, or 24% and 36% respectively.
This was better than the Q4 guidance on a GAAP and non-GAAP basis, driven by lower than expected launch costs as well as by positive revenue mix of higher profit space systems products and services.
This compares to GAAP and non-GAAP gross margins of negative, 236% and negative 84%, respectively in the third quarter of 2021.
Were significantly impacted by a onetime catch up related to stock based compensation charges triggered by the destock transaction as well as Covid restrictions in New Zealand and the related impacts on our launch rate and overhead absorption and the prior Q3 2021 period.
Yes.
Gross margins for the full year 2021 were negative, 3% and positive 16% respectively.
Large services GAAP and non-GAAP gross margins were 1% and 6% in the fourth quarter respectively.
Versus a negative $13, 71% and negative 668% in Q3 of 2021.
For full year, 2021, <unk>, GAAP and non-GAAP gross margins were negative, 38% and negative 15% respectively.
A positive trend as we exited the year.
The improvement in gross margin in the fourth quarter of 2021 was the result of higher electronic bill rates.
Space systems, GAAP, and non-GAAP gross margins were 48% and 67% for the fourth quarter, respectively versus 71%, 73% in Q3 of 2021.
For full year 2021 space systems gap.
Turning to operating expenses.
GAAP operating expenses for the fourth quarter of 2021 were $31 million, which was approximately $6 million higher than prior guidance driven by and forecasted purchase price intangible amortization expenses related to the acquisitions of ASC in PSC.
700, K a $700000.
With stock based compensation related to PSC updated $1000 performance based escrow reversal related to ASI of $1 $8 million.
A onetime stock based compensation bonus related to certain R&D and production milestones as well as costs associated with our employee share purchase plan of $800000.
And $1 8 million and higher than anticipated deal related fees and expenses from acquisition activity in the quarter.
Full year 2021, GAAP operating expenses were $100 2 million.
Compared to $43 $1 million in 2020.
The step up in 2021 operating expenses.
100, $102 million compared to four I'm sorry, the step up in 2021 as compared to 2020 was primarily driven by higher prototyping spend and staff costs targeted a broadening out of our space systems products and services.
On the development of our neutral launch vehicle as well as higher public company spending related to our product and professional services staff costs and director and officers insurance premiums.
non-GAAP operating expenses for the fourth quarter 2021 were $20 4 million in line with the fourth quarter's guidance.
Full year 2021, non-GAAP operating expenses were $62 3 million versus $38 4 million in 2020.
We will continue to aggressively invest in Tam expanding product initiatives that we believe will strengthen our competitive positioning as the end to end space company as well as scaling our public company infrastructure.
Moving to the consolidated statement of operations net income and adjusted EBITDA.
For 2021, adjusted EBITDA loss was $8 5 million, which was $1 $5 million better than the midpoint of our Q4 guidance range driven by the previously mentioned outperformance relative to revenue and margin in the quarter.
Primary adjustments and reconcile in Q4 GAAP net income to adjusted EBITDA included Mark to market warrant income of $24 $1 million related to the outstanding publicly and privately traded warrants which were subsequently redeemed on January 31 2022.
Income tax provision benefit of $6 $1 million.
Station and amortization of $4 $1 billion, the full quarter impact of our Hercules loan interest expense of $2 8 billion.
Performance based escrow reversal of $1 $9 million.
Acquisition costs of $1 8 million and <unk>.
$2 million of FX related expenses.
GAAP R&D expense was $12 million for the fourth quarter, which included stock based compensation of $3 million in amortization of purchased intangibles of $1 million, yielding $8 million of non-GAAP R&D expense for the fourth quarter of 2021.
Growth in R&D spend continues to be driven largely by increased staffing and project expenses related to our space systems products and services neutral in development at <unk>.
Could you spend on our launch vehicle automated flight termination systems development efforts.
GAAP.
SG&A expense was $19 million for the fourth quarter, which included stock based compensation of $2 $9 million.
Acquisition costs of $2 1 million.
Performance based escrow re that's really the ASI, a $1 8 billion.
And amortization of purchased intangibles of $100000, yielding approximately $12 1 million of non-GAAP as you. The hydro transaction costs performance based escrow readouts in the first full quarter expense of director and officer insurance as a public company.
Cash flow from operating activities was a negative $21 9 million for the fourth quarter of 2021.
With $2 $8 million generated from operating results.
Q4 saw an increase in cash consumed of $8 6 million versus the third quarter of 2021.
Cash flow from operating activities in Q4 was impacted by the add back of non.
Yes, my acquisition related performance for investors.
Charges.
These were offset somewhat by noncash expense add backs from stock based compensation of $8 40.
Really.
Depreciation and amortization charges of $3 4 million.
For full year 2021, our cash flow consumed from operating activities was $71 8 million versus.
Versus cash consumed from a productivity of $27 $8 million in 2020.
This increase in cash consumption was driven by operating loss of $117 $8 million in 2021 versus an operating loss of $55 million in 2020.
In addition, cash consumption was driven by an increase in inventory of $4 $7 million in prepaid and other current assets by $10 $5 million.
These items were offset somewhat by noncash expense add backs.
X from stock based compensation of $32 6 million and noncash foreign expense of $15 3 million.
<unk> amortization charges of $10 $9 million and by an increase in contract liabilities of $27 5 million.
Cash flow consumed from investing activities was $80 $7 million in the fourth quarter of 2021 compared to cash consumed of $5 7 million in the third quarter of 2021 with this quarter on quarter period increase in cash consumption driven by the net cash paid to acquire ASI and POC as well as excellent execution on several large capital project.
Including expanding our labs and satellite manufacturing facilities at our long Beach headquarters on our second launch pad launch complex one our new consolidated propulsion test complex, New Zealand and the acquisition of electron launch recovery assets.
For the full year 2021, our cash flow consumption from investing activities was $92 1 billion compared.
Compared to cash consumed of $37 3 million in 2020, driven largely by the same factors affecting Q4 discussed earlier.
In the fourth quarter cash consumed from financing activities was $1 8 million as compared to $704 million in cash generated in the third quarter with a cash consumption in the fourth quarter, driven by $2 2 million and net reduction of the proceeds from the <unk> associated with delayed billing activities for professional <unk>.
Services related to our merger with vector acquisition Corporation and the related type financing.
This was somewhat offset by collecting $400000 in proceeds from the exercise of employee stock options.
The combination of cash consideration generated from financing activities for the year, resulting in six months.
$292 $1 million and ending cash and cash equivalents.
This compares to 12.
$21 5 million and net cash generated from financing activities for 2020.
The primary source of cash generated from financing activities in 2021 was driven by the $728 million of net proceeds from the merger with vector acquisition Corporation and the related pipe financing.
In addition to generating $98 9 million in net proceeds from our long term secured term loan with Hercules capital as well as collecting $3 1 billion in proceeds from the exercise of employee stock options, which was more than half of management's redemptions related to the <unk> spectrum auction and merger with vector acquisition Corp. In the third quarter of 2021.
2020 cash generated from financing activities was comprised of $25 million in net proceeds from the issuance of preferred stock and $1 million and dsos for the extra stock options.
We believe the liquidity resources of the company enable the execution of our strategic development roadmap, including the development of our neutral and launch vehicles and continued investments targeted at expanding our total.
Total addressable market for strategic space system solutions.
With that let's turn.
Let's turn to our guidance for Q1 2022.
We currently expect revenue in the first quarter of 2022 to range between 42 million and $47 million.
Which includes two dedicated launches and near full quarter contribution from Solera, which closed on January 17 2022.
We expect Q2.
Where do you expect Q1, 2022, GAAP and non-GAAP gross margins of 17% and 30% respectively.
GAAP gross margins are driven by product mix as well as for full quarter contribution of purchase intangible amortization expense.
And stock based compensation related to PSC ASI ancillary.
It is important to note the purchase price allocation for Celesio has not yet been completed at the time of today's call and therefore is not captured in our Q1 guidance.
We expect Q1, 2022, GAAP operating expenses to range between $38 million and $40 million.
And non-GAAP operating expenses to range between $21 million at $23 million.
This quarter over quarter step up is driven by the effects of a full quarter contribution from ASI in PSC as well as near full quarter contribution from Celesio.
In addition, we continue to fund strategic development programs targeted at delivering strong top line growth in 2020 beyond across launch and space systems, and our goal delivering operating leverage within the business.
The effects of these investments are already bearing out as proof of our expanding backlog and recent announcements regarding the award from NDA to design manufacture and deliver 17 satellites for globalstar.
To put this into perspective, our space systems business generated its first revenue 47 quarters ago.
It only contributed over a little over $2 million in revenue for the full year 2020 to now representing approximately approximately two thirds of our Q1 guide.
We expect Q4, 2021, GAAP and non-GAAP interest expense to be $2 7 billion.
With the completion of our private and public warrant redemption that closed on January 31 2022.
Our P&L will no longer be subject to mark to market income and expense impacts of these legacy warrants.
We expect Q4 2020.
We expect Q1 2022, adjusted EBITDA loss to range between $3 million and $5 million.
And with that I'd like to open the call to questions operator.
Thank you if you'd like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove that question. Please press star followed by team again to ask a question Press Star one as a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question.
We will pause for a brief questions registered.
So first your line is open.
Hey, Thanks for taking our questions and congrats on the quarter.
Step two topics I wanted to ask about.
First is.
Considering the.
Get sanctioned.
Our trough political prisoners, you cannot cannot fly for Europe .
I guess.
Is there any way to kind of speed up development of new trial to kind of compensate for that.
Yes. Thank you.
Obviously, it's a crazy time.
In the World right now and.
We're working on neutral and as quickly as we can.
So we can we can accelerate that.
Much more than it already is.
But needless to say that.
Things continue this direction they will be.
More limited launch availability then.
What normally would have been.
It's been bearing quite a bit.
You have all this content.
And the most important satellites.
Is there anything you feel that's out there completed most of it are.
Is there anything kind of strategic.
You still see out there potentially.
Integrated electric propulsion.
We keep a pretty active pipeline.
Companies and deals that we want once theyre in.
I wouldn't say that.
We finished about im not going to get them to in any detail about what particular.
Technology, we wont be growing clinics.
Got it launch cadence I know you have to kind of embedded in the first quarter.
Or say.
Is there any kind of.
Rough indication, assuming no delays what could be kind of.
Run rate.
By the end of the year.
Sure.
I'll take the first part of that a minimum one to pick.
Pick up the second part is not coming.
By our customers readiness.
You've seen us accelerate one customer because.
Another customer.
Yes.
It wasn't quite ready on time side, the thing that drives that amongst patents amongst is that customers are leading us.
Yeah, and I'll jump on to that and I think that the as Pete mentioned, we're not a production constraint at the moment I think our production.
Resources have really delivered in last quarter. So so we're very much on pace to deliver the number of rockets that were planning to for 2022. So our internal forecast for production. This year was we talked with and our plan is to build 15 rock.
Market this year, we'd love to be in a position, where we could have some inventory of rockets on the shelf so funding savings, but you're literally we could have some rockets to the shelf that we could support churns opportunities because every year you see turns opportunities where a customer comes in and they've got a very short lead time, because either they want to spark squad on some spectrum, where they want to have to do it.
When you do a quick tech demo in orbit. So there's no reason to believe that we can't support those kinds of opportunities this year as we progress.
So we really think about where we want to be we want to be exiting the year, we're launching at least monthly on a consistent basis.
And then progressing towards our goal where we get to.
Say two rockets per month on a consistent basis.
I would say.
I think from again from a production perspective, theres nothing that would indicate that we can't get there I think there is we're still in the process of the market demand kind of developing into what it ultimately will be as you know.
The small launch kept dedicated small launches a new category.
But I would say that everything looks good at this point.
Very comfortable that we will be a gating item to delivering to revenue. After the business, it's really kind of where the customers are and I think all of us have to get somewhat accustomed to kind of the lumpiness of launch right. So as Pete mentioned, our customers really kind of gate, our launch cadence more or anything else and I think that will get alleviated over time as we have yes as demand picks up and you can really.
Slot replace opportunity. So that you don't lose launch slots and you can kind of maintain your growth aspirations I think a good example.
So that was literally in this quarter, where I mentioned that we launched earlier today, we were able to basically swap.
We'll swap missions relatively quickly again, because we have a unique position of having our own launch rates. So we can move things around as we need to.
If we were operating on for traditional government range that would've been the case. So I think that there's a lot of things that influence launch rate cadence and so forth, but our goal will be again consistent launching on at least a monthly basis exiting 2022.
Awesome. Thank you.
Yes.
Thank you Mr Yu.
The next question is from Christina Lake.
Morgan Stanley Your line is open.
Hey, good afternoon guys.
Maybe just one.
Okay.
On you mentioned rocket lab capabilities now span the full space economy with your recent acquisitions and you've got critical.
Vertical integration to so does that mean youre comfortable with the portfolio as it stands today and we should expect M&A level M&A level to kind of.
Stop here or do you continue to see opportunity for bolt ons.
Yes.
Yes sure.
Michael I'll take it.
Sorry go ahead.
No you go ahead.
Sure.
Yes, Kristina I think from.
From an appetite perspective, we still have plenty of appetite to go and further accelerate the growth of the business through inorganic means we've been successful as you've seen in doing for acquisitions.
Relatively short period of time, three since going public in August .
We continue to see interesting and compelling assets out there.
So I would say that I wouldn't expect the pace to continue as it has been because thats a very very quick to do three acquisitions in series as we've just done.
I still expect it to.
We will find opportunities that we can execute on.
And that was again one of the one of the big reasons for going public was to make sure that we have the capacity and the capital to go out there and do these kinds of Tam expanding deals. So we think our strategy. So far is bearing fruit and we continue to plan to push that although I would say just naturally speaking doing three acquisitions in the first six.
Months of a public company's life isn't something that is normal or I would necessarily predict would continue into 2022 on that on that same rate.
And then you can see kind of the strategy.
Rolling out.
With.
The win with MDI and Globalstar.
Having having such a secure supply chain and really really enabled that.
To do that.
Really established suppliers and that satellite manufacturing field.
Thanks, and then also can you provide any updates on the plant testing around the first stage retrieval via helicopter and if you can't provide any specifics around timing of the upcoming tests can you speak to the testing regime overall and milestones.
Enable direct.
The regulatory recovery of booster is using a helicopter I think you guys have said about 50% is eventually where you want to be.
Yes, absolutely.
The helicopter the things I'd like to do this work.
It had all the modifications completed.
Currently on route to New Zealand.
We've completed all of the last of the drop too.
Last week.
Tim has been out there.
Dumping jumping rockets, let out.
And.
The philosophy of Marine Treaty that we Didnt slash down last year really really validated the final piece, we actually had helicopters.
And Ron diver.
Not catch but run diabetes at this stage.
It was really the last big piece sorry.
That makes homes coming up where we'll have the <unk>.
The helicopter sort of that really arent and we will we will.
Attach and.
You want to get the right long, great and if I could sneak a third one.
The $143 million contract win do you got from MDA has a fairly meaningful win and you get to showcase this portfolio that you've built with Valero Sinclair EPL. So when you think about delivering on this contract are there additional capex that you have to do in order to be able to.
Build a 17.
500, kilogram spacecraft or do you have the capacity already in place and can you discuss potential execution risks around this contract.
Yes.
Made significant investments and continue to make significant investments in two.
And to the fact systems Division I think we mentioned in the slides here the continued.
Pension of the satellite manufacturing facility you have seen this also on growth.
ASI and increase our footprint in Colorado.
Still some stomach.
Some expansion.
Required from a facility standpoint these were.
Or the old claims before we actually won the contract sustained.
Prepayments swinging.
As it has been for quite some time.
And then.
I think with respect to execution.
These are complicated spacecraft for sure.
We have assembled.
And as you can see supply some of the acquisitions that have executed on these programs in the past many many times and.
We are feeling very confident.
In the coating stability.
A look at some of the other missions. We've also had been awarded mission NASA missions to Mars from NASA and the like mission.
He's a very very deeply complacent missions, and that's really where our engineering team excels is.
On these.
Complicated program and just to make sure in your previous question Kristina.
Sure Tom.
Okay.
Loans are coming soon.
<unk>.
Kevin.
The date for that.
Gold recovery great. Thank you Peter Thanks, Adam.
Thank you.
The next question is from the line of Erik Rasmussen with Stifel. Your line is open.
Yes, thanks for taking the questions and congratulations to the year for you guys.
Maybe just a clarification on the launch and the cadence and everything else so too in the upcoming quarter or this quarter.
Q1, and then exiting the year at least one.
Per month.
Just wanted to.
Reconciling that with 15 builds through the year is that builds or launches.
Those two coincide with one another.
Yes, no those are those the <unk> are incremental builds in 2015 2022, so it's not launches so.
We've talked about kind of a range of.
Of launch or mission that would go off this year is it.
In 2022, and it's I'd.
I'd say that right now again, I think we're very comfortable kind of where we're at right now of being able to support a manifest that their launches.
That rate that I was talking about exiting 'twenty two at.
We don't want to provide full year guidance at this point. So we're kind of just providing kind of next quarter.
But again I think we feel very comfortable where we're at our ability to support.
Launch manifested.
We have discussed previously.
Okay.
Thanks, and then maybe just the outlook for Q1.
Maybe you can just unpack the revenue outlook.
The organic piece versus what's coming from recent acquisitions.
Okay.
And then I have another question.
Sure Eric Yeah, we're not going to go into the details of kind of what kind of comprises space systems, particularly at this point because it is becoming a very kind of diverse and intertwined set of businesses.
And when you think about the components ranging from components that we've developed organically.
We drilled a partnership like for example, radios with Johns Hopkins.
The various.
Elements from Saint.
Sinclair and then the software from ESI.
The solar panels, and so forth themselves from.
For <unk>, it's just it's there's a lot of interdependencies, and it's kind of hard to really kind of attribute.
At this point and kind of driven by organic versus inorganic. So at this point, we just kind of again point to the.
We provide the level of detail as far as which component, but as far as launch versus space systems, but I think going below space systems are probably not going to be kind of productive and really be all that meaningful.
Got you I understand and then maybe just lastly on the.
Follow up on the MDA Subcontract award by the way congrats on that.
What sort of milestones should we be looking out for and it also seem that there is an opportunity for rocket led to provide additional services and up to nine additional spacecraft.
What could that mean in terms of revenue above the $143 million an initial contract and then the last thing on that is they did talk about <unk>.
Globalstar is going to be looking to even have a contract for launch.
Of those satellite separately is that something that you can also win.
<unk>.
Yes.
Yes, Pete I'll, let you take the.
The opportunity is kind of around the satellite build scale.
Yes, absolutely.
Yes.
Is everybody.
There is.
Options to build further and there are a number.
Other options around on a piece of the technology.
The.
The launch.
The scheduled launch date for these satellites coincides nicely with.
From operational readiness, and we will certainly.
The bidding on.
<unk> for putting spacecraft, which.
If successful would really.
Rounding out the strategy in charge of the power of being able to build satellites and Andrew sorry.
<unk>.
Okay.
And Eric I would say that around like the milestones and so forth I mean from a.
On a revenue perspective this is.
For the most part are backend loaded contracts from a revenue perspective. So you can think about obviously, we've got a lot of work up to this point.
<unk> designs doing the design work, but then that's really kind of just to get the award now it's all about kind of really kind of doing the next level of NRT work and then ultimately the beginning of shipping the systems to the customer so.
I think as far as milestones you probably won't hear or.
A lot on as far as this is not like neutron where youll do an engine test for example, or kind of implement some infrastructure. That's visible. So this is one of those contracts that where it's going to be co that silo execution, where we have a we have a very detailed set of milestones internally to execute towards but nothing thats really.
That would be visible.
Against this to investors until you start to see revenue come off of the contract, which again is really more back end loaded. So you really shouldnt expect I would say a material revenue contribution in 2022 from this for this contract. This is really more 2023 and beyond.
Got it thanks, and then as far as the.
The upside to that if we were to deliver the.
The incremental nine options of the contract.
Again, we don't we don't want to speak to that at this point because again I think.
Part of this is to make sure that People's expectations don't get don't get out of whack. So for US we just want to speak to whats committed and whats committed at the 17th that's what went into backlog and to the extent that we get notification from the customers that they want to exercise some of that rental options, we'll be sure to let folks know about that.
Thanks, Good luck with everything thank you Mr.
Thank you Mr Rasmussen.
Your next question is from the line of CPE sales CFO with Roth Capital. Your line is open.
Hi, Peter I, Adam Congratulations on strong finish to 2021.
Adam I know don't want to break things out, but I just want to clarify just made with <unk> and <unk> 22 was minimal because of the accounting.
On the merger or is that what.
No no no no. So basically we will get we will get most of the quarters impact from Soliris in Q1, because the deal closed on January 17th So theres going to be a lot of purchase price accounting related impacts to our GAAP results in in Q1, but no we will get will get full or not full but nearly full operational contribution.
<unk>.
In Q1 and would have been mentioned previously when we announced the acquisition is that they were kind of roughly on a $20 billion per quarter $80 million per year revenue run rate.
And so you should be thinking along those lines of kind of a pro rated amount assuming that the deal closed on January 17th just just for rough math.
Okay, I'm glad I got it okay, and then the backlog clearly a very strong side. Congratulations on that is there any way to understand how much of the backlog.
Repeatable for launch versus spacecraft versus basically component does that break out kind of helpful. Just if not that just qualitatively what drove significant spikes since the end of calendar 'twenty one.
Yeah, well, obviously the biggest contributor to post year end backlog growth came from the MTA contract right.
$143 million.
We did have continued growth in our backlog across our space scrap components business software.
All the pieces of space systems are really operating well right now in all contributing to that growth.
And the backlog number.
Bob.
We continue to to sign up new launch customers as well so.
It's like there's not necessarily a weak spot in the business or not.
The disproportionate contribution in the post year was certainly on the space systems side, specifically to this MDA contract, but I wouldnt want that to kind of obscure. The fact, there's been a lot of other activity across the portfolio of space systems and across launch as well. So we're very encouraged by the by the backlog growth I mean, that's one thing we've always been tried to.
Message to two to investors is just you know you can.
We can talk about pipeline all day long, but it's really all about backlog backlog shows the committed.
Resources behind platforms, whether it be launch where space system. So yes, we take a lot of comfort in that and that backlog growth that we've seen not only in 2021, but as we've progressed so far through 2022.
Right now the MDA contract certainly equivalent so that's on that just one last quick question. The preview that fact, the envelope math it comes out to about $8 5 million per space I'm, just wondering if thats a good number to use going forward spacecraft opportunities is it proportional to the.
<unk> or complexity of the spacecraft any color there would be helpful. Thanks.
Yes, I wish I wish it was that easy Unfortunately, each spacecraft so unique.
There's really no kind of metric that really fits at all.
Mass nor type of platform, they're all very very different.
And you can also think about the fact that the.
The space craft that we that we designed in this case here.
There is quite a bit of NRA and thats, all kind of taken in aggregate. When you look the totality of the contract. So you kind of have also hardware portion how much of it is like.
Obama at Assembly and AIP versus <unk>. So.
We will.
I get to the extent that we get further constellation as we get further constellation volume upticks, we will be sure to share those metrics as it become available.
Okay, great Thanks, and thanks for that.
Yes.
Thank you Mr. Jeff Silber.
The next question is from the line of Ophthalmology with Canaccord. Your line is open.
Hi, Good afternoon, everyone. My first question here for Peter we have any update on the rain software that you thought you could get from NASA to offer at the wall.
<unk>.
Hi, Austin.
They have released.
So version to us and we are going through.
Panel reviewing there's probably some slight tweaks that.
That need to be made but that has been progressing.
Progressing NASA has delivered some software products to them, which is the other comfort in giving us much more confidence to be able to.
Scheduled to launch on development.
Okay. That's helpful.
And then just on the neutron facility, that's being built in Virginia.
Do we have any timing on how long you think it'll take to get that facility set up and start putting out losses.
Neutrons, all come from there or well some come from New Zealand or California.
Yes, no I'm, sorry, one year terms would come from that facility.
The land has already.
Being acquired by.
The mid Atlantic Despite court.
<unk>.
We will be digging holes in the ground there shortly.
The Permian kind of enables us to.
Sure.
A more relates to parts of the building that infrastructure.
There are certain things they need immediately and obviously you don't need to launch.
<unk> leads a month.
The whole construction part of that is price.
Quite eloquently Acosta submission.
Development timeline.
Yes.
Got it and then how comfortable are you guys with the supply chain right now or are you seeing any.
Potential issues on the horizon or are you still very confident in this environment.
I don't think anybody's confident in this environment I mean, I will say that it is.
Great.
Two.
A large part of the supply chain, because you can really manage things like everybody.
We are continuing to.
Managed shortages and all those kinds of things we took an approach of.
Liam.
Carrying a large amount of what.
Sorry.
We haven't seen any program.
And the result of any supply chain issues.
Excellent thanks for calling in.
Thank you Mr Mueller.
The last question is from Cai von <unk> with Cowen Your line is open.
So as you know layer one was was rewarded.
Just yesterday.
Blockade with Taro basically I guess, Scott one of those.
Spots 42 satellites. They claim they are putting up this huge facility in Florida and are basically going to have.
Volume production, so they will have cost totally an unmatched by everyone else and it.
It looks like your MDA sounded like kind of in the same size range. So do they represent a serious competitor to you because it looks like theyre growing predominantly after.
It looks like you're going after more commercial civil so.
What's sort of a threat do they pose if I may.
Yeah.
Yes.
Great question.
We're a little bit different in that respect.
If we look at.
The supply China of critical components, whether it be solar reaction wheel.
<unk>.
All of those things.
We've taken a approach of.
Making sure that.
We have temporarily.
Perhaps and also has the scale.
<unk>.
So really.
I think we're in a different.
Different kind of price, we're not just focused on commercial.
So the defense work.
Well, but I mean, I think if you're looking at acquisition strategy and what we've kind of rolled off.
Hesitant.
Either way.
We'll be disciplined.
Times are.
At a component level.
Sure.
Thank you Ms Giovanna remarks.
Yes.
I will now pass the conference over to Adam Mcknight for any closing remarks.
Thanks, operator, before we wrap up the call I'd like to thank everyone, who participated in today's call and we look forward to having the opportunity to provide further updates on our business, including through our <unk> on March 13 through 15.
The Deutsche Bank, <unk> annual media Internet and Telecom conference on March <unk>.
14th in.
And the Bank of America space Transport Aviation in Autos Research Summit or stars Conference March 'twenty through 'twenty.
And again, thanks, again, and we look forward to speaking with you again about exciting progress that we're making our business. Thank you operator.
That concludes the rocket labs fourth quarter 2021 financial results Conference call. Thank you for your participation you may now disconnect your lines.
Yes.
Yeah.
Okay.
Okay.