Intuitive Machines Inc. Q1 2023 Earnings Call

Operator: Good day. Thank you for standing by. Welcome to the Intuitive Machines First Quarter 2023 Conference Call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. If you would like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two if you would like to remove your question from the queue. If anyone should require operator assistance during the conference, please press star then zero to signal an operator. As a reminder, this conference is being recorded. Now I would like to hand the conference over to your host, Josh Marshall. Please go ahead, sir.

Speaker 2: Have a good day and thank you for standing by.

Speaker 2: Welcome to the Intuitive Machines first quarter 2023 conference call.

Speaker 2: At this time all participants are in listen-only mode.

Speaker 2: After the speaker's presentation, there will be a question and answer session.

Speaker 2: If you would like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker 2: You may press star and then two if you would like to remove your question from the queue.

Speaker 2: If anyone should require operator assistance during the conference, please press star then zero to signal an operator.

Speaker 2: As a reminder, this conference is being recorded.

Josh Marshall: Good afternoon. Welcome to Intuitive Machines' First Quarter 2023 earnings call. Leading the call today are Steve Altemus, Chief Executive Officer, and Erik Sallee, Chief Financial Officer. Before we begin, please note that some of the information discussed during today's call will consist of forward-looking statements setting forth our current expectations with respect to the future of our business, the economy, and other events. These include projections of revenue, earnings, and other financial items, statements on plans and objectives for the company or its management, statements of future economic performance, and assumptions underlying these statements regarding the company and its business. The company's actual results could differ materially from those indicated in any forward-looking statements due to many factors. These factors are described under forward-looking statements in the company's earnings press release and the company's most recent 10-Q filed with the SEC.

Speaker 3: And now I would like to hand the conference over to your host Josh Marshall. Please go ahead. Good afternoon welcome to Intuitive Machines' first quarter 2023 earnings call. Leading the call today are Steve Altamis, Chief Executive Officer and Eric Salle, Chief Financial Officer.

Speaker 3: Before we begin, please note that some of the information discussed during today's call will consist of forward-looking statements setting forth our current expectations with respect to the future of our business, the economy, and other events.

Speaker 3: These include projections of revenue, earnings, and other financial items, statements on plans, and objectives for the company or its management, statements of future economic performance, and assumptions underlying these statements regarding the company and its business. The company's actual results could differ materially.

Speaker 3: from those indicated in any forward-looking statements due to many factors. These factors are described under forward-looking statements in the company's earnings press release and the company's most recent 10-Q filed with the SEC. We do not undertake any obligation to update forward-looking statements. We also expect to discuss certain financial measures and information.

Josh Marshall: We do not undertake any obligation to update forward-looking statements. We also expect to discuss certain financial measures and information that are non-GAAP measures as defined in applicable SEC rules and regulations. Reconciliations to the company's GAAP measures are included in the earnings release filed on Form 8-K. Finally, we posted an earnings call supplement on our website, which provides additional context on our financial performance. You can find this presentation on our investor's relations page at www.intuitivemachines.com/investors. Now, I'll turn the call over to Steve Altemus.

Speaker 3: that are non- GAAP measures as defined in applicable SEC rules and regulations. Reconciliation to the company's GAAP measures are included in the earnings release filed on Form 8K. Finally, we posted an earnings call supplement on our website which provides additional context on our financial performance.

Speaker 3: You can find this presentation on our Investors Relations page at www.intuitivemachines.com backslash investors. Now I'll turn the call over to Steve Altamus.

Stephen Altemus: Thank you, Josh. I'm pleased to welcome you all to our Q1 2023 earnings call. Notably, our first earnings call as a public company. I'll begin today with a short overview of our company for any first-time listeners. Review our recent business highlights, followed by an overview of our commercial activities. After which I will hand the call over to Erik Sallee, our CFO, for a more comprehensive overview of our financial results for Q1 2023. Starting with a brief overview of Intuitive Machines for those of you who are new to the story, we are a space infrastructure and services company founded in 2013 that is contributing to establishment of lunar infrastructure and commerce on the Moon.

Speaker 4: Thank you, Josh.

Speaker 5: first earnings call as a public company.

Speaker 5: activities. After which I will hand the call over to Eric Sally, our CFO for a more comprehensive overview of our financial results for the first quarter of 2023.

Speaker 5: Starting with a brief overview of intuitive machines for those of you who are new to the story, we are a space infrastructure and services company founded in 2013 that is contributing to establishment of lunar infrastructure and commerce on the moon.

Stephen Altemus: The company has a leading position in the development of lunar space and operates through four distinct business areas: Lunar Access Services, Lunar Data Services, Orbital Services, and Space Products and Infrastructure, each with a specific focus and set of services. Lunar Access Services provide reliable and affordable means for governments, companies, and individuals to explore and place objects in cislunar space or on the lunar surface. Intuitive Machines has developed a complete lunar program that includes mission control, the Nova-C lunar lander, a space-to-ground communications network, and a series of launch vehicle contracts with SpaceX. The company has four missions on the flight manifest, with plans to increase the frequency and complexity of missions over time. Lunar Data Services is a private and secure network called the Lunar Data Network that sends and receives secure communications, navigation, and imagery to and from the Moon.

Speaker 5: The company has a leading position in development of lunar space and operates through four distinct business areas.

Speaker 5: Lunar access services, lunar data services, orbital services, and space products and infrastructure, each with a specific focus and set of services.

Speaker 5: affordable means for governments, companies, and individuals to explore and place objects in cis-looner space or on the lunar surface. Intuitive machines has developed a complete lunar program that includes mission control, the novacy lunar lander, a space to ground.

Speaker 5: Communications Network and a series of launch vehicle contracts with SpaceX.

Speaker 5: The company has four missions on the flight manifest with plans to increase the frequency and complexity of missions over time.

Speaker 5: Lunar Data Services is a private and secure network called the Lunar Data Network that sends and receives secure communications, navigation, and imagery to and from the moon.

Stephen Altemus: The LDN supports line of sight and is designed to support data relay services for spacecraft in cislunar space and systems on the lunar surface. The network is expected to evolve to provide backup services to NASA and the US Space Force. The LDN is comprised of a mission control center, global ground stations, baseband units installed at each ground station, and lunar data relay satellites starting later this year. Orbital services provides in-space orbital services for both commercial and government organizations. These services include repair, refueling, and raising the orbits of existing satellites as well as rideshare. Intuitive Machines seeks to leverage its domain expertise in space products such as optical navigation, rendezvous and proximity operations, robotic mechanisms for satellite delivery, satellite servicing, debris removal, and space domain awareness in orbits from LEO out to cislunar space.

Speaker 5: The LDN supports line-up site and is designed to support data relay services for spacecraft in cis-looner space and systems on the lunar surface.

Speaker 5: The network is expected to evolve to provide backup services to NASA and the U.S. Space Force.

Speaker 5: The LDN is comprised of a Mission Control Center, global ground stations, base band units installed at each ground station, and lunar data relay satellites starting later this year.

Speaker 5: organizations. These services include repair, refueling, and raising the organs of existing satellites as well as rideshare.

Speaker 5: Intuitive Machine seeks to leverage its domain expertise in space products such as optical navigation, rendezvous and proximity operations, robotic mechanisms for satellite delivery, satellite servicing, debris removal, and space domain awareness in orbits from LEO out to Cessna lunar space.

Stephen Altemus: Finally, space products and infrastructure offers reliable and cost-effective space products to its customers. These offerings include propulsion systems, navigation systems, lunar mobility, power infrastructure, and human habitation systems. Intuitive Machines also provides highly specialized aerospace engineering services for complex space systems development to NASA and the aerospace industry across the United States. Underpinning this, I want to highlight what strengthens our beliefs and validates our business strategy thesis. The Space Force's requirement to ensure freedom of action in space is driving them to initially focus on cislunar space domain awareness sensors and ex-geo position, navigation, and timing solutions, giving China and NASA's efforts. We believe the Defense Department funding for cislunar activities will drive the Space Force to rely on purchasing cislunar commercial services for the next five-plus years versus acquiring and operating new government systems.

Speaker 5: Finally, space products and infrastructure offers reliable and cost-effective space products to its customers.

Speaker 5: These offerings include propulsion systems, navigation systems, lunar mobility, power infrastructure, and human-habitation systems.

Speaker 5: And Tudor Machines also provides highly specialized aerospace engineering services for complex space systems development to NASA and the aerospace industry across the United States.

Speaker 5: Underpinning this, I want to highlight what strengths and strengths are beliefs and validates or business strategy thesis.

Speaker 5: The Space Force is requirement to ensure freedom of action in space is driving them to initially focus on SIS Lunar Space Domain Awareness, Sensors, and XGO position navigation and timing solutions, giving China and NASA's efforts. We believe the Defense Department funding for SIS Lunar activities will drive the Space Force to rely on purchasing SIS Lunar Commercial Services for the next five plus years.

Stephen Altemus: This funding provides an opportunity for companies such as Intuitive Machines to sell space domain awareness, position, navigation, and timing, and secure communication services to the Space Force, especially given that the commercial sector will be the driving force in cislunar space due to the capital that is flowing into the new space entrants. This, along with other domestic and foreign allied policies, enhances our belief in the growing space economy and why we are so well-positioned. With that as a backdrop, let's move to the quarter. We completed our business combination with Inflection Point Acquisition Corporation in February of this year, which resulted in Intuitive Machines trading on the Nasdaq stock exchange under the ticker symbol LUNR, L-U-N-R. The committed capital from this transaction provides us with the necessary resources to execute on our business objectives across our four business units and enables our future growth.

Speaker 5: versus acquiring and operating new government systems. This funding provides an opportunity for companies such as Intuitimus machines to sell space domain awareness, position navigation and timing, and secure communication services to the Space Force, especially given that the commercial sector will be the driving force in this lunar space due to the capital that is flowing into the new space entrance. This funding provides an opportunity for companies such as Intuitimus machines to sell space domain awareness.

Speaker 5: This, along with other domestic and foreign allied policies enhances our belief in the growing space economy and why we are so well positioned. With that as a backdrop.

Speaker 5: Let's move to the corner. We completed our business combination with inflection point acquisition corporation in February of this year, which resulted in intuitive machines trading on the NASDAQ stock exchange under the ticker symbol lunar LUNR.

Speaker 5: The committed capital from the transaction provides us with the necessary resources to execute on our business objectives across our four business units and enables our future growth. Taking our milestones by segment in the quarter and beginning with junior access services, NASA redirected our first lunar mission landing site to the Moon's South Pole region.

Stephen Altemus: Taking our milestones by segment in the quarter and beginning with Lunar Access Services, NASA redirected our first lunar mission landing site to the Moon's South Pole region in support of the agency's priority objectives for its Artemis program in February. This redirect, while initially shifting our timing to execute, does carry incremental financial benefits for us. Changing Intuitive Machines' first landing site is a clear signal from the government that we are in the midst of a space race, and the Moon is of strategic importance. That sentiment was apparent at this year's National Space Symposium as NASA rolled out its Moon to Mars strategy. Department of Defense is gradually recognizing the importance of cislunar space, due in large part to China's recent activities directed at and around the Moon, and NASA's focus on the Artemis program.

Speaker 5: in support of the agency's priority objectives for its Artemis program in February . This redirect, while initially shifting our timing to execute, does carry incremental financial benefits for us.

Speaker 5: Changing intuitive machines first landing site is a clear signal from the government that we are in the midst of a space race and the moon is of strategic importance. That sentiment was apparent at this year's National Space Symposium as NASA rolled out its moon to Mars strategy. Department of Defense is gradually recognizing the importance of cis-limiter space.

Speaker 5: Do in large part the China's recent activities directed at and around the moon, and NASA's focus on the Artemis program. Given the elevated importance of Intuitive Machines' first mission landing site, we made significant execution progress, including the structural testing of our novacy spacecraft. The successful and completed testing allows us to safely launch on a SpaceX Falcon 9 rocket.

Stephen Altemus: Given the elevated importance of Intuitive Machines' first mission landing site, we made significant execution progress, including the structural testing of our Nova-C spacecraft. The successful and completed testing allows us to safely launch on a SpaceX Falcon 9 rocket. Additionally, we successfully completed a propellant loading demonstration that filled our lunar lander with cryogenic liquid propellant commodities to test the fill equipment and loading procedures at the launch pad. Our software and mission operations teams mirrored that progress during Q1, completing a full-duration mission sequence test of the flight software and flight avionics systems with the mission control team. With these significant milestones already accomplished this year, Intuitive Machines is well on its way to flying its first mission in Q3.

Speaker 5: Additionally, we successfully completed a propellant loading demonstration that filled our lunar lander with cryogenic liquid propellant commodities to test the fill equipment and loading procedures.

Speaker 5: at the launch pad. Our software and mission operations team mirror that progress during the first quarter completing a full duration mission sequence test of the flight software and flight avionics systems with the mission control team.

Speaker 5: With these significant milestones already accomplished this year, and two of the machines as well on its way to flying its first mission in the third quarter. This mission intends to return the United States to the surface of the Moon at a strategically essential landing site as a precursor to the human Artemis missions.

Stephen Altemus: This mission intends to return the United States to the surface of the Moon at a strategically essential landing site as a precursor to the human Artemis missions. Our commercial lunar access services activity continues to increase both in lunar surface payloads and rideshare payloads. The diversification of our revenue in lunar access and delivering payloads in orbits beyond the geo area is a strong and growing indication of the long-term success of our business. Next is lunar data services. To support our three NASA-contracted lunar missions, Intuitive Machines established its lunar data services to command and control its spacecraft and communicate with the spacecraft and payloads. In Q1, we took the initial steps in commercializing that service beyond internal usage during our own lunar missions. Recent highlights include a proposal submission of our offering to NASA's solicitation for Near Space Network Services in April.

Speaker 5: Our commercial lunar access services activity continues to increase both in lunar surface payloads and ride-chair payloads. The diversification of our revenue and lunar access and delivering payloads in orbits beyond the geo area is a strong and growing indication of the long-term success of our business.

Speaker 5: To support our three NASA contracted lunar missions, intuitive machines established its lunar data services to command and control its spacecraft and communicate with the spacecraft and payloads. In the first quarter, we took the initial steps in commercializing that service beyond internal usage during our own lunar missions. Recent highlights include a proposal submission of our offering to NASA's solicitation for Near Space Network Services in April .

Stephen Altemus: This is a 10-year multi-award contract for communication services direct to and from Earth and data relay and navigation services in and around the vicinity of the moon. Intuitive Machines has submitted a prime bid for data relay services with Raytheon as a significant subcontractor. This solicitation is structured much like NASA's CLPS, or NASA's Commercial Lunar Payload Services initiative, which receives task orders over a period of 10 years to provide services in terms of minutes of communications. Whether that is standby, critical, or emergency communication services. The solicitation leverages our established and operational ground stations around the globe to give us continuous communication coverage. At the end of 2022, Intuitive Machines validated its network by tracking NASA's Lunar Reconnaissance Orbiter and the Artemis 1 mission. During Artemis 1, our communications network tracked the Orion spacecraft out to about 430,000 kilometers, demonstrating our capabilities.

Speaker 5: This is a 10-year multi-award contract for communication services direct to and from Earth and Data relay and navigation services in and around the vicinity of the moon In Tudor Machines has submitted a prime bid for data relay services with Raytheon as a significant subcontractor This solicitation is structured much like NASA's clips

Speaker 5: or NASA's Commercial Lunar Payload Services Initiative.

Speaker 5: which receives task orders over a period of 10 years to provide services in terms of minutes of communications.

Speaker 5: whether that is standby, critical, or emergency communication services.

Speaker 5: The solicitation leverages are established in operational ground stations around the globe to give us continuous communication coverage.

Speaker 5: At the end of 2022, Intuna Machines validated its network by tracking NASA's lunar reconnaissance orbiter and the Artemis-1 mission.

Speaker 5: During Artemis 1, our communications network tracked the Orion spacecraft out to about 430,000 kilometers, demonstrating our capabilities. In addition, we validated our ground stations against NASA's Lunar Reconnaissance Orbiter, which is orbiting the Moon, and did orbit determination from each ground station to demonstrate that we can do navigation services as part of that ground network.

Stephen Altemus: In addition, we validated our ground stations against NASA's Lunar Reconnaissance Orbiter, which is orbiting the Moon, and did orbit determination from each ground station to demonstrate that we can do navigation services as part of that ground network. All of this demonstrates our strength in the bidding process for the Near Space Network Services contract. We believe we are in a strong position to provide a solid offering to NASA and expect NASA to award the contract in Q3 of this year. Moving to orbital services now. We invested time and personnel in our orbital services business unit during Q1. In the weeks following, Intuitive Machines received its largest single contract award to date, NASA's five-year, $719 million Omnibus Multi-Engineering Services contract.

Speaker 5: We invested time and personnel in our orbital services business unit during the first quarter.

Speaker 5: In the weeks following, intuitive machines received its largest single contract award today, NASA's 5-year, $719 million on the bus multi-engineering services contract.

Stephen Altemus: Intuitive Machines is the majority partner in the joint venture with KBR to operate missions, develop technologies enabling services including satellite servicing and refueling, satellite repositioning, and orbital debris removal. This win is of strategic importance, allowing us to support NASA in designing, developing, and demonstrating critical technology required to support the emerging orbital servicing market, and a validation of the company's experience in spacecraft development, autonomous systems, and near space communications. When we entered our business combination agreement, we said that we were going to start this orbital services business unit. We incubated it and are happy to report that we landed a large prime contract to establish it. The contract was recently protested, but we believe our offer represents excellent value to the customer, and upon adjudication, upholding the award decision should start work in late Q3 or Q4 of this year.

Speaker 5: Intuitive Machines is the majority partner in the joint venture with KBR to operate missions, develop technologies enabling services including satellite servicing and refueling, satellite repositioning and orbital debris removal.

Speaker 5: This win is up strategic importance, allowing us to support NASA in designing, developing, and demonstrating critical technology required to support the emerging orbital servicing market, and a validation of the company's experience in spacecraft development, autonomous systems, and near-space communications.

Speaker 5: When we entered our business combination agreement, we said that we were going to start this Orbital Services business unit. We incubated it and are happy to report that we landed a large prime contract to establish it. The contract was recently protested, but we believe our offer represents excellent value to the customer.

Stephen Altemus: Finally, up next is our space products and infrastructure business. Our space products and infrastructure business unit is where we monetize capabilities including developing propulsion systems, servicing engineering contracts, and NASA awards for lunar mobility vehicle, power plants, and human habitation systems. This business made strides in currently contracted work and future opportunities. Today, Intuitive Machines is proud to introduce the Moon RACER team, with the intent to propose against NASA's solicitation for Lunar Terrain Vehicle for the Artemis program. Intuitive Machines is the prime contractor in the Moon RACER team with Northrop Grumman, Boeing, Roush, AVL, and Michelin as our teammates. We believe this team of industry-leading professionals is capable of developing large, integrated, and complex systems, including an electric chassis, space-rated wheels, and the operations to support long-duration lunar surface exploration.

Speaker 5: And upon a adjudication upholding the award decisions should start work in late Q3 or Q4 of this year.

Speaker 5: Finally, up next is our space products and infrastructure business. Our space products and infrastructure business unit is where we monetize capabilities including developing propulsion systems, servicing engineering contracts, and NASA awards for lunar mobility vehicle.

Speaker 5: power plants, and human habitation systems.

Speaker 5: This business made strides in currently contracted work and future opportunities. Today, Intuitive Machines is proud to introduce the Moon Racer team with the intent to propose against NASA's solicitation for Lunar Terrain Vehicle for the Artemis program.

Speaker 5: Intuitive machines is the prime contractor in...

Speaker 5: In the Moon Racer team with North of Grumman, following Roush.

Speaker 5: AVL and Michelin as our teammates.

Speaker 5: We believe this team of industry leading professionals is capable of developing large, integrated, and complex systems, including an electric chassis, space rated wheels, and the operations to support long-duration lunar surface exploration. Two of the machines is also advancing the design of our lunar-figured surface power reactor.

Stephen Altemus: Intuitive Machines is also advancing the design of a lunar fission surface power reactor under contract with NASA and the Department of Energy as part of the IX joint venture between Intuitive Machines and X-energy, with Intuitive Machines as the majority partner. In the weeks following Q1, Intuitive Machines briefed the Department of Energy and NASA at the Idaho National Laboratory about its midpoint design cycle. Lastly, I'd like to touch on our lunar production and operations center. We are completing construction of an over 100,000 square foot facility with design build contractor Burns & McDonnell, and consulting by Griffin Partners. Intuitive Machines is proud to partner with the city of Houston and the Houston Airport System, which are financing the $40 million project that will enable the company to meet growing demands across all four business units.

Speaker 5: under contract with NASA and the Department of Energy as part of the IX joint venture between intuitive machines and X energy.

Speaker 5: Within two to machines is the majority partner.

Speaker 5: In the weeks following the first quarter, intuitive machines briefed the Department of Energy and NASA at the Idaho National Laboratory about its midpoint design cycle.

Speaker 5: Lastly, I'd like to touch on our Lunar Production and Operations Center. We are completing construction of an over 100,000 square foot facility with design, build, contractor Burns and McDonald and consulting by Griffin Partners. Intuitive Machines is proud to partner with the City of Houston and the Houston Airport System.

Stephen Altemus: At the end of Q3 2022, Intuitive Machines started operations inside its new engine verification facility or flame range, located within Intuitive Machines' 12.5 acre lot that also houses the company's lunar production facility. The state-of-the-art testing facility is designed to further develop, test, and vacuum-qualify Intuitive Machines' advanced cryogenic engines and safely execute other elevated risk testing. To quickly recap, Q1 2023 established Intuitive Machines as a publicly traded company. Our go public transaction provided us the resources to execute on our business objectives, and we are well capitalized to do so. We've been awarded NASA's five-year, $719 million OMES3 contract. We are continuing to retire risks on our way to a Q3 mission to the Moon, and we continue to mature our lunar data services in preparation for another prime contractor award.

Speaker 5: which are financing the $40 million project that will enable the company to meet growing demands across all four business units.

Speaker 5: At the end of Q3 2022, Intuitive Machines started operations inside its new engine verification facility or flame range, located within Intuitive Machines 12 and a half acre lot that also houses the company's Lunar Production Facility.

Speaker 5: The state-of-the-art testing facility is designed to further develop tests and vacuum qualified in two-to-machines advanced cryogenic engines and safely execute other elevated rapid testing.

Speaker 5: To quickly recap, the first quarter of 2023 established in Tudor Machines as a publicly traded company. Our GO public transaction provided us the resources. The first quarter of 2020 established in Tudor Machines as a publicly traded company.

Speaker 5: To execute on our business objectives and we are well capitalized to do so. We've been awarded NASA's 5-year-719 million dollar owns three contract.

Speaker 5: We are continuing to retire risks on our way to a third quarter mission to the moon, and we continue to mature our lunar data services and preparation for another prime contractor award.

Stephen Altemus: I am extremely proud of the team here at Intuitive Machines for their hard work and dedication as we look to deliver for all of our stakeholders. We are well positioned through the balance of 2023 to deliver on our expectations and drive long-term shareholder value. With that, I'll turn the call over to Intuitive Machines Chief Financial Officer, Erik Sallee.

Speaker 5: I'm extremely proud of the team here in the two of the machines for their hard work and dedication as we look to deliver for all of our stakeholders.

Speaker 5: We are well positioned through the balance of 23 to deliver on our expectations.

Erik Sallee: Thank you, Steve, and thanks to everyone joining us today. I'll begin by reviewing our Q1 2023 results and then discuss our outlook for the rest of the year. We ended Q1 with a contracted backlog of $161.1 million, $107.7 million of which is expected to convert to revenue over the remainder of the year. This backlog does not include the NASA OMES-3 contract which was awarded in early April after Q1 ended with a contract ceiling value of $719 million. Additionally, some of our services contracts are funded incrementally and not included in firm backlog. $187 million of the anticipated to-go 2023 revenue is either in firm backlog or contracted, with OMES being the major driver of the latter.

Speaker 5: Thank you, Steve, and thanks to everyone joining us today. I'll begin by reviewing our first quarter 2023 results and then discuss our outlook for the rest of the year. We ended the quarter with a contracted backlog of $161.1 million, $107.7 million of which is expected to convert to revenue over the remainder of the year. This backlog does not include the NASA OEMS-3 country.

Speaker 5: which was awarded in early April after the first quarter ended with a contract ceiling value of $719 million. Additionally, some of our services contracts are funded incrementally and not included in firm backlog. $187 million of the anticipated two-go 2023 revenue

Erik Sallee: We believe our firm backlog, together with other contracted commitments, puts us in a strong position moving forward and shows our continued customer traction within our existing and near-term market segments. Our Q1 2023 was in line with expectations. We generated revenue of $18.2 million in Q1 compared to $18.5 million in Q1 2022. The majority of our Q1 revenue was from lunar access services, and specifically our three NASA Commercial Lunar Payload Services, or CLPS, contracts, which generated $12.8 million of the $18.2 million in Q1 revenue. Operating loss was $14 million compared to a $4.5 million operating loss in the year-ago quarter. This was primarily due to public company readiness costs as well as impacts from the launch schedule updates Steve mentioned earlier.

Speaker 5: the majority of our first quarter revenue was from lunar access services, and specifically our three NASA commercial lunar payload services, or CLPS contracts, which generated $12.8 million of the $18.2 million in Q1 revenue.

Speaker 5: Operating loss was $14 million compared to a $4.5 million operating loss in the year-ago quarter.

Speaker 5: This was primarily due to public company readiness costs as well as impacts from the launch schedule updates Steve mentioned earlier.

Erik Sallee: Operating expenses were $32.2 million in Q1, $2.8 million of which was attributable to expenses associated with our public listing. We do not expect to incur these transaction expenses going forward. We anticipate that this, combined with the volume increase later in the year, should help us achieve positive EBITDA in Q4 of this year. Importantly, we ended Q1 with a cash balance of $46.8 million, which represents a well-capitalized position and allows us to execute on our business strategy. Additionally, our quarter-ending cash balance does not include the $13.6 million we received from warrant exercises in April, which will be disclosed as a subsequent event. We have always been and will continue to be a capital-efficient company and will allocate capital to the highest risk-adjusted returns in a disciplined manner.

Speaker 5: Operating expenses were $32.2 million in the first quarter, $2.8 million of which was attributable to expenses associated with our public listing.

Speaker 5: We do not expect to incur these transaction expenses going forward.

Speaker 5: We anticipate that this, combined with the volume increase later in the year, should help us achieve positive EBITDA in Q4 of this year.

Speaker 5: Importantly, we ended the first quarter with a cash balance of $46.8 million, which represents a well-capitalized position and allows us to execute on our business strategy.

Speaker 5: We have always been and will continue to be a capital efficient company and will allocate capital to the highest risk-adjusted returns in a disciplined manner.

Erik Sallee: As a private company, we were mostly self-funded, so we know how to live within our means. The growth capital from the transaction is being deployed toward incremental investments, specifically tied to customers and programs generating near-term revenue in order to achieve our previously stated goals. The LTV, NSNS, and FSP programs, as Steve mentioned earlier, are three great examples of this. Moving to our guidance for 2023. As we move forward as a public company, we will be issuing guidance utilizing ranges for important metrics in line with many of our public company peers. The protest of OMES, which only occurred two days ago, will delay the start of this contract by up to 100 days. OMES represented a significant portion of our projected 2023 revenue. However, this does not impact the overall value of the contract.

Speaker 5: As a private company, we were mostly self-funded, so we know how to live within our means.

Speaker 5: The growth capital from the transaction is being deployed toward incremental investments, specifically tied to customers and programs generating near-term revenue in order to achieve our previously stated goals.

Speaker 5: The LTV, NSNS, and FSP programs that Steve mentioned earlier are three great examples of this.

Speaker 5: Moving to our guidance for 2023.

Speaker 5: OEMs represent a significant portion of our projected 2023 revenue. However, this does not impact the overall value of the contract. We continue to feel confident in the value of our proposal to the customer and pending a successful adjudication of the protest in our favor to expect to begin work on OEMs in the fourth quarter. Accounting for this recent news, we expect our 2023 revenue to be in the range of $174,000, to 268 million, and gross margin to be in the range of 5 to 18%.

Erik Sallee: We continue to feel confident in the value of our proposal to the customer and, pending a successful adjudication of the protest in our favor, expect to begin work on OMES in Q4. Accounting for this recent news, we expect our 2023 revenue to be in the range of $174 million to 268 million and gross margin to be in the range of 5% to 18%. We expect to end the year with a cash balance of approximately $49 million and will seek to manage the business appropriately to achieve this result. We expect our revenue generation to be stronger in H2 of the year, given revenue recognition and timing of several events and contracts, which we anticipate will occur in H2 of the year and support our projected growth.

Speaker 5: We expect to end the year with a cash balance of approximately $49 million and will seek to manage the business appropriately to achieve this result.

Speaker 5: We expect our revenue generation to be stronger in the second half of the year, given revenue recognition and timing of several events and contracts which we anticipate will occur in the second half of the year and support our projected growth.

Erik Sallee: A stronger second half is in line with previous years and not uncommon within the aerospace and defense industry as a result of the contract nature of the business. For example, in 2022, 56% of our revenue was generated in the H2 of the year and 44% was generated in the Q4. Programs that we expect to ramp up over the next six months include COMET, JETS, xEVAS, and OMES. Significant potential new contract awards later this year include NSNS and LTV. We believe we will be on track to hit our guidance if we achieve key milestones on the expected timelines for this year, including successful lunar landings, OMES execution, and being selected as a winning bidder for NSNS. I will now briefly go over our outstanding equity to help clarify our share count calculations. We have three classes of equity, Class A, B, and C.

Speaker 5: JETS, XEVAS, and OMS. Significant potential new contract awards later this year include NSNS and LTV. We believe we will be on track to hit our guidance if we achieve key milestones on the expected timeline for this year, including successful lunar landings, OMS execution, and being selected as a winning bidder for NSNS. I will now briefly go over our outstanding equity to help clarify our share count calculations.

Erik Sallee: Class A are the common shares that are publicly traded. Equity held by employees prior to our listing were converted into Class B shares. Equity held by our three founders were converted into Class C shares. There are 14,771,804 A shares outstanding, 10,566 B shares outstanding, and 68,140,188 C shares outstanding as of the quarter-end balance sheet date. Lastly, I will reemphasize, we believe our Q1 ending cash balance, combined with the additional capital from the warrant exercises in April, gives us a strong balance sheet with the resources to execute on our business plan in a prudent manner. With that, operator, we are now ready for questions.

Speaker 5: We have three classes of equity, class A, B, and C, class A or the common shares that are publicly traded. Equity held by employees prior to our listing were converted into class B shares.

Speaker 5: Equity held by our three founders were converted into Class C shares.

Speaker 5: There are 14,771,804 A shares outstanding, 10,566 B shares outstanding,

Speaker 5: and 68,140,188 C-Shares outstanding as of the quarter end balance sheet date.

Speaker 5: Lastly, I will re-emphasize we believe our Q1 ending cash balance combined with the additional capital from the Warren exercises in April gives us a strong balance sheet with the resources to execute on our business plan in a prudent manner.

Operator: Thank you, sir. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then one now. The first question we have is from Sujeeva De Silva from ROTH MKM. Please go ahead.

Speaker 5: With that, operator, we are now ready for questions.

Speaker 2: Thank you, sir. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then one now. The first question we have is from Fuji Da Silva from Roth MKM. Please go ahead. Next question.

Sujeeva De Silva: Hi, Steve and hi, Eric. Congratulations on all the progress to date. For IM-1, are there any remaining pre-flight milestones? It'd be great to get an update on expected timing for IM-2. Seems like it's kind of come right on the heels of that.

Speaker 6: Hi Steve and hi Eric. Congratulations on all the progress today. So for IM-1, are there any remaining pre-flight milestones? And it'd be great to get an update on timing, expect timing for IM-2. Seems like it's kind of come around the gill to that.

Stephen Altemus: Yeah, Suji, good afternoon. Yeah, we've made some significant progress, as I mentioned, in terms of our structural modal test, making sure that the structure is ready to go in the acoustic and vibration environment underneath the Falcon 9 fairing. We did the cryogenic loading test to demonstrate that we can load successfully when we get to the launch pad. The other significant test was the mission sequence test, where we put the whole mission control team to work with the ground software interfacing with the flight avionics and the flight software to demonstrate that we could go from launch countdown, in transit to the moon, and then touchdown on the moon. We are now recovering the vehicle from the cryogenic testing and reconfiguring it for a final configuration, getting ready to ship to the Cape.

Speaker 5: Yeah, Suji, good afternoon. Yeah, we've made some significant progress, as I mentioned, in terms of our structural modal test, making sure that the structure is ready to go in the acoustic and vibration environment underneath the falcon 9 fairing. And then we did the cryogenic... You have probably heard of it very recently. Yes. Cool right?

Speaker 7: loading tests to demonstrate that we can load successfully when we get to the launch pad. And then the other significant test was the mission sequence test where we put the whole mission control team to work with the ground software interfacing with the flight avionics and the flight software to demonstrate that we could go from.

launch countdown in transit to the moon and then touch down on the moon. We are now recovering the vehicle from the cryogenic testing and reconfiguring it for a final configuration getting ready to ship to the Cape. We have some functional testing to do and we expect in the

Stephen Altemus: We have some functional testing to do, and we expect in the mid to late Q3 to be actually at the launch pad and preparing for liftoff. That's a little bit of a movement from initial expectations, and so we're currently assessing where mission 2 will land, in terms of the schedule or the calendar. Right now we're on track for that Q3 on mission 1, and we'll come back to you with an assessment when we get it on the schedule for missions 2 and 3, which are in the approximate timeframe that we had originally scheduled.

mid to late Q3 to be actually at the launch pad and preparing for liftoff. So that's a little bit of a movement from initial expectations and so we're currently assessing where mission two will land in terms of the schedule or the calendar, but right now we're on track for that Q3 on mission one.

Sujeeva De Silva: Okay. Helpful color, Steve. Then questions on the OMES contract. Can you first talk about the protest, and just the base on which that protest is being lodged, just to understand it and your opinion there? Also for the $719 million, is that entirely attributable to Lunar or is that shared with partners and what's the linearity expected there?

it in your opinion there. And also for the $7 or $19 million, is that entirely attributable to Lunar or is that with part share with partners and what's the linearity expected there?

Stephen Altemus: Yeah, okay. For the first question, the protest that occurs at Goddard Space Flight Center through the procurement is fairly frequent, unfortunately, in terms of vendors who apply and are unsatisfied with the outcome. We know from the statistics that less than 10% of those protests are actually overturned. We have high confidence in our value offering to the government. I don't know the underpinnings of it. Our score was exceptional in the proposal, and we came out of it as a clear winner. We're confident that once we get through this 100-day protest period for the GAO, that the award will stand on that. As far as the makeup, we are in a joint venture with KBR. Intuitive Machines is the majority partner at a 51%/49% split between Intuitive Machines and the partner. Erik, any commentary on the revenue breakout?

Okay, for the first question, you know, the protest, you know.

That occurs at Goddard Space Flight Center through the procurement is fairly frequent unfortunately in terms of Vendors who apply and are Unsatisfied with the with the outcome we know from the statistics that less than 10% of those protests are actually overturned So we have high confidence in our value

in the proposal and we had, came out of it as a clear winner. So we're confident that once we get through this 100 day protest period for the GAO, that the award will stand on that. As far as the makeup, we're in a joint venture with KBR.

Intuitive machines is the majority partner at a 51% 49% split between the two machines and the partner. Eric, any commentary on the...

Erik Sallee: Suji, the revenue will be entirely attributable to Intuitive Machines. The full $719 million, it will be attributable to Intuitive Machines.

On the revenue breakdown you the revenue the suji the revenue will be entirely attributable to intuitive machines so the full 719 million It will be attributable to intuitive machines Okay, please like clarification And then the other question was on the linearity of that over the five years whether it's fairly even and I'll just tack on My last question and move on the revenue guidance has a big

Sujeeva De Silva: Okay. Appreciate the clarification. The other question was on the linearity of that over the five years, whether it's fairly even. I'll just tack on my last question and move on. The revenue guidance has a big range around it. If you can give us what's the high-end versus low-end delta, what some of the factors there would be. Thank you so much, Erik.

Erik Sallee: You bet. The revenue on OMES will be fairly linear after the program starts. In terms of the drivers, I tried to lay some out earlier, but the range is broad, we acknowledge that. There's no way around. We do have three to five significant events that shape the outcome for the year, both from a business and a financial standpoint, Suji. That's just sort of where the numbers flow once you look at how those could pan out. Not all of them, but some of them are binary. That's just where we're at. What they are, it's the lunar landings. I mean, the biggest ones are going to impact whether we come in on the high side or low side.

I tried to lay some out earlier, but the range is broad. We acknowledge that. There's no way around. We do have three or five significant events that shape the outcome for the year, both from a business and a financial standpoint, Suji.

and that's just sort of where the numbers flow once you look at how those could pan out. And not all of them, but some of them are binary. And so that's just where we're at. What they are, it's the lunar landings. I mean, the biggest ones are going to impact, whether we come in on the high side or low side, you know. The lunar landings, our ability to execute on OMS.

Erik Sallee: The lunar landings, our ability to execute on OMES, once the protest is over, and the winning in NSNS as well, and then executing on that with the high end of the range, also contemplating us winning the LTV prime bid as well later in the year.

Sujeeva De Silva: Thanks. Appreciate you entertaining the questions and congrats on a strong quarter out of the gate.

high end of the range, also contemplating us winning the LTV prime bid as well later in the year.

Stephen Altemus: Thank you.

Thanks, appreciate you understanding the questions and congrats on a strong quarter out of the game. Thank you.

Operator: Thank you. The next question we have is from Josh Sullivan from The Benchmark Company. Please go ahead.

Thank you. The next question we have is from Josh Sullivan from the benchmark company. Please go ahead.

Josh Sullivan: Hey, good evening.

Erik Sallee: Evening, Josh.

Josh Sullivan: The expectation to end the year with $49 million, is that the midpoint of the revenue range?

The expectation that the end of the year was 49 million. Is that the midpoint of the revenue range?

Erik Sallee: Yes. Correct. That's right.

Josh Sullivan: Maybe how should we think about cash burn cadence through the year?

Oh, yes, correct. That's right.

Erik Sallee: Yeah, that's one I've always tried to tell our story in a way where I talked early about those incremental investments, and how we've always been capital efficient. Obviously, you can kind of imply what our cash burn was in Q1, and you'll see it in the financial statements obviously. I specifically said, I think, what was it? The terminology we spent some time thinking about. We will manage operations to achieve this result. Some of the cash burn that's anticipated with that in the upside scenario are things we can throttle if we end up coming down more towards the lower end of the range.

And then maybe how should we think about cash burn cadence through the year? Yeah, that's what I've always you know tried to tell our story in a way where I talked earlier about those incremental investments and how we've always been capital efficient. Obviously you can kind of imply what our cash burn was in Q1 and you'll see it in the financial statements obviously.

But I say, I specifically said, I think, what was it? The terminology we spent some time thinking about, we will

manage operations to achieve this result, some of the cash burn is anticipated with that in the upside scenario are things we can throttle if we end up coming down more towards the lower end of the range. And so that's why, regardless of where we come out in the revenue range, you know, I feel good about our ability to manage the business to that cash result, which I think is a great...

Erik Sallee: That's why, regardless of where we come out in the revenue range, I feel good about our ability to manage the business to that cash result, which I think is a great feature of the business and something I personally, and I think we as a group, have tried very hard to set ourselves up for, is we don't go spend the money till we have it. We always keep ourselves in a well-capitalized position, a prudent position. We can always continue to go after government contracts, as we have in the past, to help self-fund a lot of the development costs. As we have the capital, which we do now, accelerate those to use that to put ourselves farther ahead of the competition.

a lot of the development costs, and then as we have the capital, which we do now, accelerate those to use that to put ourselves farther ahead of the competition. So that's how I think about sort of the cash and how we're going to manage ourselves in a prudent way to regulate the cash burn in accordance with the volume.

Erik Sallee: That's how I think about sort of the cash and how we're going to manage ourselves in a prudent way to regulate the cash burn, in accordance with the volume.

Josh Sullivan: Got it. Just given the wins, including OHMS, how are you tracking against your contract win rate assumptions, just relative to some of the longer-term financial outlooks that you provided?

Erik Sallee: I think, we had about a 50% win rate in Q1. As I said before, in the analyst day before we went public and stuff, sort of we had a very gross level. We had a 40% win rate sort of baked into the financials previously. That should give you an idea.

financial outlooks that you provided? I think you know the two we had about a 50% win rate in Q1 and you know as I said before our in the like analyst day before we went public and stuff sort of we had a very gross level we had a 40% win rate sort of baked into the financials previously so that should give you an idea.

Josh Sullivan: Great. Thank you for the insight.

Erik Sallee: Yep. Thank you.

Operator: Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then one now. The next question we have is from Austin Moeller from Canaccord. Please go ahead.

Thank you for the time. Thank you. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then one now. The next question we have is from Austin Mona from Canaccord. Please go ahead. Please press star and then one now.

Thank you for the time. Thank you. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then one now. The next question we have is from Austin Mona from Canaccord. Please go ahead. Hi, good afternoon, Steve and Eric.

Austin Moeller: Hi, good afternoon, Steve and Eric.

Stephen Altemus: Good afternoon, Austin.

Austin Moeller: Just my first question here. If we look at the lunar data services business, what are your thoughts on the competition from Lockheed Martin's Parsec relay constellation in lunar orbit, especially considering that you have the first-mover advantage and your satellites will be there first?

Good afternoon, Austin. This is my first question here. If we look at the Lunar Data Services Business, what are your thoughts on the competition from Lockheed Martin's Parsec Relay Constellation in Lunar orbit?

Stephen Altemus: Yeah. Thank you for that. What's interesting here is that there's multiple players interested in cislunar space, and so that is great in terms of total available market and seeing this nascent market take hold. What's fantastic is that you point out that we have already contracted for the first two data relay satellites, which are scheduled to fly on mission two and mission three. They'll be deployed by the end of this year and early next, hopefully. Also, we have the ground communications network for direct-to-Earth communications with the spacecraft. We have considerable traction in establishing that communication network from Earth and also data relay around the Moon, which gets us there a year or two ahead of any of the competition.

especially considering that you the first mover advantage and your satellites will be there first. Yeah, thank you for that. What's interesting here is that there's multiple players interested in syslooner space. And so that is great in terms of total available market and see this nascent market take hold.

What's fantastic is that you point out that we have already contracted for the first two data relay satellites, which are scheduled to fly on mission two and mission three. They'll be deployed by the end of this year and early next, hopefully. And also we have the ground communications network for the mission.

direct to Earth communications with the spacecraft. We have considerable traction in establishing that communication network from Earth and also data relay around the moon, which gets us there a year or two ahead of any of the competition. It's interesting and flattering to be copied or imitated, but it's clear that there's a sense that there's an emerging market here and proud to be at the forefront of that. So we'll continue to invest in lunar communications data relay satellites.

Stephen Altemus: It's interesting and flattering to be copied or imitated. It's clear that there's a sense that there's an emerging market here, proud to be at the forefront of that. We'll continue to invest in lunar communication data relay satellites and position navigation and timing to make sure we maintain that lead ahead of our competition. The Near Space Network contract, we put a solid offering in there with our major sub in Raytheon to provide the solutions and the heft we might need for enterprise-class systems as we move into that 10-year contract. We feel really good about our positioning here, fully expected competition in this NSNS 10-year procurement. We expect about three awards there for data relay. Each one may be on the order of about $1 billion.

position navigation and timing to make sure we maintain that lead ahead of our competition. And then near space network contract we put a solid offering in there with our sub-contract major sub in Ration to provide the solutions and the heft we might need for more enterprise class systems as we move into that 10-year contract.

Stephen Altemus: It's a rich target for some of the contractors to go after.

Austin Moeller: That's great. Just to follow up, how might cash generation and positive EBITDA in Q4 be impacted if either IM-1 or IM-2 continues to move to the right? My understanding is that only 10% of the total revenues associated with both of those contracts are related to actual touchdown on the lunar regolith, right?

for some of the contractors to go after.

That's great. Just a follow-up, how might cash generation in positive EBITDA on Q4 be impacted if either IM1 or IM2 continues to move to the right? My understanding is that only 10% of the total revenues associated with both of those contracts are related to actual cuts.

Erik Sallee: Your last statement is absolutely correct, Austin Moeller. In terms of how EBITDA will be affected, that depends on the rationale. If they move to the right, I would expect us to be incurring additional costs for the overall mission on the contract. That would be a headwind to EBITDA. If the move is as a result of a customer-directed request, then that would also come with a mod, which would increase the total contract price, which would be either neutral or maybe positive, depending on how well we do on negotiations to EBITDA. On cash, again, a move to the right would have a similar impact. If it's just cost growth from a move to the right on our side, that's going to have the corresponding headwind to cash.

mission on the contract, so that would be a headwind to EBITDA. But if the move is a result of a customer-directed request, then that would also come with a mod which would increase the total contract price, which would be either neutral or maybe positive depending on how well we do on negotiations to EBITDA with a probably a...

and on cash, again, a move to the right would have a similar impact, right? If it's just cost growth from a move to the right on our side, that's going to have the corresponding headwind to cash. But if it's also associated with the direction of the customer, they would also then have additional payment milestones as part of that mod.

Erik Sallee: If it's also associated at the direction of the customer, they would also then have additional payment milestones as part of that mod that should make it neutral or again, maybe slightly positive, depending on how the actual negotiations go. Does that help give color to that question?

that should make it neutral or again maybe slightly positive depending on how the actual negotiations go. Does that help give color to that question? Yeah, I think that clarifies everything, so thanks for the details there. Yep. Thank you. There are no further questions at this moment.

Austin Moeller: Yeah, I think that clarifies everything, so thanks for the details there.

Erik Sallee: Yep.

Operator: Thank you. There are no further questions at this moment. I would like to turn the floor back over to Intuitive Machines Co-founder and CEO, Steve Altemus, for closing comments.

Stephen Altemus: Well, thank you everyone for your interest in Intuitive Machines. Just as a reminder, Intuitive Machines will be speaking at these upcoming conferences and look forward to the opportunity to share news and updates at the 2023 Canaccord Genuity Annual Growth Conference, 14 and 15 June, the Roth MKM Ninth Annual London Conference, 20 and 22 June, and the Jefferies Virtual Space Summit on 27 June. We look forward to speaking with all of you soon about the progress that Intuitive Machines is making towards a sustained human presence on the moon. Have a good evening.

at the 2023 Cancer Tech Conference, June 14th and 15th, the Roth MKM 9th Annual London Conference in June 22nd, and the Jeffries Virtual Space Summit on June 27th. We look forward to speaking with all of you soon about the progress of Intuitive Machines is making towards a sustained human presence on the moon. Have a good evening. Thank you, Sal. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.

Operator: Thank you, sir. Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.

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