Q2 2023 Intuitive Machines Inc Earnings Call
Americium 241, radioisotope Sterling generator that may be integrated into lunar landers to enable it to survive the lunar night cycle.
Unlocking this capability in support of Nasa's Artemis program is Paramount for intuitive machines, and the entire space exploration industry.
The application of these radioisotope power systems extends beyond lunar surface longevity intuitive machines entered the proposal pool for the Air Force Research Labs joint energy technology supplying on orbit nuclear power.
Called Jetson low power contract this month.
The proposal calls for two of the machines and its team to develop satellite positioning and maneuverability solutions using radioisotope power systems in support of Nasa's Gateway, a multipurpose outpost orbiting the moon.
Intuitive machines jetson team leverage its nuclear power.
Systems power generation in space exploration expertise building on our existing lunar fission surface power reactor contract, which we brief the department of energy and NASA. The second phase $4 5 million dollar award for our fission surface power contract is expected later this year.
While NASA remains a fundamental pillar of our success these nuclear in space opportunities.
Spread across the defense energy and civil agencies represent an exciting opportunity for intuitive machines to evolve as a dynamic adaptable and forward looking company.
In April .
<unk> awarded its five year 719 million.
All or omnibus multi engineering services contract referred to as ohms to develop technologies, enabling services, including satellite servicing and Refuelling satellite repositioning and orbital debris removal.
In the days, leading up to this call. The U S government Accountability office affirmed Nasa's evaluation of homes, three proposals, resulting an intuitive machines retaining the award we expect to start our transition soon and look forward to growing and orbital services marketplace.
Since the first quarter intuitive machines has submitted more than $3 billion in proposals spread across aerospace and defense sectors, including human space flight.
We submitted our bid as the prime contractor for Nasa's lunar terrain vehicle services contract as the Moon racer team for the exploration and development of the South pole region of the Moon.
The lunar terrain vehicle is a key part of Nasa's Artemis program.
And would be intuitive machines prime contractor debut and human space flight.
The company is taking steps to possibly mitigate the effects of outside control program Award date changes for example, Nasa's C. P 22, which calls for a Nova C class land or to deliver a drill to the moon South pole has moved from the third quarter to November and the agency's near space networks.
Services contract awards have moved from 'twenty to 'twenty three to early 2024.
Before I conclude I wanted to mention a new director to help support and facilitate our growth trajectory, we have appointed Nicole Seligman to the intuitive machines board of directors Nicola Distinguished career has included senior leadership roles in global public companies with their Kohl's valuable expertise now enriching our board.
We continue to forge ahead in our endeavors.
With that I'll turn the call over to intuitive machines, Chief Financial Officer, Eric Sally.
Thanks, Steve and thanks to everyone joining us today I'll begin by going through our second quarter 2023 results.
We ended the second quarter with a contracted backlog of $137 $3 million. This backlog does not include the NASA AUM three contract, which as Steve mentioned earlier the protest resolved in our favor last week clearing the way for us to start transition and begin work in Q4 of this year.
Driven primarily by NASA commercial lunar payload services initiative or clips. The company concluded second quarter 'twenty, three with $18 million in revenue compared to $19 $2 million in revenue in the second quarter of 2022.
Operating loss was negative $13 $2 million versus negative $2 2 million in the year. Prior period. This is primarily due to schedule impacts Steve mentioned earlier as well as public company costs. We ended the second quarter of 'twenty, three with a cash balance of $39 $1 million.
Given delays to government customer acquisition timelines and U S. Federal budget uncertainty, we're withdrawing our previously issued financial guidance for broke whole year 2023. This.
This is not a result of the loss of any anticipated material government customer commitments or contract awards with that operator, we're now ready for questions.
Thank you.
Thank you.
Ladies and gentlemen, even in I'll be conducting a question and answer session.
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Ladies and gentlemen, we will wait for a moment, while we poll for questions.
Our first question comes from the line of Fuji de Silva with Roth M. P. M. Please go ahead.
Hi, Steve Hi, Erika congratulation on the progress here and certainly a lot of exciting things coming.
Maybe you can talk about the program push outs and I guess the withdrawn guidance, maybe you can give us a sense, Eric maybe you or Steve the drivers here and how much. Each one is a factor of U S government spending uncertainty versus what you cited in the press release, which is program delays and then launch pad congestion I just want understand which of these maybe it's more of a.
A meaningful factor.
Yes, <unk>. Thanks for the question this is Steve.
Let's see with respect to.
U S government funding, it's really the.
The federal budget and this leading up to an election year provides an overall sense of uncertainty, but we still see a commitment to human space flight in the Artemis program, we share generous bipartisan support.
For the NASA budget, which is our primary source.
And in particular, you see that growth in human space flight and with our contract a bit.
Good for the lunar terrain vehicle you also can look at geopolitics and globally and see the Russian launch.
Recently to our to the lunar South pole and the Indian launch to the lunar South pole, which means this is right upon us and.
Good that we have a commitment from the federal government to support the human space flight programs. However, we did see some delays in major awards like the owns contract we talked about the protest that award was initially offered.
In July and had moved out now to post.
Post protest to the November time frame.
We also saw the near Space Network services. The communications program that we bid on between the first and second quarter. We're in a really good position for that one partnering with and teaming with Raytheon that moved from late third quarter early fourth quarter to the first quarter of 2024, and then also we saw the clips.
Award or the clips proposal for C. P 22, which is the next mission up in the sequence of missions.
Coming from the NASA clips program out of the Science mission Directorate that moved from the third quarter into well into the fourth quarter before they make that award.
There's other smaller ones like a tipping point, which we did receive an award we expect that that award in the May timeframe and it wasn't until July we saw that award and that will affect implementation and when we on ramp for that that contract. All good news there all commitments that still stay with us. It's just they're generally sliding to the right and that has an effect on things.
I think what you can look at in terms of what's left to go this year we have.
Some significant milestones as I've been talking about in terms of our mission one launch in November .
The next clips award to occur late November the LTV award to occur, possibly here in the fourth quarter.
<unk> transitioned to execution will occur in the fourth quarter on both the follow on for the fission surface power reactor next phase and the Jetson eight F. R. L proposal, we expect both of those to start.
In this late third quarter timeframe.
And so that's kind of where we stand and that's kind of an assessment of of where where we're going with.
The external environment and it's pressures on us.
Okay, I appreciate that color and I understood understand these programs can move around obviously the.
Maybe specifically on homes now that you are starting to line that up for revenue just a sense of how that progresses linearity wise is it fine loaded back end loaded or does it kind of progressed relatively steadily through the quarter as once I guess, let's just say <unk> 24 hours in the first full quarter.
But right now we will start with the negotiation portion of the contract to kind of set the transition time period. There are several dates ahead of us that NASA is considering on when we actually move from transition to execution and then there'll be a ramp up from a time, depending on what the initial task orders will be.
We don't expect it to be.
The total value divided by the number of months that are on that contract, we actually think that there'll be a ramp up period and.
We're kind of thinking about how that will unfold here in the November December timeframe.
Got it and then lastly on and I'll move on here.
The LTV contract sounds interesting to me in the sense that maybe your first when is a prime what's what's your likelihood of you think weighing that versus competition, just I had to handicap that because I think that'll be an important milestone for you guys. Thanks.
Okay.
Yeah, what we've done as you know we tried to show a great deal of transparency to our pipeline and what we our pipeline of opportunities and we give a P. Go in a P win for each one we assess the competition understand the strengths of the teaming and then come out with that P win associated we think that'll be multiple award.
Words.
And we know there's a limited field of entrance and our team is an exceptionally strong team with intuitive machines as a prime.
And Boeing and Northrop Grumman and ABL as our subcontractors.
Okay. Thanks, Steve Thanks, everybody.
Thank you.
Our next question comes from the line of Austin Muller with Canaccord Genuity. Please go ahead.
Hi, good afternoon.
Afternoon Austin.
Just my first question here just to clarify so the timing of the NASA.
NASA contract award for essentially what would be the item four months, that's still expected in the fourth quarter right that would be weak.
23 already appropriated dollars correct.
So Austin it was initially trying to get out by the end of September , but NASA delayed that to towards the end of November So we saw.
Centrally at two months slip in that next clips mission.
Okay. That's that's helpful. And then do you expect your $39 million cash balance to be sufficient to execute on the contracts onto your plate or do you expect more cash proceeds from the current NASA contracts like like <unk> and the other iron.
Missions to satisfy your needs there.
Yeah, we expect our current cash balance and.
Cash receipts from the you know our existing contracts.
To be sufficient to take care of our cash needs. I mean, I think you saw that our operating cash flow in Q2 was actually positive which is a great sign obviously, you've you've seen I think as you're following us Austin, our cash is lumpy our inflows and outflows are bolt milestone based and so from quarter to quarter.
You've got some lumpiness in there and you've really got to look at this on a full year basis.
And we've always tried to be resilient as we've talked about.
To be able to withstand these types of program delays like this so the cash on our balance sheet plus the milestones we have on the books.
It should take us through and then we also obviously have the $50 million committed equity facility, which we can use opportunistically to provide further cushion if needed.
Okay, and then just one more if I may can you expand on what you're seeing in the congressional burdens of the fiscal year 2000 and for NASA budget in regards the clips and other important programs do you I mean as you mentioned on the call earlier, Russia ascending moen in 'twenty five the winter in South Florida.
<unk> seen indicative to me that there is going to be any slow down there in terms of the program of record.
Yes, Austin, we do see a commit in the Artemis program and human space flight, where that will affect it is you know the overall pressure across the U S federal budget will affect.
And Tricia enforced NASA to have to make some trades within their budget to a lower priority items and so you'll see a fencing.
I believe in terms of technology dollars that are flowing.
Out from this space Technology Mission Directorate.
Competing with science dollars that will flow out of the science mission Directorate across the science portfolio that who will.
Received those dollars those limited dollars that will come out of a what appears to be a reduced NASA budget at.
At least in the and the negotiations that are occurring between the house and the Senate today. So that's where we really see that that sorting out will occur, but we still see that the highest priority artem items from from the human spaceflight Artemis program, namely the human lander, namely the space suits and the lunar terrain vehicle.
As the top items that that should receive funding.
Okay, great. Thanks for all the details there.
Thank you.
Our next question comes from the line of Laura Lee with Deutsche Bank. Please go ahead.
Hi team congrats.
Congratulations on good execution in the last quarter and it's nice to see.
E R N Y launch schedule and my question would be could you elaborate elaborating more on the next steps to.
Cute.
<unk>.
Yes.
Thanks, Laura I appreciate the question.
Like I said, we've made some incredible.
Incredible execution progress over the past quarter and subsequent to date.
Completing.
Our full burn of our flight engine.
And the Hot fire test, which is a test where the engine is integrated with the lunar Lander and then we fill that with propellants and fire that and that was a wild success going forward with the Lander Assembly complete will run about two weeks of flight software functional testing to make sure that every pin out connection in every.
A wire harness works in conjunction with our flight software that series of testing will then go into electromagnetic interference test to make sure that theres no adverse effect on our payloads with when the lenders all powered up and then we'll do kind of center of gravity measurements mass measurements and get the vehicle.
Ready to be buttoned up in its shipping container and prepared to ship to the Cape and we expect that to be all completed by September 15th.
And then from there.
Making sure that Theres no congestion on the pad before we actually ship out to the launch site, we'll need about 35 days of the launch site to do the processing.
And to make sure that all the gases are filled in the propel and so ready to go and then we'll get encapsulated in the Ferring and then from that point.
A wet dress rehearsal and a launch.
Well fantastic well, thank you for the color.
Alright very good.
Thank you.
Our next question comes from the line of Chris Sheppard with Cantor Fitzgerald. Please go ahead.
Hey, Steve Hey, Eric Good afternoon, congrats on the quarter and thanks for taking our questions.
Wanted to just maybe clarify on the on the guidance are withdrawn.
To be clear does that apply to the revenue guidance the gross margin and the cash or is it a or is it exclusively the the revenue guidance. Thank you.
Yes, we're withdrawing.
Thanks for the question Andreas.
We're withdrawing guidance across the board I mean, obviously revenue gross margin those all are interrelated.
And really it's just associated as Steve said earlier with the uncertainty around the timing of awards and significant milestones that are falling right. In Q4 at year end, there's just three or four or five of them that are really material and you know some of them might happen in November December or January .
And really from in terms of the.
The health of the company and how we're doing any of those any of those timings would be great but.
Trying to pinpoint a week or two here and there around year end.
We felt was not really helping us helping you guys focus on what's important to make our business successful and that we're executing on our vision and strategy. So we just didn't feel comfortable making guesses on those.
Which ultimately you know when you're down to a couple of weeks here and there it's little more than that particularly when you're dealing with space launch in some of these cases, obviously, we've seen the government acquisition timelines can move we're not the first company to experienced that so that's really what's driving it as we said earlier, we haven't lost anything that we previously had in our forecast.
<unk>.
Material to us, it's all shifted out to the right.
So because of all that and all the all the metrics you mentioned are related.
No. It does apply across the board, but we tried to at least Orient you on the milestones that are relevant.
The best we know on homes right now the best we know on launch day some of the Big Award timings and obviously those are going to drive.
<unk> ability and cash and top line as well depending on you know how they break our way or not and because we've kind of talked about the <unk>.
Value of Atlanta has payment and things like that previously so hopefully that that shed some light.
On.
A little more color on the on our statement.
Yeah. Thanks, Eric that's Super helpful. I appreciate it.
I appreciate that insight, so I guess I mean.
At this time is there any additional visibility you might be able to give us in terms of either revenue or margins. You know should we be expecting positive margins by by yearend.
I know in the past you had mentioned the positive EBITDA with a targeted by by later this year any thoughts around that as to where that might stand.
Yeah, I can't comment on everything I mean, one thing we think.
We feel good about is if we land successfully this year gross margin should be.
Positive in the second half, which I think is a good sign obviously pointing towards the future and then we will be mitigating our capex I say mitigating thats the wrong word, but capex, you're going to naturally come down over the second half of the year relative to the first half and then some of our.
Or our non Cogs opex, so SG&A that will mitigate as well over the second half as we're through some of the public company costs and other things that kind of created an increased run rate on that over the first half. So those are some of the maybe high level.
Thoughts in terms of Directionally, where we're headed in the second half.
Got it okay. Thank you and maybe one last one if I may.
With the upcoming lockup period, ending right for the the rollover in for the sponsor.
How do you think the market should be thinking about this increase in float or are these now chairs being unlocked.
Any color there any visibility as to what what you know.
How should we be thinking about that thank you.
You bet Andres honestly.
It's difficult for the company to have a.
Opinion on that so we'll just let.
But you obviously correctly stated what the timing is on that that's public information, but we'll let the market decide.
Okay. Thank you very much I'll pass it on congrats again.
Thank you. Thank you.
Thank you.
As there are no further questions I would now hand, the conference over to Steve Altemus Co founder President and Chief Executive Officer for his closing comments.
Yeah.
Well, thank you for joining us today.
Great. Your time, you spent with US. So we look forward to continue our with our execution intensity and making history together in just a few short months.
Thank you very much.
Yeah.
The conference off into two machines has now concluded. Thank you for your participation you may now disconnect your lines.
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