Q3 2023 Terran Orbital Corp Earnings Call

November 14, 2023

If any questions, which you can off by pressing star followed by the number one on your telephone keypad I'll now turn the call over to our highest Jonathan Sigman. Please go ahead Jonathan.

And that referral acting Chief Financial Officer, Corporate Controller turnover Corporation, Mark will provide a business update and highlights for the past quarter.

We will review the quarterly results turn overall executive team will then be available to answer your questions.

During today's call we may make certain forward looking statements. These statements are based on our current expectations and assumptions and as a result are subject to risks and uncertainties. Many factors could cause actual events to differ materially from forward looking statements made on this call for more information about these risks and uncertainties. Please refer to the companys.

Filings with the Securities and Exchange Commission, each of which can be found on our website www dot turn orbital dot com readers are cautioned not to put any undue reliance on forward looking statements and the company specifically disclaims any obligation to update the forward looking statements that may be discussed during this call.

Hello, everyone and welcome to the Toronto <unk> Q3, 2023 earnings call. My name is M&A and I'll be cool to 19, you'll coat today. After the prepared remarks, there will be the opportunity for any questions, which you can ask by pressing star followed by the number one on your telephone keypad, Oh, No technical I'm sure Hi, Jonathan segment.

Please also note that we will refer to certain non-GAAP financial information on today's call you can find reconciliations of the non-GAAP financial measures with the most comparable GAAP measures in our earnings press release with that I will turn it over to Mark.

Please go ahead Jonathan.

Thank you Emily and good morning, everyone and thank you for joining <unk> third quarter 2023 earnings with me. This morning are Mark Bell co founder Chairman and Chief Executive Officer of turn or those Corporation and Matt Russell acting Chief Financial Officer, Corporate Controller Territorial Corporation.

Thank you John and thank.

Thank you everyone for joining our third quarter 2023 earnings conference call.

Also want to thank those of you who attended our virtual town Hall event on October 26, which is part of our effort to increase investor engagement.

Mark will provide a business update and highlights for the past quarter and then Matt will review the quarterly results.

Our town Hall, we were pleased to highlight the teams recently announced contract wins across three separate programs in two continents. Our active engagement on 80 opportunities relating to more than 2800 satellites for 40 different customers collectively valued at over $2 7 billion.

Turn it over all his executive team will then be available to answer your questions.

And our current expectation that we will have sufficient cash to cover capital investments and operations until becoming cash flow positive which is expected in 2024.

We had an excellent quarter with year over year revenue growth of 58% increasing revenue to $43 9 million from $27 8 million.

Our third quarter adjusted gross profit increased over 270 present from 12 million to $12 million from $3 2 million in the comparable period.

<unk> successfully executing on converting our pipeline into signed contracts, resulting in a new record breaking backlog inclusive of our $160 million surge of orders announced in October we are starting to see the benefits of our investments in capacity equipment and automation, which was initially.

Thank you John.

Thank you everyone for joining our third quarter 2023 earnings conference call.

Also want to thank those of you who attended our virtual town Hall event on October 26, which is part of our effort to increase investor engagement. During our Townhall. We were pleased to highlight the teams recently announced contract wins.

With improvements in operating operating efficiency. These investments are intended to lay the foundation and position us for growth for the years to come.

That's three separate programs in two continents, our active engagement on 80 opportunities relating to more than 3800 satellites for 40 different customers.

To establish us as the leading supplier of satellite buses globally. We recently announced two important strategic initiatives first is the introduction of our new lineup of seven standard satellite bus platforms. These standard platforms feature flexible architecture, using our common components, which have extensive flight heritage.

Really valued at over $2 7 billion.

And our current expectation that we will have sufficient cash to cover capital investments and operations until becoming cash flow positive which is expected in 2024.

And modular design.

This design methodology allows us for a minimal levels of customization.

We had an excellent quarter with year over year revenue growth of 58% increasing revenue to $43 9 million from $27 8 million.

Depending on our customers' needs and enables us to deliver satellites at mass scale with speed quality and pricing that our customers desire.

Our third quarter adjusted gross profit increased over 270 present from 12 million to $12 million from $3 2 million in the comparable period.

Second we launched a responsive states initiative, which represents 10 or a little of objective to be able to deliver to customers. The satellite bus within just 30 days.

Our team successfully executing on converting our pipeline and to sign contracts, resulting in a new record breaking backlog inclusive of our $160 million surge of orders announced in October we are starting to see the benefits of our investments in capacity equipment and automation, which was initially.

Complete payload integration within 60 days.

By maintaining a stock of standard interchangeable components, we will be able to deliver in days not years. The satellites required by both government and commercial customers are critical missions.

With improvements in operating operating efficiency. These investments are intended to lay the foundation and position us for growth for the years to come.

We plan to have the initiatives are fully operational by Q4 of 2024.

Now turning to our overall performance and quarterly updates.

To establish us as the leading supplier of satellite buses globally, we recently announced two important strategic initiatives.

Habit.

See you on our progress in support of the State Development Agency programs. We are pleased to announce in October our selection by our partner Lockheed Martin to build 36 Allied buses for the Beta award of tranche two of the transport layer. This brings us to a total of 88 satellites. We are providing in support of STS transfer layer of which 10 were launched in.

<unk> is the introduction of our new lineup of seven standard satellite bus platforms. These standard platforms feature flexible architecture, using our common components, which have extensive flight heritage and modular design.

September Meanwhile, on the production side, our team is hard at work at manufacturing 42 satellites and supportive tranche one of the transfer layer. We are on track to begin delivering the first of these satellites during the fourth quarter and the balance by the end of the second quarter of 2024 to enhance the security of our supply chain of critical components.

This design methodology allows us for a minimal levels of customization.

Depending on our customers' needs and enables us.

To deliver satellites at mass scale with speed quality and pricing that our customers desire.

Okay.

Second we launched a responsive states initiative, which represents 10 or a little of objective to be able to deliver to customers of satellite bus within just 30 days.

Through this program, we made the strategic decision to commit to a new propulsion supplier.

One of the very few components. We don't currently produced in house, we are proud of the decade long track record of not missing a satellite launch and we took this action now to protect the programs scheduled to protect the program schedule.

Complete payload integration.

Within 60 days.

Maintaining a stock standard interchangeable components, it will be able to deliver in days not years, the salaries required by both government and commercial customers are critical missions.

We believe that our experience and track record with <unk> zero and tranche. One we're trying to do in tranche one of the transport layer.

We plan to have the initiatives are fully operational by Q4 of 2024.

And our partnership with Lockheed Martin have differentiate us and position us well for SBA as awards outside of the transport layer.

Now turning to our overall performance and quarterly updates I am happy to update you on our progress in support of a fifth development agency programs. We are pleased to announce in October our selection by our partner Lockheed Martin to build 36 salad buses for the Beta award of tranche two of the transport layer. This brings us to a total of 88 satellites.

I am pleased to report our margin performance has significantly improved.

Our increase in gross profit and adjusted gross profit primarily represents the fact that we're working on larger programs and then a mix of contracts have better margins our year to date adjusted gross profit margin of 16, 5% is double last year's gross margin of eight 2% for the comparable period.

We are providing in support of STS transfer there of which 10 were launched in September. Meanwhile, on the production side. Our team is hard at work at manufacturing 42 satellites and supportive trucks one of the transfer there.

And is now in line with our previously disclosed year end targets as we move to become EBITDA positive by next year. This is an important metric and shows great progress.

We are on track to begin delivering the first of these satellites during the fourth quarter and the balance by the end of the second quarter of 2024 to enhance the security of our supply chain of critical components of this program. We made the strategic decision to commit to a new propulsion supplier.

We continue to improve control of our supply chain I believe that if we control our supply chain, we control our destiny.

We now produce over 85% and growing of all our components in house, which lowers our cost and speeds up by delivery.

Some companies lay off employees, we lay off vendors. We have brought in house now CNC machining printed circuit Board Assembly wire harnessing torque Rod Assembly <unk> testing and full bus feedback, we will be adding other components modules and subsystems and AIG in the coming months any vendor who is not price competitive.

Yeah.

We believe that our experience and track record with <unk> zero and tranche, one with <unk> one of the transfer there and our partnership with Lockheed Martin have differentiate us and position us well for SBA as awards outside of the transport layer.

Our cannot keep up with our schedule will be removed and that product at scale will be brought in house, we live in a world of firm fixed price programs. So the days of cost plus are long gone and we are ready to meet the challenge.

I am pleased to report our margin performance has significantly improved.

Our increase in gross profit and adjusted gross profit primarily represents the fact that we are working on larger programs and then a mix of contracts have better margins our year to date adjusted gross margin of 16, 5% is double last year's gross margin of eight 2% for the comparable period.

I'd like to provide a quick update on the company's contract with provider networks as disclosed late last month and at our first Investor Town Hall meeting since our last earnings call. We have not received.

We have not received a structured further milestone payments and do not yet have a definitive schedule on when further received may be received as a result of this delay we have removed the expected revenue contribution related to Nevada for a full year 2023 outlook, hence the change in guidance.

And is now in line with our previously disclosed year end targets as we move to become EBITDA positive by next year. This is an important metric and shows great progress.

We continue to improve control of our supply chain I believe that if we control our supply chain, we control our destiny.

We remain engaged with our model on our Nevada on a regular basis and have been reassured as recently as today by rollout that we should expect to receive our contractual milestone payments this year.

We now produce over 85% and growing of all our components in house, which lowers our cost and speeds up by delivery.

Some companies lay off employees, we lay off vendors. We have brought in house now CNC machining printed circuit Board Assembly wire harnessing torque Rod Assembly testing and full bus feedback and we will be adding other components modules and subsystems and AIG in the coming months.

Accordingly, we continue to believe our robotic contract will provide significant future revenue and cash flows the timing whichever is uncertain and we wanted to be conservative in our guidance going forward.

Overall I am proud of what we've accomplished and wherever you are heading now let me take the opportunity to introduce Matt <unk>, who is joining us on the earnings call for the first time that has been turn orbital as corporate controller for the past last two years and has done an amazing job and we couldnt answer anyone more prepared to serve as our acting chief financial officer with that I'll hand the.

The vendor who is not price competitive or cannot keep up with our schedule will be removed and that product at scale will be brought in house, we live in a world of firm fixed price programs. So the days of cost plus are long gone and we are ready to meet the challenge.

The call over to Matt to review, our financial performance in the quarter and provide our financial outlook for the full year over to you Matt.

I'd like to provide a quick update on the company's contract with provider networks.

As disclosed late last month and at our first Investor Town Hall meeting since our last earnings call. We have not received it.

Thank you Mark and good morning, everyone I'm happy to be here today and to help support the company at this exciting point in its journey.

Received expected further milestone payments and do not yet have a definitive schedule on when further received may be received as a result of this delay.

As we plan our 2020 budget.

And magnitude of our pipeline opportunities as well as the additional capabilities, which we have added which I find most compelling about our company.

We have removed the expected revenue contribution related to Nevada for a full year 2023 outlook, hence the change in guidance, we remain engaged with our motto on Nevada on a regular basis and have been reassured as recently as today by Nevada that we should expect to receive our contractual milestone payments this year.

Often difficult to forecast and model.

Any opportunity, it's a privilege to help the company offers to execute and deliver on these attractive opportunities.

Now onto the financial results for the quarter I am pleased with our continued growth in revenue, which was $43 9 million for the third quarter of 2023.

58% increase over the same period in the prior year. The increase in revenue was primarily due to the work performed on our SBA programs on a comparative basis as all of the additional contribution from Nevada.

Overall I am proud of what we've accomplished and wherever you are heading now let me take the opportunity to introduce Matt <unk>, who is joining us on the earnings call for the first time.

Gross profit was $9 7 million for the third quarter on top of a 30 some falls in the same quarter of 2022.

That has been parent orbitals corporate controller for the past last two years and has done an amazing job and we couldnt ask for anyone more prepared to serve as our acting chief financial officer with that I'll hand the.

Excluding share based compensation and depreciation and amortization included in cost of sales our adjusted gross profit in the third quarter was $12 million compared to adjusted gross profit of $3 2 million in the same quarter in 2022.

Call over to Matt to review, our financial performance in the quarter, and then provide our financial outlook for the full year over to you Matt.

Our gross profit and adjusted gross profit benefited from EAC adjustments and certain nonrecurring changes in estimates related to inventory during the third quarter of 2023.

Thank you Mark and good morning, everyone I'm happy to be here today and to help support the company at this exciting point in its journey as we plan our 2020 budget, it's the breadth and magnitude of our pipeline opportunities as well as the additional capabilities, which we have added which I find most compelling about our company.

Selling general and administrative expenses were $29 million in the fourth quarter of 'twenty three.

Paired with $24 7 million from the same quarter in 2022.

Often difficult to forecast and model <unk>.

The increase was primarily driven by higher cost of labor.

Sales and marketing expenses and business development activities due to our growth initiatives offset by a decrease in share based compensation.

It's a privilege to help steer the company's efforts to execute and deliver on these attractive opportunities.

Now onto the financial results for the quarter I am pleased with our continued growth in revenue, which was $43 9 million for the third quarter of 2023, 58% increase over the same period in the prior year.

Adjusted EBITDA was negative $13 million for the quarter compared to negative $13 9 million in the same period in the prior year.

The increase in adjusted EBITDA was primarily due to an increase in adjusted gross profit, partially offset by an increase in selling general and administrative expenses.

Increase in revenue was primarily due to the work performed on our SBA programs on a comparative basis as well as the additional contribution from a bottom.

Overall adjusted EBITDA loss is largely a function of increased expenses.

Gross profit was $9 7 million for the third quarter compared to 37000 in the same quarter of 2022.

The ramping of our business development capabilities and back office across the company to serve as the foundation of supporting a multibillion dollar backlog and pipeline in the coming quarters and years.

This is part of an overall investment to position ourselves for future growth.

Our backlog at the end of the quarter was $2 6 billion of which $2 $4 billion is related to our contract with robotics.

Our gross profit and adjusted gross profit benefited from EAC adjustments and certain nonrecurring changes in estimates related to inventory during the third quarter of 2023.

Capital expenditures for the quarter were $6 1 million and primarily related to our investments in capacity and capabilities.

Selling general and administrative expenses were $29 million in the third quarter of 2003.

Finally as of September 30, we had approximately $3 eight $338 7 million of cash on hand, which was aided by a $32 $5 million equity offering in September.

Paired with $24 7 million from the same quarter in 2022.

The increase was primarily driven by higher cost of labor and bond.

Sales and marketing expenses and business development activities due to our growth initiatives offset by a decrease in share based compensation.

Approximately $313 million of gross debt obligation.

As of October 31, we had over $70 million of cash on hand.

Sure.

Adjusted EBITDA was negative $13 million for the quarter compared to negative $13 9 million in the same period in the prior year.

Yeah.

We remain excited about finishing the full year on a strong note and hope we can announce new awards heading into 2024.

The increase in adjusted EBITDA was primarily due to an increase in adjusted gross profit, partially offset by an increase in selling general and administrative expenses.

<unk> and successful execution on new and existing contracts remain the number one priority for our team.

Overall adjusted EBITDA loss is largely a function of increased expenses related to the ramping of our business development capabilities and back office across the company to serve as the foundation of supporting a multibillion dollar backlog and pipeline in the coming quarters and years.

As highlighted in our previous calls the exact timing of execution on our new contracts is an important variables impacting our near term results.

As a reminder, recognition under our accounting for revenue recognition on our accounting policies revenue is not recognized in our results until we performed work on the contracts that is cash receipts do not drive the recognition of revenue.

This is part of an overall investment to position ourselves for future growth.

Our backlog at the end of the quarter was $2 6 billion of which $2 4 billion is related to a contract with robotics.

We now expect our 2023 full year revenue to be greater than $130 million or at least a 38% increase year over year compared to 2022.

Capital expenditures for the quarter were $6 1 million and primarily related to our investments in capacity and capabilities.

A decrease in revenue guidance is primarily related to the removal of <unk>.

Finally as of September 30, we had approximately $3 eight $338 7 million of cash on hand, which was aided by a $32 $5 million equity offering in September.

The delayed star in awarding of certain larger programs.

And the potential for challenges, we're working through on the other programs.

Our year to date adjusted gross profit margin was $16 5 million is now in line with our previously disclosed year on target and we expect GAAP gradual improvement in future periods.

And approximately $313 million of gross debt obligation.

As of October 31, we had over $70 million of cash on hand.

The pace and magnitude of margin improvement may vary depending on program mix and execution. Finally, we note our capex for the year is expected to be less than $30 million.

Okay.

We remain excited about finishing the full year on a strong note and hope we can announce new awards heading into 2024.

Efficient and successful execution on new and existing contracts remain the number one priority for our team.

Now I'll turn the call back over to Mark. Thank you Matt today, we are going to do and thank you everybody for your support of turnover a little we're going to do questions. It answers a little differently. This time around we're going to start with institutions cover us and then we're going to open it up to anybody U S. As some people have e-mailed those questions feel free to add yourself to the queue.

As highlighted in our previous calls the exact timing of execution on our new contracts is an important variables impacting our near term results.

And we're going to take we're going to unlike the town Hall, where we did all reading off questions. Here all questions will be asked live and answered live and anybody can ask a question.

We now expect our 2023 and full year revenue to be greater than $130 million or at least a 38% increase year over year compared to 2022.

We're going to.

Turn it over to our first.

If you turn over back to the operator, I guess right operator.

The decrease in revenue guidance is primarily related to the removal of robot out there.

It's all yours.

Thank you Andrew.

The delayed star in awarding on certain larger programs.

Mind, you if you'd like to ask a question today you can do so now by pressing star followed by the number one on your telephone keypad. If you changed your mind or you feel like your question has already been said you can relay. Your question by pressing Star and then K.

And the potential for challenges, we're working through on the other programs.

Our year to date adjusted gross profit margin was $16 5 million is now in line with our previously disclosed yearend target and we expect GAAP gradual improvement in future periods.

We will now go to our first question, which comes from Greg Konrad with Jefferies.

Please go ahead your line is open.

The pace and magnitude of margin improvement may vary depending on program mix and execution. Finally, we note our capex for the year is expected to be less than $30 million.

Hi, Mark Matt. This is Sam gets us from Jefferies dialing in for Greg Conrad.

Firstly, thanks for the time and congratulations on winning enrolling a third tranche of the transport layer.

Now I'll turn the call back over to Mark. Thank you, Matt today, we're going to do and thank you everybody for your support of turnover a little weather do questions. It answers a little differently. This time around we're going to start with institutions cover us and then we're going to open it up to anybody U S. As some people have e-mailed those questions feel free to add yourself to the queue.

With that order and the backlog how should we think about where economics can go from here relative to the two prior tranches and sort of how should we think about the economics on this tranche compared two tranches zero and one.

Thanks, Craig I'll take an answer at that one.

And we're going to take we're going to unlike the town Hall, where we did all reading off question here all questions will be asked live and answered lives and anybody can ask a question.

So for this particular as a reminder, this award was in our backlog as of September 30 and October Award.

The economics of which.

It is a larger award and with our larger awards, we generally expect it to be.

We're going to.

Turn it over to our first.

If you turn over back to the operator, I guess right operator.

Global lower margin, but we think it's going to be.

It's all yours.

The mid teen mid to high teens as we go forward.

Thank you as a reminder, if you'd like to ask a question today you can do so now by pressing star followed by the number one on your telephone keypad.

And that's relatively comparable with some of our other SBA programs.

P. J your mind or you feel like your question has already been said you can relay. Your question by pressing Star and then K.

And we're seeing as we go as time goes on margins will continue to improve as we bring more and more.

We will now go to our first question, which comes from Greg Konrad with Jefferies. Please go ahead. Your line is open.

Components and modules in house.

Hi, Mark Matt. This is Sam gets us from Jefferies dialing in for Greg Conrad.

Got it. Thank you that's helpful and I guess, just maybe as a quick follow up.

Just firstly, thanks for the time and congratulations on winning a role in the third tranche of the transport layer.

You highlighted the responsive space initiative and some of the new products that <unk> been working on to enable that mission.

That order in the backlog how should we think about where economics can go from here relative to the two prior tranches and sort of how should we think about the economics on this tranche compared two tranches zero and one.

Should we think about in terms of timing for that to convert into into revenue and then could you maybe size that sort of the Tam on that and why you guys think your you are in a good spot to compete in that space.

Thanks, Craig I'll take an answer at that one.

Can you repeat the very beginning of that again.

So for this particular as a reminder, this award was in our backlog as of September 30 and October Award.

Yes, you've been highlighting the responsive space initiative.

<unk> of which.

The new products that you're working on to enable that and just trying to understand sort of what that looks like.

It is a larger award and with our larger awards, we generally expect it to be.

A revenue conversion and then.

Global lower margin, but we think it's going to be and the.

What that does to your Tam and how you think about that opportunity set from here.

Mid teen mid to high teens as we go forward.

So it all started.

Tubular background here.

In 2005, a kernel J Raymond at the time wrote a paper called tactically respond to this space.

And it's relatively comparable with some of our other SBA programs.

Yes.

Nobody really has hit a lot of attention to it.

Seeing as we go as time goes on margins will continue to improve as we bring more and more.

Then we became two years ago at National Space Symposium I was at dinner with him and he became the forests are generally started space force and he was trading at that dinner about his dream was to order satellite or the first of the month again delivered on the 30th of the month.

Components and modules in house.

Got it. Thank you that's helpful and I guess, just maybe as a quick follow up.

And we're making that dream come true as he just recently came down and visited the facility, where we're going to be doing this.

You highlighted the responsive space initiative.

Some of the new products that <unk> been working on to enable that mission.

All about the days of use of course take a decade, because $1 billion to build the satellite.

Should we think about in terms of timing for that to convert into into revenue and then could you maybe size that sort of the Tam on that and why you guys think you're in a good spot to compete in that space.

They need things faster they need it now.

The world stays very fluid.

Crane, Israel has shown us how quickly things can change overnight.

Can you repeat the very beginning of that again.

And they want the ability to get assets to put them into space.

Yes, you've been highlighting the responsive space initiative and some of the new products that you're working on to enable that and just trying to understand sort of what that looks like in terms of revenue conversion and then what that does to your Tam and how you think about that opportunity set from here.

The government has always talked about only 4% to 6% of all the ISR. It's currently being met from space, There's just incredible demand and supply and it was taking too long space development Agency has helped shorten that cycle up but only by that down to two years for our program and the goal is for ISR I don't want to get it down to you Dave.

So it all started.

<unk> not years and so we see the Tam just incredibly large.

A little background here.

2005 kernel J Raymond at the time wrote a paper called tactically respond to this space.

Not just for the U S, but globally for any country you have.

To be able to do it but we're going to start slow.

We really hit a lot of attention to it.

We became two years ago at NASA space Symposium I was at dinner with him and he became the forests are generally started space for us and it was trading at that dinner about his dream was to order satellite at the first of the month again delivered on the 30% of the month.

We're seeing we just bid on three different programs, where it's a six to eight months turnaround by the satellites.

We'll know by the end of this year, if we won.

And that will be the first shot of us get doing it once we have all the components of modules and stock.

And we're making that dream come true as he just recently came down and visited the facility, where we're going to be doing this.

<unk>.

End of next year.

Facility closure, because all Goodyear vanilla or even call it a good year.

It's all about.

That will allow us to really assemble things robotically very quickly, which is currently assembled modules a third of our modules are assembled robotically.

It used to cause take a decade, because $1 billion to build the satellite.

Anything faster they need it now.

Well the world stays very fluid Ukraine, Israel has shown us how quickly things can change overnight.

By next year all of our models, we robotically assembled and the satellite buttons as well will be robotically assembled.

So.

They want the ability to get assets to put them into space.

Anytime a conflict zone pops up that country could order satellites from us and get them in orbit within 60 days, it's a big difference.

The government has always talked about only 4% to 6% of all their ISR. It's currently being met from space, There's just incredible demand and supply and it was taking too long.

Yes.

Does that help.

<unk> development agency has helped shorten that cycle up but only by that down to two years for our program and the goal is for ISR I don't want to get it down to Yo.

Yes. Thank you Mark that's very helpful. I appreciate it sure.

Days not years, and so we see the Tam just incredibly large.

Any other questions. Our next question comes from Erik Rasmussen with Stifel.

Not just for the U S, but globally for any country, who has.

Please go ahead Erik your line is open.

And be able to do it but we're going to start slow we're seeing we just bid on three different programs, where it's a six to eight months turnaround by the satellites.

Thanks.

Great. Thanks, Yeah, thanks for taking the questions.

I just wanted to ask about the progress with the SBA programs to date and in the context of what we've learned from various sources.

We'll know by the end of this year, if we won.

And that will be the first shot of us get doing it once we have all the components of modules and stock.

Future program, so far it seems that the team has executed well, but if we think about what has been awarded thus far it seems that taryn is sort of under indexing, what others had been awarded.

<unk>.

End of next year.

Facility closure, Goodyear vanilla or even call it a good year.

That will allow us to really assemble things robotically very quickly, which is currently assembled modules a third of our modules are assembled robotically.

What are your expectations for additional SBA awards.

And what could you share b and we use surprised on how the Alpha award played out.

By next year all of our models, we robotically assembled and the satellite buttons as well will be robotically assembled.

So.

Any questions here so.

So.

As far as SDA goes.

We never want to make assumptions of what we could and couldnt window in the future.

Anytime a conflict zone pops up that country could order satellites from us and get them in orbit within 60 days, it's a big difference.

On the <unk> Alpha Award, we knew we can't win everything and there are other players out there and the SDA Derek has made it very clear he wants a diversity of manufacturing base. So we went three in a row. We don't we didn't expect to win four in a row. So that was great that us winning it's Lockheed the prime and we are.

Okay.

Does that help.

Yes. Thank you Mark that's very helpful. I appreciate it sure.

Any other questions. Our next question comes from Erik Rasmussen with Stifel.

Lockheed sub so it was not it was not a big surprise at the end of the day for us.

Please go ahead Erik your line is open.

We weren't winning but now we're looking at other SBA programs, because we never bid on tracking before we haven't been on most of the other types of programs that they've done.

Thanks.

Great. Thanks, Yeah, thanks for taking the questions.

I just wanted to ask about the progress with the SBA programs to date and in the context of what we've learned from various sources.

<unk> and what have you. So we are and we're talking to other primes as well about partnering with them on their SDA bids.

Future program, so far it seems that the team has executed well, but if we think about what has been awarded thus far it seems that taryn is sort of under indexing, what others had been awarded.

Because lockheed does not bid on everything with the SBA.

And also we want all of our buses are becoming more popular and now that we have tenant orbit Trans zero and we've been very pleased with their performance.

What are your expectations for additional SBA awards.

We have a lot more strictly than we had before so we're feeling pretty good about other SBA programs in the future, but we never really want to.

And what could you share b and we use surprised on how the Alpha award played out.

So.

Guess as to what they think they are probably listening to this.

Any questions here so.

As far as SDA goes.

But we appreciate their business very much.

We never want to make assumptions of what we could and couldnt window in the future.

Gotcha Okay.

And then maybe.

The backlog is at $2 6 billion at the end of the quarter.

I know, it's higher with those new awards.

Still expecting to convert 80% of this by 2025.

Which reflects the re bought a portion and then with that how should we think about the split between 2024 and 2025.

Lockheed sub so it was not it was not a big surprise at the end of the day for us.

Yes.

It's definitely heavily weighted towards 25, because thats when you get into real Assembly mode 24 is a lot of a lot of <unk> and the production of modules, but youre talking about.

We weren't winning but now we're looking at other SBA programs, because we never bid on tracking before we haven't been on most of the other types of programs that they've done.

<unk> and what have you. So we are and we're talking to other primes as well about partnering with them on their SDA bids.

As things get pushed to the right.

Things get absolute revenue gets pushed out to the right as well, which is what happened here. We've provided this year. The important part is that the revenue happens at all at the end of the day.

Because largely does not bid on everything with the SBA.

And also we want all of our buses are becoming more popular and now that we have tenant orbit Trans zero and we've been very pleased with their performance.

Great.

So, but the timeline, though is has.

We have a lot more strictly than we had before so we're feeling pretty good about other SBA programs in the future, but we never really want to.

Move for revolver in terms of having those satellites up by Q2 or Q3 of 25.

Guess as to what they think they are probably listening to this.

Provider has to both liquidity ICU provider has to have their satellites in orbit by specific data to specific dates. So at the end of the day, it's going to cost them more in order to get there because we're going to have to spend and where you have to spend more money to get there, but it is but we have a $187 million of non.

But we appreciate their business very much.

Gotcha Okay.

And then maybe.

The backlog is at $2 6 billion at the end of the quarter.

I know, it's higher with those new awards.

Still expecting to convert 80% of this by 2025.

We provide a backlog that will be recognized at the end of 2025.

Which reflects the re bought a portion and then with that how should we think about the split between 2024 and 2025.

And if you think about it and we still 42.

For tier one and <unk> 36, or <unk>, we got to deliver.

That doesn't include all the other things we've bid on that were waiting to hear we have just recently.

Yes.

It's definitely heavily weighted towards 25, because thats when you get into real Assembly mode 24 is a lot of a lot of math and a re and the production of modules, but youre talking about.

Stood up a business development organization and we are now seeing we relied on Lockheed Martin for the first couple of years. We are now expanding our wings to lots of different primes. I think there are 10 primes. The 10 largest primes in the world six of them were in dialogue with three.

As things get pushed to the right.

Things get absolute revenue gets pushed out to the right as well, which is what happened here.

This year the important part is that the revenue happens at all at the end of the day.

Three of them are Chinese we don't talk too and there's only one left.

And so we've been very busy talking to all the other major primes on how we can work together.

Great.

And the big Planet.

So the timeline, though is.

Didn't move for revolver in terms of having those satellites up by Q2 or Q3 of 25.

Great. Thanks for taking thanks for taking the questions.

And I'll make one more point.

Spending a lot more time on commercial so we're spending a lot of not just <unk> in the U S. But commercial is making up a larger and larger part of our future revenue base, we are seeing in the future.

Provider has to both liquidity ICU revival has to have their satellites in orbit by specific data to specific dates. So at the end of the day, it's going to cost them more in order to get there because we're going to have the same where you have to spend more money to get there, but it is but we have a $187 million of non.

We're pushing very hard for revenue diversity across the board.

There are many robotics kicking around the planet.

Provide a backlog that will be recognized at the end of 2025.

Thanks, Good luck.

And if you think about it and we still 42.

Thank you.

For tier one and <unk> 36, or <unk>, we got to deliver.

Our next question comes from Christian Buss with B Riley Securities.

That doesn't include all the other things we bid on that were waiting to hear we have just recently.

Please go ahead. Your line is open hi, thanks for taking my.

Thank you operator appreciate it so.

Just.

First off on the gross margin I understand going forward is dependent on program mix quarter to quarter, but generally speaking right now.

Are you now at a point, where youre remaining backlog next represents programs in call. It the high teens to 20% gross margin.

Three of them are Chinese we don't talk too and there's only one left.

Yes.

Other words are you expecting to be able to withstand that pro forma gross margin in 'twenty four and beyond the 16, 5% target you have for this year.

And so we've been very busy talking to all the other major primes on how we can work together.

And the big Planet.

Yes. Thank you thanks for the question Brian So.

Great. Thanks for taking thanks for taking the questions.

We're optimistic.

And I'll make one more point.

Spending a lot more time on commercial so we're spending a lot of not just <unk> in the U S. But commercial is maybe of a larger and larger part of our future revenue base, we are seeing in the future.

Our 16, 5% and is really important for our future margin expectations.

What we Havent backlog right now.

<unk>.

Hello to mid 'twenty, and so just leaning out our backlog tacking on new program.

We're pushing very hard for revenue diversity across the board.

There are many robotics kicking around the planet.

The higher margin.

And what we've seen on some of our legacy program, we feel pretty good about our margin.

Thanks, Good luck.

Our margin profile going forward.

Thank you.

Okay sure thanks for the color.

Our next question comes from Christian Buss with B Riley Securities.

Then jumping over to tranche one on so you are still expecting deliveries in the fourth quarter. That's good to see but just given the switch in propulsion suppliers away from Astra has that pushed out the number of deliveries that you initially expected to complete in the fourth quarter.

Please go ahead. Your line is open hi, thanks for taking my.

Thank you operator appreciate it so.

Just.

First off on the gross margin I understand going forward is dependent on program mix quarter to quarter, but generally speaking right now.

No.

Are you now at a point, where your remaining backlog next represents programs in call. It the high teens to 20% gross margin so.

Is that an all contributing to the lower revenue guide pushing more of that trend in 'twenty four.

I mean, we had a dream originally just like we do with T zero to deliver way ahead of schedule and deliver the whole thing.

Yes.

Other words are you expecting to be able to withstand that pro forma gross margin in 'twenty four and beyond the 16, 5% target you have for this year.

By the end of this year, but the reality is.

Yes. Thank you thanks for the question Brian So.

<unk> has been with AST has been quite has been a challenged we do expect to see engines from at.

We're optimistic.

Our 16, 5% and is really powerful.

According to them, but we're not we're not we're hedging our bets and moving forward music on a trial zero.

For our future margin expectations.

What we Havent backlog right now.

Yes.

I have two different.

<unk>.

Low to mid <unk>, and so just leaning out our backlog tacking on new program.

Provider. So we're not dependent on Astra Savasta delivers great. If they don't deliver it will still have all our engines and it just makes a lot of extra engines for another further next program.

The higher margin.

And what we've seen on some of our legacy program.

Does deliver.

Feel pretty good about our.

Our margin profile going forward.

Okay, Alright, thanks, Mark and then so shifting gears today your enterprise.

Okay sure thanks for the color.

The new disclosure last week on the three configurations for that.

And then jumping over to Ed to tranche one on so you are still expecting deliveries in the fourth quarter. That's good to see but just given the switch in propulsion suppliers away from Astra has that pushed out the number of deliveries that you initially expected to complete in the fourth quarter. So.

It was interesting to see the third configuration configuration fee.

MEO and Geo applications, just curious if you could give any more color are you currently building and EMEA or Geo buses or are you bidding on rfps for those applications.

We are bidding on rfps for lots of meals and lots of micro geos.

Is that an all contributing to the lower revenue guide pushing more of that trend in 'twenty four.

And.

It is.

I mean, we had a dream originally just like we do with T zero to deliver way ahead of schedule and deliver the whole thing.

So thats, what we decided you know we're getting a lot of demand for that so we decided to expand the enterprise bus line.

By the end of this year, but the reality is.

To do that that's why you see <unk> configuration.

<unk> has been with that has been quite has been a challenged we do expect to see engine. It's Matt.

Out there because this is what you are asking for.

According to them, but we're heading that way.

We were trying to focus our NRI.

But sizes for what customers are demanding today.

We're hedging our bets and moving forward music.

Zero.

Okay, Great and then just last one for me you talked about the 2800 satellites valued at $2 $7 billion across there.

And that.

We will have two different.

Provider, so we're not dependent on Astro.

<unk> delivers great if they don't deliver it will still have all our engines and it just makes a lot of extra engines for another for the next program.

Will it ever was 80 80 opportunities 40 customers. So.

They both delivered.

Just quick math on that implies sort of around 1 million per satellite, which.

Okay, Alright, thanks, Mark and then shifting gears today your enterprise boxes you.

I think historically you guys.

Talked about maybe three call $3 million to $5 million for satellite is sort of a sweet spot that can you just help us understand sort of the disconnect there.

You had that.

The new disclosure last week on the three configurations for that.

You seem to see the third configuration configuration fee for MEO and Geo applications. Just curious if you could give any more color are you currently building and EMEA or Geo buses or are you bidding on rfps for those applications.

I am sorry, I don't know if you gave a lot of static on your line can you repeat that question.

Yeah sure. So you talked about the 2800 satellites valued at $2 $7 billion or so and just a quick math on that implies.

We are bidding on rfps for lots of meals and lots of micro geos.

And.

Under a $1 million per satellite I think historically, you've talked about $3 million to $5 million.

It is.

Got it.

So thats, what we decided.

Satellites are JJ, just wondering if you could give some color on that disconnect.

We're getting a lot of demand for that so we decided to expand the enterprise bus line.

It's all over the place so you have some $4 million.

To do that that's why you see <unk> configuration.

$10 million.

Some for $15 million it really just.

Out there because this is what youre asking for.

You have a very wide disparity depending on what people are building things and micro Geo EMEA were much more expensive than things and leo or or Julio.

So we're trying to focus our NRI.

But sizes for what customers are demanding today.

Okay, Great and then just last one for me you talked about the 2800 satellites valued at $2 $7 billion across there.

Everybody is going out and looking at different sites highlights now.

Not all sizes fit all needs, which is why we keep expanding the bus lines.

Will it ever was 80 80 opportunities 40 customers. So I mean, just do quick math on that implies sort of around 1 million per satellite which.

Okay, Alright, great. Thanks for the color Mark appreciate it thank.

Thank you.

I think historically you guys.

Our next question comes from Scott Buck with H C Wainwright.

Talked about maybe three call $3 million to $5 million for satellite is sort of a sweet spot that can you just help us understand sort of the disconnect there.

Please go ahead your line is open.

Hi, Good morning, guys. Thanks for taking my questions.

I am sorry, I don't know if you have a lot of static on your line can you repeat that question.

Some kind of follow up on your comment regarding the commercial space curious, what what kind of demand youre seeing from potential commercial partners and whether or not.

Yeah sure. So you talked about the 2800 satellites valued at $2 $7 billion or so and just a quick math on that implies.

Kind of general macro uncertainty has dampened maybe some of that demand in the near term.

Yes.

Under $1 million per satellite I think historically, you've talked about $3 million to $5 million.

The demand received from commercial partners around the world, It's just astronomical.

Far greater than I was very hyper focused on the Dod and the IC when I first started.

Satellites are JJ.

I'm wondering if you could give some color on that disconnect.

It's all over the place so you have some $4 million.

But the demand for commercial far exceed that.

$10 million.

You have some for $15 million it really just.

We're seeing we don't see anything slowing down there's lots of spectrum out there. If you want to utilize the spectrum everything from Internet of things to <unk> Zhu from space to direct a handset too.

You have a very wide disparity depending on what people are building things and micro Geo EMEA were much more expensive than things and Leo or.

Julio.

Tens of applications that people are looking at that are requiring very large very robust constellations. So it's interesting as all of us.

Everybody is going out and looking at different sites highlights now.

Not all sizes fit all needs, which is why we keep expanding the bus lines.

Also interesting to note.

Yeah.

But we think 500 kilograms is like the sweet spot right now.

Okay, Alright, great. Thanks for the color Mark appreciate it thank.

Thank you.

<unk>.

Use of being a little bit smaller, but we're seeing people things are getting bigger and bigger but the dollars they're willing to spend it's more but theres more money to make good space and I don't know ever has been before.

Our next question comes from Scott Buck with H C Wainwright.

Please go ahead your line is open.

Hi, Good morning, guys. Thanks for taking my questions.

We're seeing a big push into commercial <unk>, then, they're refreshes for Leo MEO and Geo because remember one of the recurring revenue business everything we build we've got to replace but were seeing huge quantities and Leo that people are looking at.

Some kind of follow up on your comment regarding the commercial space curious, what what kind of demand youre seeing from potential commercial partners and whether or not.

Kind of general macro uncertainty has dampened maybe some of that demand in the near term.

It's very exciting.

Yes.

The demand received from commercial partners around the world, It's just astronomical.

Great.

One thing I'd point out.

Just add one thing one thing to point out is as we start building. These quantities the costs start to go down significantly so as we sit to replicate these things over and over again the recurring costs go down dramatically. So there is a lot of.

Far greater than I was very hyperfocus on the Dod and the IC when I first started.

But the demand for commercial far exceed that.

The advisers with volume.

Better pricing across the board for everybody.

Sure no that makes sense and Mark are you actively bidding on programs now or are you still in kind of the discovery phase or research base there.

Tens of applications that people are looking at that are requiring very large very robust constellations. So it's interesting as all of us.

Oh, no we're quite actively bidding so we have a we have.

Also interesting to note.

Size of our but we think 500 kilograms is like the sweet spot right now.

Mac and his team have done a great job and they are very actively running around the world bidding on things.

Buses.

Thinking a little bit smaller, but we're seeing people things are getting bigger and bigger but the dollars are willing to spend more but theres more money to make good space and I don't know ever has been before so we're seeing a big push into commercial <unk>.

Very rapid pace.

We are we have got in front of a lot of people and people are coming to us it's great that the <unk>.

Now finding us they're seeing what we're doing.

The technologies and the ability for mass production of small effects is invigorating the marketplace.

Ah refreshes for Leo MEO, and Geo because remember when the recurring revenue business everything we build we've got to replace but were seeing huge quantities and Leo that people are looking at.

People are proliferating Leo is not just the government it's for everybody, but we're getting it from all every every country has somebody who wants to build their own constellation every country wants to have their own transfer later tracking layer from the <unk> side, the military side of the country of the country, but the commercial they want to have their own <unk>. They went out of their own internet of things.

It's very exciting.

Great.

One thing I would point out.

I'll just add one thing one thing to point out is as we start building. These quantities the costs start to go down significantly so as we sit to replicate these things over and over again the recurring costs go down dramatically. So there is a lot of.

They don't want to just have a BD Americans it's amazing.

Yes that makes sense and very helpful.

Matt can you tell us what contribution from Nevada was in the quarter in terms of revenue.

The advisers with volume.

Better pricing across the board for everybody.

Yes revolve those revenue.

Sure no that makes sense and Mark are you actively bidding on programs now or are you still in kind of the discovery phase or research base here.

Is.

No.

It was around $6 7 million on a year to date basis around like $5 million.

Oh, no we're quite actively bidding so we have a we have.

For the quarter.

Perfect. Thanks, that's it for me guys I appreciate the time thank you.

Mac and his team have done a great job and they are very actively running around the world bidding on things.

Thank you.

Very rapid pace.

Our next question comes from the line of Marc Stern, who is a private investor.

We are we have got in front of a lot of people and people are coming to us it's great.

Please go ahead your line is open.

These are now finding us they're seeing what we're doing.

Yes first my comment was I think.

The technologies and the ability for mass production of small effects is invigorating the marketplace.

Previous.

Question, a couple back we have made a math there and that comes out.

People are proliferating Lee it was not just the government it's for everybody, but we're getting it from all every every country has somebody who wants to build their own constellation every country wants to have their own transfer later tracking layer from the <unk> side, the military side of the country of the country, but the commercial they want to have their own <unk> that went out of their own internet of things.

$1 billion of satellite.

The satellite on robotics and anyhow my.

Question is.

Presuming.

Sorry, I never get Sidney.

Single additional strength from Nevada.

Do you have enough cash to make it through to cash flow positive.

Yes, we do.

They don't want to just have a BD Americans.

It's amazing.

Thanks.

Yes that makes sense and very helpful.

Matt can you tell us what contribution from Nevada was in the quarter in terms of revenue.

We have no further questions on the line so I'll turn the call back to the management team.

Yes, <unk> revenue.

Because I know there's people so there's still people on left on the call.

<unk>.

It was around $6 7 million on a year to date basis around like $5 million.

But he wants to ask the question there were more than happy to take anybody's questions.

Not we're going to thank everybody for coming today and I appreciate your time and.

For the quarter.

Perfect. Thanks, that's it for me guys I appreciate the time thank you.

And your support and.

Thank you.

We're excited we're excited everyone here at <unk> is very excited going into the year and in 2024 is going to be an amazing year for us.

Our next question comes from the line of Marc Stern, who is a private investor.

Please go ahead your line is open.

I think we have a question there.

I think its there is no question there was a question.

Yes first my comment was I think.

Operator.

Previous quest.

Question, a couple back made a master and that comes out.

We have a question from Jonathan Klein with Cold wet Sunday or aviation Jobin. Please go ahead.

Million.

$1 million of satellite on robotics, but anyhow my question is.

Yes.

Hey, guys. Good morning, and thanks for taking the call in regards to the cash flow positive.

Zooming.

Sorry, I never get.

A single additional strength from our revolver.

With or without robotics.

Have enough cash to make it through to cash flow positive.

What is the earliest possible quarter, you see becoming cash flow positive in worst case scenario, what's the latest.

Yes, we do.

Down the road do you see it happening.

Yes, Thanks Jordan.

Thanks.

We're still currently going through our 2020 for budget and forecast cycle.

We have no further questions on the line so I'll turn the call back to the management team.

So Don so earliest would be Q1 lens will be Q4.

I know there's people. So there's still people are left on the call. If anybody wants to ask the question there were more than happy to take anybody's questions. If not we're going to thank everybody for coming today.

The plan is to be cash flow positive during 2024.

A lot of that is just based on timing of programs.

And I appreciate your time and.

I understand.

Your support and.

I understand.

We're excited we're excited here at turnover, but it was very excited going into the year and in 2024 is going to be an amazing year for us.

Thanks, guys.

Sure Yoga anytime.

Yes.

Alright, as we have.

I think we have a question there.

I'll start.

I think its there is no question there is a question.

One more just popped up operator.

Operator.

Our next question comes from China.

We have a question from Jordan <unk> with corporate Sunday or aviation Jobin. Please go ahead.

This investment.

Go ahead.

Yes.

Yes, Hello can you please discuss opportunities within your pipeline, where you just expect decisions within the next three months and just maybe quantify what you expect within the pipeline to be announced within the next three months.

Hey, guys. Good morning, and thanks for taking the call in regards to the cash flow positive.

With or without robotics.

What is the earliest possible quarter, you see becoming cash flow positive in worst case scenario, what's the latest.

Well, we don't go through details on bids that haven't closed yet.

Down the road do you see it happening.

Just talk about the pipeline in general, but now we don't really try not to give it away specifics. So we don't have our competitors figure out what we're working on.

Yes, Thanks Jordan.

We're still currently going through our 2020 for budgeting forecast cycle.

But within the pipeline that's got to be spread out probably over the next year or more but is there any any color that you can shed on maybe more near term side.

So donna.

No.

Last would be Q1 lens will be Q4 by.

The plan is to be cash flow positive during 2024.

Size without getting into specific programs as to what what you're looking for over the next few months.

A lot of that is just based on timing of programs.

I understand.

We expect to have.

Understand.

Yeah, we sort to have over the next six months some significant announcements to make we are seeing more and more large opportunities.

Thanks, guys.

Sure Yoga anytime.

Yes.

Alright, as we have.

From both commercial.

Also we got one more just popped up operator.

And government entities from around the world.

So we will have more color on that as it gets.

The next question comes from cafes, Makena with space.

Announced that there are some competitive processes that we are bidding on now we just don't want to go into detail on the phone.

This investment.

Please go ahead.

And then with regard to commercial opportunities.

Other commercial opportunities. Besides Nevada have you won or are optimistic about.

We have many of optimistic about buyback the same answer I will try to I'm not trying to be.

Well, we don't go through details on bids that haven't closed yet.

Argumentative here, but we don't want to go into details on things that haven't been haven't been closed yet. So we are so we are doing very well in the bid in the bidding process with a number of opportunities and as they close we won't we will disclose it we will publicly disclose them.

Just talk about the pipeline in general, but we don't really try not to give it away specifics. So we don't have our competitors figure out what we're working on.

But within the pipeline that's got to be spread out probably over the next year or more but is there any any color that you can shed on maybe more near term.

And then just.

Two more just one is with regard to return on invested capital does the company utilizes specific return on invested capital hurdle rate when allocating capital and if so can you just discuss the rate that you use.

Size without getting into specific.

Programs as to what.

You're looking for over the next few months.

We expect to have.

I mean, when you look at it we look at things that we purchase whether it be robots or test equipment and such as we try to get a 12 month ROI or better. So for example, virtually all of our robotics 12 month ROI on one hundreds and shop with less than 12 months.

Yes, we said they have over the next six months some significant announcements to make we're seeing more and more large opportunities.

Both commercial.

And government entities from around the world.

So we will have more color on that.

As it got announced that there are some competitive processes that we are bidding on now we just don't want to go into detail on the phone.

It is on a table of less than 12 months. So we look at all the big Capex that we spend and we want to get our money back less than 12 months or less and thats kind of how we've been viewing it thats why we went very quick returns because we've been outsourcing a lot of these things and by bringing them in house the returns tend to be very very fast.

And then with regard to commercial opportunities.

Other commercial opportunities. Besides Nevada have you won or are optimistic about.

We tried it with we're very capital efficient as far as the capital or the Capex that we spent I mean, we've projected only $30 million of Capex. This year and we expect to come in below that.

We have many are optimistic about but back to <unk>.

And so I'm not trying to be.

Argumentative here, but we don't want to go into details on things that haven't been hasnt been closed yet. So we are so we are doing very well in the bidding process with a number of opportunities and as they close we won't we will disclose it will publicly disclose them.

Thank you and then just final thing. So this morning, there was a tweet out.

Declan Ganley talking about they fully expect to payment to taryn orbital by the end of this year and that the events of October 7th have slowed things down, but they are confident that they're getting back on track and that the program remains on schedule have you spoken directly with the provider about this and can you just maybe talk about that this morning. It looks like you've retreated that just wondering if you can just shed.

And then just two more just one is with regard to return on invested capital.

The company utilizes specific return on invested capital hurdle rate when allocating capital and if so can you just discuss that.

Rate that you use.

Any more light on that.

I mean, we look at it we look at things that we purchase whether it be robots or test equipment and such as we try to get a 12 month ROI or better. So for example, virtually all of our robotics.

Yes, I did see the deck this morning.

We obviously are aware of who their funding sources.

I personally know who their funding sources, so we have confidence in their funding source.

12 month, ROI on 100 gig shop with less than 12 months.

That said, yes, it did retreated Chris I would like to treat.

It is on a table of less than 12 months. So we look at all the big Capex that we spend and we want to get our money back less than 12 months or less and thats kind of how we've been viewing it as long as we want very quick returns because we've been outsourcing a lot of these things.

Feel free to retrieve it yourself, it's always a good thing.

But that said other than that I don't more to comment other than you know he's very frustrated that they havent closed yet, but they are making progress.

Many of them in house, the returns tend to be very very fast.

I appreciate you taking the questions. Thank you. Good luck, thank you for calling.

So we're very capital efficient as far as the capital the Capex that we spent.

We won more too.

Two more two more this is great Kevin and keep them coming.

<unk> only $30 million of Capex this year, and we expect to come in below that.

Operator, our.

Our next question comes from Peter Zhang him as a part of it.

Peter Please go ahead.

Thank you and then just final thing. So this morning, there was a tweet out.

Thank you Mark and thank you everyone for hosting this call and for taking this format I appreciate that I know, it's not easy.

Declan Ganley talking about they fully expect the payment to taryn orbital by the end of this year.

Given.

The events of October 7th have slowed things down, but theyre confident that they're getting back on track and that the program remains on schedule have you spoken directly with the provider about this and can you just maybe talk about that this morning. It looks like you re tweeted that just wondering if you can just shed any more light on that.

I think it's great.

Yeah, we wanted to hear from everybody I think this is great.

Just a quick question regarding Q4 performance I know you mentioned that.

The tranche one deliveries.

Yes, I did see the decorative this morning.

Delayed now.

One and potentially Q.

We obviously are aware of who their funding sources.

Q2 was.

The original thank you again.

Personally know who their funding sources, so we have confidence in their funding source.

Yes were not delayed the original schedule went out to Q2, we were trying to beat the schedule. There is a difference.

That said, yes, we did retreated because I would like to treat feel free to it feel free to retrieve it yourself is always a good thing.

So we're on it.

We're trying to we were trying to beat it.

But that said other than that I don't more to comment other than he's very frustrated that they havent closed yet.

You May you schedule is easy, but I like the beat schedule I don't like to just make them.

They are making progress.

So what is the expected revenue for Q4.

I appreciate you taking the questions. Thank you. Good luck, thank you for calling.

Turning off of the one <unk> target.

We want more.

2023.

<unk> has great people and keep them coming.

And where we are currently is it looks like about 26 27 million for Q4 is that correct.

Operator, our next question comes from Peter Zhang Here is it private.

Peter Please go ahead.

That will be on the low side as we had mentioned earlier.

Thank you Mark and thank you everyone for hosting this call and for taking this format I appreciate that I know, it's not easy.

Providing conservative guidance and.

The reasons for that 130 number which would imply a lower rate of Q4 revenue is the fact that there is.

Given.

I think it's great.

Yes, we want to hear from everybody I think this is great.

Certain challenges on certain programs and the ultimate resolution of those challenges aren't known at this time.

Just a quick question regarding Q4 performance I know you mentioned that.

And I never ever want to get caught again with having to go out with to raise my revenue targets and then have to lower them again, so we're going to we're going back to the way we used to do it.

The tranche one deliveries.

Delayed now.

One and potentially Q2.

For 20 years, we've never missed the revenue targets and this is the first so we don't want to do to make that mistake again.

The original thank you again.

Yes were not delayed the original.

So we're back to being conservative.

Okay fair enough.

I guess the lesson learned from the 250 <unk> got a good time.

You are right.

Okay go ahead sorry.

During the Q2 call you had mentioned about the extreme due diligence done around Nevada funding in payment.

Did the <unk>.

Research not consider the potential delays that we're experiencing right now.

And that would require any alternative funding from Nevada.

No we knew we knew their funding source very well.

With him personally.

A long time ago.

Extreme confidence and saw no reason why they wouldn't have been funded so this was just a it was quite a surprise both to us and to robotics, but yes, we did lots of diligence we've done on all sides.

And we had extreme confidence.

On their ability to fund.

And we still expect them to get funded.

There are there are some external circumstances that have popped up that ability things.

It is a large sovereign and we expect them to come through at the end of the day.

Okay.

Alright, Thank you I appreciate it.

Thank you.

Our next question comes from Marc Stern, who is a private investor.

Please go ahead.

Yes. It did the previous mentioned Twitter reminded me of our comments last question I have.

A few weeks ago, the Terry on orbital Twitter site posts are protected and I actually submitted and still have pending and a question about two or three weeks ago to have them unprotected. So why are they are protected is that some kind of mistake by taranto orbital around purpose.

Regardless social media is shaking his head looking at me, saying he has no clue. What you are talking about but we will go check it out.

So obviously with it.

Okay.

Yes.

I believe you.

Hello.

I don't know it was fine.

I E.

<unk> had its going to look into it so sorry.

I don't pose to the turnover of our accounts, but the guy who does is going to find out.

Yeah.

Thank you.

You're welcome thanks, everyone. Thanks for pointing that out to us.

Next we have a follow up question from Peter Thanks, Dan who is a private investor.

Thank you Bob just one more one more question here regarding the.

The proposal from the co founders and their recent.

The latter.

After the fact, when you announced the reduced revenue guidance any thoughts there and how should be shareholders consider.

The pipeline that they are proposing and how does it align with.

The pipeline that you have minus rebuttal.

I don't understand the question.

Can you try again, so the co founders are proposing the cofounder of <unk>.

Pipeline.

First of all they are not co founders the three founders of turnover below a mark Bell dance data and Anthony private.

Those are the three founders.

You got to you if you get your facts straight please.

The second.

Dave or they said they were able to do they proposed what they say they can close $1 7 billion.

Which is great. We have not seen we have lots of things that were bidding on but we don't disclose what we're working on could it be the same thing it cannot read the same things.

They wanted to be helpful shareholders, they could give us the information.

They choose not to and that's their decision.

Okay. Thank you.

Welcome.

Hey, Joe the questions. We had so I'll turn the call back to the management team.

Okay, well. Thank you very much for attending everybody. We really appreciate it and we appreciate all the feedback and inviting.

Inviting everybody else to have question.

<unk>.

Everyone too I guess.

Productivity <unk> after the holidays, everybody and Joe your Thanksgiving and thank you very much for joining us.

Thank you everyone for joining us today. This concludes our call and you may now disconnect your lines.

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