Q3 2024 Sidus Space Inc Earnings Call
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Ladies and gentlemen, greetings and welcome to decide this space third quarter 2020, full results and business update call.
Speaker Change: This time all participants are in a listen only mode. If anyone should require operator assistance during the conference. Please press star and zero on the telephone keypad.
Speaker Change: As a reminder, this conference is being recorded.
Speaker Change: It is now my pleasure to introduce your host Bill White CFO of Cyberspace.
Thank you. Please go ahead.
Speaker Change: Good evening, everyone and thank you for joining us for cited spaces third quarter 'twenty 'twenty four earnings conference call.
Speaker Change: Joining us today from the company is our founder Chairman and CEO Caryl, Craig and myself Bill White Chief Financial Officer.
Speaker Change: During today's call we make certain forward looking statements. These statements are based on current expectations and assumptions and as a result are subject to risks and uncertainties. Many factors could cause actual results to differ materially from the forward looking statements made on this call. These factors include our ability to estimate operational expenses.
Speaker Change: Liquidity needs customer demand supply chain delays, including launch providers and extended sales cycles.
Speaker Change: For more information about these risks and uncertainties. Please refer to the risk factors in the company's filings with the Securities and Exchange Commission each of which can be found on our website www dot cited space Dot com.
Speaker Change: Listeners 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.
Speaker Change: At this time I'd like to turn the call over to our chairman and CEO Caryl Craig Carol Please.
Speaker Change: Thank you Paul and welcome everyone.
Speaker Change: For those of you, who maybe new to our company satisfaction States, Michigan enabler, providing solutions that include custom satellite design.
Speaker Change: <unk> integration, Michigan management manufacturing and AI enhanced space based sensor data as a service.
Our Michigan based access re imagined and we're committed to rapid innovation adaptable and cost effective solution and the optimization of space systems and sensor data collection.
Speaker Change: We've demonstrated space heritage, including the manufacturer and operation of our own satellites and sensor system as he sat and we serve government defense intelligence and commercial agitate around the globe.
Speaker Change: We are strategically headquartered on Florida space Coast, where we operated 35000 square foot manufacturing Assembly integration and testing facility.
Speaker Change: Basic economy evolves from a niche sector to a mainstream industry, it's generating value across various field and addressing global challenges such as military support.
Speaker Change: These exploration and climate change.
Speaker Change: The impact of space in the satellite industry is becoming increasingly recognized which is driving a growing demand diverse cutting edge based derived data and solution.
Speaker Change: Through our Olympics that platform, we offer customers a variety of mission option, whether customizing a satellite.
Speaker Change: Payload or delivering data as a service.
We developed the Lizzie SAP platform, which achieved first launch success in March 2024, as a cost effective infrastructure platform, specifically designed to provide technical flexibility.
Speaker Change: This model is somewhat unique in our industry, while others may have begun with a single technology and don't constellation is around the technology, we built a platform around technological advancement to support the growing global space of cotton.
Speaker Change: Well, we serve as a space mission and they learn multiple ways, we see a growing need for more diverse base based earth observation data and insights to allow organizations to make better decisions higher confidence and with increased accuracy and speed.
Speaker Change: It really is that we can have multiple sensors on the same satellite to simultaneously collect varying data types with the same collection geometry, and also serve multiple markets and customers on a single satellite.
Speaker Change: This helps mitigate risks associated with external factors like macro economic shifts or technological disruption and it allows us to adapt quickly to market changes.
Speaker Change: Another differentiator is our other edge AI system, which we used to analyze the data on orbit.
Speaker Change: Our product allows us to quickly integrate cutting edge commercial off the shelf processors, like Nvidia and Google into our satellites to keep pace with increasing computing power and because of a better edge AI algorithms can be updated post launch we can expand the text the missions, we serve from our existing on orbit assets.
Speaker Change: We expect to enrich our onboarding process data with customizable analytics users control for their own use cases and in turn provide data subscription across multiple industry organizations can improve decision, making and mitigate risk.
Speaker Change: Moving now to our recent accomplishments.
Speaker Change: We achieved a 90% year over year revenue increase during the third quarter and we had notable achievements across all our lines of business.
Speaker Change: We successfully completed the primary objectives of the autonomous satellite technology for a resilient application our Astra in space payload mission with NASA Stennis space Center.
Speaker Change: We received a follow on contract for additional extra support.
Speaker Change: We secured a contract with wireless technologies to supplier other edge computing system for fire detection.
Speaker Change: High altitude infrared imaging and we were awarded a $2 million contract supporting the U S. Navy propulsion program.
Speaker Change: In addition, we successfully completed the critical design review Lizzie L. A laser communications satellite contracted by the Netherlands organization, which triggered a milestone billing to the multimillion dollar satellite agreement.
After the quarter closed we announced that we were exclusively selected by Lone Star data holding to design and build their first generation of data storage satellites and support their resiliency as a service business.
Speaker Change: Under the agreement Cital Swissair amongst our exclusive satellite manufacturing partner for six data storage satellites that will orbit the moon.
Speaker Change: Advanced state of storage and disaster recovery capabilities for mission critical information.
Speaker Change: This demonstrates our ability to scale, our movies that platform to meet the constellation manufacturing and operational needs of diverse customers and mission, including lunar missions.
Speaker Change: Yeah.
Speaker Change: In October we secured FCC satellite approval for him as he sat Fi as part of our micros constellation and lower or better.
Speaker Change: This key regulatory milestone marks a significant step in our on our expansion plan and aligns with our long term strategy to position ourselves to deliver a diverse and unique set of data for situational awareness for government defense intelligence and commercial sectors worldwide.
Speaker Change: It is also a key milestone in helping us achieve higher revenues and improved margins.
We continue to make strong progress on expanding our honorable footprint does he sat too has successfully completed testing and is ready for launch which is slated for no earlier than December of this year, but as I sat three are scheduled to launch shortly afterwards. Thank you wanted 2025.
Of course, one schedules are subject to many factors, including several that are outside of our control.
And we continue to demonstrate our commitment to delivering innovative flexible and cost effective solutions, we recently announced our plan to upgrade to our latest that communication system to integrate iridium enabled technology in the future satellite.
Speaker Change: This upgrade will enable us to provide near real time direct to satellite messaging arrange a time sensitive applications and will position side as the leading provider of small form rapid data transmission services in the commercial space market.
Speaker Change: We also developed an advanced high speed switch cards that can be offered as a standalone product to support the small satellite supply chain.
Speaker Change: The new hybrid three D printed switched card extends the capabilities of the payload processor, enabling communication with multiple optical sensors do high speed low voltage differential signaling data connection.
Speaker Change: Our recent achievements and results reflects strong momentum as we focus on our strategic priorities of growing our customer base across multiple business areas, while delivering performance excellence and dancing progress that constellation and driving innovation.
Speaker Change: Moving forward, we're seeing increased interest in our satellite manufacturing data offerings and long term partnerships, especially following our successful launch and our sales pipeline supports a strong growth outlook.
Speaker Change: Our proven ability to design build launch and operate 120 kilogram satellite is the obvious catalyst to the growth of our pipeline.
We continue to submit arrange a proposal and responsive.
Speaker Change: Patients to government and commercial customers.
Speaker Change: Proposals are under evaluation and we expect to see the results of a contract decision in the coming weeks and months.
Speaker Change: We anticipate continued growth in our pipeline and backlog with increased revenue recognition expected other constellation expands.
Speaker Change: We have signed contracts or subscription based data as a service for upcoming satellites and we expect additional data contracts over the life of the satellite.
Speaker Change: As we look ahead, our on orbit expansion and VSAT strategic upgrades position side is to expand our capabilities and drive continued growth.
Speaker Change: As we look at our financial results and projections, it's important to describe the diversity of our business model as it relates to the types of contracts and margins and year over year comparisons are manufacturing satellite contracts take varying forms firm fixed price time material and milestone progress payments. This resulted in inconsistent or lumpy revenue recognition quarter over quarter.
Speaker Change: Our contracts are made up of a mix of material and labor expenses and those expenses can occur at different times over the life of the contract.
Speaker Change: Because of this quarterly comparisons are not necessarily indicative of expected annual results.
Speaker Change: And now I'll hand, the call over to bill to discuss our financial highlights.
Bill White: Thank you Carol.
It's a pleasure to be here today to discuss our third quarter 'twenty 'twenty four financial results.
Bill White: We continue to focus on growing revenue and delivering operational excellence. While also working to manage our operational expenses were committed to rapid innovation adaptable and cost effective solutions.
Bill White: We have invested in the growth of our company through capital expenditures expenditures on our satellites with research and development and the implementation of a robust ERP system.
Now onto our 2024 third quarter financial results.
Bill White: Total revenue for the three months ended September 32024 was approximately $1 9 billion, an increase of approximately 900000 or 90% compared to a total revenue for the three months ended September 32023.
Bill White: This increase was primarily driven by satellite related revenue and the timing of fixed priced milestone contracts as compared to the prior year.
Bill White: Cost of revenue increased 69% for the three months ended September 32024 to approximately $1 8 million as compared to $1 1 million for the three months ended September 32023.
Bill White: This was primarily driven by a mix of contracts with higher material expenses, Vice labor shifts and milestone payments.
Bill White: For our higher margin satellite related business and higher depreciation costs associated with the monthly depreciation of our first satellite asset deployed March 'twenty 'twenty four dupree.
Bill White: Depreciation will continue to impact cost of revenue until we can generate a high volume.
Bill White: Satellite and data related revenues, which have higher margin stuff that's related depreciation expenses.
Bill White: Our gross profit for the quarter ended September 32024 increased 140% to approximately 38000 compared to a loss of approximately 96000 for the three months ended September 2023.
Bill White: Gross profit margin was 2% for the third quarter 'twenty 'twenty four as compared to a negative 10% for the third quarter 2023.
Bill White: Again, this was mainly due to favorable mix of contract types and increased sales in our higher margin satellite related business.
Bill White: Selling general and administrative expenses for the first quarter ended September 32024 totaled approximately $3 2 million as compared to $3 8 million for the same period last year.
Bill White: Approximately 600000 decrease was primarily due to a reduction in legal fees from our 2023 business acquisition combined with an increased usage up internal resources, a reduction in payroll and related expenses directly related to the building of our satellites, which was moved to fixed assets and a reduction in D&O insurance expense.
Bill White: And marketing and investor related expenses.
Bill White: To provide investors with additional information in conjunction with our results as determined in accordance with GAAP. We also included in our 2023 Form 10-K, a non-GAAP measures to determine or adjusted EBITDA.
Bill White: We use adjusted EBITDA to evaluate our operating performance and make strategic decisions about the company's future direction.
Bill White: Adjusted EBITDA loss, a non-GAAP measure for the three months ended September 32024 totaled.
Bill White: The $2 5 million as compared to an adjusted EBITDA loss of negative $3 6 million for the same period last year.
Bill White: It presents a 33% improvement in our EBITDA total non-GAAP adjustments for interest expense depreciation and amortization acquisition deal costs average cost capital markets and advisory fees.
What do your compensation expense warranty cost and other costs are provided in the reconciliation table listed in our third quarter 2024 earnings press release released earlier today.
Bill White: Net loss for the three months ended September 32024 was $3 9 million compared to a net loss of $4 1 million for the same period last year.
Bill White: Do you view the balance sheet as of September 32024, the company had $1 2 million of cash as compared to $1 2 million last year.
Bill White: As we continue to manage our cash flows conservatively, we will prioritize the strategic use of our cash resources to pay down debt and fund our upcoming satellite builds which are crucial for driving revenue and the overall growth and profitability.
Speaker Change: We'll also continue to identify additional opportunities to reduce expenses and increase efficiencies within our business with that I'll turn it back over to Carol.
Carol: Thank you Bill.
With over eight months of let me start operating in orbit Cytostasis entering an exciting phase of growth as we continue to execute our strategic priorities.
Carol: Our three D printed AI enhanced Lizzie south are central to our future high margin data as a service business model, which focuses on the integration of multiple sensors and technologies in a single satellite.
Carol: Satellites also enable simultaneous data collection that can support industries, such as agriculture maritime oil and gas among others.
Carol: We are committed to expanding further into these sectors to generate additional revenue ultimately increasing the value for our shareholders.
Carol: Our next two satellites are in advanced stages of production and are scheduled for launch within the next four to six months.
We are diligently executing our plan to build a unique multi mission constellation and the proactive steps. We took early on such as securing a multi launch agreement with Spacex and purchasing substance that's with long lead times are enabling us to deliver a steady cadence of launches to meet the customer demand that we promised.
Carol: The success, we've already achieved with our very first satellite has strength and the confidence of our team industry partners current and potential customers and shareholders alike.
The confidence from that first launch success and our ability to scale our unique with the SAP platform to provide cost effective solutions brothers was demonstrated by the Lone star constellation of war and we look forward to beginning the design and build of the six lunar Lizzie satellites for their Moon mission.
Carol: I want to express my sincere gratitude to all our shareholders for your continued support of cider.
Well he's been with us from the beginning or have recently joined you are an integral part of our journey as we create unprecedented access to space.
Carol: I remain fully committed to restoring shareholder value and I'm optimistic about the higher revenue streams, we anticipate from our satellite manufacturing and space data as a service constellation.
Speaker Change: Thank you to all for joining us today for Cytostasis third quarter 2024 earnings Conference call.
Speaker Change: I'll now ask the operator to close the lines.
Speaker Change: Thank you.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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