Q1 2025 Intuitive Machines Inc Earnings Call
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Speaker Change: Ladies and gentlemen, thank you for standing by, and welcome to the Intuitive Machin's first quarter, 2025 Conference Call. At this time, all participants are in a listening mode. After this week's presentation, there will be a question and a session. To ask a question during the session, you will need to press star one on your telephone. You will then hear an automated message advising your hand is raised.
To withdraw your question, please press star one one again.
Speaker Change: Please be advised that today's conference is being recorded. I will now let you turn the conference over to Stephen Zhang, head of investor relations. Go ahead.
Speaker Change: Good morning. Welcome to the Intuitive Machines' first quarter, 2025 earnings call.
Speaker Change: Chief Executive Officer Steve Altemus, and Chief Financial Officer Pete McGrath are leading the call today.
Speaker Change: Before we begin, please know that some of the information discussed during today's call will consist of forward-looking statements setting forth our current expectations with respect to the future of our business, the economy, and other events.
Speaker Change: The company's actual results could differ materially from those indicated in any forward looking statements due to many factors.
Speaker Change: These factors are described on the forward-looking statements in the company's earnings press release and the company's most recent 10K and 10Q filed with the SEC.
We do not undertake any obligation to update forward-looking statements.
Speaker Change: We also expect to discuss certain financial measures and information that are non-GAAT measures as defined in the applicable SEC rule and regulations.
Speaker Change: Reconciliation to the company's GAAP measures are included in the earnings release filed on Form 8K.
Speaker Change: Finally, we posted an earnings call presentation to our website which provides additional contact on our operational and financial performance.
Speaker Change: You can find this presentation on our Investor Relations page at www.intuitivemissions.com slash investors.
Now I'll turn the call over to Steve Altemus.
Thank you, and welcome everyone.
Speaker Change: On our last call, we emphasize that the company would be focused on execution as the new administration began to take shape.
Speaker Change: Over the last few months, we have seen the administration rethinking how the federal government acquires emerging technology and services, instigates private sector innovation, and creates long-term value.
Speaker Change: Recently, we have seen signals of alignment at the federal level, including key appointments and clearer budgetary direction from the Executive Branch in Congress.
Speaker Change: The President's budget requests reinforces NASA's funding priorities, and the House Armed Services Committee has advanced an additional $150 billion reconciliation package supporting DOD initiatives.
Speaker Change: These developments give us visibility into future opportunities across civil and national security space.
Speaker Change: The evolving federal landscape, including shifting NASA priorities, presents a clear opportunity for Intuitive Machin.
Speaker Change: We're leveraging our proven performance and speed to market across LTV, NSNS, and clips the track record of stretching the federal dollar through innovation that scales to expand into adjacent markets like national security space and other non-looner domains.
Speaker Change: This diversification and track record builds on our core strengths and positions us as a broader infrastructure and data services provider across the space economy.
Speaker Change: As we anticipated last year, the Artemis campaign is evolving, nominated NASA Administrator Jared Isaacman has articulated a bold dual track vision to pursue lunar and martian exploration with Artemis as a stepping stone.
Speaker Change: We believe this decision reinforced by the President's recent NASA budget request.
Speaker Change: Signals continue support for deep space initiatives that intuitive machines is built to serve. Our technologies developed through projects like Cliffs and Ascentives and LTV are designed for applications across both Moon and Mars.
Speaker Change: While Congress continues to debate potential reductions in NASA science budget, we remain confident in the resilience of our core exploration programs.
Speaker Change: Clips Initiative, and the LTVS program are progressing with three delivery procurements.
Speaker Change: Plan this year, and our major contracts are aligned with national priorities and long-term strategy.
Speaker Change: As part of this alignment, Intuitive Machines was invited to testify before the House Space and Aeronautics Subcommittee on NASA's Clips Initiative. In my testimony, I highlighted how Clips drives innovation and reshapes the cost of exploration.
Speaker Change: I also highlighted the opportunity for larger bulk by Clip's task orders, showcasing how NASA's early investments in commercial lunar services set the stage for broader participation across various government sectors.
Speaker Change: For example, through our NSNS contract, we're extending the benefits of this model by enabling other federal agencies beyond NASA.
Speaker Change: to utilize our data infrastructure and payload delivery services on lunar orbit missions.
Speaker Change: This strategic approach of leveraging NASA's infrastructure investments to support national security space exploration goals exemplifies how the clips model can scale to meet the needs of diverse government initiatives.
Speaker Change: As part of our ongoing efforts to diversify international security space, the first quarter so meaningful progress under our stealth satellite and orbital transfer vehicle programs.
Speaker Change: Additionally, we recently secured a key contract award for an Earth Reentry Vehicle broadening our footprint across the space domain for new government and commercial customers.
Speaker Change: Leveraging our lunar lander architecture, the orbital transfer vehicle is designed to deliver payloads to multiple orbital regimes.
Speaker Change: We initiated phase two activities under a letter contract with a government customer with the full contract scope expected to be finalized by the end of this month.
Speaker Change: We continue to advance next generation technologies that can transform spacecraft operations in orbit. In the first quarter, we prepared
Speaker Change: to complete Phase I of the Air Force Research Laboratory's Jetson Contract, focused on developing a low-power nuclear electric propulsion system designed to enable stealth-like satellites without the volume or visibility of traditional solar-powered systems.
Speaker Change: Intuitive Machines is a sole contractor selected for this program, and we anticipate exercise of the following option later this year.
Speaker Change: In the days following Q1, we completed the study to transition the on-orbit satellite servicing and manufacturing mission to geostationary orbit for the Space Force.
Speaker Change: A move that would diversify our revenue base and alignment with the anticipated 2026 budget growth for national security space.
Speaker Change: We'll continue to support the study through May and expect the government decision later this quarter.
Speaker Change: Transitioning to an adjacent strategic horizon, Intuitive Machines is advancing a critical new capability, Earth reentry. This effort supports our long-term vision to deliver end-to-end space services from the lunar surface to precision return on Earth.
Speaker Change: In the days following the first quarter, the Texas Space Commission finalized the contract awarding Intuitive Machines $10 million to initiate development of a precision, earth reentry vehicle, and microgravity research laboratory.
Speaker Change: This technology is expected to serve as a key element in the architecture for our future moon and Mars sample return missions.
This initiative also demonstrates a forward-leaning funding model.
using state investment to catalyze commercial and federal participation.
Speaker Change: Alongside the $10 million state commitment for working to secure additional funds through a diverse pipeline of biopharmaceutical customers and strategic government stakeholders.
Speaker Change: Our approach will include proprietary precision landing technology differentiated from traditional ballistic reentry and builds on a strategic partnership with Warion that we announced in 2023 to accelerate investment and commercialization in microgravity applications.
Speaker Change: While we continue to diversify outside of NASA, we are simultaneously advancing and executing on our data transmission services.
Speaker Change: Under NASA's NSNS contract, we completed a key customer verification milestone and recognized $3 million in revenue during the first quarter. Entering the second quarter, we were issued an additional task order valued at $18 million for the next two near-space network services milestones.
Speaker Change: which we expect to complete this summer. In parallel, we are actively discussing with National Security Space stakeholders to host multi-Agency payloads on our lunar data relay satellites.
Speaker Change: The Lunar Data Satellite Constellation portion of NSNS is designed to provide secure and continuous connectivity for navigation, command, and control of spacecraft for a wide array of customers while driving higher margin recurring revenue streams.
Speaker Change: to complement the satellite constellation Intuitive Machines operates and provides data analytics services for the lunar reconnaissance orbiter camera and the shadow cam.
Speaker Change: As part of this activity, Intuitive Machin stewards, the repository for virtually all US lunar imaging and mapping data collected to date.
Speaker Change: By pairing high-resolution lunar imagery and analysis with real-time data relay and positioning from our satellites, Intuitive Machines is working to build the foundation for a lunar navigation operating system, enabling secure mobility route planning, surface navigation.
and Logistics Coordination across government and commercial lunar missions.
Speaker Change: Our first data relay satellite deployment remains on schedule where launch along with our IM-3 surface delivery mission in the first half of 2026.
In the first quarter, we landed our second lunar mission.
Speaker Change: The IM-2 mission landed further south than any mission in history, in an area surrounded by mountains and perpetual low-angle sunlight, conditions no lunar spacecraft had ever previously navigated.
Speaker Change: We now have firsthand operational data from that region, and we're using it to harden our systems and inform how the industry approaches this part of the moon.
Speaker Change: IM3 progress continued in the first quarter. We completed payload testing, including testing of NASA's three jet propulsion laboratory developed rovers.
Speaker Change: The mission is destined for Reiner Gamma, a mid-latitude region of the moon, and one of the most distinctive and enigmatic natural features of the moon, known as a lunar magnetic swirl.
after completion of the IMT mission.
Speaker Change: which ended early due to the landing anomaly, we performed a comprehensive post-mission review. It included internal teams, external experts.
Speaker Change: and Independent Reviewers, working with NASA and our suppliers to analyze every aspect of decent and landing at the Moon South Pole.
Speaker Change: Landing in this harsh environment requires two things. First, you have to land precisely, second, you have to land softly. Achieving both of these requires our sensors and onboard navigation algorithms to perform nearly perfectly in extreme environments.
We identified three primary contributors that affected the IM2 landing.
Speaker Change: One, laser altimeter interference. In the final phase of the descent, we saw signal noise and distortion that did not allow for accurate altitude readings.
Two, terrain and lighting effects
Speaker Change: South Pole topography and low angle sunlight created long shadows and dim lighting conditions that challenge the precision capability of our landing system.
Three, Crater Recognition Tuning
Speaker Change: Our optical navigation used imagery from LRO at 100 kilometers from the lunar surface that could not accurately account for how craters appear at lower altitudes with South Pole lighting conditions as he approached the landing site.
Speaker Change: Really forward, we will succeed, land softly, land upright, land ready to operate. We've identified the issues that are making the necessary changes we believe will get us there on I-M3.
Here's what's different.
Speaker Change: We've added, did similar and redundant altimeters to the sensor suite, and they're going through more rigorous and extreme flight-like testing than we've done before.
We've incorporated an additional lighting independent sensor for surface velocity measurements.
Speaker Change: We've expanded onboard terrain crater database for enhanced navigation across the surface of the moon.
Speaker Change: Additionally, we collected the most detailed imagery of the lunar South Pole on Mission 2, and we're feeding this unique flight data directly into our machine learning algorithms to improve crater tracking and navigation performance in these extreme, extreme conditions.
We must learn fast.
Speaker Change: Fix what needs fixing and move forward smarter. I am to give us data that nobody else has. We're using it to build a better system and applying those lessons directly to I am three, which remains on schedule.
Speaker Change: As we continue to lay the groundwork for improved surface delivery
Speaker Change: We are maturing infrastructure programs for essential equipment and systems that make space operations possible.
Speaker Change: We continue to grow this area of business and in January NASA awarded the company a $2.5 million contract to define the moon to Mars architecture for logistics handling and offloading combined with surface cargo and mobility.
Speaker Change: The Award for the Architecture Definition incorporates intuitive machines, lunar-trained vehicle and cargo-class lander designs.
Speaker Change: which made significant strides toward design maturity for NASA's Lunar Terrain Vehicle Services contract, culminating in successfully completing the preliminary design review just last week.
Speaker Change: Building on the human and the loop testing conducted at Johnson Space Center in quarter-four last year for Artemis Astronauts evaluated the terrestrial LTV mock-up
Speaker Change: The team implemented key vehicle modifications based on direct astronaut feedback and verified that these changes met or exceeded NASA's expectations through additional testing.
Speaker Change: Notably the team also integrated a scanning LiDAR system in the terrestrial prototype, enabling autonomous, self-driving terrain navigation.
Speaker Change: An essential feature for the extended uncrewed lunar operations, and demonstrates this capability in a live evaluation with NASA's LTV selection team.
Speaker Change: Additionally, Moonracer activated a high fidelity six degrees of freedom simulator that digitally replicated one six gravity conditions using lunar surface data from NASA and Intuitive Machines Phoenix Office for lunar reconnaissance imagery.
Speaker Change: This tool advances design validation and astronaut training while reducing dependency on costly physical prototypes.
Speaker Change: We believe the team is positioned with a distinct competitive advantage by achieving these technical milestones before the final feasibility assessment.
Speaker Change: Further strengthening its proposal and to the machines as advanced its heavy cargo class lunar lander design and integrated its in-house data transmission architecture built on the company's near-space network services contract.
to provide seamless direct-to-earth and lunar-data relay communications.
Speaker Change: An offering, we believe, is a comprehensive offering versus the other competing LTVS companies.
Speaker Change: As stated at the top of the call, national priorities like LTVS continue to be part of the nation's long-term space strategy.
Speaker Change: and Timing remains on track for the award of the next phase of LTBS by the end of 2025. A second draft RFP was recently distributed with a response date in the coming months with an award later this year.
Speaker Change: On our last call, I said 2025 will be all about execution, and we believe the first quarter set the tone for the rest of the year as we make progress across our diverse list of programs.
Speaker Change: Financially, we remain strong with sequential revenue growth, positive free cash flow for the first time in the company's history, and moving steadily towards EBITDA profitability.
Speaker Change: We expect opportunities for key contract awards throughout the balance of the year for Clips, LTV, and additional NSNS task orders, all of which incorporate Intuitive Machin's competitive advantage of delivering technical capability with speed and at its attractive price point.
Speaker Change: Now, I'll hand off to Pete McGrath or CFO for further comments on our financials. Pete.
Pete Mcgrath: Thank you, Steve, and thanks to everyone joining us today. We kicked off 2025 with a strong first quarter with revenues and gross margin up sequentially.
Pete Mcgrath: Q1 revenue was $62.5 million, up 14% over Q4 2024. Driven primarily by clips, LTVS, and NSMS execution.
Pete Mcgrath: We continue to work with NASA on post-mission closeout and the associated IM2 success payments which we expect in Q2 of this year.
Pete Mcgrath: Holmes Revenue was 21.7 million in the quarter, as expected, given the impact of the OSAM project.
Speaker Change: Keep in mind, as Steve mentioned, we completed a study for the Space Wars to commercialize the use of OSAM and geostationary orbit. We continue to support NASA and the Space Wars on potential path forward for the OSAM program.
Speaker Change: Close profit was 6.7 million for the quarter, versus 0.7 million in Q4 of 2024.
Speaker Change: As we continue to drive consistent and higher profitability through efficient program execution and a focus on higher margin service businesses.
This marks our third consecutive quarter of positive gross margins.
Speaker Change: SGNA for the quarter was 16.1 million versus 16.4 million in Q1 of 2024, and 13.5 million in Q4 of 2024.
Speaker Change: The higher SGNA in Q1 2025 versus Q4 2024 was due to annual incentive compensation and stock compensation costs incurred in the quarter. Consistent with Q1 2024's GNA
Speaker Change: We can expect this GNA increase in the first quarter every year due to annual incentive compensation.
Speaker Change: Operating loss for the quarter was 10.1 million versus a loss of 13.4 million in the fourth quarter of 2024.
Speaker Change: The Lower Sequential Operating Loss was driven by our higher gross profits.
Speaker Change: When comparing to Q1224, note that it includes the success payments for item 1. As data above, we expect the item to close out and success payments in Q2 2025.
Speaker Change: Adjusted EBITDA was negative 6.6 million in the quarter, and improvement of 4.6 million versus Q4 of 2024, as we will continue to drive towards runway positive adjusted EBITDA by the end of the year.
Speaker Change: Popperine Cash, Generate 19.4 million in the quarter, with capital expenditures of 6.1 million, resulting in positive pre-cash flow of 13.3 million in the quarter.
Speaker Change: Positive Operating Cash was driven primarily by Tony Amalstone payments received for I-M3, I-M4, and the LTV, in addition to our improved gross margins.
Speaker Change: We will continue to see fluctuations due to the timing of milestones for our training towards free cash flow positive in a long term.
Speaker Change: Topx was driven primarily by the investment of our first data relay satellite.
Speaker Change: Going forward, we expect to see continued Catholics for a five-celled constellation around the moon and our ground network in support of NSN.
Speaker Change: These capex levels will be offset by higher margin revenues from the NSMS program.
Our cash balance significantly increased in Q1 to 373.3 million.
Speaker Change: This increase was driven by the redemption process of the $11.50 strike price mourns which brought in 148 million of cash to the company. And our positive free cash flow
We now have no outstanding $11.50 strike price points.
Speaker Change: In the first quarter, we opened a $40 million credit facility with favorable financial terms.
Speaker Change: This facility remains unused and is meant to smooth out working capital up and up and down as we work through the timing impact of milestone payments for our programs and our cost schedule.
Speaker Change: With access to over 400 million in capital, coupled with no debt and improving profitability, we continue to believe we have more than sufficient capital to fund our current operations.
Speaker Change: In terms of capital deployment beyond current operations, we will remain opportunistic on strategic M&A while also evaluating internal investments to accelerate growth and drive long-term
Speaker Change: We ended the quarter with contracted backlog of 272.3 million compared to 328.3 million in the fourth quarter of 2024.
Speaker Change: Has voted in Q4. We are executing the contracts that were awarded in 2020 or throughout 2025. Expect the next major awards in the second half of 2025 and first half of 2026.
Speaker Change: In April , we did receive Task Order 2 for NSNS for $18 million, a grant from TSC for $10 million, and a letter contract with a not to exceed a $3 million on a normal transfer vehicle prior to decimitizing the fourth value of the $11 million base to contract.
Speaker Change: These recent awards will be included in the second quarter report it back off.
Speaker Change: We're looking at our Q125 backlog. We expect to recognize 45% to 50% in 2025. 25% to 30% in 2026 and the remaining
Speaker Change: We are leading the outcome of several new awards this year, such as the Next Clips Award, LTV Continuation, or Phase 2, as well as the next phase of Jetson, and the initialization of our oval transfer vehicle contract.
as a May 8th Post-Theward Redemption.
Speaker Change: Our shares outstanding are 178.6 million, with 117.3 million shares of Class A, and 61.3 million shares of Class C.
Speaker Change: Moving on to guidance, we continually expect a revenue range of 250 million to 300 million for the year with a positive run rate adjusted EBITDA by Q4 2025 and positive adjusted EBITDA for 2026.
Speaker Change: Overall, this was another strong quarter for Intuitive Machines. We entered the first quarter with a significant cash balance, no debt, and a flexibility to consider both organic and inorganic growth opportunities.
With that operator, we are now ready for questions.
Speaker Change: As a reminder, to ask a question, please press star 1-1 in your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster.
Andres Sheppard
Our first question is from Austin Moeller with Canacor Genuity.
Austin Moeller: Hi, good morning, Stephen Pete. Just my first question here. I know you would talk about the defense opportunity, de-reductions to the planetary science budget or earth science budget impact the revenue opportunity from any of the NASA payload deployment awards you've been getting.
and other universities that I've worked with.
Give a glasses, T-73, SPB
Speaker Change: Ladies and gentlemen, please stand by. Your conference will resume on materially. Once again, please stand by. Your conference will resume on materially.
Bye.
Speakers, you may resume your conference.
Speaker Change: Okay, apologize for that. We lost the link there, but Austin, I was talking about the Cliffs program and our interactions with the Science Mission Directorate.
Speaker Change: There's two procurements that are coming out this year, second half of the year. One in CS6, which we expect to be awarded in the July timeframe for a delivery, and then one later in the year for a second Science Vision Directorate Award. So we do not see a direct.
Speaker Change: Impact into the Cliffs budget, our point of entry in the science, based on the President's budget.
Thank you. Thank you.
Speaker Change: Okay, and just a follow-up, considering the SLS program may have considerable changes.
Speaker Change: Is there any risk of the LTV delivery on a Nova D lander for either Artemis III or beyond being changed or delayed due to the need to procure an alternative launch vehicle?
Speaker Change: Our feeling about the Lunar Terrain Vehicle Services contract and what's been telegraphed by NASA is that that procurement will, our proposals will be due in the late July time frame with an award for a delivery mission.
Speaker Change: in the November timeframe. That's what NASA has been talking about. If you recall, aren't nobody have a cargo lander?
Speaker Change: with our LTV vehicle itself, flies on a Falcon 9 heavy, and so there's no requirement for an SLS whatsoever. So it's a very
Speaker Change: Nice packaging with the launch vehicle, the heavy cargo lander, and the LTV to get.
Speaker Change: Autonomous Roving Assets to the Moon, and what's important about that is that this continues our Moon Mars strategy, which says...
Speaker Change: Learning about how to operate and do autonomous mobility on the looode
is directly applicable to programs that would...
X1, that's very helpful. I'll pass it back there.
Edison Yu: Thank you. Our next question is from Edison U of Deutsche Bank.
Hi, good morning. Thank you for giving our questions.
Edison Yu: I wanted to ask about just your very high little view on the reentry vehicle. There's in over the last five years there's been lots of attempts to do some type of...
Speaker Change: Orbro Transfer Vehicle, Space Tag. How does one differentiate in that category in your view?
Speaker Change: So we talked about two things. We talked about a Texas Space Commission grant for our Zephyr program which is a guided precision reentry.
Vehicle that has a unique arrow shape.
Speaker Change: That we've been cultivating for since 2022. The other one we talked about was an orbiter transfer vehicle to deliver payloads into orbit's incest lunar space.
Speaker Change: The Orbital Transfer Vehicle Competitive Edge is the cryogenic stage that we use as Nova C for the lunar landing that has now been modified to serve as a transfer stage.
Speaker Change: The reentry vehicle, though, is unique, and that ballistic entry capability is what's been out there. We have a lifting body which actually has cross-range and down-range to be able to land with precision.
Speaker Change: I'd say roughly about 50 meters accuracy so it can touch down in a runway setting .
Anywhere in the world.
Speaker Change: So, it's got strategic component to it, and we can use it as a rapid, in-space laboratory to deploy biologics and pharmaceutical and smart chip payloads to orbit and bring them back with precision. And that differentiator in particular besides the precision, is that it lands with...
Speaker Change: Soft Touchdown, 3G, or 3Gravity Touchdown, not the high impact touchdowns of ballistic capsules.
I said, and then, I guess, kind of related.
New clip propulsion. I know you're doing some work around that.
Speaker Change: What's your sort of vision on how that plays out in space? I think there's other companies working on it, but generally I guess it's perceived to be much further out. What's your latest view on that?
Speaker Change: Well, I think there's several different aspects to it that we've been working on and been fairly visible with. What I talked about was the AFRL Jetson low power program where we use...
Speaker Change: A radioactive nuclear material to generate a power source that replaces essentially solar arrays. And so you can put that small satellite in a very small package.
Speaker Change: Instead of the higher-volume, higher-visibility, large solar, ray-driven satellites, and allows us to transport while we're operating payloads. So it has an abundance of power level. That's the beauty of nuclear fuel that runs the Sterling engine.
Speaker Change: The other aspect is that application is directly relatable or correlatable to the fission surface reactor that we were working on for the lunar surface.
Speaker Change: We proposed a 10 kilowatt nuclear reactor driven by a sterling engine that would be the first instantiation of infrastructure on the moon for nuclear power. So we see nuclear as an advancement for long sustained presence and movement in space and deep space.
Speaker Change: And these kind of start-up programs that test the technology are necessary to exercise the muscles for the US to have a nuclear space program.
Thank you.
Andra Shepherd: Thank you. Our next question comes from Andres Sheppard of Cantor Fitzgerald.
Andra Shepherd: Hi everyone, good morning. Thank you for taking our questions and congratulations to all the great progress.
Andra Shepherd: Steve, I'm wondering, I know you touched on this on your prepared remarks a little bit, but I wonder if you can maybe just elaborate a bit on the IM-2 milestones that you expect to recognize in Q2, including the success payment. Thank you.
Andra Shepherd: Yeah, a few recall we had about $14 million of constrained revenue or success payments lined up for
Andra Shepherd: for the IM-2 mission. You know that mission was partially successful. It was abbreviated. I talked about that.
Andra Shepherd: We're working with our customers, NASA, as multiple customers and commercial customers.
to work the clothes out famous we expect about.
Andra Shepherd: Half of those to close here in this quarter, maybe in a little bit it's a quarter three but it's on the horizon. Getting those contracts closed out and buttoned up is what we've been focusing on here. So that's really where expect to end up after all said and done with mission two.
Speaker Change: Got it. Okay. That's super helpful. Appreciate that. And just a quick follow up with your first positive free cash flow quarter. Congratulations, by the way. How should we think about free cash flow for the rest of the year? Any color you or Pete might be able to give? Thank you.
Speaker Change: Well, you know, primarily the free cash flow positive was driven by some milestones that came in in the first quarter that gave us a nice look there. We do see, you know, that our
Speaker Change: Free cash flow or receipts will still be lumpy over the year. And so while this is a positive trend going forward, it's not absolute, you know, until free cash flow estimate in 2026 where you can see it consistently.
Speaker Change: Got it. Awesome. Thank you so much, Inga. Congratulations again. I'll pass it on.
Speaker Change: Thank you. Our next question comes from the line of Ronald Epstein with Bank of America.
Ronald Epstein: Hey, yeah. Good morning, guys. How do things work for you all if we end up in a continuing resolution?
Speaker Change: for Fiscal 26. I mean, my understanding is that that's a possibility. So, how does that work for you if that were to happen?
Speaker Change: Yeah, I think we're fairly unaffected with a continuing resolution in that there's no real new program starts for us.
We have existing initiatives and programs in our major contracts [inaudible]
Speaker Change: with NASA. We are interested in what's going to happen with the reconciliation bill and see that come forward and what that effect that has on the DOD budgets, and that's one that we're still waiting to see what.
Speaker Change: How fast that would be distributed and allocated against contracts, programs, and procurements.
Speaker Change: Got it, got it, got it. And then I could have been mistaken here, but I was under the impression that the IM2 success payments were going to be originally in 1Q. Now they're going to be in Q2. What gives you confidence they're going to be in Q2? And why did they slip from 1Q to 2Q if indeed that's right?
Speaker Change: Yeah, it really, I don't know if it slips, but Mission 1, we closed success payments in Q1, we recall we launched earlier in the year for Mission 1, we launched a little bit later here for Mission 2 in the quarter, and then we have a number of
Speaker Change: Deverse customers and contracts associating with the success payments. Each one of those has to be closed out individually. And so NASA, in particular, there was a science mission director eclipse contract.
Speaker Change: There's a Space Technology Mission Directorate, three contracts. Each one of those has to be reworked and they took different approaches in the two mission directorates.
Speaker Change: and so that's what's taking the time to get all those clothes. But we've been in discussions and dialogue with NASA directly and commercial payload customers and that's why we can give you some degree of confidence that that'll be buttoned up near the end of the quarter.
Speaker Change: Gotcha, gotcha, gotcha, and then maybe just one more for me. You mentioned that you're prepared remarks a couple times, you know, the possibility for M&A, you know, the point capital that way.
Speaker Change: What's out there? I mean, how does the market look for space assets and how are you thinking about that? And when you do M&A, I mean, how are you thinking about the timeframe for your return on it?
The way I look at M&A is
I look opportunistically…
Speaker Change: Adding capabilities to the company that give us a competitive advantage or to shore up areas where we need specific skills, very unique skills.
Speaker Change: It's also an area where we can accelerate some capability that allows us to open up revenue streams in our existing programs.
Um...
Speaker Change: and just thinking opportunistically about what might be a creative or additive to the business as a whole and so we go through this review process on a regular basis to look at those opportunities and discern what might be right for the company at any given time.
We've got it. All right. Thank you.
Speaker Change: Thank you. Our next question comes from the line of Griffin Boss with B. Rowley Securities.
Thank you.
Hi, thanks, good morning. I'll just-
Speaker Change: Yes, start on clips. Given the changes that you need to make for future I-and-missions, you talked about the disparate changes dissimilar redundant, altimeters, additional lighting, the on-board drink rate of database. I know these contracts are already low margin, is this?
Speaker Change: Are these changes having a material effect on your cost profile or perhaps competitiveness going forward?
Speaker Change: You know, not fully successful in terms of all the data that we brought back, it was a matter of enormous engineering success to land in this harsh environment.
Speaker Change: There are some additional sensors and things and algorithms that we want to tune for the mission and mission three and right now we're not looking at an impact to mission three in terms of schedule a slight cost increase as we buy additional sensors for those missions.
But long term, we're still achieving...
Speaker Change: You know, success with our build delivery to the Cape and launch of our admissions back-to-back within a year and we continue that regular Cade submission. So I think the program's healthy and our ability to execute has been demonstrated.
Speaker Change: Okay, fair enough, thanks Steve. And then just shifting to LTV.
Speaker Change: I'm curious to hear your thoughts. Do you still think that NASA would prefer to choose one winner in this phase two down select later in this year? Have you heard anything on that front with regards to that changing? Can NASA potentially decide now to choose multiple vendors and maybe there's a collaboration effort between the multiple awardees? [inaudible]
For LCVS, NASA has talked to us about us.
Speaker Change: including an option that we've seen in the draft RFP that's come out where they've planned the Selective Bender for the Demonstration Mission for Delivery of the LTV to the surface.
Speaker Change: And then the possibility as an option to carry another vendor through the critical design review phase, which is about a year extension to the current phase that's out there. So they are thinking about alternatives of awarding more than one follow on contract on LTD.
Andres Sheppard,
Got it. Okay. Thank you for taking my questions. Appreciate it.
Speaker Change: Thank you. Our next question comes from Greg Pendy with Clear Street.
Greg Tindy: Hey guys, thanks for taking my question. Just one on NSN, can you just talk about the global competitive environment that, you know, you see evolving in that landscape, I believe Europe is making an effort that would be completed on a lag relative to yours, but how does that maybe change the opportunities for commercial revenue opportunities on NSN if more global competitors might be?
Entering the Market
Speaker Change: Well, I think we're in a fledgling state of the Near Space Network or Lunar Data Relay Network where the market is emerging, and right now we're talking with those companies in Europe that are looking at
Speaker Change: Participating there, first from the ground side, ground station side, and the data relay constellation, and we're talking seriously about standards and interoperability so that we can all work together to put a capability in place both for data relay communications and for PNT.
Speaker Change: So right now the international work is collaborative as opposed to competitive and right now I think there's room for successes to raise all boats in that area.
That's helpful. Thanks a lot.
Speaker Change: Thank you. Our next question comes from the line of Suji DeSilva with Roth Capital.
Speaker Change: Hi, Steve Hype, you can grab some of the progress here. Can you maybe step back and talk about updating kind of what the key segments are for Lunar given all the multiple kind of business activities you have. And you know, maybe kind of just go back to the M&A question a little bit. You know, the areas of interest that might fill some of the holes in that product segmentation for Lunar.
Speaker Change: So, I didn't talk about it this time in earnings, but I've talked about it the past couple of times and that the three pillars of commercialization of the lunar.
Speaker Change: Economy and that is the delivery services, the data services, and the infrastructure services associated with opening up that economy.
Speaker Change: Delivery services include things like ride share, as well as landing on the moon, ride share payloads, and things like the orbit transfer vehicle and the reentry capability. You think about all of those as a transportation leg or access to and from the moon.
Speaker Change: So that all fits within that pillar. The data relays, the P&T's and navigation, all of that, it's pretty self-explanatory with NSNS and then with the
Speaker Change: Infrastructure as a Service, you see also that we're doing the LTV and we also work, you know, Fis and Surface Power for the Surface which is not necessarily aligned by nuclear space, it's the Infrastructure as a Service.
Speaker Change: The Jetson work that we were talking about falls into lunar access or delivery services because we're using that satellite to position in different locations in space. So it's still all aligned with the three pillars of commercialization. It's just
Speaker Change: Because we were able to do the hard thing first, like land on the moon, we were able to branch into other adjacent
Speaker Change: kind of feeds the whole stack of domains and space from Leo to Geo to XGO to this lunar, and that's where you're seeing our expansion occur.
Speaker Change: Okay, appreciate that review there, Steve. And then you talked about higher margin service business in the mix. Can you talk about where it is in the mix today? Where it's coming from and what can be in the mix?
Speaker Change: 12 to 24 months out, I know it's higher margin. You know, at what point does NS NS inflect up from the current levels that it's at today?
Speaker Change: Essentially. Oh, that piece takes that one. Yeah, so really the high-market business is being driven by things like the near-space network services because you know what we're doing here is basically
Speaker Change: We're building out a verification capability to verify performance with NASA, but we're building the assets, they're capital assets at the all, and then we're going to be selling them as a service, and they're a higher margin services. More like you typically would see like, I would like a global star, a radiant type satellite service signaler.
Speaker Change: And so that's where the higher margin business really aligns. And that's what's really, you know, we mentioned a little bit about, you know, lumpy cash flow. You know, the milestones do come in and timing that doesn't always line up with the milestones on the contrary.
Speaker Change: and that kind of drives that lumpiness in the cash flow. You know, we are still with that higher-march in business driving towards that, just to even oppose it at the end of the year, and then uh...
Speaker Change: We'll be a bit of positive next year, or just a bit of positive next year. Free taskflow of those will still be a little bit lumpy in that summer focused on one term, which will be, will be generated primarily by this time margin business.
Okay. Thanks, Pete. Thanks, Steve.
Drunk
Speaker Change: Our next question comes from the line of Josh Sullivan with the benchmark company.
Take your mind.
Morning, Josh.
Speaker Change: So, you know, on the word chest here, you know, there also appears to be some disruption in coming to SLS and other NASA legacy projects.
Speaker Change: How are you looking at, you know, your organic opportunities to grow and adding people, you know, versus those comments on, you know, looking at an M&A? Just trying to get a sense of, you know, is it more attractive for the opportunities you've developed or, you know, filling those technical holes?
Speaker Change: Well, I would say what's attractive here is we've seen that the clips model of fixed price
Speaker Change: A more regular cadence of missions and with heavier and heavier cargo.
Speaker Change: So I think with the delay in or the reformulation of Artemis, there's a place for heavy cargo deliveries to put infrastructure on the surface of the moon.
Speaker Change: To use the communications network and the PNT or navigation operating system we talked about in advance of boots on the lunar surface.
Speaker Change: And so we're playing right into that reformulation with these capabilities and extending those, you know, our speed the market and price affordability and technical capability really do shine in this environment and so we're going to use that to help
Speaker Change: The US, how we can to make sure that we have a permanent sustained presence on the moon that leads forward to Mars.
Speaker Change: Now, in light of that, when we talked about the three pillars of commercialization, any M&A activities that we're looking at are aligned with those
Speaker Change: Three pillars to add the capabilities that we might need or add elements of the ground or data network or infrastructure that we would need to stay competitive.
Speaker Change: and then just one on the reentry vehicle opportunity on the soft touchdown sounds like an interesting angle, but just curious on the actual microgravity laboratory, is that going to be a proprietary Intuitive Machin process, or will that be customer furnished?
Speaker Change: A company that we're working partnership with called Rodeum Scientific, who does the internal outfitting of the biologics with pharmaceutical laboratory inside, they have experience with flying to International Space Station.
Speaker Change: And so we're working together to do that. Our interest is primarily in re-entering Earth's atmosphere with precision and the ability to do that as an interest there for us.
Speaker Change: A number of commercial customers as well as DOD customers. And so that's our focus. The idea that we can do a viologics and pharmaceutical and smart chip manufacturing in space.
Speaker Change: Without an international space station that's highly responsive to the market needs or what the customers are really looking for and that's the application that this reentry seems to fit.
Got it. Thank you very much.
Speaker Change: Thank you. I show no further questions at this time. I would now like to turn the call back to Intuitive Machines CEO Steve Altemus for any closing remarks.
Steve Altemus: Well, thank you everyone for attending and listening to our call this morning. I appreciate all the questions and we look forward to supporting this administration's moves, the more architecture and priorities. Thank you very much.
Speaker Change: This concludes today's conference call. Thank you for participating. You may now disconnect.