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Terran Orbital looking at strategic options

May 15, 2024

Terran Orbital has released its Q1 numbers, and reported that it has received a major order from Lockheed Martin for “18 space vehicles for the US Space Development Agency” – taking its Q2 portfolio of orders received to beyond $100 million. However, there has been no interim payment during the quarter-year from its major client, Rivada Networks.

The Boca Raton (Florida)-based satellite manufacturer now (as of May 14th) has a backlog of $2.8 billion, largely made up of a 300-satellite order from Rivada Space Networks.

Terran’s CEO Marc Bell seemed in an optimistic mood in his post-results call with analysts, saying the company had plenty of work in hand and there were many “foreign telcos, foreign internet providers, everybody” now including satellite networks into their plans.

However, he directly referred to Rivada and its “modest contribution” to revenues at Terran and that its disappearance from the order book would not be dramatic.

Revenue for Q1 stood at $27.2 million, down 3 per cent year on year. Cost of sales for the quarter was $33.4 million compared to $29.6 million for the same period in the prior year. The increase in cost of sales was primarily due to an increase of $2.9 million in labour, materials, third-party services, overhead, launch costs and other direct costs, $1.4 million related to reserves for anticipated losses on contracts period over period, and $1.3 million in depreciation and amortisation.

Net loss was $53.2 million in the qurater, compared to a net loss of $54.4 million for the same period in the prior year. As of March 31st 2024, Terran Orbital had $43.7 million of cash on hand and approximately $316.7 million in gross debt obligations.

Comments were made regarding the on-going strategic review for the company. “As previously announced, a special committee of Terran Orbital’s board of directors composed solely of independent and disinterested directors, consistent with its fiduciary duties and in consultation with its financial and legal advisors, has engaged in an ongoing proactive process to evaluate strategic opportunities that are or may be available to the Company, including maintaining the status quo and continuing to operate as a standalone, independent publicly traded company, to determine the course of action that it believes will maximise value for the company’s stockholders,” said Terran.

“Regarding the previously announced and subsequently withdrawn non-binding proposal from Lockheed Martin to acquire, in a merger transaction, all of the outstanding shares of the Company’s common stock not owned by it for a price of $1.00 per share (the “Lockheed Proposal”), independent director and special committee chair James LaChance stated: “We appreciate Lockheed Martin’s interest and engagement. In our discussions with Lockheed Martin regarding their proposal, including at an in-person meeting on April 16, 2024, we shared that the Company values its strategic relationship with Lockheed Martin, both as a security holder and as a key customer, and, as the strategic review process continues, we are committed to maximising stockholder value and remain open to further exploring if there is value to be created for our stockholders through future commercial and strategic arrangements or transactions with Lockheed Martin.”

As to the Rivada order, Terran said: “We recognised $1.7 million of revenue under the Rivada Agreement during the three months ended March 31st 2024. We did not recognise revenue under the Rivada Agreement during the three months ended March 31st 2023. As of March 31st 2024, the Rivada Agreement represented 88 per cent of our backlog and programs associated with Lockheed Martin represented 7 per cent of our backlog.”

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