Maxar (MAXR) 10 Aug 222022 Q2 Earnings call transcript

Good day. My name is Dana and I will be your conference operator for today. At this time, I would like to welcome everyone to the Maxar Technologies’ Q2 2022 Conference Call and Webcast. Today’s call is being recorded. [Operator Instructions] Thank you. like the now Jonny over would Bell. I to conference turn to And go Please ahead.

thanks to opening up by your operator. XXXX and Both to and afternoon Good Welcome open Biggs Officer, which, call. Executive Dan Porter. am questions. we Chief Chief going Financial earnings make Maxar’s for I joined after company’s the today some line the will Officer, Jablonsky remarks, conference quarter second are

call are to hour. up about We the in shooting an wrap

the to like for where wide I’d please forward-looking contain listeners to of company’s information. to on can are started, statements future found to that slides get are reasonable, subject estimates, we Slide company’s I’d there, date. actual refer the the accompanying remind lead and responses you but various maxar.com. the believes differ part today’s plans, be questions, X, risks based Before today’s to turn to at Once results materially expected forward-looking which company range of which may from are presentation, like statements, uncertainties a including represent website and today’s on performance that These could the current that at assumptions objectives to discussion,

Form ahead. I You with Dan. to on our and And earnings our the statements call section the go to the MD&A maxar.com. advisory slide company’s hand at that, company’s contained can XX-Q refer quarterly discussion regarding in Dan, forward-looking found decks the website in earnings releases, will most over recent

doing. bit an program, on in I plan, priorities through information Intelligence, the In had Slide our with we highlights sequential afternoon, review the our Good and we Maxar Please financial growth review about performance and in update detailed the work provide solid refinancing have successes of on our quarter. been Today, strategic everyone. had Earth product to go recent a Legion going recent our Johnny. the provide look Thanks, to X. talk results has a We and environmental a revenues. Please at am quarter, of activities. more that some turn saw

the performance at award challenges and from little light, good in by as is to this posted quarter Total personnel was While first Xx book-to-bill which hiring and the due the Consolidated side is In Commercial reminder announced cleared solid Layer margin XX%. roughly May. Program driven performance, lower Space expected, in growth business, Infrastructure, reflected company delays revenue the on the a large was quarter. part Electro-Optical awards. margin we a services

the great decade. Maxar billion this As added $X.X visibility the billion contract first $X.X a reminder, backlog revenue of that in contract over the award for provides is for X and years a next

multiple diversified moving provides government NRO, base paths growth other for and customer also it U.S. with Importantly, our agencies the forward.

diversified contract, had the Also, EOCL, a with awarded customers. Earth enterprise Beyond government, and segment across an bookings set Maxar recently renewal Year X of the Option allies NGA the contract U.S. Intelligence which international was million. of is the a value to option contract for has value EGD $XXX The million. approximately annual the This years program. up the is total of third X $XX for global

recompeted. to until continue years of the option next this strong negotiate to program contract additional this We and we support expect see has iteration for

GEO geospatial with the more by data continued resolution We are on-demand quarter, high quarters to offline government bookings other have Maxar award, been to Space providing addition with continue Comsat which recent to related book-to-bill impacted users capability am the nearing I providers. to completion. number to now. in transition, will revenue some in have awards business momentum C-band Intelligence Earth growth U.S. a received last continues growth imagery segment of unclassified, from this infrastructure, than version the the be And we drive Maxar and pleased XXX,XXX from in In expect online industry of for ahead. provide with about XXXX this and in decade to commercial to the the access similar large

to a As reminder, to hard tend and bit variable orders precise predict it’s be a timing.

to year X greater expect to with continue end We book-to-bill segment. Space the the a in than

into great business more of We will of GEO later. perform our front have next-gen diversification. But detail XX providing LXHarris I weather GeoXO our layer are study phase program, and little been examples two and for opportunities we a their satellites. NASA program in tracking good strategy for the work go of down-select of TX it set teaming us the a our with have our legacy with to customer as SDA their in satellites continue product buses diversification we to a pursue where – as little Com subcontractor into and on on perform

in We investments PLEO are good also seeing commercial with the our traction sector.

provide On to has the flexibility maturities longer to balance term to growth initiatives. our sheet, financial key near-term manage pursue and been through priority

have that. exactly We done

As Biggs to successfully we refinanced and and transactions ample runway in free out to revolving and and transitioned leverage a more $XXX XXXX flow driven and and profitability. and provide us execute new business the maturities These on the significantly along plans way more for XXXX credit will group. cash in by our to reduce million our bank with long-term debt facility supportive growth address XXXX stronger detail, XXXX a

year essentially the to guidance, make that environmental X not to outlook are we Legion in the ready led turn flow is anomaly for That are to rate described hardware test changes on discussion Last to to the to and environment. I for X we we continue Biggs first Since will progress the take quick for configuration have a but substantive the and interest Legion on Legion provide minutes, on more making revenue launch closeouts. details we Slide satellites on modifying program. that delaying completed adjusted us to although Please a testing the our reflect first the higher first then, on cash Moving quarter, final in guidance few any are means and September. launch. EBITDA, the are full

third hardware phase and that initial few testing is performance of be of on on fourth satellites the and We prior moving to in weeks. have next final its the to environmental Legion completed test The also in spacecraft will satellite X testing environmental integration testing.

So we are as be sequence. second launch in sixth The in and will well. hardware-ready satellites for logical short the fifth order progressing

on from side, the hardware are So track. we

became validation, testing software apparent that complete. is Unfortunately, had to July overall validation impact Moving in in and software software timelines. it delays we that our code could

down been rehearsals we the quarter. of time the challenges beginning the will X of we and the fourth and are lastly a side the can significant these been made the now these believe reduce positive between first now have the quarter teams late on testing, conducting revenue estimate validation steps at We we previously Once launch the and had launch software commissioning of ledger, period working launches. the versus campaign X of course, we shipment progress of third months and and activities months launch generation. have the commissioning against have to to begin reduce complete, and Back We estimated. second the timeframe between launches to Cape, on-orbit window launch instead satellites facility including

revenue These impacts. our reducing some in-orbit to of schedule working steps pull Additionally, allow forward and estimate we of disclosed generation us from commissioning XX been should XX the time have recoup on days. previously to

additional Additionally, WorldView the a million we launches launch, insurance to policies satellite including earlier have Legion from plus $XXX third coverage launches, with our toward weighting first increased cover in-orbit. for the our our million, year the $XXX These heavier launches.

in-orbit similar existing seek the first Following to satellites. coverage on year obtain currently we in-orbit, have we what to will our

So to launch. essentially is first recap, the complete hardware for

on a in launch closer are for the with lines. our center We good second position schedule

also progressing with are commissioning. validation Legion DAF pre-sales been insurance in have success the the multiple launches way, rehearsing systems the Along confident software and bumped are we up through and making solid progress We of upgrades remain and execute long-term coverage. program. And our ground we our to and have

of turn EOCL and quick the list Slide X Legion. for top now the are a XXXX priorities. to Let’s of At review our

have discussed, progress and the just are on one I As accomplished we making other.

these see investments products, far margin on for higher growth. as strategies continue, go-to-market investments As we runway products are concerned, long particularly our in a where focused and

reminder, dive the XXXX a you focused product for to the revisit Earth slides business areas. quarter back discussion call. our more our did I third on Intelligence on associated would that encourage a with As I deep earnings on details And

infrastructure performance and As far forward. executed awards remains as this robust focus generating on the other concerned, priorities margin capturing well solid pipeline as this are quarter, we going key base segment

and security been commercially-oriented missions. we investing continue to large defense low have solutions and PLEO orbit, like satellites as earth proliferated capabilities with our efficient, develop partnerships National expand for or Defense companies differentiated We in civil

of deep ability modular with GeoXO two experience, as the expanding to including provide subcontract the For earth where companies of constellations. This will of indications, conduct big support validation down will Maxar capability Tranche satellite and A limited capabilities to tracking and more and global The orbit Tranche was prototype as Space Agency by warfighting the to is showcase advanced win to plan a warning the part selected Extended for and low and one Observations, scope, proliferated commissioned the for the Space the National Geostationary and our associated XX a spacecraft threats, particularly constellation. production X design and security and illustrate layer tracking Phase X systems. of These leverage is tracking ago, weeks a of Development we X SDA prime Maxar forward. adapt spacecraft Maxar program is company’s missile It’s conventional missile the LXHarris our Architecture. of this study. national Also, two layer, platforms The execute teams. warnings hypersonic going Defense tracking missile NASA platforms or

decades develop of concept work space monitoring generation Our of a This weather spacecraft. team this that will started continues for ago. next legacy the

XXXXs built GOES to The team XXXXs, their and second and expected the follow-on operated the the was in GOES Phase GeoXO beyond which well space first A performance the lifetimes. series. Slide Our development the helped to address. X. Couple establish performance briefly of will turn work to the potential and I’d Please GeoXO requirements like to schedule. other find and for items spacecraft’s satellites

has the understanding just geospatial of understand and past the impactful satellite We war working and to outlets in and public relation the in in and Bureau global how with in been other than program current Ukraine. disinformation community Maxar the calls does Maxar where imagery, quite more have any general satellite war with of better to spread media News earnings has imagery is more which the is the combat This help what releasing than discussed itself. happening is increase our importance helped transparency prior what when.

our and We running powerful are detection precision been particularly that have showcasing XD change algorithms. capabilities

you click X. And This that link AI-enabled if allows that agricultural can at environment amounts massive also You of the on solutions monitor to Weather see high been precision through have demo make a users of is industry. scale. Desk using the our Slide way their Ukraine’s we to information

spring the this on world The Desk team that know, conflict indicated to supplies less our is is top product will been has country grain Slide ongoing assessing as weather team Ukraine’s exporters if up are The going. you demand year Desk insecurity. crops red already XXXX Farmers also of many the heatwave. regularly on As crop. map they data on tracking extreme planted the Weather the into acreage the Europe’s XX% Weather is and of changing that food likely one insights. fewer X parts its continues harvest transforms in and world’s as facing actionable

more on both the and assessment heat Slide For review X. please details impacts,

enterprise applications assessment published Legion online. to detection, planting revenue the Maxar’s in expertise, blog about harvest multispectral we also data. our global competitive a more doing read be and which geospatial We can are X offerings environmental-related and leveragable growth and and on ISS environmental trusted we this capabilities business revenue generated by track like is provide the upcoming standard our leader methane than prediction our a public for quarter This for in us substantial capacity $XX high you scores becoming environment years. we that from first geospatial the finally, and Environmental, significantly for this the published vector industry this ESG have improved opportunities. and Governance have XX% report In resolution a XXXX, strengths are and require for to Social of pleased advantage be to last sector roughly things million that And imagery, year. future and analytics post grow

business, do is communities, our help Importantly, its in make efforts the data a and details it our good where to world. more more customers better online. workforce, also invest develop diverse available upon provides and That governance on report leverage create build partners and customers Maxar to practices, practices a sustainable

So quarter. solid to summarize, we had a

We capabilities our I Biggs? deeper effort. tracking to have we our performance. a we go work environmental We have and on am good call and got TX refinancing for on to that Legion continued with to growth, turn wins work the EGD global EOCL, Biggs going still are focused And done. renewal, the with over that, laser on discussion

Earth and year-over-year EBITDA driven turn present year-over-year backlog and future commercial Space quarter XX, Thanks, and XX down second basis a debt drive loss prior Space at comps the the in increased loss tough X% investments was strong per by of Infrastructure for the government Dan. of as for as on making performance on quarter for we intelligence from are Revenue Please year mix quarter to a level $X.XX. was to result Slide combination Revenue for loss was U.S. are Net mature. share million, revenue. the for Infrastructure the this we and QX Net extinguishment where planned margins the to $XX XX% the the quarter. segment the points $XX Adjusted flat is down of comparisons growth. million inclusive continues roughly was down year refinance.

quarter. the an year-to-date expanded increased a the margins total and basis, to ERP for our which efforts quarter over XXX expense our company’s the Intelligence government included to Earth and product revenues EBITDA points. and development company $XX in results our R&D project, in Our decreased Infrastructure, Space related marketing strategy enhancement important capability. X% aggregate million On These to of adjusted basis contracting is

Slide comparison demonstrated tough a expectations was the that year, to sequential to Intelligence revenue experienced this also aside XX. EBITDA revenues Please decreased and basis product government last turn growth. good Earth was basis, a adjusted quarter programs. year-over-year met a U.S. from XX and setting flat in increases comp tough So, strong On the year-over-year margins from we year. quarter comp points, our last in our

on mix growth However, and net services this out by the are due workforce was expenses, is push The to those including our offset effect underlying margins of challenges. cleared facing masked increased year-to-date headwinds from by federal we shift in awards business the margins efforts, in are we continue product which uptick related On development and XXX adjusted to are points product our of Earth down revenues efforts. flat a includes out basis basis, build year-to-date as expenses. in EBITDA an invest the Intelligence to labor-related

negative XX.X%. On first basis remained period basis X% EBITDA adjusted due contracted the Infrastructure as near Recall at year, XXX quarter margins included healthy revenue Importantly, XXX fourth and XX% for margins primarily Space points year, turn million charge adjusted compared sequentially $XX completion and the have a EBITDA programs points. revenues in second revenues but largely mix was year-over-year backlog in have margins increased performance adjust EBITDA impact XX% slightly the and decreased basis XXX the XX. Adjusted grew Please continue year-to-date quarter U.S. XM-X. the current quarter-over-quarter and this expanded Slide related same which may the and and to in second the quarter. and strong points, XXXX, for revenue XXXX Normalizing to to of EBITDA are down growth margins of revenue matures. Sirius expanded consistent. to and of this, basis, program on half commercial

capital are off. in and unfavorable payments. the Cash already million relate spend of invested award, in in reminder, in some the in and This our as on year. million the PLEO efforts Please million R&D year. or to to future As periodic impacted seen flow operating the TX the driven tracking working continue changes $XX in XX. spend evidenced will were Slide and segment and But by quarter these company negatively from and cash Space margins in a receipts CapEx. turn included guidance timing by paying to the The rest were generated pressure increases ERP flows create second by operations the primarily Infrastructure $XX to continuing $XX for

expect a activities reverse We the Please May. second second this quarter of award completed recap and for Slide refinancing in in XX half. the announced the XX-year the to turn in EOCL to

reminder, XXXX. we a maturing bonds had As in

a there a had pending facility holistic approach, their and revolver optimal. than obligations maturities, and a rather We of also term the XXXX credit of under that a different was interrelationships were respectively. was approaching and which in the Because XXXX loan piecemeal maturities the

facility protect credit uncertain and bank a main Our group, this interest a stronger maturity firm refinancing is a risk remove X remove foundation more a the now in The in priority effort. EOCL credit rates, capital continuing the versus significant newest XXXX refinance for prior increases all increasingly contract with and years. XXXX in new and environment. with maturities, an new to near-term is secure our structure, the of supportive ourselves this award Under provides structure extension

and savings bottom base on yields happened of of of with cost in cash term interest costs from $XX the increasing our to on course down became million. year, $XX with our rising Slide X.XX% have $XX to bond interest our XXXX. of note saved XXXX opted reduction, instead launches in term Legion future final rate, WorldView with underway refinancing on X-year to upgrade us drive In will and million million in the $X XX million addition, the in we and in increased a bonds, retired more flow million without for of by reprise upwards spreads. B we interest the coupon Please during we help year. starting timing decrease a interest we what refinance. us clearly loan notes. offset from $XX the increased million to million debt an cash included $XX transactions. $XX the of bonds flexibility period we the of allow moved paying the cash environment of of The X.X%, refi, to environment from base combined interest absent interest the refinancing. the market $XXX from loans effective million and generation in of from a or loan resulting is projected Increases of all rate an rates better excludes refinancing. partially a Once ability versus combination detailed spreads increase projected existing the a of no pricing with a $XXX We floating to rate we premium X-year June costs our new our our rate had by refinance in rates $X for debt rating savings guided credit from expect expensive the free Implicitly, is that base X.XX% have spreads When comes million December for turn are and is steady more changes increases but to This term rates refinancing. in from in This of cash million, interest of away a refinancing and on the a only old for interest This payments expected on line impact breakdown attrition debt, is Break rising Markets cost was retire XXXX interest bonds. steady any B. was any increased in from about million. $XXX payments would

end $XX approximately rating, negative mitigation. savings, with Following our impact loan mitigate XXXX recovered expectation. approximately in term better an guidance before I comparable credit variance cash our and million of no of million, a year. up is call this $X.X for the with market B potential with million a $XX down The expectations in variance approximately relative to effect the our any anticipated of improved way, this In spread significant it expires ended because on million rates. interest period at SOFR the $XX million there cost to is the increase for to $XX say we

improved bring – improved to So down down an there with credit. this conditions and opportunity maybe market

depending Our originally in cash more million been At base expectations XXXX by would about by savings. I comment XXXX reduce to in interest $XX a million your of will a have contemplated for targets $XX spreads. those on $XX believe savings free on what market the increase million this absorbed rates moment. minimum, you conditions. and flow I

pricing the As industry side did went note, financing just a just our better calculations on facility. It achieve revolving I have through. doesn’t on a credit impact significant

a B $XXX increased to in – point liquidity this our through going June structure December as preferred, to Although is would quarter than execute refinancing. now loan leverage sound term million opportunity a tougher million as and repricing early of are at this of further Slide calculation end for position improvement call $XXX XXXX. have roughly the million different. We as and associated with as environment $XXX in increase the million and it’s year we fund of the been our $XX B bank debt interest forward, quarter. capital look this Please as we the of the borrowings refinancing had of term early to million From Net loan to bonds XX. turn with $XX by as revolver did driven the well

adjustments removed well. a EBITDA move denominator IFRS the for and adjusted a leverage from to used IFRS to is the as to Our we as covenants GAAP bank reset has GAAP being this adjustments changed calculation as and match

to Going still additional from benefit stock-based as expected anticipate we calculation covenant I compensation. the forward,

compared to internally statements. of calculation be leverage to derived we what new our X.Xx. from will how is as Under well. the a levered calculation, leverage financial This However, is aligned calculation this covenant viewed be new closer X.Xx our can more with our

ratio our questions take came of a of activities. I minutes that a carry-forwards to covenant related turn XX. versus Slide coverage X.Xx. asset to X.Xx to address during refinancing to Please couple interest up is tax Our our want

more is going income, of to tax forward move be assets these apparent. taxable As to generation value we the

million, had million, R&D we $XXX effective of tax thorough federal NOL the addition in NOLs, $XXX year, federal tax tax and carry-forwards interest of aggregate last a are which $XXX tax deduction carry-forwards assets to XX million. approximately of to these at $XX million today’s credit carry-forwards December rate. On of As basis,

that expect from taxes will assets strategies at sometime these until significant shield our tax We cash XXXX. tax us least and in

to credits R&D to million related tax flow. by around This benefits help $XX and future generating increasing continue expect annually XXXX. everyone should cash model also We tax

please remain Now, XXXX to with and on conjunction some Total an unchanged. company with guidance the Slide lower adjusted the ranges turn for XX headwind. announcement. EBITDA Earth pressure our Intelligence, revenue business in At update the presented consistent guidance. on EOCL tightened total Top award we margin revenue creates line range services our

that active higher prospects business depends as the of been we have have still fully reach range also in partially We offset this. book-to-ship much margin high-end of imagery saying within on our The the should timing is or business.

trend government We businesses. the and byproduct see be continue will primarily across fourth This our in to Intelligence, expect growth prior fourth consistent year. quarter enterprise growth with driven quarter to the Earth in the

We would have upgrades. Ukraine a a Intelligence. DAF precision increased of government and strong we last this growth what to Similar pipeline variety revenues, of in XD, come Earth off including sources, from quarter, customer including said opportunities

as less Legion we work year. taken is for for the continue And to see the we in have execute guidance on backlog. have we Guidance revenues We Space of there risk out Infrastructure this unchanged.

this segment. in We of see opportunities also robust set a

range, will work growth driven drive expenditures expectations not flow are business EBITDA cash current lower margin Space this at year, the to Infrastructure, consolidated top-end towards are in of was are $XX adjusted the QX. our of our year have forecasting risk we tracking particularly the less EBITDA, adjusted change by the million will Intelligence, the primarily this as presents results seeing impact in are Earth EBITDA the softness margin is towards operating intercompany range we work. help for and Legion. in tracking as Legion by already higher materially, end is we growth remainder our adjusted covered the Capital I At to eliminated. The Turning higher services to driven And guidance but don’t of fairly related quarterly line from savings of forecast assumed long constant have and plans by reconfirm interest sure a don’t the $XX factors unchanged everyone assumes in ask hopefully September Legion consider therefore every on offsets am that about delay Generally, which our fourth is The interest item of credit it of implicitly changed we range the other recent the element quarter, of XXXX Having to whether I we said launches guidance and in market, all refinance. costs the This to million. quarter. elements longer for guidance. or from our conservative. are there will effect on call. so delay rates XXXX effect term update early is existing that, to cash to debt too every product

the $XX for we of full adjusted run-rate was million. first year year the have Legion EBITDA point, historically a reference said As

are launches We commissioning are between focused cycle tightening our timeline time. and on

guidance for in there our costs future, we a us good may satellites. sets growth still be the As in de-risks otherwise, refinancing To executed full the quarter and summarize operating result, delay X that increased the results. in well up cash which and near-term achieving a no market deployment carries of affecting sequential tough all meaningful with our

We have the revenue that, and With outlook strong Q&A. over both I’d opportunity of and businesses begin to the maintaining year. our across the sets are the to like EBITDA back for call we to adjusted operator our for hand

ahead. Please from will Peter Thank with question come Instructions] [Operator go Baird. Our Arment you. first

to of just maybe satellites? level Thanks. Legion, kind on you the normal just should could Dan, Dan, Yes, sure help just set. transportation thanks. the you of focus validation we period? maybe Hey, if on I How Biggs. Legion, on Good long how am also, then afternoon, but to And of get long describe is expect questions a the lot software

with Well, would Peter. validation we thanks, that software be Yes, thought had some by done delays and unexpected. now we were

bought that’s we fact all so hardware-ready the But QX. And down software a in way got QX causing the has validation program. from that to of into the late are that testing. through the risk lot We shift get essentially

program, And range. so, we to down new continue on to development this of are our the the in satellites with off take the like knock we program deliverables before items a we list

are still the and ground do of planning We particular all send that, current Legion’s Once the than this opportunities cycle. wanted to to track we downrange, send on on satellites air. potentially to in shipment. do but We schedule, downrange we we more are by that finish the have see

service by which so if mentioned we and So, a by days then, depending we wisely, go do of believe schedule day be rehearsal little take. with while commission had in of also XX reduce we and time we route it able air we focus the have to it’s day loading from commissioning cycle we as call, on think satellites. we on ground on the this got also be unloading focusing able to And that to unfortunate using times, same shrink anywhere to have there the delay bit the time the XX a towards to on slack activities turnaround, I been and otherwise,

needs. the their satellites for – for of limiting having our investors impact customers, impact for yet revenue the important So, mission on-orbit the of the impact of any not generation and

Appreciate Thanks. that. there. I it will leave

Peter. Thanks

will come question next Please with Colin our go Barclays. ahead. Canfield from And

demand? bit maybe market, market? Satcom do kind little or and how Talking how within about give kind good context, view you moving can you of us discuss or think tech modestly that pieces you evening. new a a of incremental And Hi, of the Infrastructure, geostationary Space if about kind flat big tech demand legacy on the just between you of can update

Yes, thanks, Colin.

award to important been off that are continue there those continue is in, we been able one time solid expect share. maintain and market service of of So we we numbers longstanding be, some the for a our continue the here. base have for we market. And what market I really used that than It’s were announced TXTL quite lower pleased also GEO-KOMPSAT really our to but to to customers the expected awards to strategy will down-select And announce the pretty us. am that which to and

as And growth on resiliency a realize for them. in our that’s excited product in work the good both that well are set more customer our that to have base as and but sets. would business our we serving So business, continue we diversifying vectors we see additional to did

good really – spending, mentioned, programs well money PLEO. efforts capabilities in And as we And security NASA and new as capabilities have like huge have also been market capability been Biggs opportunities. which are defense national and so programs, we technologies for as our R&D working

eventual like NASA, is National perfect there being the look Defense satellites you of and just as GeoXO well. that. to as with weather strategic of dollars importance for If Infrastructure Intelligence of spent as a for well and down-selected is science but program, GEO-KOMPSAT space TXTL NASA the example the at being not exploration another on that element

forward. those we We flow cash forward are that more building and be fronts. so are that and on margins able one increasing pushing think one growth to And protect going will potential we its resilient business, has a much better better

that little within bit for LHX what just a And implies of business. about it. construct, trajectory deal and the could cash talk the margin you the Got just

has But frame that are don’t there disclose it? that way going we think that as kind transform of about flows how and because is bid competitive to the business, understanding obviously, into pretty the terms, a through been you they competitive. environment think good I want to

this are program different every missions, commercial across not intel but to What picking missions. an really XXX% to. have that for didn’t glad that, national you a say missions I’d Colin. are am not so I design And or is I at, Thanks, said defense program also one it’s for usable, good thing is architecture the but is, we is looking architectural PLEO Yes. just that about we

buying work this are design award, of we lot down a technology and and engineering upfront. So with

even lower becomes is So, ramps constellation, this is much this a and again, larger start margin it prototype it of is as a little with a and grows XX-satellite business to a sort constellation. infrastructure this as if

the margin other on here missions as as as we and on front are we grows, depending to said, XX%, capabilities. those capability see So to there defense build well always of and if we make, investments of end already business we here rates And will the spent think have than we as do security we expect this to higher money lot should type and of bring then lumpy for a And commercial better that on well run missions, have we the on little but way be that. wanted this side will awards that. to other a we

it. Thanks Got for the color.

You bet.

Our ahead. next Capital Moschopoulos Please BMO go Thanos question with will come from Markets.

afternoon. good Hi,

Thanos. Hi,

Just – guys. hey, expanding

part MBI part guess those programs I this in and when Just point, two program of weakness of delays of expanding any the on some results? issues the at visibility delays, so the services staffing the there, the of terms with business

of as revenue throughout – go as seem it’s – guidance little we originally weakness product we that we to they we year. with this be more and taking that’s are than hold in get resolving, Yes, at it visibility into a longer but our even backfill some the of And there. why we just business, higher we beginning margin of are EBITDA some And would course though it’s addressed, bit to Biggs the the year. been able also the thought

continue We learning, product related our lot other rest robust. is Intelligence work well together have kind into a there the there, situational very cutting-edge a artificial lot work lump are really Earth it and matches of in business. We the classified that But machine things of intelligence, technologies a space of that awareness business. as doing we like to services of to

it’s valuable for so us. And business very

would right a moving Some now. just of than like it little slower bit is we

across other companies the industry, lots explained think by hiring well. I challenges as of the pretty been have well

think always – are effort security that it, clearances. corner got to with as we that the pour a to are people well the and as expertise, just side particularly of but business, we turning for lot on continue on right the hiring of we into we We tech the right

again, program DAF jump international and look upgrades seeing [indiscernible] more was And alluded really to year-over-year, just I down [indiscernible]? a that and to Okay. to since forward just the tough comp so then in ongoing growth

probably mentioned to think One, DAF I Yes, the call two you things the upgrades. out.

done, several We have upgrades have the do done those throughout year. got but of we to the get course continued of

several demand but now, for seeing strong are continued under We contract Legion.

do with of regions we online. especially And customers got have going customer demand have base. capabilities, to the built-in help Legion that’s the DAF the world. DAF constellation, location but with of the comes to number throughout existing world in as we Legion our as to us more monetize well overall efficiently and the So just growth the upgrades And opportunities with add and the then high

we The year very well. are with international as our large other is adoption say with better thing we customer. comp book seeing product I’d international defense The with last some tough customers mentioned shift a business

So technology we adoption going well. could strong some of forward. that are of XD seeing And as we the see

because of us, international really that base, that’s for exciting and some making the business that’s diversified the a with seem been we So in margin have investments customers. intelligence the defense fruits to be the particularly high customer piece bearing

Thank Excellent. Great. you.

Thanks, Thanos.

from Herbert Capital Our next ahead. go Markets. question will come Ken RBC Please with

afternoon, good Biggs. and Hey, Dan

Ken. Hey,

maybe quarter the the fourth also year on have cadence weighted. fourth quarter, fourth sounds will into items or half the third on range on – more then that comment significant key ramp the confidence little – ‘XX but bit Can as go really like in am the fiscal pretty that a of get guide for implies through a just other guidance the in I second programs is you the business to line. in expect the of specifics you more quarter we segment? The to some for sorry, the up Earth It you top get the that this Intelligence

would recall, year. year positions it last revenues of spoke that domestically, that we had maybe to upgrades do see the of driven good adoption is us third before increase quarter to there then out that Earth of million, year a $XXX have and front by by good and Intelligence The up So, product some pace there Dan internationally a well I if up DAF to some we to would that’s sharper recall year, and step and last increased really of in fourth kind and is, have that to, expect the expect. chance in flattish good this might and our the of all world growth much is XD this that you The and us. a quarter. the say of fourth fourth quarter we third again events, interest that step general up you through the we

we done forward. base on It’s bit do capability. had are It’s that the product are is unique add we line deals Ken have and build few I little to, accretion to really pricing while Probably and on have more a bottom believe just a taking that we wanted a quicker line. these and the will to they would to going pricing on a little bit accretion And of business longer, too, but that, solid move XD are opportunity we think if holding a of for valuable. the have deals going get an really overlay the revenue

pivot on you just over relative schedule satellites for some those could to I I remind the can starting and if work maybe out And first X, work, X do the some to helpful. us very just six? the Okay, development to think have Legions, you initial called satellites on

Yes.

out the we launch fourth believe working level launches finished bought will on third are any with on partially current X, case of see so lines we for program, we we of keep build time parts there do long constellation. because we at set, Legion between for on but launches there, have issues XX-day second better the center and we X lead current we So was on commissioning launch. just constellation, more are had software process little continued kind a center the that hand getting bit And and demand and in so just started to we second the did as the over to hardware of the the even and launch as plans well. assume the and procurement line particularly the first resiliency then the quarter in what

getting also effort And – from we enhance provide So some for the effort in constellation. those about our it’s call, the XX back see were but of on We launch those put more to to to today would months minimum mentioned did to of that on-orbit. into up well. built ramping demand we to resiliency in on Q a want buy an the at kind we insurance profile into on least the as customer are strong start if XX thinking the out

just just a forward, of move So of in that. was are but just of better kind And business we where set we much we today. position that – building we are the barrier a refinancing as are around solid part more

Yes, spending they of need to back first to ‘XX. our Legions those until latter would wouldn’t the earnest is and answer assumptions list, baseline the year. assumption on part I just there revenue gave And to of and assumptions X go start and on the prospect really revamp I remainder long to X your is an in up EBITDA supports say which question for ramp Intelligence, the Earth the I our

us to largely really again timing about comes opportunity and the by exact down book-ship much good once of business. we So driven in as the feel type set as front just particularly

the Great. you. Appreciate Thank details. all

Melius Please with ahead. comes from of go next [Operator Robert the Research. question line Instructions] Our Spingarn

afternoon. good Hi,

Hey, there.

Hey, Rob.

where for on you – for the you WVL X you hardware X receive and should and for are review you X? could Do beyond instrument the the get electro-optical number did X? X Dan, when hardware and you

Rob. thanks, Yes,

four So have the satellites. all instruments do for first the of we

reference hardware environmental X I then final the going other into doing instruments. of and shortly One need, complete Satellites in into X the testing and they are that. have satellite couple X said, closeouts. the As test essentially go environmental a X will weeks hardware and after particularly is

to hardware launch-ready we closeouts this well X, within for a But expect not fall the our and checklist here. schedule got in of X. items for on instruments down now. launch have We schedule, order launch have yet we up essentially short – those and X the pretty right the with planned final Raytheon support satellites on order four and and do X have them be from we or will been with So do doing X perspective

X then we the you about X-month more how the And Is talked QX, a a could months on to give think delay And to you about? is software delay that? detail little on Okay. to December, should that issue October? September it from

Yes, are down. not we it pinning

just are saying QX. We

verification in So QX, the the conduct validation think just thought. before of and we of we to the satellites full happened We are the all life on-orbit. able the longer run satellites tied in that what the of software got to challenges put now anomaly through better from than final validation And But testing. we were more up a we on that just it was, were went And expect had software lots complete and validation to during have in we a kind the QX. phase past to events And might that and delays we things getting and late of took we mission really be able of satellites software the are we operations lots different a be lot hand. and feel the we that roadblock much hit out. and tests will ensure fully ticked lot

days to last and X? the XX we XX just and And should X but X on expect X launch after to Okay. still question Legion

Yes, yes.

Okay, Thank excellent. you.

You bet.

Moeller will Genuity. Austin from Please with question next Our come Canaccord go ahead.

Dan good Biggs. Hi, and afternoon,

Hey, Austin.

Good afternoon.

compete Should lumpy we manufacturers? here, this win and times generation we sat relative more you significantly just these small with So to with layer? GEO-KOMPSATs more XXX to to Infrastructure revenue Space did first using modulated work or my spacecraft and faster kilogram of try you question assembly as should less the continue expect NASA bus, program in like tracking LEO expect

will them can would then order he Yes, on in and commentary, – Biggs like. add think if I reverse I the take color

definitely will go lot per have faster a We satellite. unit to

call a out might on else these projects So X what we quite well. take, applications look sometimes And to but don’t assembly pump particularly might or like the as similar are programs are infrastructure program, be like buses lot these and satellites. it to want maybe how defense course I as a more are at the satellite we are do to larger doing a getting we going yet, able more, take in wrote overall bus line how of XX building scope we Geo but commercial expanded this we to cadence, very high to

make see So a Biggs quickly. upfront usually up a have good in don’t you this you been business investments off the investments pay and brought them we point, making

wins. We really excited to are this see translating quickly those investments into

So, that’s for business. good the

and certainty feather coming don’t might is your in at can that of but On the we business. diversified the early but a on one that predict it’s a see, to big more tell and awards, them probably it it’s you as with base these us still call side build quite size if I in, thoughts? much on for endeavor, quarter want first hopefully, should this to to something point, a layer of like too see of we don’t with a second little in, the out I half predictable slug year-to-year full business, the to robust smoothness, program large spacecraft we quite we the half Biggs, but lumpiness of side think business because more Geosat see manufacturing and sort depending them quarter

business to I the very predictable. I add, hard would more the has make just team mean worked

accounting. As Dan percent still a base says, I All expanding caution business the complete is positive. it is

the presumably that, degree base going as quarter the from some basis are variability grows, business you so diversifies. but quarter And always of result have as to of a backlog to

any significant You line a EAC variations should from to see top more basis steadiness quarter on accounting. quarter absent

helpful. the on the That’s once margin the it delays schedule validation follow-up. software the orbit, and XX-day or the Do in that then in needed gets increase on ground for midpoint? validation Okay. spacecraft anticipate XX-day testing could just for you testing the to and And a that potentially software

not are that. we expecting No,

to work towards I of is able think commissioning lot a fact, we the that operations. do have number driving the for In been left

that teams the the and the process. more we And there. been the the have results are to seeing of we time part So, the rehearsals good taking ground that been – doing have fluid commissioning additional on additional – efficient on get teams

in the of commissioning. end launch validation this software delays not we the So, to expecting on impact are

it In way. to fact, we the trying other drive are

for Great. the all details. Thank you Okay,

Austin. Thanks bet. You

next Quilty Our ahead. will question Analytics. come with Please Quilty Chris from go

Thank you.

follow-ups. things So, congrats PLEO three list tranche that and contract. on two got But guess your off of the contract X I defense I a knocks award,

price should two this awards, when the First SDA this third given busses all contract? doing [indiscernible] And next we a quarters? is and the part, one north. is, in spirals, X,XXX quarter fixed then X-year on presumably for the expect to that kilograms the question, the layer hit revenues Second tracking or or is were

something So, new? can scale bus you up bus, down X,XXX the scale or to Legion

– just to I me got Let Chris. those sure all make

first price And are model kind fixed that. we we a off, excited So, about are under here. of yes,

used living that of have model. We to been sort in

endeavor. on contracts but So, partner long commercial with getting, our about them, heritage, has a definitzing Harris just phase, with just being also this great we to work been us with and and very them for capture excited not and on working the are able LX

the hit, on off. revenues gone starting – when has gun the On

And cycle are showing you fourth so hard, we the should start it start we already build and quarter ramp, got really start third very we in but working will have see up design and here. revenue to quick as quarter

have capabilities buses, the that where space sizes bit seen of lot of those been margin sizes. of transition terms investments investments pressure on little have and business of to technology a in related different and the us In buses, of those allow a bus side of between just we

XXXX lot the traditional We got money X,XXX. have development we a the spend So, capability. of Allegiant on of

developing We have also. capability going of we I capabilities been modular sort here to the way, a have developing PLEO other am workhorse been as along well. And call what

a as commercial or other programs making adeptly. pretty we to it the NRO, what model there. what teams seamlessly, the I the the SDA, classified think Force, but have look And pretty, pretty will like you with Not in prototype think be down through and out, well, adeptly and engineering the we like, been focus how unclassified happens I so, on, programs with investments depending up go capabilities able stack go on orbit, phase this, or Space

that So, back you referring Lightspeed the work capability to PLEO Telesat did? is

We past in Yes. there. great long brought talent. We have lot But gone some we of that. a a way did

Our Web. Chief side programs out Not came the Chief business guy set the Engineer of Web. of down One out for Chief One came on the that Technology Engineer, small of

really strong we really hiring capabilities. folks defense industrial base, And had existing as including have We and some across good here have been the talent engineering well.

on had as but bit And not well So, gone back also, our way have guess to we us customers to we tied little I that, we as other have – for think. work I technology. studies, paying continue Telesat, past

hasn’t been XXX% funded. it So, Maxar

had develop customers us have there. paying forward-looking to We technology

past. Fortunately, and I products, products earth the hardware down gone way development follow-up don’t or actual that up. A and issue. Telesat like that’s SecureWatch referring has just DAP, because of on to the But different EarthWatch you intelligence, of and you whatnot? like, a saying products you margins When were were you RGT, were mentioned

great, say, maps is going XD our that strong the into products – global are customers next there, base EGD, well. development our we talking let’s SecureWatch, as And that we and about level. And like capabilities, more now Yes. into let’s products take work vivid coming refer to we have When really this like been adoption. seeing the things to

just data So, them more the those services we we there. to also easily we customers that products, have consume, and working on the the host not to for our make in got it but have been environment

one of up it Got flattish. it. sound those came Vricon, quarter, of you in QX was there And like QX, movement doesn’t much think short products and speaking of I this sort

previously XX So, be still of a a with to goal think Is range hit, of QX it’s you sort I achievable an talked big a had big to real to XXX. QX? getting that got real about

yes, Oh, absolutely.

are We there. good adoption seeing

QX I close rates now, slower But from adoption think strong performance, picking was what little in have maybe a QX. in the up. some over into maybe so then saw obviously very or been rate, ramp bleed the QX back you QX

with program purchases, sector earth we a the the public business, how for programs the like army source that’s that. close intelligence World One side fast of big the On and on is program, out dependent Terrain

business, there On the adoption a out our enterprise well. into growth rates future And for we seeing as do. as with commercial runway good or customers of enterprise the are we long side

companies, more as as than enterprise with business traditional our lot diversified services business more a there. well energy companies, much geolocation insurance I think companies, metaverse like gaming companies, just

Got it. for And speaking recently? has of hardening a because launches, insurance, market have secured been the quite bit you insurance the the

it and insurance the existing secured a our actually was have cost at. than did we we at Now, insurance, program lower

So, with we are very pleased that outcome.

Dan it, towards weighted and I otherwise, we that cover insurance sense distributed. the mentioned only launch, we standpoint from be increase launch insurance the think risk of, that should the where is increase but which not third first costs, and makes

that, Good. for am sure I not is though. good a GEICO if option

see. on have question am will can both segments? you to Biggs, Final book-to-bill we lazy, because I us So, give the

in XX-Q, you It’s the get data. the can certainly underlying

Just a here and second I will…

lazy. I have been

case, basis, so a like We that, SI because look which $X.X for That’s to at X.X quarter. billion the of in XX-month fine. It’s X.X. AI would on is in trailing very the high this of the the and portion flows EOCL award, X.X, overall firm is

quarter If you intelligence, at earth exaggerated on it’s infrastructure, X.X only for space EOCL. overall. It’s by for and it look X.X for a X.X basis, very

you. Thank Great.

Chris. Thanks

will Our Poponak with from next go come Goldman question Noah Please Sachs. ahead.

everyone. Hey Hello everyone.

Hey Noah.

pretty, something do to on are? you have been It’s how far Dan, us specific that roadblocks can what finish validation is you vague can surprised to you roadblocks, can software have line, has Legion tell the said on process, in to important. are, just you I the process more have get you but get you there so what been where what pretty relative the you? pretty this close know to

call earnings like on clarity immense Yes. an to Hard bring to this.

the our I we ways, both simulators, validation complete there are satellite, have, environment, of we points. the other the certain to software all when with think the the software to integrated the in I tests is, a integrating And hardware us stop range environment like what on would run hard that that hard software want we various from not well the of as to you into as environments more say we then hit that as doing those do. expect of or precluded it lot trigger validation propagate hit and just system the your that

thought to through encompassing quite thought as had we upfront of we ones that believe that up all validation So, out there held they did. basic some And not We is turned wired we we are rest phase. and we wired the that have we as the testing program. substantially

rate you going you seen sure and And burn before and get am got expect so of are a to per you nowhere, it and good a down I and going handle what’s a on you number now, at look you have it. certain certain curve defect up day starts at your And hit as a resolutions this rate, down.

working the seeing even on hard, weren’t sort just burn-down and of flat are hit Ours we it the rate we line very there, though a expected. teams

through. as those fault that, are the much system We to a validation, we that telemetry we like this. and validation see through we of at chart rates triggers, of path will burn-down things not on on at things, more a we now without continue be are look as look expecting predictability. higher much as go seeing that risk It’s and full detection, But kinds level going of to then – like high-level

about delayed us, So, yes. – it are we

delayed are we at what a and just it it, lot, way learned kind program through wasn’t better But the us of we we programmatics. weeks this so we And understanding it worked expected. point, several our and and

percentage That’s now Legion? it that. helpful. are appreciate validation for complete Okay. out of you I the Is an make what possible software total on of to estimate XXX%,

on check, heat then numbers. are that systems It’s And are, particular just all as a a little we or not large, hard to kind these light, percentage come exact of some very because to like, it, total some ones. ascribe kind of did of

a really of ones are more but hard, percentages now So, now, the validation the program. past discrete lot in we integration the are of and big aspects

what then validation? remains software Okay. And after

launch based outs and After close moving final downrange software and the it’s satellites then doing validation, preparations.

Okay.

So, we are…

Yes. that was progress. It’s testing what were the unfortunate I close-outs. And got first it are of to anomaly had. lot say ground. we their hardware satellites did final of quarter, as would most focused environmentals we and last ran the has we In that make we on in through a is, all issue what We been,

risk a kind lot This made the overall we down as off of progress. and here. not we just we continued so And go burn-down have But program. the one, the to of aspects along our checklist of knock great slowed

you. Okay. Thank

Thanks Noah.

will go Please of come with from ahead. Grunfeld Our next Elizabeth America. question Bank [ph]

couple Hi, good had a questions. I evening.

first The operational? Legion being one dependent on your is EOCL contract

It now into capacity. assets Under Legion as first ramp If then the orbit years, for and anything up of backup award, for contract, happen, on tenure to picking is Legion is our potential were full capacity additional does several the not. out right start any the awards we EOCL step and monetize that year. will capacity, reserved But this is which is million million from what we online, EOCL sit comes a able $XXX ups right above as yes, from the Legion to are. because moving $XXX beyond also to be we now, as great current those Legion

they mean extend how can the life I you know end I And mean orbit. them, much more the approaching you satellites, are life how existing in I is But well, the in Is have of launch? many Okay. that can say then compensate think fourth fourth much when life, contingency of then you we How be the their those should no longer much that? new of that early December your that timeline, And is within assuming how Is for to a delays? quarter? within in extended quarter? as about

say way there, much we how contingency I exact through this. is because the Well, don’t I well, am until hesitant know just all are to

checklist smaller. getting and Our is smaller

on buttoned and this. the had up. until say on them getting these satellites predictive final ship can’t, fully I We several won’t the I are for we And delays. environment But downrange, and have we are more more the

On year a of process. we health, question constellation through the go every

that do useful pushed XX-K. extended an times based have engineering our run WorldView accounting times. in X simulations of used So, out how just and Several simulations and that those But life things last. long sometimes we multiple we we those X, Worldview And GeoX, publication engineering, we are for put also we now, on the purposes. then make different two things internal we about have predictions life

capable. whether to We mission constellation satellites. monitor we are satellites. analysis useful again in that of October, doing work determine the tend forward past, they the to be said to October adding all we looking lives the space. the in will that space, have will will We continually be the longer health in we on again is to in fully The last the our current of in starting And satellites longer here. to tend last as And

the through Okay. additional now, of this with delay, cost? looking for And Legion then what questions six cost one you what one just are get, total total the more is at I

Yes.

reported So, $XXX million we still was think last is quarter, I that in territory. over it

fourth spent draw, But but if this time so Additional delay year, the for this the year. quarter not to we year deem for make significant. the our additional would next all our guidance not doesn’t in in cost. next factory and that necessary certainly, I guidance additional And it’s be changing update plans for will

Okay. Great. very Thank much. you

Thanks Elizabeth

final And come ahead. go Securities. will question Please Ciarmoli our Truist from Michael with

just questions. on about this mean a for year, have specifically, cash flow. got how should next those said And ramp and mean mean Good Hi. big I later. I ‘XX? second will for guidance, just then the this cash year. make evening both Thanks I just I guess you you year pretty half decisions taking think guys. you we

You sliding $XX to cash should be there any million to you by how target I Is have about cash, $XX I we going just next flow change? got that are like things sounds out? But as mentioned the handicap out we that million. think guess? It know potential is free there. change cost CapEx of year, there the satellites. should any maybe, Just to

believe to to Yes. I wasn’t coming. change a trying is there that you lead

plan will item we that when do line right interests say look and the to other than Just this guidance be more line that every with and at item up-to-date then now. will and change we not we each anything our later obviously year, know

would direction of So, you that the million market million or would back that that bring that the we year, Interest, to million. on upon taking would I do improved. But based term basis, the hopefully another. that leads things and and out $XX guided some to the $XX standpoint some one would of of constant be we you analysis yes, you take $XXX your a in it plan the $XX no-call for From million. kind go expiring up can have next to, lead loan if of Markets and on we – impact down. say mitigation

year, this to was our associated interest. with the change guidance million For $XX

cash is In from obviously $XX will half $XX terms half, have working any capital $XXX the EBITDA change our would cash we of half, that gave. that cash be capital, burn-off a the customers improvement forward, quickly quarter a second then payments that know upon it is in in bring we we we capital, you to And to think in trend There which front generation back and guidance interest the year for flow expect case, would international in second negative data, the working million of here, exacerbated based walk we full in had cash are of interest for which the million. that some to the The is by and second the this roughly that had from it end up the way then how working cash the half. before I improvement in which is this converted to normal fact here us. the that and second receivables, billings and a reversal built first is in But down. the big that negative domestic million

it. Appreciate guys. Thanks Great. Alright. Perfect.

to CapEx the a that do And down numbers. debt as to comment, just our committed targets. our to XXXX see general cash very I the you think flow to in achieving ratings paths credit too. paid we enhancing are We and getting many still holiday have those

very, So, are company committed for business interest have it think and performance that’s to very That’s levers We performance it. to lots against Thanks. driving joining really call. of appreciate everybody doing operator, moved us, against keep Thanks, healthy rates And in us. us. we got other that. moved the I the But spreads now. for

for today’s conclude you Thank and now conference. will disconnect. participation we may your now And you