WASHINGTON — Terran Orbital reported increased earnings but a significant financial loss in 2023 as it continues to consider options after a bid from Lockheed Martin.
The manufacturer of small satellites released its 2023 financial results on April 1, revealing a revenue for the year of $135.9 million, an increase of 44% from the $94.2 million in revenue reported in 2022.
Despite the rise in revenue, Terran Orbital still reported a net loss of $151.8 million for the year, slightly down from the $164 million net loss in 2022. It has an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $77.4 million in 2023, slightly worse than the $69.5 million adjusted EBITDA loss in 2022. The company ended 2023 with $71.7 million of cash and equivalents on hand, compared to $93.6 million at the end of 2022.
The company attributed the increase in revenue to “continued and increased level of progress made in satisfying our customer contracts and reflects the ongoing favorable impact from significant contract wins and modifications in recent periods.” However, it said “growth initiatives” linked to those efforts factored into its bigger adjusted EBITDA loss.
“Our revenue growth and gross margin improvement confirm the strength of our strategy and execution. The future of space is responsive, and Terran Orbital is well-positioned to capitalize on this growing market segment,” stated Marc Bell, chief executive of the company.
Terran Orbital was supposed to release its financial results and have an earnings call on March 26. However, a day before that scheduled release, the company announced it would unveil its results on April 1 and have an earnings call the following day. In the April 1 release, the company stated it was cancelling its earnings call “in light of the company’s ongoing strategic review.”
That review has taken on added urgency after Lockheed Martin announced on March 1 that it was offering to acquire Terran Orbital by buying the two-thirds of the company’s shares it does not already own for $1 each as well as purchasing $70 million in outstanding stock warrants and assuming or repaying $313 million in debt. Lockheed Martin is a major customer of Terran Orbital’s smallsat buses and provided 81% of its 2023 revenues, according to Terran Orbital’s 10-K filing with the Securities and Exchange Commission.
Terran Orbital responded to the proposal on March 4 by adopting a stockholder rights plan, or “poison pill,” to block a hostile takeover. It also stated an independent committee of its board of directors would evaluate the Lockheed proposal as part of its broader strategic review. The company has not commented publicly further about those efforts.
The financial results provide little new insight into Terran Orbital’s largest single contract, a $2.4 billion deal with Rivada Space Networks to produce 300 satellites that accounts for nearly 90% of its backlog. Terran Orbital said in January that Rivada had paid all its outstanding invoices, and Bell stated at the Satellite 2024 conference on March 20 that Rivada is still up to date on its payments., but has not revealed when or how much those payments were.
Terran Orbital's 2023 earnings matched its prediction given in its third quarter financial results in November, when it anticipated over $130 million in revenues for 2023. This was lower than earlier forecasts of at least $250 million for 2023 as the company removed projected revenue from the Rivada contract due to uncertainties about when it would be completed.
The company's SEC filing also includes a warning from its auditor about its ongoing losses and provisions in debt agreements requiring the company to have adjusted EBITDA of minimum zero by the end of 2024. Terran Orbital mentioned that it can prolong this deadline by one quarter for every $25 million in net cash raised from equity sales, and it is actively discussing with funding sources to do so.
