Earnings Transcript for LLAP - Q1 Fiscal Year 2022

Operator: Hello everyone, and welcome to the Terran Orbital First Quarter 2022 Earnings Call. My name is Victoria and I will be coordinating your call today. [Operator Instructions] I'll now pass it over to your host, Marc Bell, to begin. Please go ahead.

Unidentified Analyst: Thank you, Victoria. Good morning, everyone. And thank you for joining Terran Orbital 's First-Quarter 2022 earnings call. With me this morning are Marc Bell, Founder, Chairman, and Chief Executive Officer of Terran Orbital Corporation, and Gary Hobart, Chief Financial Officer, Terran Orbital Corporation. Marc, will provide a business update and highlights for the quarter. And then Gary will give an overview of our results. Our executive team will be available to answer your questions. During today's call, we may make certain forward-looking statements. These statements are based on current expectations and assumptions and as a result, are subject to risks and uncertainties. Many factors could cause actual results to differ materially from the forward-looking statements made on this call. For more information about these risks and uncertainties, please refer to the risk factors in the company's filings with the Securities and Exchange Commission, each of which can be found on our website, www.terranorbital.com. Leaders are cautioned not to put any undue reliance on forward-looking statements, and the company's specifically disclaims any obligation to update the forward-looking statements that may be discussed during this call. Please also note that we will refer to certain non-GAAP financial information on today's call. You can find reconciliations of the non - non-GAAP financial measures with the most comparable GAAP measures in our earnings press release. With that, I will turn the call over to Marc.

Marc Bell: Thank you Mallow. And good morning, and thank you for joining our first -- to our first quarter 2022 earnings conference call. This is a very exciting quarter at Terran Orbital. In late March, we went public and began trading on the New York Stock Exchange. We signed a record $162 million in new contracts and ended the quarter with a record backlog of over $220 million. Let me first give you an overview of the company for those of you who are new. We pioneered the space industry, small satellite revolution. We have been delivering small satellites to a broad mix of customers for over a decade, including NASA, Lockheed Martin, the Department of Defense, the Intelligence community, the European Space Agency, and numerous commercial customers. What we do matters. We deliver in months for millions of dollars solutions that used to take years and billions. Our satellites provide higher-functionality, persistence, and faster product delivery. We have a broad mission mix, including defense, college education, climate monitoring, disaster response, and space exploration. Terran Orbital is taking an industrial approach to building satellites at massive scale. We serve an industry that is forecasted to launch approximately 50 thousand satellites over the next decade, creating an enormous opportunity for companies with advanced, scalable, vertically integrated production capabilities. We operate for more than 250 thousand square feet of office and production space, and have over 370 employees today. Additionally, Terran Orbital is developing a next-generation satellite constellation that will feature software-defined synthetic capture radar, also known as SAR, which enables our satellites to image the image the Earth, both day and night, and in all types of weather. While we are still in the early stages, we're developing the compelling and differentiated solutions which we will believe generate high-margin data products and services. Like I said before, we've had a very successful and exciting first-quarter. Here are some of our highlights from our first-quarter so far. First, we are focused on delivering constellations to complete customer's missions. In Q1, we delivered two CICERO satellites to GeoOptics, and a CENTAURI-5 satellite to Fleet Space Technologies. Since the quarter end, we delivered CAPSTONE to advance space in support of NASA at the [indiscernible] Gateway plus three satellites to NASA for CPOD and the Pathfinder Technology Demonstrator three mission. And earlier this week we announced that we've delivered the first of ten satellite buses to [indiscernible] in support of the Space Development Agency Transport Layer Tranche 0 Credit goes to our production and engineering teams for successfully delivering our customers satellites on-time. We have a total of six satellites scheduled for launch on the SpaceX transport of five launch this month, with another satellites launch from New Zealand to Luna Orbit. The successful delivery of customer satellites is our top priority. And we couldn't be more proud of our team. Second, we signed a record number of contracts in the quarter, totaling a $152 million. We were awarded the company's largest contracts ever buy Lockheed Martin to build 42 satellites in support of the SDA transport layer and Tranche 1. This was following on an award to manufacturer 10 satellites, which we're currently building and deliver that for Tranche zero. We are also announced a contract to build an additional three micro satellites for Lockheed Martin. These and other awards during the quarter, led to a tripling of our backlog to a more than record $220.3 million. Third, we continue to build out manufacturing and operational capacity. We signed a 10-year lease, adding 60,000 square feet next to our existing production and assembly, 30 in Irvine, California. We continue to make important addition to our leadership team and our highly skilled workforce. We're growing our headcount by about 10% of month and we ended the quarter with more than 330 employees. Fourth, we advanced the development of our Earth Observation Constellation. We received the natural comments with office BAA for demonstration of our Commercial Rental imaging capability. The NRO is the buyer of phase remote sensing data for in terms of community and the Department of Defense. And we see this NRO award as a stepping stone to larger program opportunities. We continue to assemble and test our first two synthetic arbitrator radar satellite. And recently completed a range testing of our advanced radar array. Finally, the unprovoked invasion of Ukraine has created both geopolitical instability, anti-human and Mediterranean crisis for Ukrainian people. Our company is unified in our mission to support the United States as allies and the people have Ukraine. I'm particularly proud of our team’s early response to the conflict in delivering Geospatial intelligence to help Ukrainian people defend their home land. After that exciting first-quarter, we're looking forward to continue growth through the rest of 2022. We expect our new production facility in Irvine, California to be fully operational within been Q3 as far as satellite deliveries. Our $220 million backlog represents a variety of mission that we're excited to deliver in the coming quarters. Also, as Dillard's, you've already mentioned, we're on track to deliver announcement, Pathfinder for an optical Earth Observation satellite for an international commercial partner. A technology demonstrated to NASA with the list communications terminal designed by MIT [indiscernible] laboratory, and a satellite with six ledger optical payloads to support weather observation for the air force research laboratory. And finally, showcasing our successful transition to multi-cellular program. We expect to deliver all 10 satellites for trench 0, but the Space Development Agency transfer layer in 2022, while commencing work on the next 42 satellites for trans line. With that, I will now turn it over to our Chief Financial Officer, Gary Hobart, for an overview on our financials for the quarter. Gary.

Gary Hobart: Thank you, Marc. And good morning, everyone. Revenue for the first quarter was $13.1 million, a 25% increase year-over-year. On an LTM basis, we hit a company record, $435 million of revenue for the 12-month period ending March 31, 2020 -- 2022. A 47% increase compared to the 12 months ending March 31, 2021. During the quarter, we executed on a growing mix of missions for Defense, civil, and commercial customers. Leading customer commitments is priority one, and the face supply-chain pressures widely reported across the industry. Terran Orbital managed them well and successfully delivered satellite to its customers. We did however, make adjustments to our projected EACs on certain firm fixed price contracts. EAC adjustments reduced revenue by approximately $3 million in the quarter. As a reminder, we recognize revenue on most of our programs on a percentage of completion basis and changes in the EAC have a cumulative catch-up impact in the period in which we make the adjustment. Adjusted gross profit for the quarter was negative $0.2 million down from $1.2 million in the prior year. The EAC adjustments previously mentioned, reduced adjusted gross profit by approximately $3.7 million. This includes $3 million for the revenue impact, and another $0.7 million of contract loss reserves. Adjusted EBITDA was negative $14.7 million compared to $3.6 million -- negative $3.6 million in the same period in the prior year. The decrease in adjusted EBITDA was due to the change in adjusted gross profit, as well as, increases in labor, facilities, professional fees, and other corporate costs related to the expansion in our capacity and the process of becoming a public company. Finally, we're pleased to have successfully closed our merger with Tailwind Two Acquisition Corp. on March 25th, despite a difficult equity market backdrop. We thank our capital partners for their ongoing trust in us and in support of our mission. The transaction resulted in the issuance of 255 million in equity and debt securities consisting of 80 million of equity split between SPAC, cash and trust and PIPE, and $175 million of new and rollover debt. Other than PIPE, payment obligations due in the remainder of 2022, we have no material debt maturities until 2026. At quarter end, we had approximately $77 million of cash and 137.3 million of shares outstanding. We finished the quarter with approximately $222 million in backlog, and we're tracking a pipeline of 140 identified opportunities with more than $12 billion in value. The company's near-term focus is on the successful execution of our customer programs and winning new contracts, to expand our backlog. Accordingly, the company plans to contribute significant resources to continue to expand its manufacturing capacity, vertically integrate, and expand our ever-growing, exceptional pool of talent. In addition, we continue to assembly and test our first two synthetic aperture radar satellites, our SAR constellation represents highly attractive economics, and we're pursuing the opportunity consistent with our available capital resources. At present, we are targeting capital expenditures for 2022 in a range of $15 million to $20 million. I will now turn the call back over to Marc.

Marc Bell: Thank you Gary, and thank you everyone on the call for your continued support of our company. If you want more information about the company, please go to www. terranorbital.com, and now I look forward to taking your questions. I'm going to turn it back over to the Operator. And I now turn it back over to the Operator.

Operator: Thank you. We will now start our Q&A session. If you'd like to ask a question, please [Operator Instructions]. If you have joined us online, please [Operator Instruction]. While preparing to ask a question, please ensure that your line is unmute to likely. And our first question comes from Greg Conrad at Jefferies. Please go ahead. Your line is open.

Greg Konrad: Good morning. Maybe guard and you touched on it a little bit, but posts Ukraine, it seems like the budget conversation has changed with part of that being kind of rapid, advanced, and safe budgets and just appetite to integrate commercial intelligence into the works. Well, what are you seeing on the star side? Just thinking about demand and conversations with your customers and maybe how does that alter the ability to satisfy that demand given flexibility around bringing capacity online.

Marc Bell: I mean, we've seen Ukraine as it has really, has validated the need for additional ISR Cabot capabilities, especially with synthetic [indiscernible] radar. If you have your keep in mind, the Russia Military pretty much only moved at night. So traditional extra optical imaging was useful in helping Ukrainian government. We saw that we were able to identify and help the Ukrainian government defend Kiev and can help to stop the Russians in their track. As far as played an enormous help in this battle in the Ukraine, and it demonstrated the validity of why [indiscernible] is so important.

Greg Konrad: And then you refrained from giving '22 revenue guidance, but had provided a '22 framework pre -merger. When we think about that $94 million per satellite solutions, has anything changed around timing of contracts or the supply chain pressures that you called out just thinking about how this year plays out?

Marc Bell: We look at our supply chain, we continue to improve on our supply-chain, we're trying although the risks are always still there. We have to continue to add contract and add customers. We're very pleased at the rate that we're adding contracts and new customers. Our focus right now to deliver SDA Tranche Zero delivered on time. That's the key metric for us internally. And we're highly confident we will be able to do that.

Greg Konrad: And then maybe just sneaking in one last multiple part question. But I mean, just on our math, if we look at the Tranche 1 award, it maybe comes out to 3 million per satellite. How do you think about ASP in general trending or at least for modeling purposes, what's a good placeholder number? And then as it relates to that, we hear a lot about these new mega constellations coming to market and I'd assume you're in the running for anything that is -- that out. Any sense of make versus buy and what you're seeing in terms of opportunities for some of these mega constellations versus others that have maybe produced stuff in-house?

Marc Bell: Sure. So we don't disclose revenue per satellite per se. We have its history. I had satellites that've been built for as little as a million dollars per satellite, and some of over $10 million per satellite. So we have a pretty broad range. A lot of it depends on the features of the satellite, including payloads. I think that the $3 million number you've mentioned is probably at the middle to lower end of the range, as far as average. I might suggest that it's anywhere from 3 $ to $4 million on a basic flux in avionics that excludes payload. And so I think that's a good reference point for you to use.

Gary Hobart: And on the mega constellations, you are correct. There are many people out there, both governmental and non-civil and commercial looking at large constellations. We are actively talking to a number of potential customers. We're looking at our production capabilities we're able to do that's why we're expanding, as you see that being the future. And it's an exciting time for us, with everybody out there looking to build constellations to solve different problems here on earth.

Greg Konrad: Thank you.

Operator: Perfect. Thank you so much for your question. Our next question comes from Robert Spingarn at Melius Research. Please go ahead. Your line is open.

Robert Spingarn: Hey, good morning.

Marc Bell: Good morning.

Robert Spingarn: Marc, I wanted to ask you about -- hoping to add a little color if you could, on the status of the two PredaSAR satellites. I think either you or Gary said they were in testing, but when is the plan to get those on orbit? And then I have a couple of follow-ups.

Marc Bell: Sure. We are -- the intendeds are pretty much complete. We've been testing them and it's working fabulous. We are working on the buses now. We want to get the SDA program out first, that is our top priority, and then we will get our two birds up in the air. And it's just a matter of prioritizing. The Space Development Agency, they've made it very clear. If you look at last week, Paula Trimble, the Policy Chief at the SDA declared, ''We aren't going to pick the winners, the winners are going to deliver '' quote-on-quote, basically informing us that those who deliver on time will be the winners of the future constellations.

Robert Spingarn: So what is on time for you here? What should we be looking forward in terms of the calendar as the year progresses?

Marc Bell: The SDA has a date with delivery date that we're going to attempt to close, but as you see, we just announced we delivered Bus zero. You'll see soon we will announce bus one as we announced the buses that will be going up the first five as we do it in fives. Those are key metric, those announcements. [indiscernible] the timetable, sorry.

Robert Spingarn: Okay. Fair enough. Gary, you talked -- you guided the CAPEX I think Irvine's going to be up and running you said in the third quarter, Marc may have said that. With the cash burn in Q1 how should we think about cash burn going forward as the company gets bigger, as you spend that CAPEX and given your current balance sheet?

Gary Hobart: We are managing our capital and capital allocation with existing cash to work through the balance of the year and into the new year. So that'll give you a rough estimate of how with roughly $77 million of cash to start this April period and going into the second quarter, that should give you a rough approximation of how we're managing our cash. And yes the urban facility and a little bit in Santa Maria, where we have our machine shop, we have portion of our CAPEX. The CAPEX also includes the continued development of our Earth Observation constellation, and some smaller projects, including ERP system, some automation and other things that are built around really trying to accelerate our capacity on satellite builds.

Robert Spingarn: Okay, and then just a detailed question within the backlog the 222, how much of that is fixed price versus cost plus?

Marc Bell: [indiscernible] everything in the back. Zach breakdown on that. But the majority of our contracts and backed by the super majority are fixed price contracts. And that's as much as we can say. With contracts usually work with contract. When you're doing where you're working on developing it, a competitor costs plus. But then when you get the constellations, in terms of two fixed price for the end of the day, all the big stuff is all fixed price.

Robert Spingarn: [indiscernible].

Marc Bell: But just like a house, when you're [indiscernible] about, does like a house when they make changes to it, we're able to we get paid more but we make changes the contract for additional compensation.

Robert Spingarn: Okay. And then I just was going to ask how does inflation factor in here or there any protections or do you have to eat any increase in costs on the fixed-price lift portion of the work.

Marc Bell: We're building new things so fast. Inflation related doesn't play a part into it. It plays a part. We budget. We obviously continue to adjust our prices annually for inflation, but it really the play a big part into it. a good point of the bigger issue usually is supply-chain and things becoming commoditized. But as more and more things we manufacture in-house, as we're about to move forward with building our own printed circuit board assembly facility that will be our next big thing of vertically integrating.

Robert Spingarn: Okay, thanks so much.

Operator: Perfect. Thank you so much for your question. Our next question comes from Josh Sullivan, at Benchmark Company LLC, please go ahead. Your line is open.

Josh Sullivan: Good morning.

Marc Bell: Morning Josh.

Josh Sullivan: Just looking at the headcount now and the back heaven hand, where do you think headcount will be at the end of the year as you scale up or order of magnitude [indiscernible]

Marc Bell: We've been increasing our headcount approximately 10% a month, give or take. We feel it's as much as we could absorb. We're trying to be very logical, methodical, how we add headcount as we have to be able to absorb them in orderly fashion. We get judged, when people -- when we're bidding on programs, our clients look at our headcount and they look at our square footage [indiscernible] every state that we have. And that's why we're rapidly adding more space but we're doing it in a very controlled fashion. We're not trying to go out and just add a thousand people all at once.

Josh Sullivan: Got it. And then as far as the Florida manufacturing facilities, can you update us on any progress there, just where we stand?

Marc Bell: Yes. So we actually spoke with Space [indiscernible] the other day they're negotiating with their banks, because they were waiting for us to go public in order for them to continue to close the transaction. We are -- hopefully it's very soon we should get some answers back as to when we'll have a closing date, but we are -- right now [indiscernible] for them to do what they need to do. Once their financings in place then we'll get our leap and we'll be all set.

Josh Sullivan: And then just one last one, on the EAC adjustment. Did you mention what the driving factors were there or which Programs?

Marc Bell: Could you repeat the question, please? I'm sorry, couldn't hear from I the beginning.

Josh Sullivan: On EAC adjustments, did you mention factors were there, or which programs there were on?

Marc Bell: Gary?

Gary Hobart: Yeah, so the EAC adjustments with certain of our fixed-price contracts, we've not identified these -- broken it out by program.

Josh Sullivan: Okay. Thank you for the time.

Gary Hobart: Thank you.

Operator: Thank you very much for your question. Our next question comes from Austin Morena at Canaccord Genuity, please go ahead, your line is open.

Austin Moeller: Good morning Marc and Gary.

Marc Bell: Good morning, Austin.

Gary Hobart: Morning.

Austin Moeller: So, just my first question here. If I remember correctly, from the Investor Day, two predecessor satellites going up this year and then your total should be 16 next year, which should imply 14 going up next year. So with the $77 million in cash and the a $175 million in new debt, I remember it's about $20 million apiece for each satellite, but of course that includes the launch costs and the lifetime operating costs. So is it still your intent to launch 14 credit sar satellites next year?

Gary Hobart: So what we're doing right now is we are still pursuing our constellation with the first two satellites, but we're also mindful of our capital resources. So until we see about where we stand on capital to pursue the opportunity which we see as very attractive, we're limited on our schedule for the first two satellites and the capital will really drive the next decision on that. We have not updated the capital cost per satellite but directionally it is still -- we still see them as basically $10 million apiece to launch and build and then they operate over five-years at about 2 million per year. And so hopefully that answers your question.

Austin Moeller: Yes, that's super helpful. And then just a follow-up here. I saw you guys book the Transporter 6 SpaceX mission, but I was just trying to clarify, will one of the PredaSAR satellites this year go on that rocket, or will it be both of them?

Marc Bell: We're still working on that. As a matter, right now we're prioritizing the SDA 's Tranche 0, that is our absolute priority, as that program is very important to the GOG and we want to make sure that gets out first. And we're looking at opportunities then to utilize the Tranche 1 batch to dramatically lower the cost of the constellation to a new lead capital in order to go back. This is all happening in real-time price. Now, as the SDA put out that story, we hear -- and we hear about it clear, other coverages we have are Lockheed Martin, that delivering SDA on-time is incredibly important. And so that's our priority. But we're still working our way to launch in Q1 and beyond the first two satellites, this is very important we get those up as well. We're in a bit of a juggling act, but we're trying to make sure that we're delivering for our cost SDA first and foremost.

Austin Moeller: Yeah, I would definitely think that SDA has a major priority there. So just thanks for all the details.

Marc Bell: We look at the opportunity for SDA and we want to prove to them that we can do this. Though as you did on Tranches two, three and four, they have a good experience with us as Tranche zero and one. And as you know, there are 684 satellite, I believe, being planned just for the transport layer. And that their nose have to get replenished every five years. So for us, that's a multi-billion-dollar opportunity over the next decade.

Austin Moeller: Definitely sounds very exciting. Thanks for all the color.

Operator: Thank you. Thank you very much, Austin, for your question. And as a reminder, if you would like to ask a question, [Operator Instructions]. Our next question comes from Suji De Silva at Wealth Capital Partners, LLC. Please go ahead. Your line is open.

Suji Desilva: Hi Mark and Gary. Good morning. Congratulation on the progress here. Guys what is the best way to think, what metrics of the best way to think about the way you're growing capacity in the next one or two years. Maybe you can help us understand like, what's the best way to think about that is satellites or a number of satellites in square feet or whatever.

Marc Bell: That is actually a great question. So what we do is by the time we get a program, it's too late for us to hire people and to add capacity. So we do is we're adding capacity ahead of programs that we added. And adding people ahead of programs that we have been very high degree of covenants we will be [indiscernible]. So as you see us signing more leases or as you see us hiring more people that is a solid indicator of program that we expect to be winning. We're not just building space for the sake of building space; we're building space because customer targeted customers about constellations that they wish to build and we need to have enough space to assemble them and enough people build them.

Suji Desilva: That's very helpful insight. Thank you, Marc. And a question about credit SAR, maybe it's not the case, but I'm wondering, do you have visibility ahead of your satellite constellation launches there from customers who are pre -buying or indicating pre -buys of the service or capacity or does that happen as you start to put the satellite space?

Marc Bell: It'll tabulate once they've launched, but the Ukraine has really demonstrated the need for synthetic amateur radar and has really -- it's solidified why it's so important, and we're seeing lots of inquiries from customers about other things -- other types of things that you do with SAR, and other advances to different SAR products.

Suji Desilva: Okay, great, thanks, Marc. Good job on the progress guys. Thanks again.

Marc Bell: Thank you.

Operator: Perfect. Thank you so much for your question Suji. And our next question comes from Eric Vassimon at Stifel. Please go ahead.

Eric Bippen: Guys. Thanks. I'll echo big, big progress on the quarter. Wanted to just ask on the Irvine facility, it sounds like that's coming online in Q3, but where you at in terms of having capacity for that on that initial opening. And then what does that facility looked like once you take full build.

Marc Bell: So it's a 60,000-foot facility, 20,000 square feet of it actually comes online, approximately by about Memorial Day. The other 40,000 square feet will be later this year. So the production side of the facility where we do manufacturing of the products will come online by Memorial Day, the assembly side of that house, will come -- the 40,000 square feet via the assembly will come online by Q3.

Eric Bippen: Okay. And what is --

Marc Bell: We manufacture components first, and then we assemble them, so we're building up the building and by components first and then assembly, but keep in mind, we only signed, this week I believe in February. And we already finished 20,000 square feet. And we're also building robotics putting in robotics for the first time in this facility. We will be building a robotic assembly line for components in this facility, it'll be the first-time, we're doing this.

Eric Bippen: Got it. And then maybe just on the supply chain, headwinds, you sounded like you were okay on the inflationary side, but on the supply chain side there's obviously impacts being felt in all industries. What are do you doing proactively in order to stay ahead? Maybe just talk about some of the things that the team's been doing to fight off that headwind.

Marc Bell: We try to order things in advance as far as possible. We're obviously looking at M&A as the possible solutions from these issues. There's a lot of opportunities out there, and we want to continue to vertically integrate? And we want to continue to -- you're right now we make 85% of our components in-house. I committed to make a 100% of our components in-house over the next 36 months. We are working away to move that timeline up as fast as possible. The only thing we won't make in-house are solar panels which we acquired at Lockheed Martin, they're really doing quick job at a bit of a great price. But everything else, we want to build -- make in-house over the next 36 months. The point is we want to run machine shop now, when outstanding our own machine shop, that everything is aerospace, aluminum and a satellite and make that all in-house. And now we're moving on putting in robotic loaders into all those RSV machines. So we can literally run 24/7 365. And as we get bigger also, we have more influence over our vendors. And so we'll be able to move up the food chain as I would say. So we're doing pretty good about it. But unfortunately with COVID and everything that's happened in this world, we can never guarantee anything. But we are doing our best to mitigate it as best as possible.

Eric Bippen: And maybe just on the competitive landscape, have you seen any interesting companies emerge recently, any changes in your expectation's previous market earlier position, especially around SAR and then just on the satellite manufacturing side?

Marc Bell: We see lots of new companies starting up all the time. We're working on number of VLEO project, which is very interesting, very low Earth orbit. As you know, as you get closer to the Earth, you can take a higher-quality image. So that's been very interesting. We are working on -- we're seeing nuclear -- people want to cover nuclear in space, nuclear propulsion. And that's been very interesting. I listen people talking about it. So there are -- there's a lot of money being invested in space startups. And the money we're seeing being invested and being smarter are no longer focusing on pie-in-the-sky, but more practical applications, and -- High-Resolution ISR, better faster communications, your OISL is going to be a thing of the future. Then we have a contract equipped in OISL on one of our PredaSAR satellite, which will connect to DARPA -- DARPA's Blackjack program. But if you think about it, all the future transport layers will all have OISL as well. So that is the communication linked to the future in space.

Eric Bippen: Great, helpful, [indiscernible] good luck.

Marc Bell: One thing also to point out in the Space Force got a significant $7 billion Fiscal year '23 budget increase. This represents tangible evidence of bipartisan support to recapitalize our nation, their strategic space assets, and the deliberate pivot to more resilient and dependable architecture. This 40% budget increase the concentrated R&D. And in procurement, which expands the available margin for Terran Orbital.

Eric Bippen: Sounds good. Thanks for all that. Good luck. Thank you very much.

Operator: Thank you so much Eric, for your question. And as a reminder, if you would like to ask a question, (operator instructions) And now our next question comes from Rubin Roy at Westpark Capital. Please go ahead. Your line is open.

Ruben Roy: Hi. Thank you. Marc, yes, it's good -- great job on the progress. You touched on most of my collection, but I wanted to just go back to something you said around Ukraine and validation of some of the efforts that you guys have been working on for a while now. And in addition to SAR, just wondering when your discussions with your customers, have you seen over the last 90 days or so. Any significant changes in sort of looking for the technologies or any changes to that design architectures, etc. I'm just thinking about around ISR, and if you're seeing any significant changes on what your customers are looking out to build over the next 18-24 months? Thanks.

Marc Bell: Sure. I mean you've heard me say that Ukraine is demonstrating the resiliency of small cell constellations. General David Thompson testified just this week the centered on services committee, that despite Russia design to prevent Ukraine for musing space-based capability, there inability to do that is quite a reflection of these new proliferative architectures that are very difficult to deny overall which validates Space force's architecture. And we are seeing lots of new money being put in and lots of new interest in advancing search to the next level, advancing electric obstacle to the next level. There's an amazing new technology being developed that will revolutionize ISR subspace.

Ruben Roy: Got it. Okay, and then just a quick follow-up area and

Marc Bell: I'm sorry. I don't just thought I'd like to add. When I say your exciting new technology, we're at the center of not only these constellation or these conversations, but we're actually on the center of being able to manufacture and produce some of these products for the DOD and the [indiscernible] community. So we have incredible foresight with the knowledge that we do and the programs that we have, internally.

Ruben Roy: Great, thanks, Mark. And I guess this for you and Gary, you mentioned that inflation really doesn't there on sort of the way you guys are operating. But just in terms of the supply chain pressures and how to think about EAC charges, if any, the magnitude. How do you think about that as you look out into the next couple of quarters?

Gary Hobart: Well, I think that weighed very heavily on our adjustments to EAC that we announced in the first quarter. I think the supply chain generally impacts quite frankly, the timing and sequencing of our builds. Each of the satellites kind of has about 50 different unique combined -- about 20 different unique modules and 50 modules overall. If you will have one component that's delayed or miss, you really can throw off your entire build cycle. So I echo Mark's comment that inflation doesn't bear upon us because of the build cycles or return around most of our programs. And 18 to 24 months periods from data signing. So it is relatively quick from pricing to award to fulfillment. But we're mindful of supply chain because the impact it has, I'm just a build cycle. And that's a big driver of how we thought about our overall life of program costs. And again, that was reflected in the adjustment we did in the first quarter.

Ruben Roy: Okay. Thank you Gary.

Operator: Thank you very much for your question Rubin. At this time there are no further questions, and I would like to pass back over to Marc for any final remarks.

Marc Bell: Sure. Well, I just want to thank you for coming today. We are -- we have a very -- we had an exciting quarter. We have a lot of exciting stuff coming up in the future. We appreciate everybody's support and I'm just going to turn it over to Gary just for some closing remarks.

Gary Hobart: Sure. Thanks, Marc. I think we're excited about the process going forward as a company. We've got over $220 million of backlog to start this second quarter. A $12 -- a $12 billion dollar pipeline that we are pursuing to add to that. I did want to make a clarification because there may have been audio issues during my portion of my presentation. Our LTM revenue was $43.5 million for the 12-month period ending March 31st, 2022. That represents a 47% increase from the 12-month period ending March 31st, 2021. So I just want to clarify that for the call.

Marc Bell: Great. And with that, we thank everybody. Gary and I are available if you have questions at any time. We appreciate everybody showing up today and we wish everybody to have a good weekend. Thank you for joining us.

Operator: Thank you everybody for joining today's call. You may now disconnect your line.