Intuitive Machines, Inc. Q3 FY2025 earnings call

• Intuitive Machines entered into a definitive agreement to acquire Lanteris Space Systems for $800 million, consisting of $450 million in cash and $350 million in Intuitive Machines Class A common stock. - The acquisition positions Intuitive Machines to become a next-generation space prime, combining its agility and innovation with Lanteris' satellite production, scale, and space flight reliability. - Lanteris has over 65 years of experience, delivered over 300 spacecraft, and maintains 99.99% on-orbit availability. - Q3 financials: Revenue $52.4M, gross margin $5.7M, net loss $10M, adjusted EBITDA negative $13.2M, backlog $235.9M. - Acquisition funded by $345M gross convertible note offering, closing expected in Q1 next year, accretive to revenue, adjusted EBITDA, and free cash flow.

In Q3, revenue was $52.4 million, driven primarily by OMES, CLPS, and NSNS. Gross margin was $5.7 million. Net loss for the quarter was $10 million, and adjusted EBITDA was negative $13.2 million. The backlog was $235.9 million. Lanteris' business is broken down as approximately 25% defense, 25% civil, and 50% commercial.

• Q4 revenue expected in line with Q3 due to government shutdown uncertainty. - Intuitive Machines to provide new outlook for combined company in early next year. - Acquisition expected to be immediately accretive to revenue, adjusted EBITDA, and free cash flow.

• Regulatory risk: Standard antitrust review by the government, taking 20 days to file and 30 days for opinion. - Integration risk: Full integration of Intuitive Machines and Lanteris over the next 9-12 months.

Q: What changes has Advent made within Lanteris to improve the margin profile of their manufacturing since they bought them? And are there any large, exquisite satellite programs in the backlog that still need to ship out?

A: Advent has invested in the 300 Series satellite, moving in a positive direction with efficiencies. They're essentially nearing completion of the power propulsion element for NASA's Artemis program.

Q: Should we frame the strategy here as looking to gain more manufacturing capability left of launch and then being able to drive margins with services revenues post launch using the ground stations and the op center?

A: Yes, that's correct. The services model is a higher-margin business, using manufacturing and production to feed data networks.

Q: What do you envision as the sort of growth profile of Lanteris going forward?

A: The combination of Intuitive Machines and Lanteris will feed existing programs and unlock new markets like SDA Tranche 3 tracking layer, TedRS replacement, Mars data Relay, and alternate GPS.

Q: Is there any way to break down Lanteris' backlog in any deeper way, perhaps even by what programs would be the most in there in terms of customer exposure?

A: Lanteris' business is roughly 25% defense, 25% civil, and 50% commercial, and the backlog can be broken down in that way.

Q: How do IM and Lanteris scale some of the data opportunities?

A: By extending data services and networks, including opportunities like tracking data relay satellite services, deep space network commercialization, and replacing aging infrastructure at Mars and Mars data relay.

Q: How might you be thinking about Artemis 3 or related tactical opportunities here?

A: Intuitive Machines is in a position to offer solutions for the human landing system, throwing their hat in the ring with Lanteris by their side.

Q: Is there any way to break down Lanteris' backlog by end market?

A: The commercial work is the GEO communications birds, and the tracking layer is in national security.

Q: What does this mean for SDA and Golden Dome opportunities now as a combined company?

A: Lanteris' 300 series satellite is a strong offering for SDA's tracking layer, and the combination provides unique solutions for Golden Dome opportunities.

Q: Was Lanteris the kind of capability you guys were specifically shopping for? Were there other potential targets?

A: Lanteris was next on the list after adding Kinetics for precision navigation, and they'll continue to look to add capabilities to evolve into a next-generation prime.

Q: Can you highlight what maybe regulatory risk on closing the deal or integration risk? And risks with EOCL potential budget cuts?

A: Standard antitrust review, 20 days to file and 30 days for opinion; integration risk over 9-12 months; no major risks seen from EOCL budget cuts.

Q: How does the addition of Lanteris change the calculus with regard to the timing of deployment of data relay satellites?

A: Anticipate more demand for satellites in the Lunar constellation, looking for rideshare opportunities to deploy them sooner.

Q: Can you dig into the $8 million contract extension from AFRL for the in-space nuclear power tech and its positioning for the nuclear reactor contract?

A: The Jetson AFRL contract advances Sterling engine technology, similar but not identical to Fission Surface Power technology, testing stirling engine cycle propulsion.

Q: Clarification on Lanteris' revenue mix between recurring/service revenue vs satellite product revenue. And on robotics?

A: Lanteris has product-based revenue from satellites, and the combination positions for the service model. Robotics is a complementary capability, with a center of excellence in Maryland, and Lanteris is on the LTVS team providing robotic arms, with opportunities in national security programs like RGXX and MGO.