9 minute read
Terran Orbital boldly goes way beyond CubeSats
Despite a rough ride on Wall Street, Terran Orbital is soaring to new heights. With a second state-of-the-art manufacturing facility soon to come online and an impressive backlog of orders, the company’s future looks bright. We sat down with Marc Bell, Co-Founder and CEO of Terran Orbital to get an inside look at how he has navigated the ups and downs of bringing the company public and is now forging a decisive growth trajectory.
Crispin Littlehales, Executive Editor, Satellite Evolution Group
Question: You have a fascinating and incredibly successful track record as an investor. What prompted you to found Terran Orbital and how has the company evolved over the last decade?
Marc Bell: My partners and I both grew up as science fiction nuts. Partially thanks to Star Trek, we’ve always been fascinated with anything and everything space. When the opportunity arose to purchase the company that popularized the CubeSat, Tyvak Nano-Satellite Systems, we did. One of my partners, Tony Previte, had a degree in Aerospace engineering, so we decided he should run the company. He ran it for 10 years and just under four years ago he asked me if I would take over for him. I was more than happy to do so, but I didn’t want to run a small CubeSat manufacturing operation, I wanted to build another unicorn.
Within three years of becoming CEO, we went from building a few CubeSats a year to being able to produce more than 200 space vehicles a year. In the next year, we expect to be able to manufacture over 1,000 space vehicles annually, complete with payloads and solar panels, largely using our own components and controlling our supply chain. Today, 90 percent of the components we use are manufactured in house, which is a huge deal. It plays out very well in the satellite industry where everyone has been having supply chain problems. I always say that “if you control your supply chain, you control your destiny.” The more control you have over your supply chain, the better chance you have of success because you rely less on outside vendors. We’re able to avoid common issues because they’re limited to just a few things that we don’t make in house yet, but eventually will.
Much of our focus has historically been on space vehicles in LEO orbit. We’re now expanding and starting to focus on all orbits and mission. The days of big satellites in GEO are over and there’s no reason to build the massive behemoths that used to take up to 10 years and US$ 1 billion to create. We are creating a much smaller size—up to 1000 kilograms at a better price point and at a much faster pace. It’s better to spend less money, replace the satellite sooner, keep the technology current, and get more bang for your buck.
We’re seeing high levels of interest from both foreign telecoms and militaries who are migrating from traditional GEO satellites to small sat LEO, MEO, and GEO. Every military wants what United States has. They want a transport layer, a tracking layer, and all the other things that we do here. At present, we are talking to a lot of people around the world about this technology.
Question: You took Terran Orbital public in March 2022 and the share price has fallen steadily. Still, Wall Street analysts believe in Terran Orbital and predict a strong comeback in the market. What do you see in terms of the company’s potential over the next 12 months?
Marc Bell: My partner and I decided to take Terran Orbital public and merged into a special purpose acquisition company (SPAC). Between us both we had already taken 17 companies public, more than six of which were unicorns. Then, the SEC issued guidance shortly before we merged into a SPAC which prevented companies that go public through a SPAC from filing a shelf registration statement and issuing equity for one year. This undermined our ability to access the capital markets immediately.
Because SPACs are usually around for a year before they merge into a company, the prior ability to typically be able to file a shelf immediately upon going public to access the capital markets and raise as much money as you need was a great benefit. By removing that, those who were investing in SPACs ran away because all the upside was taken away. Because we were a capital-intensive business, we ended up putting on a lot of debt when we “de-SPAC’d”. We went from US$ 20 million in revenue initially to US$ 94 million in 2022 and US$ 135.9 million in 2023 and we are continuing to grow revenue wise. As predicted, we are growing into our company and in the not-too-distant future we will become EBITDA (earnings before interest, taxes, depreciation, and amortization) positive, then net income positive, then free cash flow positive. We always look at companies from the top down. We start with revenues, then we want gross profit margins. Critics point out that Terran Orbital has a lot of SG&A (selling, general, and administrative expenses) but that’s a fixed price regardless of our growth now.
Question: CAPSTONE was a huge success. What was it like working on such a high-profile project with NASA and Advanced Space?
Marc Bell: CAPSTONE is the ‘Energizer Bunny’ of satellites. As of today, it has surpassed 2 years in operation and still phones home every week. The satellite’s robust design and our engineering expertise have enabled it to operate flawlessly for even further enhanced NASA tests.
The goal was to show and test the communications network for the eventual permanent Moon base and station. We needed to prove how they could communicate and always stay in contact with home even on the dark side. Ultimately, there will be a constellation of satellites so whomever is up there can always phone home.
NASA was a pleasure to work with, as was Advanced Space. They made good partners on the program. We we’re able to spend a lot of time with Advanced Space throughout the program. The vehicle continues performing beyond expectations and NASA and Advanced Space are considering even more updates and missions for the vehicle.
Question: You’ve spoken recently about “responsive space”. Can you expand on that concept and tell us how the company’s suite of standard space vehicles comes into play?
Marc Bell: Back in 2005, Vice Admiral Arthur Cebrowski and then Colonel Jay Raymond, who would become Chief of Space Operations for the US Space Force, wrote a paper called “Operationally Responsive Space” which was far ahead of its time.
Responsive space is about getting an order and delivering it at warp speed. The world is becoming more dangerous, and space is becoming a new domain of warfare. We need to be prepared so that if our satellites get knocked out by our adversaries, we can replace them very quickly. The Department of Defense (DoD) is spending a lot of time figuring out both the launch and the satellite side. At Terran Orbital, we are focusing on how to build satellites faster while lowering the cost and increasing the functionality so that we can be truly responsive to the needs of the customer.
We do this by controlling the supply chain and by making the components and modules in-house. Soon we’ll have a new facility opening and we’ll begin inventorying all the components and modules. In September of last year, we announced a new set of standards, and released a new set of buses that are based on those standards. The components inside don’t really change, it’s just a question of how many batteries and how many reaction wheels are used for a particular model.
We use the same batteries and the same reaction wheels regardless of which model is selected. It’s rather like Legos—mix and match making them quick and easy to assemble.
Question: Terran Orbital is changing the game when it comes to manufacturing satellites. Can you share some details about your current and future mass production capabilities?
Marc Bell: We have facilities in several places in California. We are completing a 94,000 square foot state of the art manufacturing facility in Irvine, CA to expand upon our existing 60,000 square foot facility there. We expect to reveal more details about what we’re doing later this year.
Question: The company is now billing itself as an “end-to-end mission provider”. This is quite different from the strategy you were pursuing in early 2022 which was centered around PredaSAR. What inspired you to shift your priorities so dramatically?
Marc Bell: A few years ago, I wasn’t involved with Terran Orbital as much. I was on the Board of Directors, but I had a separate company that I was running called PredaSAR. When I became CEO and we took Terran Orbital public, we merged the two companies together.
Terran Orbital now sells SAR (synthetic aperture radar) satellites, based on the PredaSAR product line. We’re currently in the next generation of SAR panels. The product is a lot more sophisticated and has higher resolution than the original PredaSAR product. Since there are restrictions on what resolution you can sell on the commercial side, most of the customers are government.
Question: What are the key challenges facing Terran Orbital and where do you see the company five years from now?
Marc Bell: The biggest challenge is managing growth. We have 44 satellites on the floor being built right now, a steady workflow that keeps that plant busy, and we look forward to the new facility to be operational. We do a lot of work for US customers, but we also have a company in Italy called Tyvak International which continues to grow. There we work predominantly with foreign entities such the European Space Agency (ESA) and numerous European foreign governments.
Five years from now? The world is changing very quickly. Look at the opportunities in space. The FCC is dealing with 50,000+ applications for satellites and that’s just the United States. It’s a big planet and every country wants to become a space power. As a result, we’re seeing the market expand exponentially. Terran Orbital is here to not only keep pace with this cosmic expansion but to lead the charge into the final frontier.
