BOCA RATON, Fla. - Terran Orbital Corporation (NYSE: LLAP), a leading satellite manufacturer for the aerospace and defense sectors, has reported a decline in first-quarter revenue for 2024, alongside a new contract with Lockheed Martin (NYSE:LMT). The company's revenue fell to $27.2 million, a 3% drop from the previous year's $28.2 million, attributed to unfavorable Estimate-at-Completion (EAC) adjustments on a significant program, which faced subcontractor challenges.
Despite the revenue dip, Terran Orbital secured a contract to build 18 space vehicles for the Space Development Agency's Tranche 2 Tracking Layer, under a strategic cooperation agreement with Lockheed Martin that extends through 2035. The company's backlog as of March 31, 2024, stood at $2.7 billion, with $2.4 billion related to its contract with Rivada and $300 million from other programs. As of today, the backlog is estimated to exceed $2.8 billion, inclusive of $400 million of non-Rivada programs.
Cost of sales for the quarter increased to $33.4 million, up from $29.6 million in the same quarter of the previous year, leading to a gross loss of $6.2 million. This loss was influenced by a $13.6 million negative impact from EAC adjustments. Selling, general, and administrative expenses saw a decrease to $28.3 million, compared to $32.5 million for the same period last year, primarily due to reduced share-based compensation expense and research and development activities.
Terran Orbital experienced a net loss of $53.2 million, an improvement over the $54.4 million loss in the prior year. Adjusted EBITDA was negative $28.2 million, reflecting a decrease in Adjusted Gross Profit. The company ended the quarter with $43.7 million in cash and approximately $316.7 million in gross debt obligations.
Marc Bell, Co-Founder, Chairman, and CEO of Terran Orbital, highlighted the company's vertical integration strategy as a means to mitigate supply chain disruptions and maintain timely customer deliveries. The company's strategic review process remains ongoing, exploring various options, including maintaining its independence.
InvestingPro Insights
In the context of Terran Orbital Corporation's (NYSE: LLAP) recent financial performance, several metrics and InvestingPro Tips offer a deeper understanding of the company's market position and future prospects. The company's market capitalization stands at a modest $212.06 million, reflecting its niche role within the aerospace and defense manufacturing industry.
InvestingPro Data reveals a substantial revenue growth of 44.23% over the last twelve months as of Q1 2023, indicating a significant increase in the company's sales activities. However, this growth contrasts with a quarterly revenue decline of -1.01% in Q1 2023, aligning with the reported dip in the company's first-quarter revenue for 2024. This juxtaposition of annual and quarterly performance underscores the volatility and challenges faced in the satellite manufacturing sector.
With a negative P/E ratio of -1.16 and an adjusted P/E ratio of -1.39 for the last twelve months as of Q1 2023, the company's earnings are not currently supporting the share price, which could be a point of concern for potential investors. The InvestingPro Tips also highlight that Terran Orbital has been quickly burning through cash and suffers from weak gross profit margins, with a gross profit margin of only 6.3% for the last twelve months as of Q1 2023.
On a more positive note, analysts are optimistic about the company's future, predicting net income growth and sales growth in the current year. However, the company's stock price has experienced significant volatility, as evidenced by a 28.57% drop in the 1-month price total return but a strong 47.53% return over the last six months. This could signal a turning point for the company, especially considering the recent contract with Lockheed Martin.
For investors seeking a comprehensive analysis, there are additional InvestingPro Tips available, which can be accessed through the company's InvestingPro page. These tips provide insights on metrics not covered here, such as the company's ability to make interest payments on debt and its valuation in terms of free cash flow yield. To explore these tips further and gain a full picture of Terran Orbital's investment potential, use coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. Currently, there are 14 additional InvestingPro Tips listed for Terran Orbital, which could be invaluable for a thorough investment decision-making process.
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