Rocket Lab Corp 10-Q for FY2024 Q1
Rocket Lab Corp (RKLB)
About this 10-Q
Rocket Lab Corp filed this 10-Q on May 6, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).
Headline figures
Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $92.77M
- up 69.0% from $54.9M a year earlier
- Net loss
- $44.26M
- compared with a net loss of $45.62M a year earlier
- Diluted EPS
- -$0.09
- compared with -$0.10 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
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Registrant’s telephone number, including area code: (
Securities registered or to be registered pursuant to Section 12(b) of the Act.
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of May 2, 2024, the registrant had
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q may constitute “forward-looking statements” for purposes of the federal securities laws. The information included in this Quarterly Report on Form 10-Q has been provided by us and our management, and such forward-looking statements include statements relating to the expectations, hopes, beliefs, intentions or strategies regarding the future of Rocket Lab USA, Inc. (the “Company”) and its management team. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “could,” “expect,” “intends,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects on Rocket Lab. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described below and under the heading “Risk Factors.”
Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some of these risks and uncertainties may in the future be amplified by a global crises and/or any response to such a crisis and there may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the Securities and Exchange Commission (the “SEC”) as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. All forward-looking statements are qualified in their entirety by this cautionary statement.
You should also note that we may announce material business and financial information to our investors using our website (including at https://investors.rocketlabusa.com), filings with the SEC, webcasts, press releases, and conference calls. We use these mediums, as well as our official corporate accounts on social media outlets such as Twitter, Facebook, LinkedIn and YouTube, to broadcast our launches and other significant events, and to communicate with the public about our company, our products, and other matters. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website and through our other official social media channels. The information contained on, or that can be accessed through, our website or our social media channels is not a part of this Quarterly Report on Form 10-Q.
Unless the context requires otherwise, references in this Quarterly Report to “Rocket Lab,” “Company,” “we,” “us” and “our” refer to Rocket Lab USA, Inc. and our subsidiaries.
ROCKET LAB U.S.A., INC. AND SUBSIDIARIES
FORM 10-Q
March 31, 2024
Table of Contents
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PART I. |
5 |
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Item 1. |
5 |
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Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023 |
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6 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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PART II. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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4
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ROCKET LAB U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2024 AND DECEMBER 31, 2023
(in thousands, except share and per share values)
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March 31, 2024 |
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(unaudited) |
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December 31, 2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities, current |
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Accounts receivable, net |
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Contract assets |
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Inventories |
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Prepaids and other current assets |
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Assets held for sale |
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Total current assets |
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Non-current assets: |
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Property, plant and equipment, net |
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Intangible assets, net |
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Goodwill |
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Right-of-use assets - operating leases |
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Right-of-use assets - finance leases |
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Marketable securities, non-current |
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Restricted cash |
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Deferred income tax assets, net |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Trade payables |
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$ |
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Accrued expenses |
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Employee benefits payable |
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Contract liabilities |
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Current installments of long-term borrowings |
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Other current liabilities |
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Total current liabilities |
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Non-current liabilities: |
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Convertible senior notes, net |
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Long-term borrowings, net, excluding current installments |
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Non-current operating lease liabilities |
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Non-current finance lease liabilities |
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Deferred tax liabilities |
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Other non-current liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive income (loss) |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
ROCKET LAB U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(unaudited; in thousands, except share and per share data)
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Three Months Ended March 31, |
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2024 |
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2023 |
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Revenues |
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$ |
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$ |
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Cost of revenues |
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Gross profit |
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Operating expenses: |
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Research and development, net |
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Selling, general and administrative |
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Total operating expenses |
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Operating loss |
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Other income (expense): |
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Interest expense, net |
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Gain on foreign exchange |
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Other (expense) income, net |
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( |
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Total other (expense) income, net |
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( |
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Loss before income taxes |
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( |
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( |
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Provision for income taxes |
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( |
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( |
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Net loss |
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$ |
( |
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$ |
( |
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Other comprehensive loss, net of tax: |
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Foreign currency translation loss |
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( |
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( |
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Unrealized gain (loss) on available-for-sale marketable securities |
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( |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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Net loss per share attributable to Rocket Lab USA, Inc.: |
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Basic and diluted |
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$ |
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$ |
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Weighted-average common shares outstanding: |
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Basic and diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
6
ROCKET LAB U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(unaudited; in thousands, except share and per share data)
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Common Stock |
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Additional |
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Accumulated |
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Other |
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Shares |
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Amount |
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Capital |
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Deficit |
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Income (Loss) |
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Total |
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December 31, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Issuance of common stock under equity plans |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Purchase of capped calls |
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— |
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— |
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( |
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— |
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— |
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( |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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( |
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( |
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March 31, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Common Stock |
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Additional |
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Accumulated |
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Other |
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Shares |
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Amount |
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Capital |
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Deficit |
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Income (Loss) |
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Total |
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December 31, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Issuance of common stock under equity plans |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Issuance of common stock for acquisition |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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March 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
7
ROCKET LAB U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(unaudited; in thousands)
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For the Three Months Ended March 31, |
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2024 |
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2023 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Stock-based compensation expense |
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Loss on disposal of assets |
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Loss on extinguishment of long-term debt |
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Amortization of debt issuance costs and discount |
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Noncash lease expense |
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Change in the fair value of contingent consideration |
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( |
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Accretion of marketable securities purchased at a discount |
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( |
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Deferred income taxes |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
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( |
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Contract assets |
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( |
) |
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( |
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Inventories |
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( |
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Prepaids and other current assets |
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( |
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( |
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Other non-current assets |
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( |
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Trade payables |
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( |
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Accrued expenses |
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Employee benefits payables |
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( |
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Contract liabilities |
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Other current liabilities |
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Non-current lease liabilities |
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( |
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( |
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Other non-current liabilities |
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Net cash used in operating activities |
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( |
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( |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchases of property, equipment and software |
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( |
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( |
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Purchases of marketable securities |
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( |
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( |
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Maturities of marketable securities |
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Net cash used in investing activities |
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( |
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( |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from the exercise of stock options and public warrants |
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Proceeds from Employee Stock Purchase Plan |
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Proceeds from sale of employees restricted stock units to cover taxes |
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Minimum tax withholding paid on behalf of employees for restricted stock units |
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( |
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( |
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Payment of contingent consideration |
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( |
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Purchase of capped calls related to issuance of convertible senior notes |
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( |
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Proceeds from issuance of convertible senior notes |
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Repayments on Trinity Loan Agreement |
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( |
) |
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Payment of debt issuance costs |
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( |
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Finance lease principal payments |
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( |
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( |
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Net cash provided by financing activities |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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Net increase (decrease) in cash and cash equivalents and restricted cash |
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( |
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Cash and cash equivalents, and restricted cash, beginning of period |
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Cash and cash equivalents, and restricted cash, end of period |
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$ |
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$ |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
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Cash paid for interest |
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$ |
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$ |
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Cash paid for income taxes |
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SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: |
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Unpaid purchases of property, equipment and software |
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Right-of-use assets obtained in exchange for new operating lease liabilities |
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Accrued debt issuance costs |
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Issuance of common stock for payment of accrued bonus |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
8
ROCKET LAB USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024 AND DECEMBER 31, 2023 AND FOR THE
THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(unaudited; in thousands, except share and per share data)
Principals of Consolidation and Basis of Presentation
The accompanying unaudited condensed consolidated financial statements are presented in conformity with accounting standards generally accepted in the United States of America (“U.S. GAAP”) and the requirements of the SEC for interim financial information and include the accounts of Rocket Lab USA, Inc. and its wholly owned subsidiaries after elimination of intercompany accounts and transactions. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2024, or for any other interim period or for any other future year.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
On an ongoing basis, our management evaluates estimates and assumptions including those related to revenue recognition, contract costs, loss reserves, valuation of warrants and stock-based compensation and deferred tax valuation allowances. We based our estimates on historical data and experience, as well as various other factors that our management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities. Actual results could differ from these estimates and assumptions.
Other Significant Accounting Policies
Convertible Senior Notes
The Company accounts for convertible senior notes under Accounting Standards Codification (“ASC”) ASC 470-20 - Debt with Conversion and Other Options and Derivatives and Hedging—Contracts in Entity's Own Equity (“ASU 2020-06”). The Company records the convertible senior notes as a long-term liability at face value net of debt issuance costs. If any of the conditions to the convertibility of the convertible senior notes is satisfied, or the convertible senior notes become due within one year, then the Company may be required under applicable accounting standards to reclassify the carrying value of the convertible senior notes as a current, rather than a long-term liability.
Debt issuance costs related to the convertible senior notes were capitalized and recorded as a contra-liability and are presented net against the convertible senior notes balance on the condensed consolidated balance sheets. Debt issuance costs consist of underwriting, legal and other direct costs related to the issuance of the convertible senior notes and are amortized to interest expense over the term of the convertible senior notes using the effective interest method.
9
Capped Call Transactions
Capped call transactions cover the aggregate number of shares of the Company’s common stock that will initially underlie the convertible senior notes. The Company determined that the freestanding capped call option contracts qualify as equity under the accounting guidance on indexation and equity classification, and recognized the contract by recording an entry to “Additional paid-in capital” (“APIC”) in stockholders’ equity in its condensed consolidated balance sheets. The Company also determined that the capped call option contracts meet the definition of a derivative under ASC Topic 815, “Derivatives and Hedging” (“ASC 815”), but are not required to be accounted for as a derivative as they meet the scope exception outlined in ASC 815. The capped call options are recorded in APIC and not remeasured.
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 280”), which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. ASU 280 requires a public entity to disclose the title and position of the Chief Operating Decision Maker. ASU 280 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in ASU 280 retrospectively to all prior periods presented in the financial statements. The Company is assessing the potential impact of adopting ASU 280 on its financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 740”), which focuses on the rate reconciliation and income taxes paid. ASU 740 requires a public business entity (“PBE”) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. An entity may apply the amendments in ASU 740 prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU 740 disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented. The Company is assessing the potential impact of adopting ASU 740 on its financial statements.
In March 2024, the SEC adopted final rules requiring public entities to provide certain climate-related information in their registration statements and annual reports. As part of the disclosures, entities will be required to quantify certain effects of severe weather events and other natural conditions in a note to their audited financial statements. The rules will be effective for large accelerated filers in annual periods beginning in calendar-year 2025. On April 4, 2024, the SEC voluntarily stayed implementation of the final rule to facilitate the orderly judicial resolution of pending legal challenges to the rule. The Company is assessing the effect of the new rules on our consolidated financial statements and related disclosures.
The following table provides information about revenue by recognition model during the three months ended March 31, 2024 and 2023:
|
|
Three Months Ended March 31, |
|
|||||
Revenues by recognition model |
|
2024 |
|
|
2023 |
|
||
Point-in-time |
|
$ |
|
|
$ |
|
||
Over-time |
|
|
|
|
|
|
||
Total revenue by recognition model |
|
$ |
|
|
$ |
|
||
The timing of revenue recognition, billings, and cash collections results in billed accounts receivable, unbilled receivables (presented within contract assets) and customer advances and deposits (presented within contract liabilities) on the condensed consolidated balance sheets, where applicable. Amounts are generally billed as work progresses in accordance with agreed-upon milestones. These individual contract assets and liabilities are reported in a net position on a contract-by-contract basis on the condensed consolidated balance sheets at the end of each reporting period.
The following table presents the balances related to enforceable contracts as of March 31, 2024 and December 31, 2023:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Contract balances |
|
|
|
|
|
|
||
Accounts receivable, net |
|
$ |
|
|
$ |
|
||
Contract assets |
|
|
|
|
|
|
||
Contract liabilities |
|
|
( |
) |
|
|
( |
) |
10
Changes in contract liabilities for the three months ended March 31, 2024 were as follows:
Contract liabilities, at December 31, 2023 |
|
$ |
|
|
Customer advances received or billed |
|
|
|
|
Recognition of unearned revenue |
|
|
( |
) |
Contract liabilities, at March 31, 2024 |
|
$ |
|
The revenue recognized from the contract liabilities consisted of the Company satisfying performance obligations during the normal course of business.
The amount of revenue recognized from changes in the transaction price associated with performance obligations satisfied in prior years during the three months ended March 31, 2024 and 2023 was not material.
Backlog
The Company’s backlog represents the estimated transaction prices on performance obligations to the Company’s customers for which work remains to be performed. The amount of backlog increases with new contracts or additions to existing contracts and decreases as revenue is recognized on existing contracts. Contracts are included in the amount of backlog when an enforceable agreement has been reached. Remaining backlog totaled $
Concentration of Credit Risk and Significant Customers
As of March 31, 2024, the Company’s customers that accounted for 10% or more of the total accounts receivable, net, were:
|
|
March 31, 2024 |
|
|
Lockheed Martin Corporation |
|
|
% |
|
MDA Corporation |
|
|
% |
|
Northrop Grumman Corporation |
|
|
% |
|
For the three months ended March 31, 2024, the Company’s customers that accounted for 10% or more of the total revenue, were as follows:
|
|
Three Months Ended March 31, 2024 |
|
|
MDA Corporation |
|
|
% |
|
U.S. government customer |
|
|
% |
|
Customer Financing
In connection with the signing of two separate multi-launch agreements with commercial customers, the Company entered into subordinated loan and security agreements. The commercial customers may choose to have certain milestone payments financed under the terms of the subordinated loan and security agreements.
As of March 31, 2024, the Company had $
11
Cash and cash equivalents and marketable securities consisted of the following as of March 31, 2024 and December 31, 2023:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Marketable securities, current |
|
|
|
|
|
|
||
Marketable securities, non-current |
|
|
|
|
|
|
||
Total cash and cash equivalents and marketable securities |
|
$ |
|
|
$ |
|
||
As of March 31, 2024, cash equivalents and marketable securities consisted of the following:
|
|
Amortized Cost |
|
|
Gross Unrealized Gains |
|
|
Gross Unrealized Losses |
|
|
Fair Value |
|
|
Cash Equivalents |
|
|
Marketable Securities |
|
||||||
Money market accounts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Certificates of deposit |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||||
Commercial paper |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||||
Corporate debt securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||||
Yankee bonds |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||||
U.S. Treasury securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||||
Mortgage- and asset-backed securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||
The following table presents the Company’s marketable securities with unrealized losses by investment category and the length of time the marketable securities have been in a continuous loss position as of March 31, 2024:
|
|
In Loss Position for |
|
|
In Loss Position for |
|
|
Total |
|
|||||||||||||||
|
|
Fair Value |
|
|
Unrealized Losses |
|
|
Fair Value |
|
|
Unrealized Losses |
|
|
Fair Value |
|
|
Unrealized Losses |
|
||||||
Certificates of deposit |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||||
Commercial paper |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Corporate debt securities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Yankee bonds |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
U.S. Treasury securities |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Mortgage- and asset-backed securities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|||
The Company has not observed a significant deterioration in credit quality of these securities, which are highly rated with moderate to low credit risk. Declines in value are largely attributable to current global economic conditions. The securities continue to make timely principal and interest payments, and the fair values are expected to recover as they approach maturity. The Company does not intend to sell the securities, and it is not more likely than not that the Company will be required to sell the securities, before the respective recoveries of their amortized cost bases, which may be maturity. As of March 31, 2024, the Company had not recognized an allowance for credit losses on any marketable securities in an unrealized loss position.
The following table summarizes the contractual maturities of the Company’s cash equivalents and marketable securities as of March 31, 2024:
|
|
Amortized Cost |
|
|
Fair Value |
|
||
Due within one year |
|
$ |
|
|
$ |
|
||
Due within one to two years |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
12
As of March 31, 2024 and December 31, 2023 the following financial assets and liabilities are measured at fair value on a recurring basis and are categorized using the fair value hierarchy as follows:
|
|
March 31, 2024 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market accounts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Marketable securities, current: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Certificates of deposit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Yankee bonds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage- and asset-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketable securities, non-current |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Yankee bonds |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
U.S. Treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage- and asset-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other non-current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent consideration |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
December 31, 2023 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market accounts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Marketable securities, current: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Certificates of deposit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Yankee bonds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketable securities, non-current |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage- and asset-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other non-current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent consideration |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The estimated fair value amounts shown above are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company’s intent or ability to dispose of the financial instrument.
There were
13
Inventories as of March 31, 2024 and December 31, 2023 consisted of the following:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work in process |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Total inventories |
|
$ |
|
|
$ |
|
||
Prepaids and other current assets as of March 31, 2024 and December 31, 2023 consisted of the following:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Prepaid expenses and deposits |
|
$ |
|
|
$ |
|
||
Government grant receivables |
|
|
|
|
|
|
||
Customer financing receivables |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
|
||
Total prepaids and other current assets |
|
$ |
|
|
$ |
|
||
In the first quarter of 2023, the Company updated its Electron recovery strategy by completing a marine recovery, which we believe will be a more effective and financially viable type of recovery. As a result, the Company has ceased mid-air rocket booster recovery and began the sale process of two helicopters. As of March 31, 2023, the Company’s two helicopters met the held for sale criteria and the Company ceased depreciating these assets.
On October 18, 2023, the Company sold one of the Company’s held for sale helicopters to a purchaser unaffiliated with the Company. As of March 31, 2024, the Company’s remaining helicopter continued to be classified as held for sale with a carrying amount of $
Property, plant and equipment, net, as of March 31, 2024 and December 31, 2023 consisted of the following:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Buildings and improvements |
|
$ |
|
|
$ |
|
||
Machinery, equipment, vehicles and office furniture |
|
|
|
|
|
|
||
Computer equipment, hardware and software |
|
|
|
|
|
|
||
Launch site assets |
|
|
|
|
|
|
||
Construction in process |
|
|
|
|
|
|
||
Property, plant and equipment—gross |
|
|
|
|
|
|
||
Less accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Property, plant and equipment—net |
|
$ |
|
|
$ |
|
||
Depreciation expense recorded in the condensed consolidated statements of operations and comprehensive loss during the three months ended March 31, 2024 and 2023 consisted of the following:
|
|
Three Months Ended March 31, |
|
|||||
Depreciation expense |
|
2024 |
|
|
2023 |
|
||
Cost of revenues |
|
$ |
|
|
$ |
|
||
Research and development |
|
|
|
|
|
|
||
Selling, general and administrative |
|
|
|
|
|
|
||
Total depreciation expense |
|
$ |
|
|
$ |
|
||
14
Goodwill
The carrying amount of goodwill for the Space Systems reportable segment was $
Intangible Assets
The components of intangible assets consisted of the following as of March 31, 2024 and December 31, 2023:
|
|
March 31, 2024 |
|
|||||||||
|
|
Gross |
|
|
Accumulated |
|
|
Net Carrying |
|
|||
Finite-Lived Intangible Assets |
|
|
|
|
|
|
|
|
|
|||
Developed Technology |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Capitalized software |
|
|
|
|
|
( |
) |
|
|
|
||
Customer relationships |
|
|
|
|
|
( |
) |
|
|
|
||
Trademarks and tradenames |
|
|
|
|
|
( |
) |
|
|
|
||
Backlog |
|
|
|
|
|
( |
) |
|
|
|
||
Other |
|
|
|
|
|
( |
) |
|
|
|
||
Indefinite-Lived Intangible Assets |
|
|
|
|
|
|
|
|
|
|||
In-process Technology |
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
December 31, 2023 |
|
|||||||||
|
|
Gross |
|
|
Accumulated |
|
|
Net Carrying |
|
|||
Finite-Lived Intangible Assets |
|
|
|
|
|
|
|
|
|
|||
Developed Technology |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Capitalized software |
|
|
|
|
|
( |
) |
|
|
|
||
Customer relationships |
|
|
|
|
|
( |
) |
|
|
|
||
Trademarks and tradenames |
|
|
|
|
|
( |
) |
|
|
|
||
Backlog |
|
|
|
|
|
( |
) |
|
|
|
||
Other |
|
|
|
|
|
( |
) |
|
|
|
||
Indefinite-Lived Intangible Assets |
|
|
|
|
|
|
|
|
|
|||
In-process Technology |
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Amortization expense recorded in the condensed consolidated statements of operations and comprehensive loss during the three months ended March 31, 2024 and 2023, respectively consisted of the following:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cost of revenues |
|
$ |
|
|
$ |
|
||
Research and development |
|
|
|
|
|
|
||
Selling, general and administrative |
|
|
|
|
|
|
||
Total amortization expense |
|
$ |
|
|
$ |
|
||
The following table outlines the estimated future amortization expense related to intangible assets held as of March 31, 2024:
2024 (for the remaining period) |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
15
Indenture and Notes
On February 6, 2024, the Company issued $
The Notes are the Company’s senior, unsecured obligations and are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness; (ii) senior in right of payment to the Company’s future indebtedness that is expressly subordinated to the Notes in right of payment; (iii) effectively subordinated to the Company’s existing and future secured indebtedness, including borrowings under its equipment financing agreement, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries.
The Notes accrue interest at a rate of
As of March 31, 2024, there was $
Capped Call Transactions
In connection with the pricing of the Notes, on February 1, 2024 and February 2, 2024, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain financial institutions. Collectively, the Capped Call Transactions cover, subject to customary adjustments, the number of shares of common stock initially underlying the Notes. The cost of the Capped Call Transactions was $
The Capped Call Transactions do not meet the criteria for separate accounting as a derivative as they are indexed to the Company’s stock. The premiums paid for the Capped Call Transactions have been included as a net reduction to additional paid-in capital within shareholders’ equity.
Trinity Master Equipment Financing Agreement
16
On February 8, 2024, the Company paid off all obligations under the Blanket Lien Draw in the amount of $
As of March 31, 2024, there was $
The future principal payments under the Trinity Loan Agreement as of March 31, 2024 were as follows:
2024 (for the remaining period) |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
Total |
|
$ |
|
Equity Classified Common Stock Warrants
In connection with the Trinity Loan Agreement, the Company also issued to Lender a warrant (“Warrant”), dated December 29, 2023, to purchase up to
The warrants were classified as equity in accordance with ASC 480, Distinguishing Liabilities from Equity, as the agreements provide for the settlement of the instruments in shares of common stock. The proceeds from the Trinity Loan Agreement were allocated to the loan and warrants based on the relative fair value at inception, resulting in a reduction to the loan amount and amortized to interest expense over the term of the loan. The warrants are recognized as additional paid-in capital, a component of equity in the consolidated balance sheets.
17
Equity Incentive Plans
The Company has a single active equity incentive plan, the Rocket Lab 2021 Stock Option and Incentive Plan (the “2021 Plan”), with the objective of attracting and retaining available employees and directors by providing stock-based and other performance-based compensation. The 2021 Plan provides for the grant of equity awards to officers, employees, directors and other key employees as well as service providers which include incentive stock options, non-qualified stock options, restricted stock awards, unrestricted stock awards, restricted stock units or any combination of the foregoing any of which may be performance based, as determined by the Company’s Compensation Committee. An aggregate of
The Rocket Lab 2013 Stock Option and Grant Plan (the “2013 Plan”) was terminated, and accordingly, no shares are available for future issuance under the 2013 Plan following the closing of the Company’s business combination with Vector Acquisition Corporation in 2021. The 2013 Plan will continue to govern outstanding awards granted thereunder.
Total stock-based compensation recorded in the condensed consolidated statements of operations and comprehensive loss during the three months ended March 31, 2024 and 2023 consisted of the following:
|
|
Three Months Ended March 31, |
|
|||||
Stock-based compensation |
|
2024 |
|
|
2023 |
|
||
Cost of revenues |
|
$ |
|
|
$ |
|
||
Research and development |
|
|
|
|
|
|
||
Selling, general and administrative |
|
|
|
|
|
|
||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
||
Options
Options issued to all optionees under the 2013 Plan vest over
Restricted Stock Units
During the three months ended March 31, 2024 and 2023, the Company granted
As of March 31, 2024, the total unrecognized compensation expense related to unvested performance-based restricted stock units granted under the 2013 Plan and 2021 Plan was $
2021 Employee Stock Purchase Plan
In August 2021, the 2021 Employee Stock Purchase Plan (the “2021 ESPP”) was approved to reserve
18
The Company has operating and finance leases for properties, vehicles and equipment. The Company’s leases have remaining lease terms of less than
There have been no other material changes in the Company’s lease portfolio since December 31, 2023.
Litigation and Claims
The Company is, and from time to time may be, a party to claims and legal proceedings generally incidental to its business that are principally covered under contracts with its customers and insurance policies. In the opinion of management, there are no legal matters or claims likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows.
Other Commitments
The Company has commitments under its lease obligations (see Note 14).
Contingencies
The Company records a contingent liability when it is both probable that a loss has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s condensed consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.
In connection with the acquisition of SolAero Holdings, Inc. in January 2022, the Company assumed a contract with a customer to provide solar panel module at a fixed price. The Company determined that it was probable that the costs to complete the solar panel modules as stipulated by the contract would exceed the fixed firm price of the solar panel modules.
The provision for contract losses outstanding as of March 31, 2024, which primarily is related to the solar panel module agreement, was $
Income tax provision and the effective tax rate for the three months ended March 31, 2024 and 2023 were as follows:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Income tax provision |
|
$ |
( |
) |
|
$ |
( |
) |
Effective tax rate |
|
|
( |
)% |
|
|
( |
)% |
The tax provisions for the three months ended March 31, 2024 and 2023 were computed using the estimated effective tax rates projected to be applicable for domestic and international taxable jurisdictions for the full year as adjusted for discrete items arising during each quarter.
The effective tax rate differs from the federal statutory rate due primarily to a full valuation allowance against our US deferred tax assets, as well as the impact of discrete items that may occur in any given year but which are not consistent from year-to-year.
The Company is not currently under examination by the IRS, state and local, or foreign tax authorities. Due to its net operating loss carryforwards, the Company remains subject to examination for U.S. federal and state jurisdictions for all years beginning with the year ended March 31, 2016. The Company’s foreign subsidiaries are generally subject to examination within four years from the end of the tax year during which the tax return was filed.
As of March 31, 2024, the Company anticipates that $
19
Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during each period.
The holder of each share of common stock has the right to one vote for each share and is entitled to notice of any stockholders’ meeting and to vote upon certain events.
Diluted net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of common and dilutive common equivalent shares outstanding for the period using the treasury-stock method or the if-converted method, whichever is more dilutive. Potentially dilutive shares are comprised of restricted stock units and stock options. For the three months ended March 31, 2024 and 2023, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss and potentially dilutive shares being anti-dilutive.
The following table summarizes the computation of basic and diluted net loss per share attributable to common stockholders of the Company for the three months ended March 31, 2024 and 2023:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Numerator |
|
|
|
|
|
|
||
Net loss attributable to common stockholders-basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
Denominator |
|
|
|
|
|
|
||
Weighted average common shares outstanding-basic and diluted |
|
|
|
|
|
|
||
Net loss per share attributable to common stockholders-basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
The following equity shares were excluded from the calculation of diluted net loss per share attributable to common stockholders because their effect would have been anti-dilutive:
|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Stock options and restricted stock units |
|
|
|
|
|
|
||
Common stock warrants |
|
|
|
|
|
|
||
Shares underlying our convertible senior notes |
|
|
|
|
|
|
||
The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. The Company manages its business primarily based upon
|
|
Three Months Ended March 31, |
|
|||||||||||||
|
|
2024 |
|
|
2023 |
|
||||||||||
|
|
Launch |
|
|
Space |
|
|
Launch |
|
|
Space |
|
||||
Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit (loss) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Management does not regularly review either reporting segment’s total assets or operating expenses. This is because in general, the Company’s long-lived assets, facilities, and equipment are shared by each reporting segment.
As of March 31, 2024 and December 31, 2023, there are
20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. You should read this discussion and analysis in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. For additional context with which to understand our financial condition and results of operations, see the audited consolidated financial statements and accompanying notes contained therein as of December 31, 2023 and 2022 and related notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 28, 2024. Certain amounts may not foot due to rounding. Certain information in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q contains forward-looking statements that involve numerous risks and uncertainties, including, but not limited to, those described under the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and Part II, Item 1A. “Risk Factors” included in this Quarterly Report on Form 10-Q and under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 28, 2024. We assume no obligation to update any of these forward-looking statements. Actual results may differ materially from those contained in any forward-looking statements.
Overview
Rocket Lab is an end-to-end space company with an established track record of mission success. We deliver reliable launch services, spacecraft design services, spacecraft components, spacecraft manufacturing and other spacecraft and on-orbit management solutions that make it faster, easier and more affordable to access space.
While our business has historically been centered on the development of small-class launch vehicles and the related sale of launch services, we are currently innovating in the areas of medium-class launch vehicles and launch services, space systems design and manufacturing, on-orbit management solutions, and space data applications. Each of these initiatives addresses a critical component of the end-to-end solution and our value proposition for the space economy:
Electron is our orbital small launch vehicle that was designed from the ground up to accommodate a high launch rate business model to meet the growing and dynamic needs of our customers for small launch services. Since its maiden launch in 2017, Electron has become the leading small spacecraft launch vehicle delivering over 180 spacecraft to orbit for government and commercial customers across 42 successful missions through March 31, 2024. In 2023, Electron was the second most frequently orbital launched rocket by companies operating in the United States and maintained Rocket Lab as the fourth most frequent orbital launcher globally. Our launch services program has seen us develop many industry-leading innovations, including 3D printed electric turbo-pump rocket engines, fully carbon composite first stage fuel tanks, a private orbital launch complex, a rocket stage that can be configured to convert into a highly capable spacecraft on orbit, and the potential ability to successfully recover a stage from space, providing a path to reusability.
In March 2021, we announced plans to develop our reusable-ready medium-capacity Neutron launch vehicle which will increase the payload capacity of our space launch vehicles to approximately 15,000 kg for expendable launches to low Earth orbit and lighter payloads for reusable configurations and into higher orbits. Neutron will be tailored for commercial and U.S. government constellation launches and ultimately configurable for and capable of human space flight, enabling us to provide crew and cargo resupply to the International Space Station. Neutron will also provide a dedicated service to orbit for larger civil, defense and commercial payloads that need a high level of schedule control and high-flight cadence. Neutron is expected to have the capability of launching nearly all of the spacecraft configurations that we expect to be launched through 2029 and we expect to be able to leverage Electron’s flight heritage across various vehicle subsystems designs, launch complexes and ground station infrastructure.
21
Our space systems initiatives are supported by the design and manufacture of our family of advanced configurable spacecraft along with a range of components, software and services for spacecraft, including reaction wheels, star trackers, radios, separation systems, solar solutions, command and control spacecraft software, high voltage space grade battery solutions, and additional products in development to serve a wide variety of sub-system functions. We entered this market with our acquisition of leading spacecraft components manufacturer Sinclair Interplanetary, and have since expanded our market participation with the acquisitions of Planetary Systems Corporation, SolAero Holdings, Inc. and aerospace software firm Advanced Solutions, Inc. Each of these strategic acquisitions brought incremental vertically-integrated capabilities for our own family of advanced configurable spacecraft and also enabled Rocket Lab to deliver high-volume manufacturing of critical spacecraft components and software solutions at scale prices to the broader spacecraft merchant market. The family of advanced configurable spacecraft, which are configurable for a range of low Earth orbit, medium Earth orbit, geosynchronous orbit and interplanetary missions enable us to offer an end-to-end mission solution encompassing launch, full spacecraft manufacturing, ground services and mission operations to provide customers with streamlined access to orbit with Rocket Lab as a single mission partner.
Recent Developments
Neutron Update
We have begun our test campaign related to the Archimedes engine for the Neutron launch vehicle and updated the schedule for first flight to no earlier than mid-2025.
Key Metrics and Select Financial Data
We monitor the following key financial and operational metrics that assist us in evaluating our business, measuring our performance, identifying trends and making strategic decisions.
Launch Vehicle Build-Rate and Launch Cadence
We built approximately eight launch vehicles 2021, approximately 12 launch vehicles in 2022 and approximately 11 launch vehicles in 2023. We built approximately three launch vehicles through the three months ended March 31, 2024. We launched six vehicles in 2021, nine vehicles in 2022 and ten vehicles in 2023. We have launched four vehicles through the three months ended March 31, 2024 and launched five vehicles through May 6, 2024. Growth rates between launches and total launch service revenue are not perfectly correlated because our total revenue is affected by other variables, such as the revenue per launch, which can vary considerably based on factors such as unique orbit and insertion requirements, payload handling needs, launch location, time sensitivity of mission completion and other factors. We believe that the growth in our build rate and launch rate is a positive indicator of our ability to scale our launch operations.
Revenue Growth
Three Months Ended March 31, 2024 and 2023
We generated $92.8 million and $54.9 million in revenue for the three months ended March 31, 2024 and 2023, respectively, representing a year-on-year increase in revenue of approximately 69%. This year-on-year increase primarily resulted from space systems growth of $24.8 million and launch growth of $13.1 million due to a higher launch cadence with four launch missions completed in the three months ended March 31, 2024, versus three launch missions completed in the three months ended March 31, 2023 and higher revenue value per launch.
Revenue and Cost Value Per Launch
Revenue and cost value per launch represents the average revenue and cost per launch contract attributable to launches that occurred during a period, regardless of when the revenue or cost was recognized. Revenue and cost value per launch can be a useful metric to provide insight into general competitiveness and price sensitivity in the marketplace. Revenue and cost value per launch can vary considerably, based on factors such as unique orbit and insertion requirements, payload handling needs, launch location, time sensitivity of mission completion and other factors, and as such may not provide absolute clarity with regards to pricing and competitive dynamics in the marketplace.
Three Months Ended March 31, 2024 and 2023
In the three months ended March 31, 2024 and 2023, our revenue value per launch was $8.2 million and $6.5 million, respectively. Meanwhile, cost per launch for the three months ended March 31, 2024 and 2023 was $6.1 million and $7.5 million, respectively, excluding a $2.1 million benefit from non-recurring employee retention credit to Launch Services cost of revenue in the three months ended March 31, 2023.
22
Backlog
Backlog represents future revenues that we would recognize in connection with the completion of all contracts and purchase orders that have been entered into by our customers but have not yet been fulfilled, excluding any customer options for future products or services that have not yet been exercised. Contracts for launch services and spacecraft builds typically include termination rights that may be exercised by customers upon advanced notice and payment of a specified termination fee. Our backlog decreased from $1,046.1 million as of December 31, 2023 to $1,015.3 million as of March 31, 2024, of which $215.6 million is related to Launch Services and $799.7 million is related to Space Systems. The decrease was primarily a result of recognizing revenue on contracts during the period, partially offset by bookings during the period.
Key Factors Affecting Our Performance
Ability to sell additional launch services, space systems service and spacecraft components to new and existing customers
Our results will be impacted by our ability to sell our launch services, space systems services, and spacecraft components to new and existing customers. We have successfully launched Electron 42 times delivering over 180 spacecraft to orbit, including one suborbital launch, through March 31, 2024. We have flight hardware and spacecraft that have flown on over 1,700 missions, including legacy missions enabled by Sinclair Interplanetary (acquired April 2020), Advanced Space Solutions, Inc (acquired October 2021), Planetary Space Corporation (acquired November 2021) and SolAero Technologies (acquired January 2022). Our growth opportunity is dependent on our ability to expand our addressable launch services market with larger volumetric and higher mass payload capabilities of our in-development medium-capacity Neutron launch vehicle, which will address large commercial and government constellation launch opportunities. Our growth opportunity is also dependent on our ability to win spacecraft constellation missions and expand our portfolio of strategic spacecraft components. Our ability to sell additional products to existing customers is a key part of our success, as follow-on purchases indicate customer satisfaction and decrease the likelihood of competitive substitution. To sell additional products and services to new and existing customers, we will need to continue to invest significant resources in our products and services.
Ability to improve profit margins and scale our business
We intend to continue to invest in initiatives to improve our operating leverage and significantly ramp production. We believe continued reduction in costs and an increase in production volumes will enable the cost of launch vehicles to decline and improve our gross margins. Our ability to achieve our production-efficiency objectives could be negatively impacted by a variety of factors including, among other things, lower-than-expected facility utilization rates, manufacturing and production cost overruns, increased purchased material costs and unexpected supply-chain quality issues or interruptions.
Government expenditures and private enterprise investment into the space economy
Government expenditures and private enterprise investment has fueled the growth in our target markets. We expect the continued availability of government expenditures and private investment for our customers to help fund purchases of our products and services will remain. This is an important factor in our company’s growth prospects.
Components of Results of Operations
Revenue
Our revenues are derived from a combination of long-term fixed price contracts for launch services and spacecraft builds, and purchase order based spacecraft components sales. Revenues from long-term contracts are recognized using either the “point-in-time” or “over-time” method of revenue recognition. Point-in-time revenue recognition results in cash payments being initially accrued to the balance sheet as deferred revenue as contractual milestones are accomplished and then recognized as revenue once the final contractual obligation is completed. Over-time revenue recognition is based on an input measure of progress based on costs incurred compared to estimated total costs at completion. Each project has a contractual revenue value and an estimated cost. The over-time revenue is recognized based on the percentage of the total project cost that has been realized.
Estimating future revenues and associated costs and profit is a process requiring a high degree of management judgment, including management’s assumptions regarding our future operational performance as well as general economic conditions. Frequently, the period of performance of a contract extends over a long period of time and, as such, revenue recognition and our profitability from a particular contract may be affected to the extent that estimated costs to complete are revised, delivery schedules are delayed, performance-based milestones are not achieved or progress under a contract is otherwise impeded. Accordingly, our recorded revenues and operating profit from period to period can fluctuate significantly depending on when the point-in-time or over-time contractual obligations are achieved. In the event cost estimates indicate a loss on a contract, the total amount of such loss is recorded in the period in which the loss is first estimated.
23
Cost of Revenues
Cost of revenues consists primarily of direct material and labor costs, manufacturing overhead, other personnel-related expenses, which include salaries, bonuses, benefits and stock-based compensation expense, reserves for estimated warranty costs, freight expense and depreciation expense. Cost of revenues also includes charges to write-down the carrying value of inventory when it exceeds its estimated net realizable value, including on-hand inventory that is either obsolete or in excess of forecasted demand. We expect our cost of revenues to increase in absolute dollars in future periods as we sell more launch services and space systems solutions. As we grow into our current capacity and execute on cost-reduction initiatives, we expect our cost of revenues as a percentage of revenue to decrease over time.
Because direct labor costs and manufacturing overhead comprise a significant portion of cost of revenues, increasing our production rate resulting in greater absorption of these costs is our most critical cost reduction initiative. Increasing our production rate is a cross-functional effort involving sales and business development, manufacturing, engineering, supply chain and finance.
Operating Expenses
Our operating expenses consist of research and development and selling, general and administrative expenses.
Research and Development, net
Research and development expense consists primarily of personnel-related expenses, consulting and contractor expenses, design software licenses, validation and testing expense, prototype parts and materials, facilities and depreciation expense. We intend to continue to make significant investments in developing new products and enhancing existing products, including but not limited to our medium capacity Neutron launch vehicle, Electron’s first stage recovery, and family of advanced configurable spacecraft features and capabilities, as well as expanding our portfolio of spacecraft components and subsystems. Research and development expense will be variable relative to the number of products that are in development, validation or testing. However, we expect it to decline as a percentage of total revenue over time.
Selling, General and Administrative
Selling, general and administrative expenses consist primarily of personnel-related expenses for our sales, marketing, supply chain, finance, legal, human resources and administrative personnel, as well as the costs of customer service, information technology, risk management and related insurance, travel, allocated overhead and other marketing, communications and administrative expenses. We also expect to further invest in our corporate infrastructure and incur additional expenses associated with operating as a public company, including increased legal and accounting costs, investor relations and compliance costs. As a result, we expect that selling, general and administrative expenses will increase in absolute dollars in future periods but decline as a percentage of total revenue over time.
Interest Income (Expense), Net
Interest income (expense), net consists primarily of interest expense incurred on debt and interest income earned on our cash and cash equivalents, short-term investments balances and marketable securities.
Gain (Loss) on Foreign Exchange
Gain (loss) on foreign exchange relates to currency fluctuations that generate foreign exchange gains or losses on invoices denominated in currencies other than the United States (“U.S.”) Dollar.
24
Results of Operations
Comparison of the Three Months Ended March 31, 2024 and 2023
The following table sets forth our consolidated statements of operations information and data as a percentage of revenue for the three months ended March 31, 2024 and 2023 (in thousands, except percentages):
|
|
Three Months Ended March 31, |
|
|||||||||||||
|
|
2024 |
|
|
2023 |
|
||||||||||
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
||||
Revenues |
|
$ |
92,767 |
|
|
|
100.0 |
% |
|
$ |
54,895 |
|
|
|
100.0 |
% |
Cost of revenues |
|
|
68,593 |
|
|
|
73.9 |
% |
|
|
48,538 |
|
|
|
88.4 |
% |
Gross profit |
|
|
24,174 |
|
|
|
26.1 |
% |
|
|
6,357 |
|
|
|
11.6 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development, net |
|
|
38,504 |
|
|
|
41.5 |
% |
|
|
23,905 |
|
|
|
43.5 |
% |
Selling, general and administrative |
|
|
28,749 |
|
|
|
31.0 |
% |
|
|
28,469 |
|
|
|
51.9 |
% |
Total operating expenses |
|
|
67,253 |
|
|
|
72.5 |
% |
|
|
52,374 |
|
|
|
95.4 |
% |
Operating loss |
|
|
(43,079 |
) |
|
|
(46.4 |
)% |
|
|
(46,017 |
) |
|
|
(83.8 |
)% |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
|
(898 |
) |
|
|
(1.0 |
)% |
|
|
(685 |
) |
|
|
(1.2 |
)% |
Gain on foreign exchange |
|
|
311 |
|
|
|
0.3 |
% |
|
|
134 |
|
|
|
0.2 |
% |
Other (expense) income, net |
|
|
(589 |
) |
|
|
(0.6 |
)% |
|
|
1,477 |
|
|
|
2.7 |
% |
Total other (expense) income, net |
|
|
(1,176 |
) |
|
|
(1.3 |
)% |
|
|
926 |
|
|
|
1.7 |
% |
Loss before income taxes |
|
|
(44,255 |
) |
|
|
(47.7 |
)% |
|
|
(45,091 |
) |
|
|
(82.1 |
)% |
Provision for income taxes |
|
|
(5 |
) |
|
|
— |
|
|
|
(526 |
) |
|
|
(1.0 |
)% |
Net loss |
|
$ |
(44,260 |
) |
|
|
(47.7 |
)% |
|
$ |
(45,617 |
) |
|
|
(83.1 |
)% |
25
Revenues
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|||||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Revenues |
|
$ |
92,767 |
|
|
$ |
54,895 |
|
|
$ |
37,872 |
|
|
|
69 |
% |
Revenue increased by $37.9 million, or 69%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Launch Services revenue was $32.7 million for the three months ended March 31, 2024, an increase of $13.1 million, or 67%, primarily due to a higher launch cadence with four launch missions completed in the three months ended March 31, 2024, versus three launch missions completed in the three months ended March 31, 2023 and higher revenue value per launch. Space systems revenue was $60.0 million for the three months ended March 31, 2024, an increase of $24.8 million, or 70%, primarily due to spacecraft manufacturing growth.
Cost of Revenues
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|||||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Cost of revenues |
|
$ |
68,593 |
|
|
$ |
48,538 |
|
|
$ |
20,055 |
|
|
|
41 |
% |
Cost of revenues increased by $20.1 million, or 41%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Launch Services cost of revenues was $24.3 million in the three months ended March 31, 2024, an increase of $3.9 million, or 19%, primarily due to the higher launch cadence referenced above. Space systems cost of revenue was $44.3 million in the three months ended March 31, 2024, an increase of $16.1 million, or 57%, primarily due to spacecraft manufacturing growth. Cost of revenues for the three months ended March 31, 2024 decreased to 74% of total revenue as compared to 88% during the three months ended March 31, 2023.
Research and Development, Net
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|||||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Research and development, net |
|
$ |
38,504 |
|
|
$ |
23,905 |
|
|
$ |
14,599 |
|
|
|
61 |
% |
Research and development expense increased by $14.6 million, or 61%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to Neutron development progress, increased staff cost as a result of hiring and prototype spend focused on expanding our spacecraft and spacecraft components product portfolio.
Selling, General and Administrative
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|||||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Selling, general and administrative |
|
$ |
28,749 |
|
|
$ |
28,469 |
|
|
$ |
280 |
|
|
|
1 |
% |
Selling, general and administrative expense increased by $0.3 million, or 1%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due a $0.4 million increase in stock-based compensation.
Interest Expense, Net
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|||||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Interest expense, net |
|
$ |
(898 |
) |
|
$ |
(685 |
) |
|
$ |
(213 |
) |
|
|
31 |
% |
Interest expense, net of interest income increased by $0.2 million, or 31%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to an increase of interest expense as a result of increased debt due to the issuance of senior convertible notes.
26
Gain on Foreign Exchange
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|||||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Gain on foreign exchange |
|
$ |
311 |
|
|
$ |
134 |
|
|
$ |
177 |
|
|
|
132 |
% |
Gain on foreign exchange increased by $0.2 million, or 132%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to our New Zealand intercompany loan denominated in New Zealand Dollars.
Other (Expense) Income, Net
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|||||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Other (expense) income, net |
|
$ |
(589 |
) |
|
$ |
1,477 |
|
|
$ |
(2,066 |
) |
|
|
(140 |
)% |
Other expense increased by $2.1 million, or 140%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to a loss on extinguishment of debt of $1.3 million in the three months ended March 31, 2024.
Provision for Income Taxes
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|||||||
(in thousands, except percentages) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Provision for income taxes |
|
$ |
(5 |
) |
|
$ |
(526 |
) |
|
$ |
521 |
|
|
|
(99 |
)% |
We recorded income tax expense of $0.0 million for the three months ended March 31, 2024 and income tax expense of $0.5 million for the three months ended March 31, 2023. The effective tax rate was (0.0)% for the three months ended March 31, 2024, compared to (1.2)% for the three months ended March 31, 2023. The effective tax rate differs from the federal statutory rate due primarily to a full valuation allowance against our U.S. deferred tax assets, as well as the impact of discrete items that may occur in any given year but which are not consistent from year-to-year.
Liquidity and Capital Resources
Since inception, we have funded our operations with proceeds from sales of our capital stock, convertible senior notes, term note debt, research and development grant proceeds, and cash flows from the sale of our products and services. As of March 31, 2024, we had $365.9 million of cash and cash equivalents and $195.2 million of marketable securities. Our primary requirements for liquidity and capital are for investment in new products and technologies, the expansion of existing manufacturing facilities, working capital, debt service, acquisitions of complementary businesses, products or technologies and general corporate needs. Historically, these cash requirements have been met through the net proceeds we received through private sales of equity securities, borrowings under our credit facilities, net proceeds received in our business combination and payments received from customers.
We believe that our existing cash and cash equivalents and payments from customers will be sufficient to meet our working capital and capital expenditure needs for at least the next twelve months, although we may choose to take advantage of opportunistic capital raising or refinancing transactions at any time. We will continue to invest in increasing production and expanding our product offerings through acquisitions.
Material Cash Requirements
As of March 31, 2024, we had outstanding $421.8 million in aggregate principal amount of indebtedness under our convertible senior notes and equipment financing agreement, of which $11.0 million was scheduled to become due in the following twelve months. As of March 31, 2024, our total minimum lease payments was $107.2 million, of which $10.9 million is due in the following twelve months. For details regarding our indebtedness and lease obligations at March 31, 2024, refer to Note 11, Loan Agreements, and Note 14, Leases, to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Our capital expenditures for the three months ended March 31, 2024 were $19.2 million. Our future capital requirements will depend on many factors, including our launch cadence, traction in the market with our space systems offerings, the expansion of sales and marketing activities, the timing and extent of spending to support product development efforts, the introduction of new and enhanced products, the continuing market adoption of our products, the timing and extent of additional capital expenditures to invest in existing and new office spaces and the number of acquisitions of complementary businesses, products or technologies we pursue, if any. We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued product innovation, we may not be able to compete successfully, which would harm our business, operations and financial condition.
27
Additionally, we expect our capital and operating expenditures will increase significantly in connection with ongoing activities as we:
Indebtedness
As of March 31, 2024, there was $355.0 million outstanding under our 4.250% Convertible Senior Notes due 2029, before unamortized discount and debt issuance costs of $11.2 million. In addition, as of March 31, 2024, there was $66.8 million outstanding under the Trinity Loan Agreement, before unamortized discount and debt issuance costs of $3.1 million.
See Note 11 of Item 1 for additional information on our outstanding loan agreements.
Cash Flows
The following table summarizes our cash flows for the periods presented:
|
|
Three Months Ended March 31, |
|
|||||
(in thousands) |
|
2024 |
|
|
2023 |
|
||
Net cash provided by (used in): |
|
|
|
|
|
|
||
Operating activities |
|
$ |
(2,588 |
) |
|
$ |
(25,385 |
) |
Investing activities |
|
|
(52,256 |
) |
|
|
(10,969 |
) |
Financing activities |
|
|
258,707 |
|
|
|
2,058 |
|
Effect of exchange rate changes |
|
|
(519 |
) |
|
|
127 |
|
Net increase (decrease) in cash, cash equivalents, and restricted cash |
|
$ |
203,344 |
|
|
$ |
(34,169 |
) |
Cash Flows from Operating Activities
Net cash used in operating activities was $2.6 million for the three months ended March 31, 2024 and consisted of $44.3 million in net loss, $23.8 million in non-cash activities and $17.8 million in cash provided by operating assets and liabilities. Included in the non-cash activities are $13.1 million in stock-based compensation expense and $8.3 million in depreciation and amortization. Included in the cash provided by operating assets and liabilities are $11.2 million in contract liabilities, $7.5 million in inventory, $6.7 million in other current liabilities and $3.9 million in accounts receivable, offset by cash used in operating assets and liabilities including $5.3 million in prepaids and other assets and $4.3 million in other non-current assets.
Cash Flows from Investing Activities
Cash used in investing activities for the three months ended March 31, 2024 of $52.3 million was primarily driven by $33.1 million of net cash used in investing activities related to purchases and maturities of marketable securities and $19.2 million of capital equipment and infrastructure investments.
Cash Flows from Financing Activities
Cash provided by financing activities for the three months ended March 31, 2024 of $258.7 million was primarily related to $355.0 million of proceeds from the issuance of convertible senior notes, partially offset by $43.2 million of repayments on Trinity Loan Agreement, $43.2 million purchase of capped calls related to the issuance of convertible senior notes and $11.2 million of debt issuance costs.
28
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates as disclosed in our audited financial statements included in our Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 28, 2024.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in foreign currency exchange rates, interest rates and inflation.
Foreign Currency Exchange Risk
Our reporting currency is the U.S. dollar, and the functional currency of each of our subsidiaries is either its local currency or the U.S. dollar. The assets and liabilities of each of our subsidiaries are translated into U.S. dollars at exchange rates in effect at each balance sheet date and operations accounts are translated using the average exchange rate for the relevant period. Increases or decreases in the relative value of the U.S. dollar to other currencies may positively or negatively affect revenue and other operating results as expressed in U.S. dollars. Foreign currency translation adjustments are accounted for as a component of accumulated other comprehensive income (loss) within stockholders’ equity. Gains or losses due to transactions in foreign currencies are reflected in the condensed consolidated statements of operations under the line item “Loss on foreign exchange.” Materially all of our revenues are denominated in U.S. dollars and we have not engaged in the hedging of foreign currency risk to date, although we may choose to do so in the future. As such, a 10% or greater move in exchange rates versus the U.S. dollar could have a material impact on our financial results and position.
Interest Rate Risk
As of March 31, 2024, we had cash and cash equivalents of $365.9 million, comprised primarily of operating accounts and money market instruments and $195.2 million invested in marketable securities, comprised of commercial paper, corporate debt securities, bank certificates of deposit, U.S. Treasury bills and notes and asset backed securities. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.
Impact of Inflation
We do not believe that inflation has had a material effect on our business, results of operations, or financial condition. Nonetheless, if our costs were to become subject to significant inflationary pressures it could diminish our margin thereby limiting our profits, especially if we are not able to fully offset such higher costs. Our inability or failure to do so could harm our business, financial condition, and results of operations.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
As required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of March 31, 2024.
Changes in Internal Control over Financial Reporting
During the period covered by this Quarterly Report on Form 10-Q, there were no changes in the our internal control over financial reporting (“ICFR”) identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 of the Exchange Act that has materially affected, or is reasonably likely to materially affect, the Company’s ICFR.
29
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in litigation relating to claims arising from the ordinary course of business. Our management believes that there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse effect on our results of operations or financial condition.
Item 1A. Risk Factors
There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 28, 2024.
Item 2. Recent Sales of Unregistered Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
Insider Trading Arrangements
During the three months ended March 31, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934)
30
Item 6. Exhibits
|
|
Exhibit Number
|
Description
|
4.1 |
|
|
|
4.2 |
|
|
|
10.1 |
|
|
|
31.1* |
Certification of Principal Executive Officer pursuant to Exchange Act rules 13a-14 or 15d-14. |
|
|
31.2* |
Certification of Principal Financial Officer pursuant to Exchange Act rules 13a-14 or 15d-14. |
|
|
32.1*† |
|
|
|
101.INS* |
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
|
|
101.SCH* |
Inline XBRL Taxonomy Extension Schema Document |
|
|
101.CAL* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
101.DEF* |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
101.LAB* |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
104* |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* Filed herewith.
† The certification furnished in Exhibit 32.1 hereto is deemed to be furnished with this Quarterly Report on Form 10-Q and will not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference.
‡ Management contract or compensatory plan or arrangement.
31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
ROCKET LAB USA, INC. |
|
|
|
|
|
May 6, 2024 |
|
By: |
/s/ Peter Beck
|
|
|
|
Peter Beck |
|
|
|
President, Chief Executive Officer and Chairman |
|
|
|
(Principal Executive Officer) |
|
|
|
|
May 6, 2024 |
|
By: |
/s/ Adam Spice
|
|
|
|
Adam Spice |
|
|
|
Chief Financial Officer |
|
|
|
(Principal Financial and Accounting Officer) |
32
EXHIBIT 31.1
CERTIFICATION PURSUANT TO SECURITIES AND EXCHANGE ACT OF 1934
RULE 13A-14 AS ADOPTED PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Peter Beck, certify that:
|
|
|
|
Date: May 6, 2024 |
|
By: |
/s/ Peter Beck
|
|
|
|
Peter Beck |
|
|
|
President and Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION PURSUANT TO SECURITIES AND EXCHANGE ACT OF 1934
RULE 13A-14 AS ADOPTED PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Adam Spice, certify that:
|
|
|
|
Date: May 6, 2024 |
|
By: |
/s/ Adam Spice
|
|
|
|
Adam Spice |
|
|
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Rocket Lab USA, Inc. (the “Company”) for the period ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to their knowledge:
1) the Report which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
Date: May 6, 2024 |
|
By: |
/s/ Peter Beck
|
|
|
|
Peter Beck |
|
|
|
President and Chief Executive Officer (Principal Executive Officer) |
|
|
|
|
Date: May 6, 2024 |
|
By: |
/s/ Adam Spice
|
|
|
|
Adam Spice |
|
|
|
Chief Financial Officer (Principal Financial and Accounting Officer) |