Good afternoon. My name is Abby and I will be your conference operator today. At this time I would like to welcome everyone to the Momentus, Inc. Third Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Mr. Darryl Genovesi, Vice President of Investor Relations, you may begin your conference.

Thank you, Abby. Hello everyone. Welcome to Momentus’ third quarter 2022 earnings conference call. With me here today are John Rood, Chief Executive Officer of the Company and Chairman of its Board of Directors, as well as Jikun Kim, Chief Financial Officer. Each will provide prepared remarks. Following these prepared remarks, we will take questions from analysts. In the interest of time, we would ask that you limit yourself to one question and one brief follow up. Earlier today, we issued a press release and made a slide presentation available on our Investor Relations website, which provides an overview of our business and financial highlights for the quarter. You can download a copy of the press release and presentation slides at investor’s Momentus space. During today's call, we will make certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions, and as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this communication. You should listen to today's call with the understanding that our actual results may be materially different from the plans, intentions and expectations disclosed in the forward-looking statements we make. For more information about factors that may cause actual results to materially differ from forward-looking statements, please refer to the earnings press release we issued today as well as the company's filings with the Securities and Exchange Commission. Readers are cautioned not to put undue reliance on forward-looking statements, and the company specifically disclaims any obligation to update the forward-looking statements that may be discussed during this call. Please also note that we will refer to certain non-GAAP financial information on today's call. You can find reconciliations of the non-GAAP financial measures to the most comparable GAAP measures in our earnings press release. None of these non-GAAP financial measures is a substitute for or superior to measures of financial performance prepared in accordance with GAAP. With that, I'd like to turn the call over to our Chairman and Chief Executive Officer, John Rood.

Thank you, Darryl. I'm delighted to talk to you about the progress we made during the third quarter and our plans for the future. I'll provide some comments on our activities during the third quarter and the subsequent period leading up to today's conference call. And then I'll spend some time discussing our plans for the remainder of the year in 2023. After I make my comments, our CFO Jikun Kim will take you through the Q3 financial highlights and our financial outlook. So turning slide 3. I'd like to reflect on the substantial progress that Momentus has made over the past 15 months since our de-SPAC and emergence as a public company listed on the NASDAQ Exchange. As a result of hard work and determination we're a much stronger company today than we were back then. We've strengthened engineering and operations capabilities. We put in place a truly impressive group of leaders from our technology development, engineering, program management, manufacturing and operations and supply chain operations composed of industry veterans with decades of experience at companies that are leaders in the space and aerospace industries. We've also recruited outstanding talent below the top of the organization chart down to the individual contributor in our engineering ranks. We streamlined our engineering and development organizational structure to support more rapid development of our spacecraft with greater rigor. We've made substantial progress, putting in place more mature, documented engineering processes to develop, assemble, and test our spacecraft and its components, including resolving issues in a disciplined and repeatable manner. The results of the improvements that we've made are evident as we compare our current experience with the next spacecraft that we plan to fly called Vigoride 5 to our recent past experience with the last spacecraft that we launched, called Vigoride 3.…

Thank you John. Before I discuss the third quarter financials, I'd like to take this opportunity to thank the Momentus team for their hard work and dedication. Turning to slide 15. Our third quarter results reflect our ongoing progress and investments to further our technology and business model. We have cumulatively signed contracts for approximately $43 million in backlog or potential revenue as of October 31, 2022. The breadth of the signed contract spanned across 19 companies in 14 different countries. In general, our customers have the right to cancel their contracts with the understanding that they could forego their deposits and milestone payments. If a customer cancels a contract before all of the payments are made, the resulting revenue will be less than the full value to backlog. Recall that our reported backlog includes firm orders as well as options. These options give our customers the flexibility to opt into an available launch slot without requiring a separate agreement. Our total backlog declined by $12 million relative to the $55 million we reported in Q2. This decline was primarily due to the exploration of options and options that we expect to expire unexercised in contrast or for motors backlog held steady this quarter. We ended Q3 with non restricted cash and cash equivalent of $82 million, which we continue to believe should carry us through to the end of 2023 as John described. We invested approximately $28 million in cash during Q3, approximately $3 million higher compared to our Q2 cash flow but in line with our announced cost reduction plans. Q3 cash investments included $3 million in debt amortizations as well as the final $5 million payment to settle a legal matter with the SEC. We ended the quarter with approximately $18 million in outstanding gross debt. During Q3, we recognize $129,000 of revenues and $115,000 in gross profits, primarily related to the V3 as it continued to deploy customer satellites, fulfilling performance obligations to our customers. I would remind you that majority of Vigoride manufacturing costs and launch costs are accounted for as R&D given that the Vigoride is still under development. We expect gross margins to decline once Vigoride deployment is complete, and we enter into production phase. In the third quarter, we generated approximately $22 million in losses from operations. On a non-GAAP basis our adjusted EBITDA was a negative $16 million, which is approximately $2 million better sequentially from Q2. Please refer to the earnings press release issued today for the reconciliation of adjusted EBITDA to GAAP net income. Non-GAAP SG&A expenses for the third quarter totaled approximately $7 million, approximately $1 million lower than the prior quarter. Non-GAAP R&D expenses for the third quarter totaled approximately $10 million, also approximately $1 million lower sequentially. We ended Q3 with approximately 84 million shares outstanding. I will now hand the call back to Darryl.

Thank you, Jikun. In a moment we will move on to the question and answer portion of our call. I would like to remind participants that all disclaimers outlined at the onset of this call extend to the question and answer session. This includes our disclaimers relating to non-GAAP financial information forward looking statements and the technology underlying our plan service offerings. Operator, would you please remind participants how to enter the queue?

[Operator Instructions] Your first question comes from the line of Edison Yu from Deutsche Bank. Your line is open.

Hey, everyone. Thanks for taking the questions, I just had to on my end. Curious I know you talked a lot about during the presentation on the new FCC rule. And can you just talk about kind of what kind of capabilities that you can offer and maybe give a kind of brief illustration of how that might look? And I know you're not really quantifying the market opportunity but it seems like operators of satellites to remove those satellites from low earth orbit within five years falling mission conclusion is a major opportunity for us.

Prior to this, as I mentioned, there was no rule the FCC had a guideline that operators deorbit their satellites within 25 years after mission conclusion, but it was just a guideline. It was not a binding rule that the FCC was planning to enforce. The new FCC rule creates a significant demand for satellite the orbiting. Satellite deorbiting is a complex mission. But I'm proud to say that Momentus anticipated that increased regulation and we've been investing in that capability for several years. The type of capability that you need is to be able to do what is called rendezvous and proximity operations meaning come up very closely to another satellite rendezvous very carefully. And then in our case, our plan right now we've been investing in the capability to do rendezvous proximity operations, we also intend to add a robotic arm to Vigoride which will enable us after coming up very carefully alongside a satellite and to grab a hold of it or to attach to it either to service the satellite if the intent is to do something like refuel it, or repair it. But for what we were just discussing the FCC rule, it would be to deorbit it. And really, that would involve grappling, or grabbing hold satellite and proceeding to tug it to a lower altitude, where it could reenter and burn up upon reentry. And now, as mentioned, it is early for us to precisely quantify the opportunity really, with any precision. But if you consider under Deutsche Bank's projections, about 2000, satellites will be deployed this year alone. And if according to Deutsche Bank, the annual deployments are forecasted to triple by 2028. So you can see a scenario with that volume of satellites that need to be deorbited during the next decade that, I think as a minimum, we expect that's going to be a multibillion dollar addressable market that's created. So thank you again, for the question Edison and we certainly think that Momentus is very well-positioned to take advantage of this regulatory change.

Understood. Second question, it's different topic. There has been some changes on the SpaceX transporter pricing. Do you have any kind of initial thoughts related to that? What kind of impact they may have?

Yes. SpaceX is introducing a new interface for rideshare missions in 2024 and you're right there is also a new pricing structure that will go along with it. For us at Momentus in the very near term as I mentioned in the call, we've signed launch services agreements for the next few SpaceX transport missions, the one that will go that's targeted for December of 2022, and then three, that are targeted for February, May and October of 2023. Now, since we've signed agreements for those, our pricing won't immediately be affected by the changes in the SpaceX pricing structure. For Momentus that would begin in 2024. Under those changes, though, there are some, changes that we're still assessing with respect to the interface, but we're in very close dialogue with SpaceX and are working with them to better understand some of the technical interfaces that have to be adjusted. But we do think that while there will be some higher costs that SpaceX is charging, that again, for us would begin to affect us in 2024. Unfortunate, there's been a lot of cost inflation in today's macroeconomic environment. And so we don't think this is unique to space transportation companies or Momentus. Once we start to experience those higher launch costs, we will attempt to pass along those higher launch costs to our customers, to the degree possible. And importantly, our competitors will feel the same upward cost pressure that we do with respect to flying on things like the SpaceX transport missions on Falcon 9 rockets. As we look a little further out, though, to the starship introduction by SpaceX, we would expect our launch costs to begin to decline again. This, I would say also, another dynamic that I'm sure you're tracking is that there are other providers of space launch services, ABL, relativity, Gilmore Space, et cetera. And these other space launch companies and a whole host of new entrants are going to increase competition and that increased availability and competitive pressure we think is going to keep launch costs low. And therefore, since we are launch vehicle agnostic at Momentus, it will give us other options for how we can fly our customers to space.

Appreciate the color.

Your next question comes from the line of James Ratcliffe from Evercore ISI. Your line is open.

Thanks. [indiscernible] environment. Can you talk about what you're seeing in terms of customer responses or views of the small rocket segments as it seems like a number of providers there are struggling. And just generally you have talked about launch costs and the like, how important to the longer term business case is the success of starship? Thanks.

Thanks for the question. I appreciate it. I'd say that the launch vehicle market, right now of course, SpaceX is the largest player in the rideshare market or the market targeting very small launch vehicles. I think the customer views the satellite producers views of the small launch providers that we're seeing their number one, what I hear is, from these customers, they're looking for some more flight heritage from some of them, or they are looking with expectation at the plans that new launch providers are have. But they do want to see those missions become more routine and see a little more flight heritage developed in many cases. I do think there is an important dynamic though, that's going on in the launch vehicle market, because of all that competition and that it's reducing launch costs. You saw McKinsey put out a study at the World Economic Forum in the summertime that if memory serves, According to McKinsey launch vehicle costs have come down by over 95% in the last 20 years. We're seeing a projected costs go down and today are our estimates are for a dedicated small rocket. If you're a small satellite company, that for dedicated small rocket launch to a final orbit that would be over $70,000 per kilogram, on average. With a ride share on a large rocket using the Momentus orbital service vehicle, we can be under $15,000 per kilogram. And so that gives a substantial cost advantage to ride, share, and ride share with a Momentus tug or orbital service vehicle that can take you to your final destination. But thank you again for the question.

Thank you.

Your next question comes from the line of Chris Sakai from Singular Research. Your line is open.

Yes, hi. Let's see. It looks like you experienced some issues in the early Vigoride mission. What did you learn from that?

Well, thank you for the question. The environment in space is notoriously harsh and unforgiving as I mentioned, and operating there is just playing hard. But understanding that environment we at Momentus knew it was important to have a robust spacecraft that can survive and complete its mission, even in off nominal conditions. On Vigoride 3 which we launched in May, we experienced a mechanical issue with a bracket and a pin mechanism that kept our solar arrays from deploying. This created a low power situation on board. And initially we were able to establish two way communication with the spacecraft. But the low power situation prevented us from maintaining that two way communication between the spacecraft and the ground stations. However, because we understood the unforgiving environment in space, we had designed redundancy and resiliency features into the Vigoride spacecraft, which ultimately allowed us to deploy seven of the nine customer satellites that Vigoride through its carrying in spite of the low power situation and lack of two way communications with our ground stations. We are continuing efforts to deploy the remaining two customer satellites. For Vigoride 5 the vehicle we plan to fly next month, we're even more focused on implementing resiliency and redundancy features and testing them on the ground, including in off nominal conditions. We've incorporated system robustness in a number of ways features like an autonomous deployment feature that enables us to deploy satellites, should we lose communications with the vehicle. We have redundancy between two sides of the vehicle that we call Side A and Side B. So major subsystems have a backup system onboard. We've incorporated for our next flight, a new feature with a beacon to facilitate finding the vehicle faster and establishing communications more rapidly or should there be interruption in communications reestablishing those communications and we've added this enhanced testing regimen, including the solar array deployment testing we showed in the video with on the actual spacecraft with the actual panels that will fly on the spacecraft. We're also doing what we call day in the life testing, which is experiencing a typical day in the life of the spacecraft and putting it nominal and off nominal situations and recovering the vehicle. And we're doing more testing of system performance overall. So as I mentioned, prior to, importantly, prior to our last mission in May, we fully anticipated in our first mission that we would experience some issues and the primary goal of that mission was to learn from how the spacecraft performed in space, and to make adjustments to improve its performance. And we've implemented those performance improvements in advance of our next launch which we're really looking forward to with a lot of eager expectation here to see Vigoride 5 go to space in December. Thanks again for the questions.

Okay, thanks for your answers.

[Operator Instructions] Your next question comes from the line of Austin Moeller from Canaccord. Your line is open.

Hi, thanks for taking my question. So what primary endpoint objectives are you looking to accomplish on the Vigoride 5 mission now that you've completed the previous mission and address the issues there? And so what primary endpoint objectives do you want to accomplish on that that will little enable quick turnaround to the Vigoride 6 and so on missions and what's considered more of a secondary objective?

Thanks for the question, Austin. The Vigoride 5 mission will be our second demonstration mission. And so the primary objective of this upcoming mission is to test the vehicle, learn from any issues we encounter, and address those issues on subsequent Vigoride vehicles as we work toward freezing a design for production. Vigoride 3 taught us many lessons, as I mentioned that we abide to Vigoride 5 and we're more confident this time around in the performance of Vigoride 5 as a result, I expect our systems our confidence in the system is going to increase with each additional demonstration mission we fly. Vigoride 5 is from our block 2.2 configuration. And that's a significant block upgrade from Vigoride 3 which was from our block 2.0 configuration. And so one of the other primary objectives of the flight is to test Vigoride 5 and the new block 2.2 configuration, which is designed to be much more capable, and a more reliable vehicle Vigoride 3. The MET thruster, which we're eager to see perform in space has been upgraded for Vigoride 5 and it's designed to be more capable than its predecessor. We've taken steps towards modularity in this design as well to allow payload to be traded for propellant which will allow us to tailor capabilities for the needs of customers. And then this improvement. And then this improvement that we have made to allow for the start of payload hosting capabilities is also significant. And we're looking forward to having our first or a significant I should say, hosted payload customer on the Vigoride 5 mission and testing and demonstrating some of the differentiators that we think allow our Vigoride hosted payload capability to be better than competitors in their ability to host payloads. The flexibility of that configuration, which will demonstrate with the Caltech payload, which is a complex and large deployable payload that is mounted to our upper deck, and also the amount of power that we can supply. We have a large solar array and can deliver up to one kilowatt and host power to our customers. Vigoride solar arrays, in fact, are modular, so in some configurations, they can produce two kilowatts of power, which is enough to power the James Webb Telescope, which is 6000 kilograms, or 200,000 standard LED light bulbs. In this configuration, we would allocate about half our available power to Vigoride and reserve the other half for our hosted payload customers, which is again a major advantage for us over competitors that can provide less power. So those are some of the things that we're eager to demonstrate on the next flight that will then will give us more flight heritage, because we think we've got differentiated capabilities. Now that if the mission is fully successful, we will have demonstrated those differentiated capabilities and space which should improve our ability to attract customers. So thanks again for the question.

Excellent thanks for all the color on the quarter.

There are no further questions at this time. This concludes today's conference call. You may now disconnect.