Primes (1/26/23)

Good morning. NASA projects that 2023 BU, a small near-Earth asteroid, will make a very close flyby of Earth tonight. The asteroid will zoom over the southern tip of South America at ~7:27pm ET, only 2,200 miles above us and “well within the orbit of geosynchronous satellites,” per JPL. 

For a fleeting moment, 2023 BU will be 10x closer to Earth’s surface than some connectivity birds parked in GEO. But don’t fret, friends. NASA says there’s no risk of the asteroid impacting Earth. In any event, Payload readers know better than to fall for any of the sensationalistic, clickbaity headlines that may graze their social media feeds today. 

In today's edition...📊 Earnings season🚀 Isar x Spaceflight📝 Contract report

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Q4 Earnings Season Is Upon Us

The aerospace & defense (A&D) primes started reporting fourth-quarter results on Tuesday, with Raytheon ($RTX) teeing off first, followed by Lockheed Martin ($LMT), Boeing ($BA), General Dynamics ($GD), and Northrop Grumman ($NOC) this morning. 

Across the board, companies’ results and forward-looking projections were on the one hand buoyed by sky-high American and allied defense budgets. But in many cases, labor and supply chain challenges continue to eat away at the contractors’ margins. 

In any event, we digress. We’re here to unpack the aerospace side of the equation. So first, let’s establish some baselines. All numbers that follow are as of press time: 

• Raytheon has a $147B market cap and is -0.8% year to date (YTD). Raytheon’s Intelligence & Space (RIS) division made $14.3B in 2022. 

• Lockheed Martin has a $119B market cap and is off 4.9% YTD. LM Space made $11.5B in 2022. (For more on this business, check our recent Pathfinder episode with LM Space chief Robert Lightfoot.)

• Boeing has a $126.8B market cap and is up 8.8% YTD. The company’s Defense, Space, & Security (DSS) division made $23.1B in 2022. 

• General Dynamics has a $62.3B market cap and is off 8.7% YTD. GD’s Aerospace division made ~$8.6B in 2022. 

Raytheon results 

Raytheon posted Q4 sales of $18.1B (vs. $18.2B est), full-year revenue of $67.1B, and Q4 adjusted EPS of $1.27 (vs. $1.24 est). RTX management guided to $72B-$73B in 2023 sales. RIS and Collins Aerospace are two of the company’s four reportable segments. 

• RIS reported Q4 sales of $3.5B (-8% YoY), and an operating profit of $278M (-56% YoY). 

• Collins posted Q4 sales of $5.6B, up 15% YoY, and an operating profit of $741M (+61% YoY). 

Lockheed Martin results

Lockheed Martin posted Q4 sales of $19B (vs. $18.3B est), full-year revenue of $66B, and Q4 adjusted EPS of $7.79 (vs. $7.41 est). LM Space recorded ~$3.3B and $11.5B in Q4 and full-year revenues, respectively. Q4 revenues increased 12% annually, due to a $210M sales boost for classified programs, $110M for the Next Generation Interceptor, and $40M for commercial space programs (i.e., Orion). The unit’s operating profit in the fourth quarter was $77M, a 25% YoY drop. 

Lockheed owns a 50% equity stake in United Launch Alliance (ULA), with Boeing owning the other half. LM’s equity stake in ULA was primarily responsible for $15M (or 6%) of Q4 profits, and $100M (10%) of the 2022 haul. 

Boeing results

Boeing posted Q4 sales of $20B (vs. $20.3B est), full-year revenue of $66.6B, and a Q4 adjusted EPS of -$1.75 (vs. $0.20 est), with rebounding aircraft sales undercut by workforce and supply chain issues. On the space side, DSS fourth-quarter revenue was $6.2B—earnings were $112M for the same period. The unit delivered three satellites to customers in Q4, but the big highlight was the Boeing-built SLS lifting off and powering the Artemis 1 mission. 

For the year, Boeing booked ~$23.2B in revenue but recorded a $3.5 billion loss (you read that right). The company had to take charges throughout 2022 for delays and cost overruns—including some of its space programs. As it looks to rightsize the ship, Boeing management says that margins will still be challenged by labor and supply chain issues. 

General Dynamics results

General Dynamics posted Q4 sales of $10.85B (vs. $10.68B est), full-year revenue of $39.4B, and a Q4 EPS of $3.58 (vs. $3.54 est). The Reston, VA company reported a record backlog of $91.1B. Q4 Aerospace revenues were $2.45B, down 4.3% YoY. For the full year, though, GD Aerospace booked ~$8.6B in revenue (+5.3% YoY). The Aerospace backlog stretched to $19.5B (+19.8% YoY), good for a book-to-bill ratio of 1.2-to-1 for the quarter.

Isar Aerospace Signs its First US Customer 

German launch startup Isar Aerospace has signed its first US customer, winning a multi-launch contract from Spaceflight, Inc.

The deal will see Isar launch a single dedicated Spectrum flight from Norway’s Andøya Spaceport in 2026. There is also a provision for a second Spectrum flight in 2025. 

“We’ve seen an increased demand for flexible and affordable launch options around the globe, but especially for our European-based customers,” said Spaceflight CEO Curt Blake. “We’re very much looking forward to working with Isar Aerospace to help us meet that growing need.”

The vehicle: Isar’s 28 m Spectrum launch vehicle is designed to carry up to 1,000 kg payloads to LEO. The company is currently targeting 2023 for Spectrum’s maiden flight. According to the company, work toward that flight is “progressing well.”

A growing launch manifest

The Spaceflight contract is Isar’s first for 2023, and adds to its growing launch manifest. The company signed its first launch contract with Airbus Defense and Space in April 2021 to deliver an EO satellite to orbit. Airbus Ventures is also an investor in Isar, having participated in the startup’s $17M Series A. Since then, Isar has broadened its customer base outside its investor group and added flights for OroraTech, EnduroSat, and Astrocast.

Another space tug: Spaceflight, Inc. is the third in-orbit logistics company with which Isar has signed a launch contract. Last November, the startup signed a contract with Exotrail for several missions to orbit for its spacevan orbital transfer vehicle. And in June, it signed a deal with Italy’s D-Orbit to carry its ION Satellite Carrier to orbit.

With its growing launch manifest indicating a healthy operational future, all that’s left is for Isar to get its bird in the air.

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In Other News

• Galileo, Europe’s global navigation constellation, can now deliver location information down to 20 cm accuracy. The details: horizontal accuracy down to 20 cm, vertical accuracy of 40 cm, and you must have a compatible receiver.  

• ESA won’t send astronauts to Tiangong. ESA boss Josef Aschbacher told SpaceNews that the agency has neither the budget nor political desire to send crews to the Chinese space station. 

• Peregrine completed TVAC testing, and thus, its entire flight acceptance campaign. Astrobotic will now ship its lunar lander to the Cape, where it will launch on ULA’s forthcoming Vulcan Centaur rocket.

• ThinkOrbital chose Colorado over Florida for its new HQ and space infrastructure factory, thanks in no small part to $547,000 in tax incentives. Governor Jared Polis applauded the move and commented that "Colorado is the epicenter of the aerospace industry.”

The View from Space

FWIW…Prof. Dominic Hodgson, a glaciologist at the British Antarctic Survey, reports that “this calving event has been expected and is part of the natural behavior of the Brunt Ice Shelf. It is not linked to climate change.”

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