Cost-minus (5/4/22)

Good morning. May the 4th be with you.

In today's newsletter:🤝 Satellogic, SpaceX🚀 No more cost-plus?💸 The term sheet

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Satellogic Books New Rides to Space

Satellogic (NASDAQ:SATL) has signed a multiple launch agreement (MLA) with SpaceX covering the deployment of 68 new EO satellites.

The freshly inked MLA succeeds Satellogic’s current one covering 2022 SpaceX launches. On April 1, SpaceX launched five Satellogic satellites to a sun-synchronous orbit on the Transporter-4 rideshare mission.

Satellogic says the launch deals put its constellation on pace to achieve weekly world remaps in 2023. The EO company aims to reach daily remaps by 2025 with a constellation of 200+ satellites. It currently operates a constellation of 22 satellites.

Year in review

Yesterday, Satellogic announced financial results for 2021. The company lost ~$118M on ~$4M in revenue. 2021 was the first year Satellogic began selling imagery. In 2020, while still prerevenue, Satellogic lost ~$114M. Nobody said building a constellation would be cheap…

Balance sheet: At the end of 2021, Satellogic had ~$8.5M in cash/equivalents. But take that snapshot in time with a grain of salt: In January, after a delay, Satellogic SPAC’d and pulled in ~$262M in gross proceeds (with $168M added to the balance sheet).

The company currently has a $816M market cap.

On SPACs…

“Look, it's a tough market, and we knew that when we closed the transaction,” Satellogic CEO Emiliano Kargieman told Payload in an April interview. “Even though we're a very capital-efficient company, we're still capital-intensive. Being a public company gives us a lot of tools that we didn't have as a private company, to build the company that we want.”

We also spoke with Kargieman about the buildout of Satellogic’s constellation, its daily remap north star, being a “data company,” and technology tailwinds.

A "Plague" on NASA

Yesterday, NASA Administrator Bill Nelson delivered testimony, no holds barred, to the Senate Appropriations Committee. Nelson was on the hill to discuss the US space agency’s budget request for FY2023.

ICYMI: NASA has requested $26B from Congress for the upcoming year, a $2B increase over FY22 enacted levels. The new budget includes the highest planetary science budget in NASA’s history and a $700M increase over 2022 levels for deep space exploration systems (aka Artemis).

The hearing: Sitting before his former colleagues of the Senate, Nelson’s job was to defend the agency’s funding needs for the upcoming year. He went in depth on contracting and public-private partnerships, a priority for the agency.

Top of the list of priorities: moving on to fixed-price contracts from cost-plus. “I believe that that is the plan that can bring us all the value of competition,” Nelson said about using fixed-price contracts for a competing Human Landing System.

“You get it done with that competitive spirit. You get it done cheaper, and that allows us to move away from what has been a plague on us in the past, which is a cost-plus contract, and move to an existing contractual price."

About that “plague”: NASA has traditionally procured technology from industry using cost-plus contracts, which allow contractors to charge the agency extra for extensions and changes to their plans.

While these contracts have delivered many of NASA’s most important programs—the Space Shuttle, for example, or JWST—they also often result in years of delays and billions of dollars in overspending. Now that there’s a more robust commercial space industry, NASA wants to harness that spirit of competition while lowering costs on its own end.

NASA has quietly been transitioning to awarding more fixed-price contracts in recent years anyway, but this is the first time Nelson, who was a big proponent of using cost-plus contracts for SLS back in 2011, has openly criticized the old way of doing things.

+ Reader poll: Do you agree with Nelson? Click to vote.👍 Yes 👎 No

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In Other News

• Astroscale’s ELSA-d debris removal demo performed a close-approach maneuver to test new capabilities with the servicer spacecraft. Note: A previous version of this blurb incorrectly stated that the ELSA-d servicer and client spacecraft had docked. Astroscale tells Payload it is evaluating "how we might attempt a capture in the coming months."

• A Russian SOZ ullage motor left over from a 2007 launch has broken up in a high orbit, creating a debris cloud containing at least 16 trackable pieces.

• Viasat called for an environmental review of second-gen Starlink satellites in a letter to the FCC on Monday.

• Globalstar (NYSE American:GSAT) registered a 3,080-satellite constellation with the International Telecommunication Union through Germany. SpaceIntelReport writes that it’s “a development that is consistent with Globalstar’s announcements that it’s on the verge of leasing satellite capacity to a large customer.”

The Term Sheet

• Firehawk Aerospace raised a Series A from Raytheon (NYSE:RTX). The deal rounds out other recent raises from Adranos and X-Bow Systems, which are also developing propulsion systems (via Payload).

• Picterra, a geospatial machine learning developer, raised $6.5M in a funding round led by VI Partners.

• G.S. Precision (GSP), a Vermont-based high-precision component manufacturer for aerospace engines and defense systems, acquired F.T. Gearing, an English supplier of tight-tolerance gear components. GSP is owned by AE Industrial Partners.

The View from Mars

In April, the Ingenuity Mars helicopter scouted out the above ridgeline near a river delta in Jezero Crater. Perseverance's eyes in the sky—i.e., Ingenuity—are a "great time-saver" that "help us explore areas the rover will never visit," project scientist Ken Farley said in a release.