Weathering the storm ☔ (4/27/23)

Good morning. We’re sending good luck to NASA astronaut Steve Bowen and UAE astronaut Sultan Alneyadi who will begin a history-making 6.5-hour spacewalk at 7:45am ET tomorrow—the first for any Arab astronaut.

In today's edition...🧹 Astroscale braces for a challenging market💵 Boeing reports Q1 earnings📝 The contract report

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Astroscale Secures ~$44M in Two New Debt Rounds

Astroscale, a Japanese startup designing orbital debris removal and on-orbit servicing technology, announced two debt raises totaling about $44M this week to ensure it has cash on hand in today’s challenging economic conditions.

On Tuesday, the company announced that it entered into a loan agreement for ¥3B (~$22B) with Mizuho Bank. Yesterday, Astroscale announced a revolving credit line with MUFG Bank for another ¥3B (~$22B) as a backstop facility in case they hit a cash shortfall.

“It is a very tough market,” CFO Nobuhiro Matsuyama told Payload. “There will be a reckoning of sorts in the future. It’s not that the industry at large is under pressure, but there will be a bifurcation between who can weather the storm and who may not make it to the end of the finish line. Given that, we are very thankful to both MUFG and Mizuho for being strong partners.”

Putting $$ to work: Astroscale plans to use the debt financing to fund existing projects that are already under contract with customers, Matsuyama said.

“The economic conditions are one of the key drivers in this decision,” Matsuyama said. “There is a very stark difference in the market conditions compared to a year ago and capital is very expensive right now.”

The two new debt raises bring Astroscale’s total debt capital to ~$100M. On the equity side, the company raised $76M in a Series G round in February.

Coming up: Despite economic concerns, customer demand from civil, defense, and commercial sectors is still high, Matsuyama said, as proven by Astroscale’s busy to-do list for 2023, which includes:

• ADRAS-J, an in-situ SSA mission launching this summer that will rendezvous with and collect data from a JAXA-owned H-IIA rocket upper body. It will mark the first attempt to approach an existing piece of large debris through rendezvous and proximity operations.

• ELSA-M, a follow-on mission to ELSA-d expected to launch in 2024, is slated to capture and remove multiple satellites in a single mission.

• COSMIC, a mission that aims to remove two defunct satellites in 2026.

• Astroscale's US branch is also working on research with the Air Force and Space Force, as well as life extension missions.

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Boeing Still in the Hole

Boeing reported a first quarter loss of $1.27 per share on Wednesday, marking the company’s seventh straight quarter in the red, though this quarter was better than last.

Boeing attributed this to 737 MAX production issues, but still announced a plan to increase production from 31 to 38 planes per month. The company did see a jump in revenue from higher commercial and military sales.

The overall numbers:

• Operating cash flow = $300M

• Revenue = $17.9B, a 28% increase YoY

• Total backlog = $411B

Breaking out defense & space:

• Revenue = $6.5B, a ~19% increase YoY

• Total backlog = $58B

Boeing’s Defense, Space, and Security revenue leaned heavily on military orders including 15 KC-46A tankers, an Air Force E-7 development contract, and an award for 184 Apaches from the US Army.

Pros and cons: Executives didn’t mention Boeing’s space activities in the earnings release or presentation, but the company suffered at least one setback in the quarter: a further delay of the first crewed launch of the CST-100 Starliner spacecraft until at least late July due to lengthy certification paperwork. On the plus side, Boeing opened a new production facility in New Orleans where it will build a new upper stage for SLS.

Market reaction: Boeing avoided a negative market reaction with cash flow reassurances that kept investor fears at bay despite the larger-than-expected losses.

In Other News

• China said it will “definitely” be able to land crew on the Moon by 2030.

• Beijing also unveiled plans for its Miyin deep space telescopes that will be used to directly image and analyze exoplanets.

• Virgin Galactic ($SPCE) conducted a glide test of its VSS Unity spaceplane.

• SpaceX scrubbed its Falcon 9 and Falcon Heavy launches yesterday. Both missions are now scheduled to launch today.

• DoD is thinking about ways to tap into the commercial space workforce during a national emergency.

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