5 Space-Focused Companies Ready to Take Off!

eResearch | Investing in opportunities outside of earth was once difficult as only a few major aerospace and defence corporations monopolized government contracts. However, new ventures and start-ups such as Virgin Galactic and SpaceX are developing technologies to lead consumers to space, protect national security, and improve internet connectivity from an orbital level – SpaceX, OneWeb and Amazon all plan to launch more than 1000 satellites each.

According to research from Space Angels, a New York-based investment firm, over the past 10 years, approximately US$20 billion has been invested into 435 space-related companies. In Q1/2019 Investments doubled quarter-over-quarter with US$1.7 billion in funding across 29 investment rounds.

The space industry is segmented mainly into four silos: (1) Human Space Travel, (2) Security, (3) Satellite Communications, and (4) Imagery and Data Analysis.

Below are five space-related companies in the space industry:

Virgin Galactic Holdings Inc. (Human Space Flight)

Last year, Virgin Galactic, backed by billionaire Richard Branson, became the first company focused on commercial human flight travel to list publicly on a stock exchange, gaining explosive media traction that has boosted its stock price by almost 200% year-to-date.

Virgin Galactic’s commercial spacecraft is called the SpaceShipTwo (“SS2”), a suborbital vehicle with a cargo plane called WhiteKnightTwo (“WK2”), which can carry 5 passengers at a price of US$250,000 per person. Two more SS2 space crafts are expected to be built by 2021 with another two expected by 2025.

Virgin Galactic plans to run 16 Commercial flights in 2020, which is expected to rise to 115 in 2021 and 170 in 2022, which is driving its projections to be EBITDA positive with a 581% increase in revenue to US$398 million by 2022.

Virgin Q3/2019 Earnings Highlights

• Revenue of US$800,000, generated from transporting scientific payloads and engineering services
• Customer deposits of US$80 million from more than 600 people in 60 countries, with potential of over US$120 million in revenue from full payment
• Net loss of US$51.1 million, mainly due to US$34.5 million in R&D expenses and US$17.8 million in SG&A expenses.
• Marketable securities of US$667 million, acquired when merging with Social Capital Hedosophia Holdings.
• Cash and cash equivalent of US$85.5 million.

SpaceX (Human Space Flight, Security, and Satellite)

SpaceX is Elon Musk’s company, which became a significant government contractor after receiving a contract from NASA for developing a rocket with the ability to land on its boosters, which allowed the rocket to be reused, saving significant costs.

The Dragon was developed by SpaceX in contract with NASA to shuttle cargo in space, and it has been used in operations for three years so far. SpaceX has already been developing a new version of the Dragon called the Crew Dragon, for another contract with NASA to shuttle astronauts to the International Space Station (“ISS”).

Earlier this year, SpaceX partnered up with Space Adventures, a space tourism company who sent seven private individuals on a roundtrip to the ISS aboard Russia’s Sovuz space craft. Near the end of 2021 to early 2022, SpaceX expects to send up to four more people to space for a trip around the Earth. The price of the trip was not disclosed but last year, SpaceX partnered with Bigelow Aerospace to fly individuals to the ISS for approximately US$52 million per passenger.

SpaceX is not just focused on human space travel but is also in the satellite communications business with StarLink, a constellation of 42,000 satellites, which will allow unserved or underserved locations to receive reliable, high-speed internet. SpaceX has been launching satellites up into space since 2018 and as of today, it has over 300 satellites in space.

Aerojet Rocketdyne (Security)

Aerojet is a rocket and missile propulsion manufacturer for military and commercial spacecrafts, and is one of the only public space companies with a large space division for national security. Aerojet also has a real estate division, which is generally used for the sale and management of company assets.

The Advanced Capability-3 (“PAC-3”), the Guided Multiple Launch Rocket System (“GMLRS”), and the hypersonic booster program, are Aerojet’s core defense programs, which in 2019 generated over US$120 million in sales.

Aerojet currently has a backlog of US$5.4 billion in unrealized revenue, mainly attributed to large multi-year awards on the Standard Missile and Thermal High Altitude Area Defense (“THAAD”) programs. Over the next year, Aerojet expects to deliver on US$2 billion of backlogged obligations.

Aerojet Q4/2019 Earnings Highlights

• Revenue of US$523 million, a 19.4% increase year-over-year, mainly attributed to an increase in defense programs including the Patriot Advance Capability-3.
• Net income of US$25.3 million, a 7.6% increase year-over-year, due to scaling of several defense programs.
• Cash and cash equivalents of US$932 million.

DISH Network Corporation (Satellite Communications)

DISH is one of the largest U.S. television providers with a fleet of its own orbital satellites, but it has been struggling as more and more TV subscribers leave for options online such as streaming and on-demand platforms. Last year, a total of 511,000 subscribers left DISH, which followed 1.1 million subscribers leaving the year prior.

DISH is currently focused on entering the 5G race with plans to deploy 15,000 sites by the end of 2023, acquire 850 MHz of spectrum from Sprint Mobile, and enter into a MVNO agreement with T-Mobile.

These 5G plans are all a part of the Department of Justice’s (“DOJ”) merger agreement between Sprint and T-Mobile, who are currently attempting to pass an anti-trust trial to merge, which the DOJ will only pass if DISH enters the wireless scene as a viable fourth competitor. Dish must provide 5G networks services to at least 70% of the U.S. population by 2023 or it will be fined up to US$2.2 billion by the Federal Communications Commission.

DISH received a lot of investor attention last quarter when its chairman brought up the topic of merging with its main competitor, DirecTV, the leading satellite TV company which was acquired by AT&T for US$48.5 billion in 2015.

DISH Network Q4/2019 Earnings Highlights

• Revenue of US$3.2 billion, a 2.1% decrease year-over-year, mainly due to a 5.2% reduction in the number of subscribers year-over-year with a net loss of 194,000 subscribers.
• Net income of US$389 million, a 15% increase year-over-year.
• Cash, cash equivalents, and marketable securities of US$2.9 billion.

Maxar Technologies (Imagery and Data Analysis)

Maxar is a diversified space technology company with focuses in space robotics, geospatial imagery and data analysis, satellite manufacturing, and other space related product developments and services. Maxar was the parent holding company of MacDonald, Dettwiler and Associates, LTD. (“MDA”), but at the end of last year, MDA was sold for US$765 million.

Last month, Maxar received a contract with NASA to build them an “innovative robotic spacecraft” with the ability to assemble multiple antenna reflector elements into one large antenna reflector in space. Maxar’s newly developed product will improve space infrastructure development as it will change the way tightly packaged components within a small capsule are assembled into a larger structure in space.

In 2017, in an effort to become the leader in geospatial imagery and data analysis, Maxar acquired DigitalGlobe, a vendor for geospatial imagery. Geospatial imagery provides data for research and analysis on changes seen on the earth’s surface from space, such as climate variability.

This month, Intelsat (NYSE: I) gave a contract to Maxar to build its “Next-Generation Intelsat Epic Geostationary Communications Satellite”. This system will include 40 geostationary satellites integrated with NASA’s “Tropospheric Emissions: Monitoring of Pollution” payload, which will provide enhanced forecasting capabilities for air quality in North America.

Maxar Technologies Q3/2019 Earnings Highlights

• Revenue of US$479 million, a 5.7% decrease year-over-year, mainly due to a 4% decrease in service sales, which is 85% of total revenues.
• Net income of US$389 million, a 15% increase year-over-year, mainly attributed to a 27% increase in product sales.
• Cash and trade receivables of US$536 million.

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*Pure-play companies in primary segment