Lockheed Martin increases its stake in Terran Orbital and invests $100 million to develop the manufacture of small satellites

Terran Orbital to expand capacity in California, cancel plans to build large factory on Florida’s Space Coast

WASHINGTON — Lockheed Martin is increasing its stake in small satellite maker Terran Orbital with a $100 million investment which increases its total capital from 9.4% to 33.5%.

Terran Orbital announced the new investment on October 31. Lockheed Martin has invested in the company since 2017 and selected it produce 42 satellites for the US Space Force Space Development Agency as part of a $700 million contract.

Boca Raton, Fla.-based Terran Orbital plans to spend the new funding to expand satellite manufacturing facilities in Irvine, Calif., and is canceling plans to build a large factory on Florida’s Space Coast in partnership with Space Florida.

“It makes sense to us right now because there is immediate demand for satellites,” said Marc Bell, co-founder and CEO of Terran Orbital. SpaceNews. Building an assembly line in Florida is expected to take three years, while the expansion in Irvine will take just 12 months, he said. “For me, adding to that is a lot easier than trying to expand to another coast.”

Terran Orbital is also moving away from plans to build a constellation of 96 synthetic aperture radar satellites, called PredaSAR. The company will continue to produce SAR satellites but will sell them to customers, avoiding the risks and expense of building its own constellation. “We want to focus on manufacturing, not being a satellite operator,” Bell said.

He said the change was precipitated by Russia’s invasion of Ukraine and the sudden growth in demand for SAR satellites. “So we thought the best decision for us in the long term was to sell the satellites” either to the government or to commercial operators, Bell said.

Since the dispute began, a number of companies and government agencies have inquired about buying satellites, Bell said. So it became clear that selling hardware – including buses, payloads and components – was the way to go, he added. “A SAR constellation is very capital intensive, like any constellation. This therefore reduces the risks for the company in the future from a capital point of view.

Executives concluded that PredaSAR was lowering the market value of Terran Orbital after learning of the recent acquisition of competitor York Space by a private equity firm and that York’s market value was $1.12 billion, more than three times Terran Orbital’s valuation.

“We’re much bigger than York, and we’re trading at a fraction of what York’s valuation was,” Bell said. “So there’s a big disconnect between us and them, and we think the constellation has held back our valuation.”

The Irvine plant has production capacity of 250 satellites per year, greater than of yorkhe said.

Bell said the revised strategy is expected to boost Terran Orbital’s stock price, which was above $11 when the company started. is trading on the New York Stock Exchange after going public in a SPAC merger – and is currently trading below $3, in part due to the broader market downturn in SPAC shares.

“The market wants us to do something different,” Bell said. “So we’re going to focus on our core business, which is manufacturing, which is not capital intensive and very low risk.”

Austin Moeller, aerospace and defense analyst at investment bank Canaccord Genuity, wrote in a research note on October 31 that Terran Orbital the value will increase due to Lockheed’s investment. “It is evident that Lockheed is looking to do more than just dip its toes in the water in the area of ​​small satellite manufacturing, given the significant TAM [total addressable market] opportunity for small satellites compared to exquisite GEO satellites.

According to Moeller, “given that York has only built 13 satellites over the past decade (compared to more than 70 for Terran), we continue to see a disconnect between the current valuation of LLAP [Terran Orbital] (market cap around $350 million) and peers like York which sold 3.2 times that valuation to private equity.

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