Lockheed Martin’s $450M Bet on Terran Orbital to Boost Satellite Production

Lockheed Martin (BCBA: LMT) is buying Terran Orbital (NYSE: LLAP), a company that’s been quietly shaking up satellite manufacturing with its 3D printing. This $450 million deal is set to boost the way satellites are built, merging Lockheed’s resources with Terran’s cutting-edge technology. Since its founding in 2013, Terran Orbital has been pushing the limits of what’s possible in space by using 3D printing to create satellites that are faster and more efficient to produce. Now, with Lockheed Martin behind them, the possibilities are about to skyrocket.

Terran Orbital has been at the forefront of using 3D printing to build satellites in ways that weren’t possible before. From tiny CubeSats to larger satellite constellations, it has found ways to make parts lighter, stronger, and quicker to produce. Beyond saving time, the technology has been proven to create better satellites that can do more in space. For example, by 3D printing critical components like synthetic aperture radar (SAR)  waveguides and structural elements, Terran Orbital has improved the performance and reliability of its satellites, providing higher-resolution imaging and more reliable data transmission.

Terran is industrializing satellite production with its state-of-the-art facilities. Image courtesy of Terran Orbital.

Lockheed Martin’s decision to acquire Terran Orbital is not just about expanding its satellite production but also about integrating Terran Orbital’s 3D printing technology into its operations. With the satellite market growing rapidly, especially for smaller, more specialized satellites, the ability to produce them quickly and efficiently is more important than ever. This acquisition puts Lockheed Martin in a strong position to meet that demand and stay ahead of the competition.

Meanwhile, this acquisition comes on the heels of a longstanding relationship between the two companies. Lockheed Martin has been Terran Orbital’s largest customer, particularly for key projects like the Space Development Agency’s (SDA) Transport and Tracking Layer programs. In fact, in November 2022, Lockheed Martin invested $100 million in Terran Orbital to support the company’s 3D printing capabilities and expand its production facilities. This investment was part of a broader strategic cooperation agreement that runs through 2035, further deepening the collaboration between the two companies.

The synergy between these two partners is clear, and with this acquisition, they could help unlock new levels of innovation and efficiency in satellite production, with 3D printing continuing to play a central role in their progress.

Small satellites from Tyvak Nano-Satellite Systems, a subsidiary of Terran Orbital. Image courtesy of Terran Orbital.

A Sale Born of Necessity?

The deal also comes at a crucial time for Terran Orbital. The company has faced financial challenges, with declining revenues, increased debt, and ongoing losses. For the first quarter of 2024, Terran Orbital reported a net loss of $53.2 million, with revenues down by 3% compared to the same period in 2023. Its stock price even dropped below $1 for more than 30 days, leading to a warning from the New York Stock Exchange (NYSE) last June. Although the NYSE notice does not result in the immediate delisting of the company’s stock, it does give it six months to raise the stock price.

Despite its technological expertise, Terran Orbital’s path to profitability has been steep, with the company burning through cash while trying to scale its operations. The $100 million investment from Lockheed Martin in November 2022 was intended to help Terran Orbital expand its 3D printing capabilities and improve its production processes. Still, it wasn’t enough to turn the tide on its financial performance.

“We’ve worked with Terran Orbital for more than seven years on a variety of successful missions,” said Robert Lightfoot, president of Lockheed Martin Space. “Their capabilities, talent and business momentum align with Lockheed Martin Space’s strategic plans – and we’re looking forward to welcoming them to our team. Our customers require advanced technology and even faster product development, and that’s what we can achieve together.”

Adding to these challenges is the broader context of how the company went public back in November 2021. Terran Orbital joined the wave of companies that went public through SPAC (Special Purpose Acquisition Company) deals during a time when many businesses were eager to hit the stock market quickly. While this move brought in initial capital and market attention, the quick transition to being a public company may have contributed to some of the financial pressures Terran Orbital now faces, considering as to how it works to sustain its stock value and meet investor expectations.

Even with these financial setbacks, Terran Orbital remains a key player in the satellite industry, boasting a backlog of orders and a solid reputation for delivering innovative satellite solutions. Its expertise in 3D printing and commitment to advancing space technology have earned them respect from both government and commercial clients.

What’s more, Lockheed Martin’s backing could provide the stability and resources Terran Orbital needs to fulfill its growing order book and regain financial footing. With a backlog valued at over $2.8 billion, including high-profile contracts with the Space Development Agency and other defense-related projects, Terran Orbital’s future, while challenging, still holds a lot of potential for recovery and growth.

Successful integration of Terran Orbital satellite into SpaceX Falcon 9 Transporter 2. Image courtesy of Terran Orbital via Instagram

A Future in Satellite Manufacturing

The acquisition of Terran Orbital is expected to close by the fourth quarter of 2024. Once the deal is finalized, Terran Orbital will continue to operate as a commercial merchant supplier, with its 3D printing technology likely playing an even more important role in Lockheed Martin’s future satellite production strategies.

For Lockheed Martin, the acquisition represents an opportunity to boost its satellite manufacturing capabilities, particularly in the growing demand for small satellites. Integrating 3D printing into its production processes could lead to faster development times, reduced costs, and more innovative satellite designs. For Terran Orbital, the acquisition will potentially provide the financial stability it needs to continue its work on satellite technology. For those in the 3D printing industry, this deal is a clear sign of the technology’s rising importance in the aerospace sector and its potential in satellite production.