Closing Bell - Manifest Space: Seeing Earth From A New Perspective with Maxar Space Systems CEO Chris Johnson 10/17/24

Episode Date: October 17, 2024

Maxar Space Systems is pioneering a new way to observe Earth from space. One of the original satellite manufacturing companies, CEO Chris Johnson joins Morgan Brennan to discuss the evolution of the company, advancements in satellite technology, and Maxar's role in NASA's Artemis program.

Nearly two years ago, Advent International announced its plans to acquire Maxar Technologies and take the space company private. The deal closed last year, and since then, the private equity firm has split the portfolio into two separate companies. Maxar Intelligence, which collects Earth observation data and sells it to governments and companies, and Maxar Space Systems, which makes satellites and other space hardware. Maxar Space Systems CEO Chris Johnson says this split has enabled more focus and faster investment. We're big enough and been around long enough to do real things like part of the space station for the moon, but we're small enough and agile enough in order to adjust to customer demands and market demands without having to go up three or four or ten layers of management. I've got a direct access to my private equity board.

We want to go do something. Here's the business justification. Let's go. And so I think that focus on core satellite manufacturing business has been really great to drive additional investment, additional focus on my business in particular. The manufacturing business is perhaps best known for building SiriusXM's radio satellite constellation. It's still making communications satellites, but Maxar Space Systems is also developing

the next-gen spacecraft for its sister company, the Worldview Legion satellites. Today and over the last few years, we've really been focused in on diversifying our product mix. And so things like Worldview Legion, and so building the next generation of 30 centimeter class Earth observation imagery to support various Intel missions, various things you might see on mapping functions. That's been a big growth area for us.

On this episode, Maxar Space Systems Johnson discusses the future of satellite manufacturing, navigating new competition, and how the company is helping NASA bring astronauts to the moon. I'm Morgan Brennan, and this is Manifest Space. We previously were part of a publicly traded company that had two kind of distinct pieces. There was the earth intelligence business, which, you know, provides a lot of the satellite imagery off of satellites. And then there was the core space manufacturing business, which is now the business that I'm the CEO of, which is the space manufacturing piece of it. And so within that business, we build commercial geocom satellites, we build Earth observation satellites, and we support a lot of national security and civil missions

as well. So really, the separation of the two businesses within Maxar Space Systems now really focuses in on the space manufacturing portion. And of course, when we talk about satellite manufacturing, I mean, Maxar, I think in recent years, perhaps has been best known for making the satellites for Sirius XM constellationellation, for example. But you're working on quite a few different types of hardware, including this Worldview Legion Constellation as well now. Yeah, yeah. So certainly, you know, the legacy and the history of, you know, 65 plus years of building satellites in this factory, you know, primarily harkens back to commercial capabilities and things like Sirius satellite radio, direct TV, Echo Star Dish.

But today and over the last few years, we've really been focused in on diversifying our product mix. And so things like Worldview Legion and so building the next generation of 30 centimeter class Earth observation imagery to support various Intel missions, various things you might see on mapping functions. That's been a big growth area for us as we build six of those satellites for our sister company, Maxar Intelligence. We see the future of that business also being pretty significant. So as those satellites get up and are taking imagery and are working really well, we see the opportunity to build more of those very similar satellites.

We think there's an opportunity to take that into more civil space as well. And so working closely with NASA on a couple of unique opportunities for not exactly the same, you know, Earth observation capabilities, but how can we do monitoring? How can we add different sensors to that platform?

So right now it's exciting to have those first four up and then take an imagery. So it's now how can we leverage that investment in those core technologies in order to do not only that core mission, but additional missions as well. When would you potentially see those opportunities manifest? be awarded in the next two years. So the typical NASA procurement, you know, we were part of a large series of activities that, you know, that were down selected from 14 to four. And then over the next year, we would hopefully be down selected with, you know, our NASA partners down to two, and that we'd be one of those. On the kind of more traditional Earth observation capabilities, you know, we see the opportunity, whether it's international partners working with Maxar Intelligence or more capabilities as the legions

come online. We think the thirst for more Earth intelligence information is out there. And so we're excited to be able to provide more of those capabilities. We think the unique thing about Worldview Legion is how quickly you're going to be able to revisit places on the Earth. And so we think that that'll add a lot of benefit to their business. And so adding more of those satellites will just further reduce that meantime to access or revisit rate. I mean, Earth observation has been around for a while. Maxar really kind of pioneered,

pioneered this capability and this technology was, I would call one of the original commercial space companies in light of that. So how do you see that market evolving, especially when we're talking about things like SAR satellites now, and you have some of these newer companies like Planet Labs, et cetera, that are pushing further with their own in-house constellations as well? Yeah, I mean, I think the desire to understand and to know what's going on on the Earth from space will just continue to grow. I mean, typically, that has been a government function, I would say, you know, it kind of grew up on the government side. And as we've been able to bring capabilities and very specifically on the Maxar front being, as you said, kind of the start of really, you know, significant capabilities on that front. Well, I am confident

that that'll continue to grow. So, I mean, EO has its place, you know, the kind of the typical things that you'd see on a Google Earth or Apple Maps. But there is certainly opportunity for alternate phenomenologies. And so things like radar, things like multispectral, even LIDAR kind of capabilities, and just the moreral, even LiDAR kind of capabilities. And just the more information that you can add to kind of an understanding of your situation, the more intelligence value that brings, the more commercial value that brings. And so, yeah, I'm excited that I continue to think that there's a place for what we think on the Maxar side is high resolution capabilities. Some of the other companies are focused at a different capability and price point.

We think there's a lot of value in bringing these high resolution capabilities to market and continue to see growth in that area. What does LiDAR enable? I mean, I hear LiDAR and I automatically think autonomous driving. Yeah, I mean, there's basically if you bring your own energy with you, that you're going to get different signals and different capabilities off the satellite. And so, yeah, like LIDAR for driving is a way that you're going to be able to tell what's around you and make decisions based on that. Think of that from space. Like if you're going to bring certain capabilities, you're going to get different readings off the earth that you wouldn't just get with sunlight.

OK, and are you still working on communication satellites and other types of? Yeah. Yeah. So certainly, you know, our core business is communication satellites. We've got nearly a hundred that are flying in geostationary orbit for various customers around the world. Right now we've got five commercial geocoms in our factory. We've got one actually in a truck that's making its way to Florida for a launch here coming up as well.

So that's a real core piece of our business. And right now, the deal flow on that geocom market is actually higher than it's been probably in the last 12 to 18 months. So we're excited to see. The geocom market used to be 30 to 35 a year back in 10, 15 years ago. It's kind of stabilized at 8 to 12. And right now we've got a big spike where we've got four active kind of proposals into customers and a number of others that are kind of right on the doorstep there. How does Geocom now coexist and what does this market evolve to be in a world of low

earth orbit communications as well? Yeah, so certainly part of the reason that we're seeing the decline kind of over the last few years into that, you know, 8 to 12 number is because of the LEO constellations and really some of the things that Starlink and others will bring to the market of, you know, there are some really effective ways to bring internet and high speed capabilities to market from LEO. we still think that there's some really great opportunities and unique capabilities to bring broadcast capabilities from Jio. So most of the Leos today aren't really doing the traditional broadcast mission that we're

going to continue to do. And I know that that market, you know, with over-the-top television and some of the other things that are putting some pressure on that, you know, is in a bit of decline, but we feel strongly that it'll continue to stabilize and that the most cost-effective and best way to bring, you know, signals to a large part of the world is through geostationary where you can have a single antenna pointed at one place and you don't have to track thousands of satellites over the sky. How's the actual manufacturing of satellites changed? Because I have these conversations quite often about how it's become more commoditized. You're seeing more offerings into the market of here's a standard bus, satellite bus that we can offer anybody and they can build anything off of it? How is that playing out at Maxar?

Yeah. So I mean, that's really been the way that our core 1300 platform was designed 15 years ago. And so part of the success within Maxar space has been the ability to take this core building block of a platform or a bus and go from anywhere from five kilowatts up to 25 plus kilowatts up to, we're going to take that same core platform for the power and propulsion element. So the NASA gateway contract, which is going to be more than 50 kilowatts and kind of power is the coin of the realm from kind of the size of the platforms. But essentially we have a platform that scales from that five kilowatts all the way up to 50 plus. And then it's really like, what do you need it to do? And how cost effectively can we package, whether it's antennas for comm or sensors or anything else that we could

put forward? So long way of saying, yeah, hey, we're bought in. We feel like we were at the front end of how do we get platforms and design platforms and develop technology that's scalable to support a wide range of missions and we think that that's being done in leo today we're doing that as part of our 300 product line in leo today and it just makes the most sense yeah hey it's commoditized we understand that the primary reason people buy satellites is for the payload and to generate revenue off of our satellites. And so how can we make the bus and the platform as cost-effective as possible in order to drive more value and more payload capability for our customers? How quickly can you make satellites? And I realize that's a very broad question,

given the fact that each order is probably very specific. It is. Yeah. I mean, typically, you know, a large geocom satellite can be anywhere from 24 to kind of 36 months, depending on how big and kind of what the technology and capability would be. We have gone faster than that. Some of that depends on how we position our supply base. There's typically some long lead items such as like propulsion tanks and some of the payload capabilities that if we just,

if we know we've got a lot of orders coming, we'll pre-position capabilities in that marketplace. On the Leo side, certainly we're driving to be even faster. So, you know, how could we build things in, you know, 18 to 24 months such that we could, you know, launch 10, 12, 18 of those at a time in a single rocket. You mentioned gateway. Talk to me about Gateway, because we know NASA, America going back to the moon, building out the infrastructure. What's Maxar's role in all of this? Yeah. So this is one of those that certainly I get out of bed excited about every day. I mean,

we're building part of the space station that will go around the moon to support the Artemis program. And so our piece here at Maxar is because we build big platforms that have a lot of power and we're kind of a world expert. We are the world expert at solar electric propulsion. We're building the power and propulsion element, which is a bit of a mouthful. So we just call it PPE for short. And PPE will provide all of the power for that space station and will help support that space station in orbit with solar electric propulsion. And it will be launched co-manifested with the halo piece of that space station, which will be where the astronauts will actually go and hang

out and do their mission. And then eventually, it'll be a jumping off point to go down to the moon and back. And eventually, it could be a jumping off point to do things in the rest of the solar system. So big power systems, big platforms, working closely with NASA, leveraging our commercial technology. And, you know, for our engineers and for us, it's like, we get to build the space station that's going to, you know, be around the moon for the next 20 plus years. How cool is that? When is it going to be around the moon? Yeah. So, you know, we have to go with a partner. And so we got to make sure that, you know, we were meeting our milestones and we're actively building it right now. So, you know, we'll make a ton of progress over the next year and deliver it to NASA

and then they'll integrate it with the Halo platform, work with the launch provider and get it up into orbit. Solar electric, I presume that means solar powered energy or is there more to it? Yeah, I mean, it's essentially, it's not quite the hybrid vehicles that we're used to, but yeah, it's harnessing the solar power from the sun, obviously. And then using either Krypton or Xenon, which is a much lighter, more efficient gas in order to fire the thrusters.

And so instead of having to put big gas cans and essentially that takes a lot of weight that you'd want to use for other missions or other capabilities, we're able to do it in a much more kind of cost and weight efficient manner. It's really fascinating. So what makes Maxar the expert in this? The fact that you build this into satellites? So I mean, we've been doing that with our commercial designs for a long time. It was a way to enable really large geo platforms to get to geostationary orbit and then be there and hang out for 15 to 20 plus years doing their mission. And so we've been at the cutting edge of that technology that we're now applying into government spaces as well. And so I want to bring this conversation full circle because it's been two years, or basically two years since Advent International took the company as it had existed at that moment in time, private.

So you get taken over by private equity. And then we saw this spin out. Well, I guess it's not a spin out, but we saw this break apart. OK, it was split the split between the intelligence business and the satellite manufacturing business, which is the business that you're running. So over the last, we'll call it two years, what has that transition entailed and how does it position you now with Maxar Space Systems moving forward for the coming years? Yeah. So I think, you know, fairly typical private equity play to take two businesses that had, you know, some amount of overlap. And certainly we're building the Legion satellites that we talked about earlier, you know, directly for that business. But when you really look at what a services business is and what a

manufacturing business is, they're very different from, you know, kind of technologies and capabilities and engineering talent and whatnot. And so, you know, Advent's decision to split that out really led to us having direct access to the board for faster decision-making, you know, really focused discussions around strategy, around investment, around, you know, what does it take to be a long-term successful manufacturing company for space hardware? And I think that that's been a really great, you know, change for us to think about that business very specifically and holistically as just a space manufacturing business, not a manufacturing business that supports a broader services activity. And so having a board directly involved in just that aspect of it has enabled us to just pick up the pace more than anything.

We're big enough and been around long enough to do real things like part of the space station for the moon, but we're small enough and agile enough in order to adjust to customer demands and market demands without having to go up three or four or 10 layers of management. I've got a direct access to my private equity board. We want to go do something. Here's the business justification. Let's go. And so I think that focus on core satellite manufacturing business has been really great to drive additional investment, additional focus on my business in particular. And of course, we're talking about things like space infrastructure. These tend to be long lead time items. So it's probably very helpful to not have to deal with something

like quarterly earnings as well. I mean, it certainly has a different effect when we're not on a public cycle. I'll tell you that we still have monthly board meetings as far as our directly reporting into Advent and those investors. But yeah, I mean, it gives us a different clarity of thought around what success looks like. And I think that that's been really helpful for the way that we're positioning this business into the future. Is there a future in which the company goes public again or too soon to say? I mean, I would defer to my Advent and private equity bosses to answer that one. Great. All right. Well, Chris Johnson, CEO of Maxar Space Systems, great to speak with you.

Thank you so much for the time today. Yeah, I appreciate the time. It was great catching up. That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.