Closing Bell - Manifest Space: To the Moon with Intuitive Machines CEO Steve Altemus 4/13/23

Episode Date: April 13, 2023

As NASA’s Artemis program preps its next mission, Morgan takes a deep dive into its multibillion-dollar program to send robots and other payloads to the moon. She sits down with Steve Altemus - the CEO of Intuitive Machines, a contractor for NASA’s CLPS initiative to provide lunar services the space agency. For more Manifest Space, listen and follow here: https://link.chtbl.com/manifestspace

To the moon. Literally. NASA is spending billions of dollars to send robots and cargo to the lunar surface this year. The Commercial Lunar Payload Services Initiative, or CLPS, enables science experiments and tech demonstrations as part of the Artemis program to land humans on the moon. Basically, NASA is buying lunar delivery services. We're the winningest most contractor in the Artemis program, winning three missions to the moon. Intuitive Machines, which went public via SPAC in February, is one of the space startups touting CLIP's contracts. On this episode, co-founder and CEO Steve Altomus talks about the company's literal moonshot and the rocket ship rise and subsequent fall back to Earth of the

stock, whose ticker is Lunar, L-U-N-R, naturally. I'm Morgan Brennan, and this is Manifest Space. So you recently went public. I want to get into all of that and the details around that and why the decision to do that now. But first, I guess a little bit of background on Intuitive Machines. Yeah, we've been an engineering company. We founded in 2013. And, you know, it wasn't until we were inventing things for oil and gas, for the health care system and for aerospace, because those are the major industries here in Houston. We jumped out of Johnson Space Center, NASA's Johnson Space Center in 2013 and started

the company. And it wasn't until 2018 when the national policy concerning space changed and they basically determined that the moon would be of strategic interest and that the United States should do everything in its power to accelerate the U.S. return to the moon and in a sustainable way. And that's putting boots on the moon. And so once that policy shift changed, we pivoted the whole company towards going after and focusing this company, Intuitive Machines, on building the critical infrastructure needed around the moon, in and on the moon and around the moon to support humans in the future. It's in our DNA. We were NASA, human spaceflight engineering for forever, it seems like.

And in our DNA, it was just we were compelled to shift the company towards that national strategic interest. And you already have contracts with NASA. You're part of the CLPS program, for example. Oh, yes. We're the winningest most contractor in the Artemis program, winning three missions to the moon. So we're planning to fly in June of this year, November of this year, and April of next year. So we have an annual cadence of missions, three in a row, the first two going to the South Pole of the moon for NASA, which has never been done before by any government or any other organization. So we're very privileged

to have the opportunity to fly to the South Pole. It's like discovering Antarctica. It's equivalent to something like that. So we're very excited for that. And the vehicle's coming along nicely. The whole program is shaping up to be a success. So we're very excited about that. And so this is going to be a robotic vehicle. You said you're still on track for June. What do you hope to or expect to find at the south pole of the moon? Well, the first, the key aspect is to land softly on the moon, on the south pole. You know, the south pole is an undulating surface and has mountains and craters and crevices. And so to land with precision and avoid hazards and touchdown and daylight,

and then with Earth viewing and be able to communicate to and from Earth, from the moon, and from our autonomous robotic lander, that's the key. We do have some interesting science payloads. But really in the second mission in November, we'll drill for water ice. There's a scientific interest in the South Pole in that it has the highest concentration of entrained water ice in the lunar soil, the lunar regolith. Prime 1 payload package, which is a Trident drill and then a spectrum analyzer that looks at the volatiles entrapped in the soil. As you drill down, the tailings pile will build up and we'll look at that tailings pile and see what the constituents are in the soil.

And that'll be quite the discovery because it'll be the first real discovery of water on the moon. It's pretty incredible. And it sort of speaks to, as you mentioned, the Artemis program, the fact that this situation is, this program is moving forward and with the idea of not only putting American boots back on the lunar surface, but this idea of going there and actually staying there this time. Yeah. So, you know, the Artemis program is made up of really four main thrusts, I would say. There's the precursor missions for science and discovery. That's what we're doing in the Commercial Lunar Payload Service program with NASA, flying for scientific interest and determining what the environment is like and what the constituents of the soil are and

how it looks and feels around the South Pole or anywhere on the constituents of the soil are and how it looks and feels around the South Pole or anywhere on the moon that we are destined to go. The next one is really for engineering the systems that are going to be needed and reduce the technology risk in those systems that will be needed for human sustained presence. And then the third one is in the lunar outpost that's orbiting the moon called the Gateway. And that's kind of a human tended space station that's around the moon outside the gravity well. And then the last one is the Artemis proper, which is really the space launch system and the Orion space capsule that you saw Artemis 1 fly late last year. And then that will be what brings the crew

to and from the vicinity of the moon. And then you'll see the human lander take the crew down to the surface. So yeah, there's quite a bit of dollars, I think over $93 billion worth of funding from the U.S. government flowing into returning humans to the moon and for the purpose of staying there for the long term? In terms of, I guess, in terms of the way this works, we talk about NASA, we talk about some of these public-private partnerships that NASA has been on the forefront of forging where government is concerned. When this June mission gets off the ground, and if it all goes according to plan, you'll be the first commercial company to land on the lunar surface, correct? Yeah, that's correct. We'll see if we're first. You know, the I-SPACE

lander is en route to the moon, and they expect to touch down in April. But the U.S. commercial companies, we have a good shot of being first by launching in June. We actually have a very energetic propulsion system. It's liquid oxygen and liquid methane. And that shortens our transit time to the moon down to about four, four and a half days. Other landers take anywhere from 30 to 60 to 90 days to wind their way out to the moon using the assist of the Earth's gravity. So we may launch later, but we'll get there sooner. And you just went public. Why go public now? Great question. We had been successful at pivoting the company to, you know, diversified space exploration company focused on installing the infrastructure around the moon. We went ahead and won the CLPS program, which is a $2.6 billion contract spread over 10 years that gives you the right to fly and bid on and fly NASA missions of collections of payloads.

We then won the first task order under that contract. We won a second one and we won a third one and we won some technologies that that we needed to develop. NASA needed to develop for the future of humans. And so we were in a good place with revenue, with backlog in our contracts. And so it was time to really think about raising enough capital to allow us to invest in the technologies that are going to be needed for advanced systems. And so with enough backlog on the books and with the opportunity to raise the capital that would fully fund the business to profitability, it made a lot of sense. You know, we weren't actually trying to time this market at all.

You know, the market's been not so favorable to these SPAC transactions after 2021 or so and in 2022. But it was the right time for us. And, you know, there's an urgency about returning to the moon. And, you know, the executive policy, the national space policy to accelerate the U.S. move towards sustainable human presence on the moon was really important to us. And so this SPAC transaction served as a mechanism where we could be public, bring the visibility to the company that needed to at a time when we were going to land on the moon and land on the South Pole and discover water ice, share that experience with the retail investor

and give them an opportunity to participate, which is what I've always dreamed of, is to expand beyond just the aerospace community and let more people think about participating in space exploration. And so it's just made a lot of sense for us and we're on our way. Very exciting. Do you think, I mean, clearly, if you just went public, you probably do. But do you do you think that the general public and the investor base and not just institutional investors, but to your point, retail investors to understand more now about space and commercial space in the sector than they did even just a few years ago? I think so. I think there's been a lot of commercial activity. You know, NASA has been moving away from, you know, the government run monolithic programs of the old days like Apollo

and even the international partnerships like in Space Station and moving towards a public private partnership be brought up where, you know, NASA buys a service from a commercial company. We like that model. This non-traditional procurement or acquisition model is very effective. It gives us an opportunity to leverage our innovation and our agility as a company to move faster and help the U.S. economy and the U.S. government move back to the moon. You see it in commercial cargo resupply to the International Space Station. That contract's set up that way. You see it in the commercial crew

flights to the space station, you know, by SpaceX. And so the model seems to be working. And moving forward now with the moon, and we talk about how do we get back to the moon in a sustainable way. We're now doing it in partnership, commercial entities and governments going back to the moon. And so it's quite an exciting time. I think the general public is realizing that. And what I really want to do is let them know that the moon is upon us. We're actually building landers. We've built a whole lunar program. We're putting communication satellites up, data relay satellites, navigation schemes around the moon. And so while we're thinking about it, it's important that the general public realize that

that's today. It's not science fiction in the future. I want to get into all of that because you have a very aggressive growth and also diversification strategy in terms of that revenue as it does grow over the next couple of years. But first, it's been a wild ride for your stock. The ticker is lunar, I should note, which is very appropriate, L-U-N-R. But it's been a wild ride. I mean, at one point after the de-SPAC happened and you were officially a public company, stock shot up more than something like a thousand percent. And I just wonder what your reaction was to that, given the fact that it's been a very intense first couple of weeks of trading. It's been quite exciting times you know i could be uh you know very very humble and put my head down and say

you know we're all about executing and trying to get our missions off the ground and it'll speak for itself well that will and we're confident that that's going to occur but it was exciting we came out um you know at ten dollars and the stock um shot up and uh it seemed to be driven by the retail investor which is very exciting because I want more participation from the general public in space exploration as a personal goal of mine. So that was good, but I try not to watch it and keep our heads down and try to work on the things that are going to make us successful. And that is executing on the plan to deliver, you know, a train team of a lander that's ready to fly and ship to the Cape to fly on a SpaceX Falcon 9 rocket. Get that off the ground and touchdown softly on our first mission with the second mission right on its heels being developed and built here in Houston and deployed in November to the South Pole again on a Falcon 9 rocket. So a lot of work in front of us.

And, you know, as we execute, that'll be reflected in hopefully a positive way in our stock price. Yeah. So you're anticipating it looks like $88 million in 2022 in terms of revenue, $300 million in 2023, $759 million in 2024. And as I mentioned, while most of that is from Lunar Access Services right now, you have these other businesses that are going to start contributing to that top line over these next couple of years too. I guess just break down for me why you feel so comfortable about growing so quickly and that you can bring these businesses on so quickly. We have a well understood and transparent or line of sight to real revenues through planned procurements from the government. We participate in those and we have had significant capture activities for

some of those contracts ongoing for some time now, over a year. Some of those will be awarded in 2023 and we have those probability weighted to get us to that $300 million number. And that creates a larger backlog for us that extends into 24 and into 25 and subsequent so those opportunities are well understood that pipeline all probability weighted is well understood and so we can speak with confidence about um you know the the opportunities that that are in front of us uh what we expect to win to get us to that, you know, we'll see. Those awards are coming out here this year, and we expect announcements shortly. Some of them during the SPAC process we've actually won, and so we are, we did win an engineering and science technology

contract with the Johnson Space Center. We did win a portion of the lunar spacesuit development. All those were not in the plan when we started. And so there's considerable upside for us. And we're fairly confident we're going to meet or exceed the expectations here for 2023 as we move forward in the year. So yeah, that's kind of where our optimism comes from and our ability to know this customer, NASA, and expand into Space Force and that diversity of customer. And then also with international partnerships, now that we're flying and as we touched down successfully on the moon, the international partners have shown keen interest in wanting to fly their payloads to the moon and are talking to us. So we're speaking to people in Australia, Japan, the United Kingdom, as a few, Italy. All of those are interested in flying some form of rover or payload or orbiter in and around the vicinity of the moon. And

we can be that delivery service for them. What's the long-term plan? I mean, right now, it's the moon. You're focused on the moon. And over the coming years, it's the moon. But I mean, are you thinking about Mars development and colonization eventually? Are you thinking about other types of ways that your technology and your prowess can, you know, create, can go to other business models or other aspects of space as well? I guess, what's the long-term vision? Yeah, that's a great question.

If you think about it, I say this often is we're kind of like an expeditionary force, right? You land softly and establish a beachhead, immediately establish communications. And so from there, you'll establish navigation. And then you start to bring up logistics and supplies to support the humans. And then you support the development of human systems. So all of that's in our plan. And what I hope is that starting with the moon, we develop a blueprint for how to commercialize a celestial body. So if we can then take that model that's

been demonstrated, proven, created around the moon to establish that infrastructure, it's certainly extensible to celestial bodies in the solar system. So as we think about Mars, as we think about the moons of Mars, or we think about other planets and moons around other planets, that's where this kind of goes in the long run. So, you know, that's really the long-term kind of idea. But in the near term, what we're doing is, like I said, we have landed access services to bring that transportation leg. We have a lunar distance ground communications network established in six different countries around the world to give us line of sight communications with the moon 24 hours a day, seven days a week from Earth.

We have plans on mission two and three to deploy data relay communication satellites. And then subsequent missions, part of the proceeds from this transaction will actually help us purchase additional communication data relay satellites. So we'll have a constellation of data relay satellites around the moon that will then be able to communicate 360 degrees around the moon, not just line of sight with Earth. And we add to that position, navigation and timing or navigation services. So think about the first lunar positioning system that goes in and around the moon. Now you have

that basic infrastructure. Today we're building infrastructure in a design study to put a power station, a nuclear fission surface reactor power station on the moon with the Department of Energy and NASA. Later this year, that design contract will be competed for a development contract, which we'll bid on. So now you have the utility of power systems to support humans. And so that's kind of the incremental steps in the near term to feed this broader blueprint that I'm talking about, about commercially establishing this infrastructure. I do have a plan to bring back lunar material from the moon back to Earth, and we'll invest in the technologies for Earth entry, you know, sending an Earth capsule back to Earth through

the atmosphere, and solve those technology hurdles in anticipation of lunar material return missions of the future. Okay. I have to ask, why does that matter so much? And how does it dovetail into the entire conversation around why returning to the moon and having a permanent presence on the moon matters so much? Well, we know already that from hyperspectral imagery of the moon that there's the high possibility of entrained water ice in the lunar soils. What other minerals, metals, what other things from the solar system are on the moon? Having been bombarded for billions of years, you know, what is the moon made of? And of,

there's certainly interest from the scientific community to bring material back from the moon for study. You know, the small amount of material that was brought back during the Apollo days only piqued the curiosity of scientists. And so we think bringing materials back is important in terms of how you live and work on a celestial body in the future. So learning how to crack the regolith into its constituents, harvest or harness the power of the regolith, all can be learned by bringing material back from the moon and studying it on Earth. And so that's kind of our goal. We think there's a scarcity value of that material. There's an intrinsic value in whatever is making up that sample or that material return. And then there might be extrinsic value in what can you make with that material. So that's our interest,

and we think that's necessary. We see that telegraphed by the National Science Foundation and that they included in the decadal survey that the compelling mission to bring back samples from the moon. And so we're responding to what the interests are from the science community. I got to think there's going to be a lot more interest than just the science community, depending on what's in what's in those samples that's coming back. Yeah. Okay. So final question for you, because you're joining me from such a fascinating looking space. Tell me where you are right now. I'm in Southeast Houston, Clear Lake in our Nova Control Command Center. This is a command center in a typical office building that we designed and built. And we are connected with our command consoles here globally to our large aperture parabolic communication dishes around the world. So those dishes communicate with our lander in route to the moon and all the way out to lunar distance.

And we bring data to and from the lander in route and back to this command center. And this command center then can send that data to our principal investigators, to the NASA payload scientists and our commercial payload participants. So it's very exciting. We're doing training in here every week, practicing control of the spacecraft and operating the spacecraft and conducting this mission. Earlier this week, we actually did a lunar orbit insertion burn from the control center, and we practiced and trained the team to execute a successful mission. So it's working well, and we can't wait for it to be used for real on the real mission. There'll be quite the team and excitement in the room, as you can anticipate, in June when we fly. 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.