RocketLab Q1 FY12/24 Earnings Review

RocketLab Q1 FY12/24 Earnings Review
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I Think It’s Gonna Be A Long, Long Time...

by Alex King

… before RocketLab is cash generative. The company continues to grow revenue - now at +25% on a TTM basis - and margins are improving, meaning, getting less horrific (only -50% TTM unlevered pretax free cashflow margins now!) - but actually becoming self sufficient is some way off. The capex-intensive nature of the business model means that this will take time. I would not be surprised to see the company acquired by a large defense contractor; Boeing, perhaps (they have a woeful launch offering today), or Lockheed Martin, maybe Raytheon or even one of the smaller names like Textron, that kind of thing. Hard to see Northrop Grumman gaining FTC clearance given their prior acquisition of Orbital-ATK, nor LHX given the Aerojet Rocketdyne buy. Anyway, to lengthen their runway the company just raised a chunk of new long-term debt, which keeps the wolf from the door for now.

Fundamentals, stock price outlook and our rating follow below.

Detailed Fundamentals