York Space Systems (YSS) CEO on Earnings, Space Tech & Orbion Acquisition

0:00Dirk Wallinger joins me now CEO of York Space Systems. I'm so glad you are with us. We're going to talk about the quarterly report and after the IPO, but how are you feeling overall? Right now you have a somewhat volatile market environment. Yeah, it definitely is a volatile market environment right now. Luckily, the vast majority of our businesses in defense and commercial as well, but you know, on the defense sector, right? I mean, that's not a need that goes away. You know, markets can go up and down, but I need to protect, you know, protect the US taxpayer, you know, protect US citizens remains. So defenses are really, you know, kind of a great place to be even when it's a little more volatile. Understood. Tell me about the quarter and, you know, the whole full year numbers that you've brought out to us. Yeah, very exciting, full year for us. Revenue was up 52% year over year from 24 to 25. Gross profit was up 133% between 24 and 25 as well. Fixed cost stayed 8%.

1:04So we're definitely seeing that divergent. We're top line continues to move upward in a real positive direction. Meanwhile, fixed costs are holding steady. So very exciting for us. We also guided that 2026 should be positive EBITDA for us. So we're really heading the right tracks and really hitting our, hitting our stride. Understood. I mean, when you think about what's going on ahead here as you reported your quarterly numbers. And I am seeing, for example, Needham has buy rating of $33 target on your space systems. YSS is the ticker symbol. So you do have some wall street votes here. What do you think drives the numbers going forward? I think what's going to continue to be important for us is to diversify the base and diversify the customer base. On the earnings call, we were happy to report that we just secured a new commercial contract, 20 plus spacecraft, $187 million. It was the first constellation of many for this customer. So I think that pointed in a really positive direction as far as the diversity of our supplier base goes. It's actually our six commercial contract. In addition, we talked about

2:07two new IDIQ contracts that we won for two different classified customers, which both represent capabilities required for national defense and golden dome. So we continue to expand our addressable market. And I think that's probably what investors are excited about. It's certainly what we're excited about. I mean, I think about the fact that profits that you've been growing, the margins that have been growing, the revenue outlook that your outlook has been on the rise when it comes to revenue, which increased 52%. How are you managing to do that? We've been in this game for a little bit. We founded the company in 2012. Always with this vision, you know, at that time, it was billion dollar satellites built over decades. We had a firm belief that that wasn't going to work for the future in our national adversaries that we were facing. So we invested, you know, a decade and a half in proliferated systems. And so now we're really starting to see a lot of that benefit. So while a lot of emerging competitors are working on getting their first platform up running or trying to transition a mass production, you know, we invested in that

3:10several years ago. And so that's where we're seeing these improvements in the financials is because we made those investments. We kind of took our medicine for lack of a better term and took that medicine, increased our production capacity. And so now we're really starting to garner those efficiencies. I know you had an acquisition, Orbian. Tell me a little bit about Orbian space technology. Why does it fit into your umbrella so beautifully? Yeah. So we have standardized platforms ranging anywhere from 200 kilograms to 2000 kilograms. And Orbian builds electrical propulsion systems. And what we saw was, you know, their wide breadth of capability on those systems fit across our platforms. We need to maintain, you know, altitude. We need to deorbit things like that. And their systems continue to work for us. We've deployed them in Orbit. They work phenomenally. It's Brad leaves a really great company there in Michigan. And we're really proud to have them on the team. Line our technology roadmap investment production so that York can continue to deliver first and deliver at half the cost. So really excited to have them on board, like I said, just a phenomenal company.

4:13And when you're talking about the contracts and stuff that you have, I mean, some of their commercial, I guess some are more well-known than others, some are confidential. What, what, you know, I know, and you have all these facilities and solutions. Which ones can you tell us about that we can really sort of sink our teeth into? Yeah. So communications is seeing a lot of growth right now. And so there's a lot of missions that we're doing that are in that mission set, whether that, you know, is K-Ban, whether that's Link 16. So we're building lots of constellation systems there. And those tend to me mostly for national defense customers. We're also doing what's called remote proximity operations. So RPO missions, where those are satellites that go and inspect other satellites. So there's just a tremendous amount of technology development happening right now. We're also doing synthetic aperture radar. We're doing electronically steered antennas. So space is just a really exciting, you know, time right now. One that probably I haven't seen in my entire career, where the technology is developing so fast. And as these

5:17technologies develop, people want them in orbit. They want that imagery. They want that information. Those analytics to feed kind of these larger technology companies that are looking to basically feed all that information into their system. So it's really seeing, what we're really seeing now is just an explosion of technology that people want deployed from space. When I think about supply chain and software, is everything going smoothly as smoothly as it could? As smoothly as it could, it's probably the way to go. So supply chain is definitely much better than it was when proliferation kind of first started taking hold probably about five, eight years ago. We've invested heavily in the production and the supply chain. We're fortunate enough that we're building inventory. That's part of some of the proceeds from the IPO or for building inventory. And the reality is is that if you're not always ordering, you know, at the second that you absolutely need it, it really releases a lot of that burden from supply chain, right? So, you know, frankly, I don't

6:19know how long it takes, you know, Honda to build my car. Quite frankly, I don't really care. What I care about is ready when I need it. And so that's what inventory does for you. Enables you to plan better for the long term to make sure that you don't have supply chain problems. So that's kind of where we're at and we expect that most of the industry will kind of move in a similar direction as well. Look, you know, as you lowered the net loss, we've seen numbers on the rise and you have, you're a leading provider to the department of defense, right? And you expect that to continue, right? How so? That's right. Yeah. I don't think anyone is making the argument that we're going to need less satellites in the future. I think it's, you know, obviously quite the opposite. We're going to need more and more satellites. We're going to need to replenish them more often and the technologies are going to continue to evolve where, you know, once you learn of something new or a new kind of capability, you're going to want to have that data in space so that you're collecting that intelligence. So I don't see it slowing down in the segment for, you know, five, ten years,

7:21even then there will always be real replenishment demand. So we're in a very fortunate position to be where we're at. All right, Dirk Wallinger, CEO of Space Systems. Thank you so much. It's really great to see with us, York Space Systems, YSSM, 24% today. Thank you.