Intuitive Machines Inc

NASDAQ:LUNR

Earnings Call Analysis

Intuitive Machines' Growth and Opportunities

Intuitive Machines marked a significant milestone with their successful US lunar landing, the first in over 50 years, and now aims to forge a lunar economy. The company has a backlog of $268.6 million and secured a $17.6 million international space agency payload, along with a $9.5 million JETSON Award. Revenue reached $30.6 million, with a $1.5 million gross margin due to OMES revenue. The post-mission cash position hit a peak at $54.6 million, fueled by warrant exercises and an equity investment. Gross margins are expected to rise as a result of past learning efficiencies. With the imminent LTVS award, and potential wins from other programs such as CP-22, NSNS, and steady inflows of proposals post-landing, 2024 is projected to be transformative for Intuitive Machines.

Intuitive Machines Earmarks Award for Developing Lunar Transit Vehicle and Continues NASA and Commercial Support

Intuitive Machines secured an award focused on the continuous delivery of infrastructure for lunar operations, supporting NASA's Artemis campaign and commercial interests. This includes developing and delivering the lunar train vehicle (LTV) to the moon.

Significant Technology Validation Achievements on IM-1 Mission

The IM-1 mission marked substantial accomplishments for Intuitive Machines, most notably the validation of the VR900 liquid methane liquid oxygen engine, proving its reliability through a deep space ignition and multiple restarts, demonstrating essential technology for future solar system exploration.

Increasingly Diverse Partner Interests

There has been a surge of interest from both commercial entities and international partners. New relationships, including those with leading cancer research teams, are exploring options to use the zero gravity lunar environment. Moreover, technological innovations are extending into commercial spaces, notably with Columbia Sportswear participating in the second mission.

Doubling of Contract Backlog Signals Growth

Intuitive Machines' contract backlog reached $268.6 million, nearly doubling from the previous quarter. This includes task orders, international space agency payloads, and Department of Defense contracts. Despite a decrease in revenue compared to the fourth quarter of the previous year, gross margins have improved, and significant cash flow is expected from the successful lunar landing.

Financial Stability and Anticipated Revenue Growth

Management assures sufficient funds to carry through the year with no additional contract awards necessary. Expected operational cost savings and improved margins, primarily from OMES contracts, position the company favorably for continued advances and potential future contract wins, even without considering forthcoming major contracts like LTVS and CP-22.

Strategic Focus on Phase Awards and Potential Billion-Dollar Contracts

The Phase I work, expected to be awarded to multiple teams, focuses on preliminary design and assessment, opening opportunities for follow-on contracts that may yield a full value of around $4.5 billion over a decade. This highlights the potential scale of new projects and how they could contribute to long-term profitability.

Earnings Call Transcript 2023-Q4

[Operator]

Welcome to the Intuitive Machines Fourth Quarter 2023 Conference Call.At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded.Now I would like to hand the conference over to your host, Stephen Zhang, Head of Investor Relations. Thank you. Please go ahead.

[Stephen Zhang, executive]

Good morning. Welcome to the Intuitive Machines fourth quarter 2023 earnings call.Chief Executive Officer, Steve Altemus and Interim Chief Financial Officer, Steve Vontur are leading the call today.Before we begin, please note that some of the information discussed during today's call will consist of forward-looking statements, setting forth our current expectations with respect to the future of our business, the economy and other events. The company's actual results could differ materially from those indicated in any forward-looking statements due to many factors. These factors are described under forward-looking statements in the company's earnings press release and the company's most recent 10-Q filed with the SEC. We do not undertake any obligation to update forward-looking statements.We also expect to discuss certain financial measures and information that are non-GAAP measures as defined in the applicable SEC rules and regulations. Reconciliations to the company's GAAP measures are included in the earnings release filed on Form 8-K.Finally, we posted an earnings call presentation on our website, which provides additional context on our operational and financial performance. You can find this presentation on our Investor Relations page at www.intuitivemachine.com/investors.I'll now turn the call over to Steve Altemus.

[Stephen Altemus, executive]

Thanks, Stephen. Welcome everyone and thank you for joining us.Today, we'll delve into Intuitive Machines fourth quarter financials, covering our fiscal performance and strategic initiatives. Moreover, we'll share updated information reflecting our recent successes, underscoring our current standing as the only U.S. company to ever land on the surface of the moon.Intuitive Machine's decision to go public last year was driven by a vision to democratize access to the moon and catalyze the emergence of a lunar economy. This historic move paved the way for groundbreaking lunar exploration and a unique opportunity to broaden access to the moon for the general commercial population. I've been looking forward to the day when we could join this call and say we accomplished that mission. Exactly 1 year after going public, Intuitive Machines launched its IM-1 mission and 1 week later on February 22, we successfully landed marking the United States first lunar landing in over 50 years. The successful landing recognized by the White House, by NASA and our commercial customers fundamentally disrupted the economics of landing on the moon while substantially retiring the cost of developing a lunar program, including our Nova-C class lunar lander. This same core lander class is currently scheduled for at least 2 more missions under NASA's Commercial Lunar Payload Services Initiative, or CLPS program, which secured its budget under NASA's new appropriations bill.The recently enacted fiscal year 2024 NASA budget continues to support CLPS along with several other key Artemis initiatives. And up next, we expect the announcement of the agency first Lunar Terrain Vehicle Services Contract in early April, responding to the company's first bid as a prime contractor in the agency's Artemis campaign. The final spending bill appropriated $24.9 billion, which was approximately $2 billion less than the NASA request. The majority of the $2 billion shortfall was in the Mars Sample-Return Program, a program Intuitive Machines has not submitted proposals into. While NASA has openly discussed the cost overruns and program delays for its On-orbit Servicing, Assembly and Manufacturing program or OSAM, there is language in the bill that preserves funding through fiscal year 2024. This preserved funding continues the planned revenue of the company's OMES III contract. Despite these political adjustments, NASA's budget continues to bolster the company's road-map as we leverage the success of IM-1 to diversify revenue streams and provide a reliable cadence of lunar missions and services. For example, NASA's Near Space Network Services award is still scheduled for May.As a company, we recognize that returning the United States to the moon for the first time since Apollo 17 was truly an integrated global effort. We worked with government agencies, multiple departments within NASA, the FAA, the FCC and a series of domestic and international partners through our lunar data network and supply chain. Additionally, there is geopolitical and policy alignment with the return to the moon. As recently described in Defense Intelligence Agency report titled Challenges to Security and Space, China and Russia value superiority in space. The efforts of countries such as China, India, Russia and Japan highlight the values placed on superiority in space by other countries. This has ignited a 21st century space race that is well underway.Amidst a surge in geopolitical lunar activity that has recently seen nation states to come to the challenges of spaceflight, we believe the success of IM-1 mission puts the commercial industry firmly into the space race. Our co-operation with agencies and other countries positions IM as a first mover in this race. The IM-1 mission delivered over 100 kilograms of payloads and shuttled numerous technology demonstrations to the lunar surface. It operated more than 144 hours on the lunar surface, transmitting more than 1.7 gigabytes of science and engineering data across all commercial and NASA payloads. The landing and data delivery from the lunar surface resulted in more than $12 million in success milestone payments in 2024 across NASA and commercial customers.The mission landed further south that any vehicle in the world has ever landed on the moon, establishing a foundation marked by numerous pioneering achievements, including validating the company's scalable liquid methane and liquid oxygen propulsion system of future-facing technology we believe is the next step in propulsion innovation required to travel further into our solar system. Our first-of-its-kind vision processing and autonomous landing technology landed within 9.9 degrees from the Moon South Pole. Massive craters, steep slopes and difficult lighting conditions marked the [Omnibus] region of the moon, proving our autonomous landing technology on our first mission sets the stage for IM-2, which is intended to land on the moon South Pole at the Shackleton Connecting Ridge to search for water ice that may be processed for propulsion and life support in the future.The commercial and NASA payloads on IM-2 complement the pursuit of water on the moon and the effort to establish a foothold on the South Pole, where NASA's $93 billion Artemis campaign is targeting human missions this decade. IM-2's propulsion and structural components are being assembled in-house, and we completed integration of the NASA's ice mining drill in the fourth quarter. In addition, Intuitive Machine's Micro Nova Hopper designed to search for water ice in permanently shaded regions of the moon completed thermal vacuum chamber testing before the end of the year. Since concluding the IM-1 mission on February 29, our team transitioned into assembling and integrating the IM-2 mission lunar lander. It uses the same core Nova C class vehicle as IM-1, allowing us to capitalize on schedule and cost efficiencies. The team assessing IM-1 data identified just a handful of adjustments we'll carry over into the IM-2 mission to optimize and refine performance. We will complete the assembly and integration process with only these minor adjustments to the flight-proven Nova C design. Intuitive Machines has been working with NASA to finalize engineering and landing site selection on IM-2, which may marginally impact our targeted 2024 launch time.The IM-1 mission success extends beyond our Lunar Access Services business unit. At the start of the call, I touched on global integration. Intuitive Machines has achieved remarkable success in globally integrating radio astronomy editions from over a dozen countries, positioning ourselves as the sole commercial provider to validate a lunar distance data service from the moon surface. This feat underscores the company's leadership in lunar data services, further demonstrated by its successful augmentation and interoperability with NASA's deep space network. We believe this creates a clear advantage in our pursuit of NASA's Near Space Network Services contract award in the second quarter.In 1 year's time, the Orbital Services business unit has moved from an incubated idea to a mature revenue and profit center for Intuitive Machines. The Orbital Services business unit secured and is executing on the Omnibus multidisciplinary engineering services contract or OMES III. With $12.5 million in revenue recognized in December 2023, OMES III has been instrumental in driving the unit's success. Moreover, the connection between OMES III and NASA's OSAM project is notable as Congress has appropriated funds for OSAM, ensuring continued revenue for that project within the OMES contract through the fiscal year. As Congress pushes for OSAM project performance improvements, Intuitive Machines remains committed working with NASA through the completion of the OSAM mission under the OMES contract.As Intuitive Machines eagerly anticipate NASA's announcement for the agency's Lunar Terrain Vehicle Services Contract, the company is diligently preparing for potential award. NASA's LTVS contract holds a total program value of more than $4 billion structured across 2 phases of award with multiple potential awardees. The first phase expected shortly after first quarter of 2024 entails a feasibility assessment, the award amounting to approximately $30 million over 1 year. If awarded, this phase aims to mitigate risks associated with developing the company's Nova-D cargo class lunar lander and advancing the Lunar Terrain Vehicle Design. The Intuitive Machines led Moon Racer team is comprised of aerospace and automotive leaders such as ABL, Boeing, Michelin and Northrop Grumman and is poised to leverage this opportunity to propel the next generation of lunar surface mobility. Following the successful completion of the Phase 1 feasibility assessment, Intuitive Machines anticipate bidding on the second LTVS award. This award is earmarked for developing and delivering the lunar train vehicle to the moon as the company continues demonstrating its capability and reliability in lunar operations. The LTVS award is anticipated to focus on continuously delivering infrastructure supporting both NASA's Artemis campaign and commercial interest. We believe this groundbreaking endeavor positions Intuitive Machines as a key player in advancing lunar infrastructure.Furthermore, Intuitive Machines IM-1 mission served as a platform for validating groundbreaking space products and infrastructure with notable achievements, including validating the company's proprietary and scalable VR900 liquid methane liquid oxygen engine. This engine was validated through the first-ever deep space ignition followed by multiple restarts, demonstrating reliability and providing successful spacecraft maneuvers to the lunar surface. Positioned as a future-facing technology, we believe liquid methane and liquid oxygen propulsion are the next evolutionary steps in propulsion technology, which are essential for enabling travel further into the solar system using the resources we know are already available on other celestial bodies. Other mission elements such as software integration for vision processing and create a recognition for autonomous landing technology were also successfully validated. With these achievements, Intuitive Machines is fielding inquiries and exploring potential opportunities to enter the market with these validated space products.Building on this momentum, the company has submitted its past performance data to NASA for consideration in their next CLPS Mission award. We've also attracted a surge of interest from commercial and international partners, including space agencies. We are forging a new relationship with a world-leading cancer research team interested in leveraging the zero gravity environment for science and medicine. Our lunar data services team is exploring interest in data relay satellite tasking using our flight-proven network and mission operations center. We're re-engaging commercial brand partnerships to push traditional earthbound retail technology innovation while extending new Columbia Sportswear innovations to our second mission.Finally, at the start of the call, I mentioned the global landscape of space exploration witnessing a remarkable increase in geopolitical activity with nations worldwide intensifying their efforts to return to the moon and explore beyond. Last week, South Korea unveiled ambitious plans to establish a new space industry cluster backed by over $1 billion in funding through 2027. The cluster will foster spacecraft development and astronaut training. We view investments in exploration like this with admiration and appreciation, recognizing its positive impact on the global pursuit of scientific advancement. And recall, at the end of the fourth quarter of 2023, Intuitive Machines formed a strategic partnership with Boryung Corporation, South Korea's premier health care investment company focusing on bolstering critical infrastructure and fostering new research and development ventures in space. This strategic collaboration exemplifies Intuitive Machines' commitment to aligning itself with the evolving global landscape of space exploration.As Intuitive Machines continues to forge partnerships to diversify revenue, the company remains dedicated to staying at the forefront of the shifting dynamics in space exploration. Aligning with this global momentum, we believe Intuitive Machines is strategically positioned to capitalize on the growing interest in space and the moon, and we're making tangible progress in that pursuit.With that, I'll turn the call over to Intuitive Machines' Interim Chief Financial Officer, Steve Vontur.

[Steven Vontur, executive]

Thank you, Steve, and thanks to everyone joining us today. I'll begin by going through our fourth quarter 2023 results and a few key highlights.We ended the fourth quarter with a contract backlog of $268.6 million, an increase of $133.4 million and nearly double versus the prior quarter. This backlog includes the first half orders from the OMES III contract, along with $17.6 million for an international space agency payload to be delivered on a future mission and $9.5 million for the Department of Defense, Air Force Research Laboratory, JETSON Award. As Steve mentioned earlier, we expect more opportunities to expand backlog this year as we respond to a steady flow of RFP and RFI request since our successful lunar landing as well as the award decisions coming on key programs such as LTVS, CP-22 and NSNS.Revenue in the quarter was driven primarily by NASA's CLPS contracts and related mission payloads along with 1 month of OMES III revenue totaling approximately $12.5 million. The company concluded the fourth quarter with $30.6 million in revenue compared to $38 million in the fourth quarter of 2022. Gross margin improved versus prior quarters and was a positive $1.5 million in the current quarter, driven primarily by the OMES revenue in December. Operating loss was a negative $5.9 million versus $13.0 million in profit for the same quarter of the prior year. Note that the prior year included a one-time NASA change order to move our IM-1 landing location which came with incremental revenue and high drop-through down to income. In addition, Q4 2023 saw higher cost of revenue as well as public company costs since the lease back in February of 2023.On the cash side, we ended 2023 with a cash balance of $4.5 million, which is after a debt pay down of $12 million in the quarter. We have only $8 million of debt remaining on our balance sheet. Note that as of March 1, 2024, our cash balance increased to $54.6 million, driven by $50.6 million of warrant exercises from an institutional investor along with a $10 million equity strategic investment. In addition, we have invoiced NASA, along with other commercial payload customers, the mission completion payments for IM-1, totaling approximately $12.5 million as a result of our successful landing. This will further strengthen our cash position for the year. It's worth noting that our March 1st cash position is the largest balance since any quarter-end position last year, and we believe provides us with sufficient capital for the near term, given our continued capital and cost discipline. Going forward, we will continue to be opportunistic in the capital markets for defensive capital to further strengthen the balance sheet.We became [self-eligible] on March 1 and as a good housekeeping measure, we plan to file an S-3 self registration statement following our 10-K. Operating cash used during the quarter was $22.3 million with CapEx of $2.2 million, resulting in free cash flow in the quarter of an outflow of $24.6 million. As previously discussed, with the completion of our new lunar production and operations center, CapEx was normalized in the fourth quarter compared to recent quarters. Going forward, CapEx is expected to be significantly lower relative to the prior year, excluding the impact of any new awards and associated CapEx requirements.Looking ahead, we expect 2024 to be a transformational year for us, both operationally and financially, building off our recent mission execution success. On the revenue side, we expect sales to expand significantly this year based on the current backlog. Our revenue outlook in 2024 could be further favorably impacted if we are successful in winning our existing pursuits such as LTVS, CP-22 and NSNS. We expect gross margin will continue to improve as we execute on OMES as well as drive cost efficiencies for IM-2 and IM-3 given the prior development and learnings from our successful IM-1 mission. Q1, in particular, is expected to be favorable, given the full quarter on execution along with the final NASA and commercial payload payments for IM-1.As I mentioned earlier, on backlog, we expect continued backlog growth this year driven by key program awards. LTVS is expected to be awarded in the coming weeks with NSNS and the next CLPS award, CP-22 expected sometime in Q2 2024. Additionally, we have seen a significant uptick in request for proposals and information following our successful lunar landing, and we hope to capitalize on our momentum.On the cash side, with $54.6 million as of March 1 and the final IM-1 success payments to be collected, we remain well capitalized to execute on existing contracts and to fund future growth.Overall, we come into 2024 from a position of financial strength. We've expanded our cash position with lower debt. We've grown backlog, our margins are improving and our future opportunities are broader than ever. We look forward to another successful year of execution.With that, operator, we are now ready for questions.

[Operator]

Thank you. [Operator Instructions] Today's first question is coming from Austin Moeller of Canaccord Genuity.

[Austin Moeller, analyst]

With IM-2, the revisions that you have to make, I guess, they're relatively minor. Does that still put you in a position to launch that mission in 2024?

[Stephen Altemus, executive]

We have been through a review of reconstructing the mission and identified the areas that needed adjustments in terms of antennas and cameras and software changes, certainly laser rangefinder enables switch harnessing improvements. Those have all been made. So we really don't see any impacts to the schedule based on the changes from IM-1. They're fairly straightforward. We are working with NASA closely as NASA is repositioning our landing site. They want to get to an area where they have some confidence that there might be water ice on the South Pole. So we are adjusting the landing site to the Shackleton Connecting Ridge. And what that does is that might have a marginal impact generally, but we are still planning for a 2024 mission for IM-2.

[Austin Moeller, analyst]

And just a follow-up on NSNS. Do you expect to be able to collect more revenues from that program once the first com satellite is positioned in lunar orbit.

[Stephen Altemus, executive]

Well, actually, there's what they call -- when we anticipate an award notification in the May time frame, as I indicated in my opening remarks, and that contract is structured in a way where NASA funds what they call a verification task order. And that verification task order is to put in place that basic initial operating capability that gives you the data relay from around the moon back to earth. And so it's not necessarily singular to a satellite that we put around, but it's getting through that verification phase of the data-relay satellites over a period of, I think it's 24 months -- 24 to 36 months to get that verification done. So after that's accomplished, the service revenue would kick-in.

[Operator]

The next question is coming from Josh Sullivan of the Benchmark Company.

[Joshua Sullivan, analyst]

Just as far as the Near Space Network Service contract, what weight is put on past performance and now that Intuitive has validated lunar data service from the moon, can you just provide us any detail on kind of the contract structure of waiting?

[Stephen Altemus, executive]

Well, I might not be able to correlate it directly to a waiting number. However, we know the contract procurement process is moving forward as several of the vendors, including Intuitive Machines, of course, have made the competitive range. And NASA has opened up oral discussions and talked to us about clarifications and asked for a final proposal for that. So we know the procurement is moving forward. We know also that the relevant experience and past performance as they requested updates to that and specifically updates based on our mission success from Mission One. So that gives us some confidence that we're moving forward in the process and closer to an award, hopefully, in the May time frame, Josh.

[Joshua Sullivan, analyst]

And then just on the changes or potential changes in the landing site for IM-2, are you expecting any change payments as you received for IM-1 when that happened?

[Stephen Altemus, executive]

Yes. In fact, we are. And NASA sent us yesterday request for tax order modification to impact from a cost and schedule standpoint and technically, what it would take to move to this particular landing site on the Shackleton Ridge. It's just very close to an original landing site, but there's been back and forth in analysis that's been done. And all that will be costed and submitted back to the government here in the first week of April, and then we'll expect that modification. And certainly, we'll cover our costs that we would anticipate based on that movement in the schedule.

[Joshua Sullivan, analyst]

And then just one last one. As far as the Lunar Terrain Vehicle contract, are you still bidding as a prime there?

[Stephen Altemus, executive]

Yes, Josh. We're really proud as Intuitive Machines enters human space flight as a prime contractor on the Artemis programs LTV. That's a developed Lunar Terrain Vehicle [indiscernible] with Intuitive Machines as a prime, the Moon Racer team includes AVL, an automotive company includes Boeing, Northrop Grumman and Michelin to name a few. And so we have a really powerful team. We're very confident in our capability and our design, and we're looking forward to hearing about that next week or in the coming weeks. So it represents a significant entrance for us as essentially a system integrator for Artemis program element. What's interesting about that, I don't know folks know, is that that's really a blend of a NASA element that is owned and operated by the commercial entity, which is Intuitive Machines in this case. So that while NASA is operating the rover with their astronauts, when they're not there, Intuitive Machines can operate at that rover autonomously and provide services for commercial customers and international governments for mobility on the surface and to collect science and engineering data. So it really becomes an asset of Intuitive Machines on the moon that's operating for up to 10 years.

[Operator]

The next question is coming from Andres Sheppard of Cantor Fitzgerald.

[Andres Sheppard-Slinger, analyst]

Let me just once more share my congratulations on our first successful mission. I wanted to maybe just touch on the backlog. So the $268 million, can you just remind us over what time period you might expect to recognize that into revenue? And then additionally, with now $12.5 million in revenue collected from the OMES contract, should we expect that kind of similar run rate on a monthly basis over the next 5 years? Is that the best way to think about it?

[Steven Vontur, executive]

The majority of the increase in backlog that we see at year-end came from the OMES task orders. And that's a 1-year set of task orders that we were awarded. So we will expect to burn that off in 2024. As far as the run rate, we expect the $12.5 million in December is right on par with what we expect monthly throughout the rest of the task order term.

[Andres Sheppard-Slinger, analyst]

And I guess just on liquidity. You mentioned your cash balance as of end of March. I'm curious what kind of margins are you expecting throughout the year? And how are you thinking about that capital needs? Obviously, you have the OMES contract kicking in every month, every quarter. Do you foresee a need to have to raise additional capital or do you feel like you're in a good place now given where you are.

[Steven Vontur, executive]

So overall, on margins, we expect margins to improve. OMES is a big factor there since it is a positive margin contract in our outlook. The rest of the cash balance that we currently have, we believe will be sufficient to get us through the remainder of the year without any further awards that we're currently pursuing. So I think that's the best way to look at our current cash balance as of March 1 and how it burns through the rest of the year. So then anything we get awarded would hopefully be positive to that cash flow forecast. Does that answer your question?

[Stephen Altemus, executive]

I would add one other piece, Andres, is that we will continue to remain opportunistic about capital raise in the future to keep looking at ways to accelerate the growth of the company. Like Steve said, we are confident that the cash balance carries us through the year. That's with no additional wins. But we are in a fantastic position for awards on LTVS and CP-22, that next CLPS award, we can't forget about that one, that's moving forward and the NSNS contract. And so with the existing contract backlog we have this year, which will burn-off nearly 80% of that this year and those additional contract awards, that puts us in a great position moving forward even beyond 2024. And then should we have delays like we experienced last year, we've still sufficient capital on the balance sheet to get us through 2024.

[Andres Sheppard-Slinger, analyst]

Maybe if I can just squeeze one last one. Regarding the LTV contract, I just want to make sure I'm understanding this correctly. So I think you said you expect this contract to be decided over the next few weeks, if I heard correctly. And then the Phase 1, you expect that to be awarded to multiple teams, if I understand correctly. So I guess what would be the contract work that you are targeting for that Phase I or what's the best way to think about that?

[Stephen Altemus, executive]

Yeah. The Phase I work, we believe there will be essentially 2 phase awards and each one is a gate to move to the next phase. We think this is a multiple award where 2 or more teams might win an award in Phase 1 and that will be the preliminary design and assessment of the delivery system, in this case is our Nova-D cargo lunar lander. That takes about 1.5 metric tons to the lunar surface. And it is also the preliminary design and assessment of the LTV itself. That's a 12-month period, priced at roughly $30 million. We expect 2 or 3 awards, like I said. The follow-on then will be a result of that to take the design to full maturation. And then we think the full value of that contract is on the order of $4.5 billion over a 10-year period, and that will be divided under multiple awardees, we believe.

[Operator]

The next question is coming from Suji Desilva of Roth MKM.

[Sujeeva De Silva, analyst]

And obviously, these calls are easier now that you made to the moon. I'm sure you agree. So congratulations, guys. The LTV award for Phase 2, isn't there a significant synergy if you're providing the Nova-D and the lander that would derisk that, that would make that a fairly significant consideration in that award.

[Stephen Altemus, executive]

Absolutely, Suji. That was our intent and our strategy going into the bid. It was to put a team together that can provide a complete service with demonstrated ability to deliver such a high value piece of cargo for the Artemis program to the surface of the moon. And with our first mission success, it really just puts us a standing call in terms of our competitiveness for that procurement.

[Sujeeva De Silva, analyst]

My other question is on the staffing you're at now and the operations center you opened up, in supporting these incremental pipeline awards, are you at a staff where you could support those? Would that need to be incrementally added? Just any thoughts there would be helpful.

[Stephen Altemus, executive]

Yeah. Currently, we're staffed both here in Houston at our lunar production operations center and up in Maryland based on that OMES contract for satellite servicing and the Nova work we're doing on OMES III. We have adequate staff. As we look at these awards, it's a first-world problem to add incremental staff to organize and manage the work as it comes in. We anticipate that we'll remain fairly flat in terms of staff needs and burn rate this year, even with these significant awards because number one, we've rolled off Mission 1 so that if we do receive a CP-22 award, that workforce will roll into CP-22, which is the next CLPS award. And then the LTV and NSNS contracts, as I've talked about, have other team members that will also provide workforce. And so we're not necessarily looking for a large ramp-up this year in workforce associated with these contracts that we're talking about, just the minor adjustments as we go forward.

[Operator]

The next question is coming from Mike Crawford of B. Riley Securities.

[Michael Crawford, analyst]

This is for Steve Vontur. Did you say that of the $269 million of backlog that you expect to recognize 80% or $215 million of that as revenue in 2024?

[Steven Vontur, executive]

Approximately that would be primarily the owned contract. As I said earlier, we're burning at about $12.5 million in revenue on that. And then the rest would be CLPS contracts IM-2, and IM-3.

[Michael Crawford, analyst]

And then of the $12.5 billion of success payments you expect to receive from IM-1, is that out of a possible how much of success payments were you eligible to potentially receive.

[Stephen Altemus, executive]

Well, I'll answer that one, Mike. The way we broke it down with the milestones, the only payload that we did not receive data back from was the SCALPSS payload, which studied the engine plume interaction with the dust on the surface of the moon. And so we held back 5% based on that payload not activating, not collecting that data. However, we were able to get data to replace that through our own cameras that give us good understanding of the regular behavior, and we're going to offer that back to NASA. So we expect the combination of about [90.5%] of the NASA payment to be received and then an augmentation for equitable adjustments for the additional data that we can deliver to NASA that puts us well over 100% of the planned payment.

[Michael Crawford, analyst]

And then just finally, one kind of broader question. While we're waiting for a department -- final NDA besides just a continuing resolution, we do have a NASA budget, although it's flattish. Is there anything that you like or don't like about the NASA budget as you've seen.

[Stephen Altemus, executive]

Well, like I said in my comments, the budget is probably $2 billion less than requested by NASA. And when we first looked at it, it looks like the road-map that we've put together as a company for commercializing cislunar space and providing infrastructure to the moon is fully supported, and we like that. That means we're on the right track, and it shows that the government is still committed to returning humans to the moon in a sustainable way. And so that's really a fantastic outcome to have such strong bipartisan support for the Artemis campaign. I did mention the OSAM project, which is on orbit satellite servicing and manufacturing, that's under the OMES contract. When we took over that contract, that project had some cost challenges and schedule challenges. And so we're working very closely with NASA to kind of put that project back in the box and get it launched under the cost bogey that NASA was looking to meet. We received notice from the spending bill, the appropriation that, that funding is in place for the task order in 2024. But the future is not set there. Should we NASA and us as the prime contractor, not be able to put that back in the box, there's a chance that the will to fly that one won't be there. And so there's a little uncertainty there in the OMES contract after 2024. That's the only piece that you asked that would give us some pause, and that's the one that I mentioned in my opening remarks. But we're confident we have a plan for that one, and we're at full funding. These task orders run year by year. So there is a considerable amount of alternative work that fits that OMES contract. It's an Omnibus multidisciplinary engineering contract. So a number of projects and programs within [indiscernible] fall under that contract. And so if we see the OSAM project under a threat, we'll have additional work, I'm sure, provided by the center and NASA to protect those jobs up in Maryland. So other than that, I think we're very pleased with where the NASA budget is.

[Operator]

Thank you. There are no further questions. I'd like to hand the floor back over to Intuitive Machines CEO, Steve Altemus, for closing comments.

[Stephen Altemus, executive]

Well, thank you everyone for joining today's call. I appreciate your thanks for our successful landing on February 22. It was truly a monumental event. Intuitive Machines made history with that soft landing on the moon. And we look forward to representing the United States and our stakeholders as we make more historic achievements in the months and years to come. So thank you very much.

[Steven Vontur, executive]

Thank you, guys.

[Operator]

Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines and log off the webcast at this time, and enjoy the rest of your day.