Intuitive Machines - Q4 2023

Transcript

Operator (participant)

Welcome to the Intuitive Machines fourth quarter 2023 conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question-and-answer session. If you would like to ask a question, please press star, then one, on your telephone keypad. A confirmation tone will indicate that you're in the question queue. You may press star, then two, if you would like to remove your question from the queue. If anyone should require operator assistance during the conference, please press star, then zero, to signal an operator. 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 (Head of Investor Relations)

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.intuitivemachines.com/investors. I'll now turn the call over to Steve Altemus.

Steve Altemus (CEO)

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 Machines' 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 one year after going public, Intuitive Machines launched its IM-1 mission, and one week later, on February 22nd, 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 costs of developing a lunar program, including our Nova-C class lunar lander. This same core lander class is currently scheduled for at least two 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 Artemis initiatives.

Up next, we expect the announcement of the agency's 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 roadmap 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 the Defense Intelligence Agency report titled Challenges to Security in 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. Amid the surge in geopolitical lunar activity that has recently seen nation-states succumb to the challenges of spaceflight, we believe the success of IM-1 mission puts the commercial industry firmly into the space race. Our cooperation 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 GB 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 than 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, a 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's South Pole. Massive craters, steep slopes, and difficult lighting conditions mark this ominous 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's 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 NASA's ice mining drill in the fourth quarter. In addition, Intuitive Machines' 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 29th, 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 will 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 dishes from over a dozen countries, positioning ourselves as the sole commercial provider to validate a lunar distance data service from the Moon's 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 one 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 III 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 III contract. As Intuitive Machines eagerly anticipates 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 two 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 one 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 AVL, 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 one feasibility assessment, Intuitive Machines anticipates bidding on the second LTVS award. This award is earmarked for developing and delivering the lunar terrain 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 interests. 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 in 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 crater 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 reengaging commercial brand partnerships to push traditional Earth-bound 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 healthcare 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.

Steve Vontur (Interim CFO)

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 quarters 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 requests 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 one 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 III 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 IPO 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 paydown of $12 million in the quarter. We have only $8 million of debt remaining on our balance sheet. Note that as of March 1st, 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 1 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 shelf eligible on March 1, and as a good housekeeping measure, we plan to file an S-3 shelf 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 up 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 of OMES 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 requests 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 1st and the final IM-1 success payments to be collected, we will remain well capitalized to execute on existing contracts as 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 brighter than ever. We look forward to another successful year of execution. With that, operator, we are now ready for questions.

Operator (participant)

Thank you. Ladies and gentlemen, just as a reminder, if you would like to ask a question, please press star, then one now on your touch-tone phone. Today's first question is coming from Austin Moeller of Canaccord Genuity. Please go ahead.

Austin Moeller (Director of Equity Research)

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

Steve Altemus (CEO)

Austin, good morning. Steve Altemus here. 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 enable 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. And 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. That's great. And just to follow up on NSNS, do you expect to be able to collect more revenues from that program once the first comms satellite is positioned in lunar orbit? Well, actually, there's what they call when we anticipate an award notification in the May timeframe, 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 24-36 months to get that verification done. So after that's accomplished, the service revenue would kick in.

Austin Moeller (Director of Equity Research)

Great. Thanks for the details there.

Operator (participant)

Thank you. The next question is coming from Josh Sullivan of the Benchmark Company. Please go ahead.

Josh Sullivan (Senior Equity Research Analyst)

Hey, good morning.

Steve Altemus (CEO)

Morning, Josh.

Steve Vontur (Interim CFO)

Hey, Josh.

Josh Sullivan (Senior Equity Research Analyst)

Just as far as the Near Space Network Services contract, what weight is put on past performance now that Intuitive has validated lunar data service from the Moon? Can you just provide us any detail on kind of the contract structure weighting?

Steve Altemus (CEO)

Well, I might not be able to correlate it directly to a weighting 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's moving forward. We know also that the relevant experience and past performance is 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 timeframe, Josh.

Josh Sullivan (Senior Equity Research Analyst)

Got it. 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?

Steve Altemus (CEO)

Yes. In fact, we are. NASA sent us yesterday a request for task order modifications to impact from a cost and schedule standpoint and technically what it would take to move to this particular landing site on the Shackleton Connecting Ridge. It's just very close to an original landing site, but there's been back and forth and 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 accept that modification in.

Certainly, we'll cover our costs that we would anticipate based on that movement in the schedule.

Josh Sullivan (Senior Equity Research Analyst)

Got it. Then just one last one. As far as the lunar terrain vehicle contract, are you still bidding as a prime there?

Steve Altemus (CEO)

Oh, yes, Josh. We're really proud as Intuitive Machines enters human spaceflight as a prime contractor on the Artemis programs, LTV. That's a developed lunar terrain vehicle or moon buggy 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 an essentially system integrator for an Artemis program element.

What's interesting about that, I don't know if 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 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.

Josh Sullivan (Senior Equity Research Analyst)

Great. Thanks for the update.

Operator (participant)

Thank you. The next question is coming from Andres Sheppard of Cantor Fitzgerald. Please go ahead.

Andres Sheppard (Managing Director and Senior Equity Analyst)

Hi, good morning, Steve. Steve and Steve, thanks for taking our questions.

Steve Altemus (CEO)

Good morning.

Steve Vontur (Interim CFO)

Morning, Andres.

Andres Sheppard (Managing Director and Senior Equity Analyst)

Congratulations on the quarter. 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 five years? Is that the best way to think about it? Thank you.

Steve Vontur (Interim CFO)

Yeah. This is Steve Vontur, Andreas, and thanks for the comments. The majority of the increase in backlog that we see at year-end came from the OMES task orders. And that's a one-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 (Managing Director and Senior Equity Analyst)

Got it. Okay. That's super helpful. Appreciate that. 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're going to 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? Thank you.

Steve Vontur (Interim CFO)

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 1st 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. And does that answer your question?

Steve Altemus (CEO)

Well, 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 LTV 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're still sufficient capital on the balance sheet to get us through 2024.

Andres Sheppard (Managing Director and Senior Equity Analyst)

Got it. That's wonderful. Super helpful. Appreciate it. Maybe if I could 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. Then the phase one, you expect that to be awarded to multiple teams, if I understand correctly. So I guess what would be the contract worth that you are targeting for that phase one? Or what's the best way to think about that? Thank you.

Steve Altemus (CEO)

Yeah. The phase one work, we believe there'll be essentially two phased awards, and each one's a gate to move to the next phase. We think this is a multiple award where two or more teams might win an award in phase one. And what that will be will be the preliminary design and assessment of the delivery system. In this case, it's our Nova-D cargo lunar lander. That takes about 1.5 metric tons to the lunar surface. And it's 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 a full maturation. And then we think the full value of that contract's on the order of $4.5 billion over a 10-year period. And that'll be divided under multiple awardees, we believe.

Andres Sheppard (Managing Director and Senior Equity Analyst)

Got it. Super helpful. Thanks again. Congratulations on the quarter, and I'll pass it on. Thank you.

Steve Altemus (CEO)

Thanks, Andres.

Andres Sheppard (Managing Director and Senior Equity Analyst)

Thank you. The next question is coming from Suji Desilva of Roth MKM. Please go ahead.

Suji Desilva (Managing Director and Senior Equity Analyst)

Good morning. Good morning to the team. And obviously, these calls are easier now that you made it to the Moon. I'm sure you agree. So congratulations, guys. The LTV award sorry, I have a bad throat. The LTV award for phase 2, isn't there significant synergy? If you're providing the Nova-D and the lander, that would de-risk that. That would make that a fairly significant consideration in that award.

Steve Altemus (CEO)

Absolutely, Suji. That was our intent and our strategy going into the bid was to put a team together that can provide the 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 standing tall in terms of our competitiveness for that procurement.

Suji Desilva (Managing Director and Senior Equity Analyst)

Okay. Great. My other question's 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.

Steve Altemus (CEO)

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 NOAA work we're doing on OMES-3. 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 one 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.

Suji Desilva (Managing Director and Senior Equity Analyst)

Okay. Thanks, guys. Congratulations to you.

Steve Altemus (CEO)

Thanks, Suji.

Operator (participant)

Thank you. The next question is coming from Mike Crawford of B. Riley Securities. Please go ahead.

Mike Crawford (Senior Managing Director)

Thank you. I guess this is for Steven 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?

Steve Vontur (Interim CFO)

Approximately. That would be primarily the OMES III 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 3.

Mike Crawford (Senior Managing Director)

Okay. Great. And then of the $12.5 million 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?

Steve Altemus (CEO)

Well, I'll add to 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 regolith behavior. And we're going to offer that back to NASA.

So we expect a combination of about 95% 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.

Mike Crawford (Senior Managing Director)

Excellent. And then just finally, one kind of broader question. While we're waiting for a final NDAA, 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 that's received?

Steve Altemus (CEO)

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 roadmap 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 a really 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 III 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 and under the cost bogey that NASA was looking to meet. We received notice from the spending bill or the appropriations that that funding is in place for the task order in 2024. But the future is not set there.

Should 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 III 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 III contract. It's an omnibus, multidisciplinary engineering contract. So a number of projects and programs within Goddard 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 I'm very pleased with where the NASA budget is.

Mike Crawford (Senior Managing Director)

Excellent. Thank you very much.

Operator (participant)

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.

Steve Altemus (CEO)

Well, thank you, everyone, for joining today's call. I appreciate your thanks for our successful landing on February 22nd. 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.

Steve Vontur (Interim CFO)

Thank you, guys.

Operator (participant)

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