Ursa Major Technologies, Inc. (BCCQ) Earnings Call Transcript & Summary

Hello, and thank you for joining us. On behalf of Ursa Major and Inflection Point Asset Management, I want to welcome you to this webinar as we discuss the business combination agreement announced between Ursa Major and Inflection Point Mach X today. Joining me are Chris Spagnoletti, Chief Executive Officer of Ursa Major; and Mike Blitzer, Chairman and CEO of Inflection Point. Before we begin, I'll cover a few housekeeping items. This webinar is prerecorded and may be accessed along with the accompanying investor presentation on the Investors page of Ursa Major's website. I'd also like to direct your attention to our forward-looking statements disclosure. This presentation contains forward-looking statements within the meaning of the federal securities law, including statements regarding the proposed business combination, the anticipated benefits of the transaction and Ursa Majors' future business plans, growth and financial performance. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. We encourage you to review the risk factors and other cautionary language included in this presentation, the joint press release issued today and in the filings that will be made with the SEC in connection with this transaction, including the proxy statements and prospectus. Ursa Major and Inflection Point Asset Management undertake no obligation to update these statements, except as required by law. This presentation is not an offer to sell or solicitation of any offer to buy any securities nor shall there be any sale of securities in any jurisdiction where such offer or sale would be unlawful. Additional information regarding the participants in the solicitation and a description of their direct and indirect interest will be included in the proxy statement and prospectus when it becomes available. With that, I'll turn it over to Michael Blitzer and Chris Spagnoletti kick us off.

Thanks, Kevin. I'm extremely excited to announce that Ursa Major will become a publicly listed company by combining with Inflection Point Mach X, NASDAQ ticker IPXX. We expect the transaction to be completed in the first quarter of 2027. This partnership continues Inflection Point's long track record of success within aerospace and defense and growing strategically important assets in the public market. With the investment resulting from this transaction, the team at Ursa Major is scaling a critical munitions company and transitioning its technology from development to full rate production. This will establish Ursa Major as the new entrant of choice in critical munitions at a time when the demand for these systems is surging. Ursa Major was founded in 2015 to bring innovative propulsion systems originally pioneered in the new space economy to the broader aerospace ecosystem. Today, Ursa Major addresses key innovation needs in hypersonics, flexible production of critical munitions through its Lynx manufacturing system and satellite mobility through its chemical propulsion solutions. Ursa Major brings solutions to these growing markets with urgent needs highlighted across all levels of government and by both political parties. Defense and deterrence are bipartisan issues and global security relies on the United States establishing advanced systems that can be fielded at scale. Ursa Major is leveraging its innovation, track record of performance and fresh capital from this transaction to meet this challenge. I will now turn it over to Chris to discuss his vision for Ursa Major and the opportunities ahead.

Before I discuss Ursa Major, I'd like to share a bit of my background. I joined Ursa Major 4 years ago and served in a variety of leadership roles, most recently as President of Liquid Systems before stepping into the CE (sic) [ CE0 ] role in February of this year. Prior to Ursa Major, I served as President of U.S. Cargo Systems, a TransDigm Aerospace Company. I bring more than 3 decades of aerospace and defense leadership experience spanning engineering, operations, manufacturing and business development. Throughout my career, I've led organizations responsible for developing and delivering mission-critical systems for military and commercial aircraft with a consistent focus on operational performance, customer success and business growth. When I joined Ursa Major, it became clear that our solutions, specifically how they were designed for manufacturability and scale from the outset, created a unique opportunity to build America's next great critical munitions company. Ursa Major has over 11 years of heritage in propulsion excellence. We tackled the hard problems first and in 2024, saw those investments begin to translate into successful customer flights. As Mike highlighted, the United States currently faces a dearth of cost-effective hypersonic programs of record capable of deterring near-peer adversaries alongside an unprecedented shortage of critical munitions. Ursa Major sits directly at the crosshairs of these 2 challenges, offering customers production-ready solutions for these urgent needs. Okay. So let's take a look at the transaction. Today, Ursa Major takes a major step forward in realizing its strategic vision by entering into a business combination agreement with an entity to be renamed Inflection Point Mach X, NASDAQ ticker IPXX, enabling Ursa Major to become a publicly traded company. Through this transaction, we are accelerating the production of critical munitions and continuing the development of our HAVOC Missile System, our long-range hypersonic strike system, all while gaining access to the public capital markets. This provides us with the liquidity to scale directly into rising defense demand. Combined with Ursa Majors' technical excellence and operational leadership creates an extraordinary team for this industry. So looking at the market opportunity, there are 3 primary market challenges Ursa Major addresses through its core product portfolio. First, the hypersonic gap. Near-peer adversaries have deployed an arsenal of over 600 hypersonic weapons, while legacy U.S. hypersonics remains undelivered or outdated. Two, the depletion of critical munitions. Ongoing global conflicts are rapidly depleting stockpile reserves and traditional defense infrastructure is struggling to replenish legacy missiles. And the third is outdated manufacturing. Adversaries have adopted modern surge capable manufacturing methods, whereas the U.S. industrial base has largely lagged behind. In response to these critical challenges, the U.S. government has requested a surge in missile ammunitions procurement. Through our HAVOC Missile System and Lynx, our proprietary approach to solid rocket motor manufacturing, we are answering that call. So I want to give a little bit more detail on our product portfolio. Okay. To share more detail on the HAVOC Missile System, this is our flight-proven low-cost, scalable hypersonic all-up-round designed to accelerate deployment and address the U.S. shortfall in fielded hypersonic weapons. HAVOC is designed to outmaneuver, evade and overwhelm adversaries by using its ability to deep throttle, pulse, vector change and operate both inside and outside the atmosphere. We believe HAVOC can set the U.S. capabilities 10 years ahead of near-peer adversaries driven by its tactical storable liquid rocket upper stage engine codenamed Draper. Within our portfolio, HAVOC offers the United States an innovative new approach to long-range survivable hypersonic strike. Our storable, tactical liquid rocket engine powers the upper stage of HAVOC and offers unparalleled ability to deep throttle, change trajectory, operate in and outside of the atmosphere, all at the cost point that make the system relevant for deterrence. It can go fast and go slow. It could fly a long way or hit a nearby target or change direction entirely. Also, given its thermal management system, HAVOC avoids some of the most costly exotic components and thermal protection systems that have plagued other hypersonic solutions. Finally, due to its engine that uses significant additive parts and ability to be manufactured inertly, it creates a platform that can scale seamlessly while primarily using only commodity inputs. This performance, ability to cost down and then producibility makes HAVOC a great solution for the U.S. needs in long-range deterrents at scale, all while meeting a price point that makes this weapon fieldable. At the same time, our Solid Rocket Motor Group has established the Lynx adaptable production line to deliver flexible, rapid replenishment, extended range applications. Our core innovation centers around inert manufacturing, where we build a motor from the inside out using additive and other inert manufacturing innovations. This, combined with DCMA-compliant energetics automation allows for the same production line to manufacture motors ranging from 2 to 22 inches in diameter. This delivers unprecedented flexibility and surge capacity to meet warfighter demands. So looking now at our company history and path forward to growth, these products are backed by years of tackling the hardest challenges in aerospace, rigorous testing, iteration and building infrastructure for cutting-edge systems. There are no shortcuts for these hard learned lessons and Ursa Major has spent the last decade building a defensible competitive moat to leverage against. We achieved our first hypersonic flight in 2024, flying our cryogenic Hadley engine with Stratolaunch. Since then, we have experienced rapid demand growth and achieved major technical milestones, including our first solid rocket motor flight, proving Hadley's reusability and successfully completing our first 2 flights of the HAVOC Missile System in partnership with the U.S. Air Force. So finally, looking at the commercial opportunity, this technical momentum has driven rapid revenue expansion. 2024 revenue came in at $18.5 million. 2025 revenue came in at $45 million, and we expect revenue in 2026 at $100 million. Our growth to date has been funded by government contracts with the U.S. Navy and Air Force along major defense primes such as BAE Systems and RTX. We are in the early innings of franchise programs like the MK 104, APKWS, and we expect these to mature into long-standing programs of record, shipping hundreds of units annually for our larger systems and thousands for our smaller systems. So this feeds into a robust near-term pipeline of about $2.8 billion. Key opportunities targeted over the coming quarters include follow-on awards for our ARMD program to continue HAVOC flight testing, new target applications and the Mach-XL Program. Additionally, we are pursuing undisclosed government solid rocket motor efforts, further awards on MK 104 and APKWS as well as low-cost containerized munition, the LCCM program, scalable rapid cruise missile system for which we produce the booster. For 2027, our revenue target is approximately $200 million, maintaining our 100% year-over-year growth trajectory. This expansion is supported by our existing backlog, follow-on opportunities and high probability near-term awards. As these programs advance, Lynx and HAVOC will drive sticky recurring revenue supported by deep proprietary IP. So looking at scaling for production, this transaction is a key enabler for transitioning our contracts into full rate production. We will deploy the proceeds directly into expanding production infrastructure across both our solid and liquid platforms. For solids, this means expansion of our facilities where we own nearly 500 acres across 6 sites. We've been doing the hard work of permitting, creating relationships with local governments and now are moving into roadwork and utilities. This facility will scale to produce over 1 million pounds of energetics and the construction could be accelerated through the deployment of capital in this round. That level of production capacity could support all of the franchise programs across the current solids efforts. At the same time, we are maturing our HAVOC Missile System production capabilities, increasing print capacity, machining, assembly, testing and all that's required to produce at scale. We currently produce around 8 HAVOC's per year, but with this capital infusion, we can produce 500 units per year, fully supporting our planned efforts. The customers' need is real. Our technology is flight-proven. And now with this transaction, we can scale the opportunity and create tremendous value for our shareholders and customers.

Thanks, Chris. Let's transition to Q&A.

Having spoken with current and prospective investors over recent months, we selected a few key questions to help provide deeper context on Ursa Major in this transaction. To kick things off, question here is, why is now the right time for Ursa Major to enter the public markets? And why pursue this via a business combination with the SPAC rather than traditional listing?

That's a great question, Kevin. Thanks. We are pursuing this now for really 3 core reasons. One is capital availability. Two is transaction speed; and three, establishing public company transparency and operational maturity. All 3 drivers stem directly from our end customer, the U.S. government, the warfighter needs solutions today. They require industry partners who can invest aggressively in scalable production, and they value the transparency and rigor required of a public company. And the government is deploying significant funding towards new entrants and defense innovation, and Ursa Major is positioning itself to capture that opportunity. And this transaction also aligns us with an experienced partner in Inflection Point who brings a strong track record of navigating public market transitions with companies like Intuitive Machines, USA Rare Earth, Quantum Space and Merlin Labs. And finally, Ursa Major is operational-ready, and we have 11-year operational foundation, over 10 successful hypersonic missions, operational customer flights on our solid rocket motors and projected revenue reaching $100 million this year.