Landing Pad Set for SPCX Earnings; Examining GE, RTX, NOC Reports

SPEAKER_1 (0:00)

For more on the earnings that we've gotten from the defense industry this morning, and more, let's bring in Andrew Chanin, CEO and co-founder of Procure AM. Andrew, great to talk to you. So nice to see you. I've been waiting for our chat, and how fortuitously in advance of these surprise earnings from SpaceX. But before we get to that, let's talk about the earnings we did get this morning. We got GE Aerospace, RTX, Northrop Grumman, a bit of a mixed reaction here. We've got Northrop Grumman moving up about 5%, GE Aerospace down close to the same.

RTX just fractionally lower, less than a percent. As far as what we heard from the names this morning, what are some of your key takeaways?

Andrew Chanin (0:36)

For the most part, strong numbers, beats and upgraded guidance. The things that typically shareholders would like to see in their earnings reports.

Certainly, there are some headwinds with potentially rising jet fuel prices for some of the companies mentioned. But as far as defense and certain areas of space-based technologies, which for us is a huge focus for space, we're seeing really strong numbers. So tough to say whether some of this is global headwinds that we're seeing with unrest in Europe and other things like that. Some angles could say that that could be good for business. Others could hurt other segments of their businesses as well. But right now, this is an area that's certainly one that deserves a lot of focus.

SPEAKER_1 (1:18)

And I want to dive into GE Aerospace because this one's probably the biggest head scratcher here. I mean, good numbers, they beat significantly. Their orders are up close to 50 percent. Management raised its full year outlook yet again. And we're still seeing a sell-off. I mean, what exactly is the market not buying into here when it comes to GE Aerospace?

Andrew Chanin (1:40)

It could just even be not fully understanding what GE Aerospace as a standalone is doing, what they're capable of, and what their vision is for the future. But certainly the numbers look strong. If there are concerns, certainly jet fuel prices could be something that could be a headwind that they're looking at. Supply chain is also another area that constantly comes up whenever you see geopolitical unrest around the world.

But certainly a lot of these projects that they're working on had been in high demand, and according to their earnings and outlook, to them appear to be strong into the future. So is it a case of people not believing the outlooks that are being reported? It's tough to say, but certainly a name that looks like it's not getting as much love as the earnings report would have suggested.

SPEAKER_1 (2:28)

All right, so let's dive in to the one we don't have yet that we're getting today, SpaceX. I mean, what are your expectations for SpaceX, and do you think that we'll get commentary from Elon Musk, even though it's technically not allowed, on a potential tie up with Tesla?

Andrew Chanin (2:44)

So I think everyone wants to know if or when some type of deal with Tesla may be struck.

You know, you must have really exciting plans this afternoon if you're not expecting to be listening on to this earnings call. If you listen to the last one, there are plenty of surprises, guidances, things that I don't think everyone was expecting. People kind of shrugged off initially the Starlink Mobile and getting further into the telecom space. But you know, with the spectrum announcement just a couple of days back, clearly different chips are being put on the table and they're stepping towards some pretty big ambitions. So you know, expect surprises because that's what we got last time. But there are so many different angles of where surprises could come from. I think people really do want to see though some of the projections from the last earnings call as far as where the revenue numbers may be by this quarter, by the end of the year. Are they still holding true? Are they better? Are they worse? I think investors really want to know.

SPEAKER_1 (3:43)

And Andrew, I saw some notes yesterday when we got the surprise announcement that earnings were coming today about why it would have been such a rush or a surprise and not given the normal couple weeks period of notice. And one of them mentioned these reports from Reuters that SpaceX is planning to raise about $40 billion for computing infrastructure as a potential reason that they may have pushed these up. That's a potentially enormous expansion beyond their core launch and connectivity businesses.

How are you looking at that from a strategic rationale point in what it would mean going forward for SpaceX?