Jason Gursky: Right. Okay. And then last one for me, just on the Neutron, can you just spend a few minutes talking about your current views on the demand outlook for that vehicle? And when in its development cycle would you expect, maybe to get your first order or to as kind of proving out the concept of what you are doing here. And then to me it is as good as you think it might be, I am just trying to balance that against the comment that we are going to bootstrap capacity there. Why aren’t we running out and trying to fulfill as much demand as possible? So, just kind of general view of the current demand environment for Neutron, when we might expect orders and what kind of levers can you pull to more quickly come in and pull in some of that demand if you think it’s really strong? Thanks.
Peter Beck: Yes. No, that’s a great question, Jason. So, look, on the order side, until a vehicle is kind of proven and flying, any launch contract that you can sign is basically worthless. We can go and sign a launch contract tomorrow with a number of customers, it will be like, some thousand dollars down and cancellable anytime. But that really doesn’t mean anything. And the one thing that you will always get from us is like, real backlogs and real numbers. So, it’s almost pointless trying to sign something like that now. And then even if you do, we saw this with Electron, right, an unproven vehicle. You just take a massive hair cut. So, you have to do really low introductory pricing. And with Electron, we carried some of that introductory pricing on 3 years and we managed to flush it out this year.
But for years, we had some really bad missions. So, I just don’t want to go down that road again. But rather when you have a flight proven product that in a launch constrained market then it becomes very valuable. So, I would much rather arrive to the market with something that works. That commands a premium, then fill my manifest up with a whole bunch of low-value launches now. And frankly the customers that we talk to aren’t looking to buy one or two launches. They are looking to buy quite a bit of capacity to fill their constellation or their other needs. So, we also need to see them delivering and being on-time at the pad because if you commit to one customer and commit a whole bunch of manifest and they are late, then that’s not a happy situation either.
So, when we are kind of reached a point of critical maturity such that somebody is willing to pay real deposits and write real contracts, then that’s a good time and you will see those kind of announcements from us. But until then, I just don’t want to put us in a position where we have just got a whole bunch of rubbish, unkind of solidified launch on a manifest that might look good on a slide, but actually isn’t that real. And then on the kind of the bootstrapping, why not go out and just prepare for a mess of volume. Look, I think I would love to do that. That would be awesome. But the reality is that, big launch vehicles, they are easier to build than a small launch vehicle, but the challenges they just consume huge amounts capital.
And we have to be diligent in the fact to use the capital we have wisely and kind of use it methodically to make sure that we actually put a vehicle on the pad and we are able to scale it in a really safe and methodical scenes. If you had no constraints on capital, then of course you go out and build big factories and pads and where you would go, but it’s not really an option and nor is it really our style. So, we like to put one on the pad and then we will work through the block upgrades and the improvements that inevitably will happen and then slowly ramp production over the coming years to meet demand.
Jason Gursky: That’s great. Thanks Peter. Appreciate it.
Peter Beck: Alright.
Operator: Thank you. Your next question comes from the line of Kristine Liwag with Morgan Stanley. Please go ahead.
Kristine Liwag: Hi. Good evening there guys. Peter, following up on Jason’s question there on the Neutron order, so does it – it sounds like you don’t anticipate orders to occur until after Neutron has its first flight, is that fair?
Peter Beck: Hi Kristine. Know that they could occur earlier, but I guess what I am saying is, is that the two things need to be true that we need to be have confidence that the spacecraft will be delivered and they need to have confidence in us. And at this stage of the development program, as I mentioned before, there are still a number of critical milestones to go through. So, I wouldn’t expect anybody to put huge deposits down on a vehicle in this kind of stage development and I think, yes, that’s just the reality.
Kristine Liwag: Yes. So, I guess it another way to think about it is it sounds like you guys are prioritizing better pricing in the long-term at the expense of building a backlog now and providing significant discounts, which could take years to offset, so if you are confident in your product, just wait till after launch and get better pricing.
Peter Beck: Yes.
Kristine Liwag: Okay. Great. That’s very helpful color. Yes. Sorry, go ahead.
Peter Beck: Well, I live through that with Electron, right. And those contracts can just be really painful to flush out of the system. And there is no argument that there is going to be huge demand and then there is huge demand, your argument about that. So, as I mentioned before like, the smart thing to do is arrive with a flight proven product and not have to do kind of crazy things with pricing and destroy the business model over.
Kristine Liwag: Great. That’s helpful color. And maybe moving to our space systems, it sounds like your Globalstar contract through MDA, as a subcontractor has been progressing well. MDA recently won a $2 billion Telesat LEO contract. How much of an opportunity is there for you to be a subcontractor to that program or similar programs of that size, because it’s pretty meaningful constellation size?
Peter Beck: Yes. Look, I can’t really comment on that program in particular. But what I will say is, we actively are pursuing these – many of these large programs both as subcontractors and also as primes. So, yes, I mean there is a real opportunity for us there. Obviously, the large volume, but also the constraint on some of those critical components like, SOLARIS, is a huge constraint within the space industry right now. And we obviously own one of the three suppliers of that particular technology in the world. So, yes, we see a lot of opportunity there and we are actively and aggressively pursuing these large constellations as – like I say as a supplier and as a prime.
Kristine Liwag: Great. If I could ask one last one, you mentioned Solero, with Solero, where are margins trending in the quarter and can you provide any update on your tracking towards the 30% gross margin target for that business?
Peter Beck: Yes, I just wanted to give Adam.
