25 February 2020

Virgin Galactic Announces Fourth Quarter and Full Year 2019 Financial Results

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Registrations of interest continue to grow to 7,957, more than doubling since last update[1]

“One Small Step” initiative announced, enabling prospects to take first step toward ticket to space

Virgin Galactic Holdings, Inc. (NYSE: SPCE) (“Virgin Galactic” or “the Company”), a vertically integrated aerospace company, today announced its financial results for the fourth quarter and full-year ended December 31, 2019.

“Throughout 2019, we continued to achieve key milestones in our mission to open access to space in a safe, innovative and affordable way,” said George Whitesides, Chief Executive Officer of Virgin Galactic. “During the fourth quarter, we took major steps toward reaching that goal by completing our transaction with Social Capital Hedosophia and becoming publicly listed on the NYSE, as well as building operational readiness at Spaceport America in New Mexico. The progress we made in 2019, combined with the high level of interest from potential customers, underpin the steps we are taking toward reopening ticket sales. We are continuing to build on our strong momentum as we enter the most exciting chapter of our story to date and prepare for commercial launch.”

Fourth Quarter 2019 Business Highlights:

  • Completed transaction with Social Capital Hedosophia and commenced public trading on the NYSE.

  • Achieved key operational milestones at Spaceport America, including exercising our new mission control, ground operational elements and external agreements/communications that were required for flights of VMS Eve and other aircraft types.

  • Transitioned a total of 70 Virgin Galactic operations personnel from Mojave, CA to New Mexico by year end, bringing our current total number of staff in New Mexico to 145, following the interior build-out of two floors at Spaceport America earlier in the year.

  • Commenced construction of the third floor at Spaceport America, which will be used for astronaut training and flight preparation activities. Achieved critical design and build milestones on the second spaceship and achieved 50% completion of the third spaceship’s structure and systems fabrication.

  • Activated key elements of rocket motor higher rate production facility. Continued to clear FAA Verification and Validation provisos. Announced strategic partnership with Boeing and $20 million investment by Boeing’s HorizonX Ventures.

  • Entered into new contract with the Italian Air Force. Announced collaboration with Under Armour and unveiled Future Astronaut spacesuits.

  • Launched Astronaut Readiness Program at Under Armour Global Headquarters in Baltimore, MD.

  • Added three new Board Directors and appointed Executive Vice President, General Counsel and Secretary. [1] Registrations of interest in flight reservations as of February 23, 2020, up 124% from 3,557 as of September 30, 2019.

Fourth Quarter 2019 Financial Highlights:

  • Cash and cash equivalents of $480 million as of December 31, 2019.

  • Revenue of $529,000 for the three months ended December 31, 2019.

  • Net loss of $73 million for the three months ended December 31, 2019, including applicable transaction costs.

  • Adjusted EBITDA totalled $(55) million for the three months ended December 31, 2019.

  • Capital expenditures totalled $6 million for the three months ended December 31, 2019.

Recent Business Highlights:

  • Received 7,957 registrations of interest in flight reservations – February 23, 2020.

  • Appointed Diane Prins Sheldahl as Executive Vice President, People and Organization – February 17, 2020.

  • Relocated VSS Unity to Spaceport America – February 13, 2020.

  • Appointed Enrico Palermo as Chief Operating Officer – January 15, 2020.

  • Achieved “Weight on Wheels” milestone for second spaceship – January 8, 2020.

“One Small Step” Sales Initiative

In a separate press release issued today, Virgin Galactic announced its “One Small Step” initiative, an important milestone in its strategy to position the Company optimally for the re-opening of spaceflight sales. Under this program, interested online registrants will be invited to pay a refundable $1,000 deposit to secure a front-of-line position for future ticket reservations. Upon Virgin Galactic releasing its next tranche of seats for sale, “One Small Step” registrants will be offered the tickets first, allowing them to make the “One Giant Leap” to a confirmed spaceflight reservation and gain full membership to the thriving Virgin Galactic Future Astronaut Community. Additional details on this initiative can be found in the separate press release, accessible on the Investor Relations website.

Fourth Quarter and FY 2019 Financial Results

Conference Call Information

Virgin Galactic will host a conference call to discuss the results at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) today. To access the conference call, parties in the United States should dial (833) 224-0545 and international parties should dial (825) 312-2253, and enter the conference ID number 7782487. The live audio webcast along with supplemental information will be accessible on the Investor Relations website. A recording of the webcast will also be available following the conference call.

About Virgin Galactic Holdings

 Virgin Galactic Holdings, Inc. is a vertically integrated aerospace company, pioneering human spaceflight for private individuals and researchers, as well as a manufacturer of advanced air and space vehicles. Using its proprietary and reusable technologies and supported by a distinctive, Virgin-branded customer experience, it is developing a spaceflight system designed to offer customers a unique, multi-day, transformative experience. This culminates in a spaceflight that includes views of Earth from space and several minutes of weightlessness that will launch from Spaceport America, New Mexico. Virgin Galactic and The Spaceship Company believe that one of the most exciting and significant opportunities of our time lies in the commercial exploration of space and the development of technology that will change the way we travel across the globe in the future. Together we are opening access to space to change the world for good. 

Forward-Looking Statements

 This press release contains certain forward-looking statements within the meaning of federal securities laws with respect to Virgin Galactic Holdings, Inc. (the “Company”), including statements regarding the Company’s spaceflight systems, markets and expected performance. These forward-looking statements generally are identified by words such as “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this presentation, including but not limited to the factors, risks and uncertainties regarding the Company’s business described in the “Risk Factors” section of the Company’s annual report on Form 10-K that it will file with the Securities and Exchange Commission (the “SEC”), in addition to the Company’s subsequent filings with the SEC. These filings identify and address other important risks and uncertainties that could cause the Company’s actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and, except as required by law, the Company assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. 

Use of Non-GAAP Financial Measures

 This press release references Adjusted EBITDA, a non-GAAP financial measure. The Company defines Adjusted EBITDA as earnings before interest expense, taxes, depreciation and amortization, stock-based compensation, and certain other items the Company believes are not indicative of its core operating performance. Adjusted EBITDA is not a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles in the United States (GAAP) and should not be considered as an alternative to any other performance measures derived in accordance with GAAP.The Company believes that presenting Adjusted EBITDA provides useful supplemental information to investors about the Company in understanding and evaluating its operating results, enhancing the overall understanding of its past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by its management in financial and operational-decision making. However, there are a number of limitations related to the use of non-GAAP measures and their nearest GAAP equivalents. For example, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance, and therefore any non-GAAP measures the Company uses may not be directly comparable to similarly titled measures of other companies.A reconciliation of Adjusted EBITDA to net loss for the three months and years ended December 31, 2019 and 2018, respectively, are set forth below:

* Represents a cash disbursement to settle amounts owed to participants of the VG Companies’ amended Cash Incentive Plan upon the achievement of the second qualifying milestone in connection with the closing of the transaction with Social Capital Hedosophia.** Non-capitalized transaction costs include non-recurring expenses related to public listing (i.e., consulting, legal, professional fees, business organizational expenses, etc.) 

For media inquiries please contact:

VirginGalacticPress@virgingalactic.com

Antonia Gray, FTI VirginGalacticFin@fticonsulting.com / VirginGalacticcorp@fticonsulting.com

For Investor Relations inquiries please contact:

VirginGalactic-SVC@SARDVERB.com 

GEORGE WHITESIDES

GEORGE WHITESIDES

SPACE ADVISORY BOARD CHAIR

George T. Whitesides is the Chair of the Space Advisory Board, where he is responsible for bringing together aerospace leaders to advise the Virgin Galactic senior management team on the journey towards regular commercial spaceflight, developing the next generation vehicles and exploring new opportunities. Previously, George served as the Chief Space Officer of Virgin Galactic, spearheading the development of future technologies, including high speed, point-to-point travel and orbital flight, after stepping down as CEO in 2020.

George joined Virgin Galactic in 2010 as Chief Executive Officer. During George’s 10 years with the Company, he built the company from 30 people to a workforce of over 900, successfully guiding Virgin Galactic through its human space flight R&D and flight test program, culminating in two space flights. These historic flights saw the first humans launched into space from US soil since the retirement of the Space Shuttle, as well as the first woman to fly on a commercial space vehicle. George led the transition of operations from Mojave, California to Spaceport America, New Mexico, and oversaw the company’s successful public listing making it a multi-billion dollar company and creating the world’s first publicly traded human spaceflight venture.

Prior to Virgin Galactic, George served as Chief of Staff for NASA. Upon departure from the American space agency, he received the Distinguished Service Medal, the highest award the agency confers.

George’s volunteer service includes Caltech’s Space Innovation Council, Princeton University’s Advisory Council for Mechanical and Aerospace Engineering, and the Antelope Valley Economic Development & Growth Enterprise. He is a fellow of the UK Royal Aeronautical Society and an associate fellow of the American Institute of Aeronautics and Astronautics.

He previously served as Vice Chair of the Commercial Spaceflight Federation, chair of the Reusable Launch Vehicle Working Group for the FAA’s Commercial Space Transportation Advisory Committee, a member of the Board of Directors of Virgin Galactic, a member of the Board of Trustees of Princeton University, co-chair of the World Economic Forum’s Global Future Council on Space Technologies, and the Board of Virgin Unite USA. George has testified on American space policy before the United States Senate, the United States House of Representatives, and the President’s Commission on Implementation of United States Space Exploration Policy. An honors graduate of Princeton University’s School of Public and International Affairs, George later earned a master’s degree in geographic information systems and remote sensing from the University of Cambridge, and a Fulbright Scholarship to Tunisia. George is a licensed private pilot and certified parabolic flight coach.

He resides in California with his wife Loretta and two children.

CHRIS HADFIELD

CHRIS HADFIELD

SPACE ADVISORY BOARD MEMBER

Colonel Chris Hadfield is a heavily decorated astronaut, engineer, and test pilot who has commanded the International Space Station. Formerly NASA’s Director of Operations in Russia and veteran of three spaceflights, Hadfield’s many awards include the Order of Canada, the Meritorious Service Cross and the NASA Exceptional Service Medal. Hadfield is a three-time NYT bestselling author, a renowned musician, an adjunct professor at the University of Waterloo, chair of the board of the Open Lunar Foundation, and host of several internationally acclaimed television series. In addition, Hadfield leads the space stream at the Creative Destruction Lab, one of the world’s top tech incubators.

DR SANDRA MAGNUS

DR SANDRA MAGNUS

SPACE ADVISORY BOARD MEMBER

Dr. Sandra H. “Sandy” Magnus is the Principal at AstroPlanetview, LLC. Most recently she served as the Deputy Director of Engineering in the Office of the Secretary of Defense for the Undersecretary of Research and Engineering. In that role she served as the “Chief Engineer” for the Department of Defense establishing engineering policy, propagating best practices and working to connect the engineering community across the department.

Dr. Magnus is the former Executive Director of the American Institute of Aeronautics and Astronautics (AIAA). Prior to leading AIAA, she was a member of the NASA Astronaut Corps for 16 years. During her time at NASA she flew in space on the STS-112 shuttle mission in 2002, and on the final shuttle flight, STS-135, in 2011. In addition, she flew to the International Space Station on STS-126 in November 2008, served as flight engineer and science officer on Expedition 18, and returned home on STS-119 after four and a half months on board.

Following her assignment on Station, she served at NASA Headquarters in the Exploration Systems Mission Directorate. Her last duty at NASA, after STS-135, was as the deputy chief of the Astronaut Office.

While at NASA, Dr. Magnus worked extensively with the international community, including the European Space Agency (ESA) and the Japan Aerospace Exploration Agency (JAXA), as well as with Brazil on facility-type payloads. She also spent time in Russia developing and integrating operational products and procedures for the International Space Station.

Before joining NASA, Dr. Magnus worked for McDonnell Douglas Aircraft Company as a stealth engineer. While at McDonnell Douglas, she worked on internal R&D and on the Navy’s A-12 Attack Aircraft program.

Dr. Magnus has received numerous awards, including the NASA Space Flight Medal, the NASA Distinguished Service Medal, the NASA Exceptional Service Medal, and the 40 at 40 Award (given to former collegiate women athletes to recognize the impact of Title IX).

DAVID A. WHELAN

DAVID A. WHELAN

SPACE ADVISORY BOARD MEMBER

Dr. David A. Whelan is the SVP Chief-Scientist of Cubic Corporation. Dr. Whelan retired from Boeing in 2017, as the Vice President, Engineering (BDS) and Board of Directors for HRL Laboratories. Whelan served as Director of the Tactical Technology Office of the Defense Advanced Research Projects Agency (DARPA) and began his career at Northrop as designer of the B-2 Stealth Bomber. Whelan is a member of the National Academy of Engineering, a fellow of the American Physical Society and IEEE. He earned his Ph.D. Physics from UCLA; He holds over 75 US patents.