03 August 2020

Virgin Galactic Announces Second Quarter 2020 Financial Results

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  • Conceptual Design for High Speed Aircraft Unveiled

  • Design of SpaceShipTwo Cabin Interior Revealed Through Live Virtual Event

  • Total Participants in ‘One Small Step’ Program Increased to Over 700

MOJAVE, Calif. – August 3, 2020 – Virgin Galactic Holdings, Inc. (NYSE: SPCE) (“Virgin Galactic” or “the Company”), a vertically integrated aerospace and space travel company, today announced its financial results for the second quarter ended June 30, 2020.

“During the second quarter we continued to advance our test flight program, including conducting two successful glide flights from Spaceport America,” said George Whitesides, Chief Space Officer of Virgin Galactic. “We saw continued growth in customer demand, with increases in paid enrollments for our ‘One Small Step’ program, and entered into deposit agreements for orbital spaceflights with twelve customers. During the period, our operations were impacted by the COVID-19 pandemic, despite our efforts to minimize disruption. However, our preparations for commercial service are well underway under the leadership of our new CEO, Michael Colglazier. Going forward, I am excited to focus my efforts and expertise on important future business areas, including high speed travel, in my new role as Chief Space Officer. We believe that these new technologies represent the future of aviation and we look forward to working with respected parties like NASA, Boeing and Rolls Royce to explore how we can revolutionize the way we travel.”

Michael Colglazier, Chief Executive Officer, added: “I am thrilled to be leading Virgin Galactic at this exciting time. We are making substantial progress across many areas of the company as we continue to focus on our path to commercial launch and the steps we are taking to get there, including conducting our first powered spaceflight from Spaceport America this fall.”

Second Quarter 2020 Business Highlights:

  • Completed first glide flight of VSS Unity from Spaceport America, New Mexico.

  • Completed second glide flight of VSS Unity from Spaceport America, New Mexico, achieving a glide speed of Mach 0.85.

  • Cleared three new FAA Verification and Validation elements, bringing the total number of elements cleared to date to 27 out of 29.

  • Completed numerous structural and mechanical installations on second SpaceShipTwo vehicle.

  • Completed over 75% of parts fabrication for third SpaceShipTwo vehicle.

  • Entered into Space Act Agreement with NASA to facilitate the development of high speed technologies.

  • Entered into Space Act Agreement with NASA’s Johnson Space Center to facilitate commercial participation in human orbital spaceflight to the International Space Station.

Second Quarter 2020 Financial Highlights:

  • Cash position remains strong, with cash and cash equivalents of $360 million as of June 30, 2020.

  • Net loss of $63 million, compared to a $60 million net loss in first quarter of 2020.

  • GAAP selling, general, and administrative expenses of $26 million, compared to $27 million in first quarter of 2020. Non-GAAP selling, general and administrative expenses of $23 million in the second quarter of 2020, compared to $23 million in the first quarter of 2020.

  • GAAP research and development expenses of $37 million, compared to $34 million in first quarter of 2020. Non-GAAP research and development expenses of $35 million in second quarter of 2020, compared to $33 million in the first quarter of 2020.

  • Adjusted EBITDA totalled $(54) million, compared to $(53) million in first quarter of 2020.

  • Cash paid for capital expenditures totalled $6 million, compared to $4 million in first quarter of 2020.

Recent Updates:

  • Named Michael Colglazier as new Chief Executive Officer in preparation for commercial service.

  • Continued to demonstrate strong pre-sales demand in the ‘One Small Step’ initiative, with over 700 deposit payments received as of July 30, 2020.

  • Minimal customer refunds, with total Future Astronauts holding at approximately 600 as of July 30, 2020.

  • Entered into deposit agreements for orbital spaceflights with twelve customers.

  • Unveiled initial design concept for a high speed vehicle.

  • Revealed interior cabin design for SpaceShipTwo, accompanied by Augmented Reality mobile app, providing customer experience simulation of Virgin Galactic spaceflight and cabin interior.

  • Completed construction of the third floor of Spaceport America, where astronaut training and flight preparation activities will take place.

Flight Program Update

Along with its second quarter 2020 financial results, Virgin Galactic also provided an update regarding the ongoing impact of COVID-19 on its business and operations. The Company has implemented rigorous health and safety procedures and testing protocols for its employees, following guidelines from the CDC and state and local officials.

The protocols and procedures implemented by the Company in response to the pandemic have limited the number of employees who are able to work on-site in the Company’s facility in Mojave, California, and at Spaceport America, New Mexico, which has slowed the Company’s pace.

Virgin Galactic expects to advance to the next phase of its test flight program with its first powered spaceflight from Spaceport America this fall, with two test pilots in the cockpit. Virgin Galactic then expects to conduct a second powered space flight from Spaceport America, with a crew of two test pilots in the cockpit and four mission specialists in the cabin. Assuming both flights demonstrate the expected results, Virgin Galactic anticipates Sir Richard Branson’s flight to occur in the first quarter of 2021.

As always, safety remains the central focus, and the test flight program will progress with a step-by-step, diligent approach. Expected dates may adjust as the Company processes data from each of its test flights.

Support in the Community 

Virgin Galactic continues to assist with COVID-19 relief efforts in its communities, including partnering with experts from the NASA Armstrong Flight Research Center, Antelope Valley College and the City of Lancaster, California on the COVID-19 task force to help hospitals in the region. In addition, the Company donated medical oxygen hoods to the Gallup Indian Health Care Center in New Mexico and made monetary donations to support the purchase of essential equipment and PPE for its local medical centers in Las Cruces.

The Company also announced a new scholarship, mentoring and fellowship program for Black scholars pursuing STEM education with a focus on aerospace, with an initial commitment of $100,000, which will be augmented by additional donations and support. In addition, Virgin Galactic continued to award STEM scholarships to students pursuing degrees in aerospace.

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 should dial (778) 560-2846 and enter the conference ID number 9097602. The live audio webcast along with supplemental information will be accessible on the Company’s Investor Relations website at investors.virgingalactic.com. 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 and space travel 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 documents filed by the Company from time to time with the Securities and Exchange Commission (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 (Unaudited)

 This press release references certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP selling, general, and administrative expense and non-GAAP research and development expense. 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. It defines non-GAAP selling, general, and administrative expenses as selling, general, and administrative expenses other than stock-based compensation and non-capitalized transaction costs, and non-GAAP research and development expenses as research and development expenses other than stock-based compensation. None of these non-GAAP financial measures is 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 these non-GAAP financial measures 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 June 30, 2020, March 31, 2020, June 30, 2019 and six months ended June 30, 2020 and 2019, respectively, are set forth below:

A reconciliation of selling, general, and administrative expenses to non-GAAP selling, general, and administrative expenses for the three months ended June 30, 2020, March 31, 2020, June 30, 2019 and six months ended June 30, 2020 and 2019, respectively, are set forth below:

For media inquiries:VirginGalacticPress@virgingalactic.comUK, Middle East, Asia, Africa – Ollie Bailey-Pratt, FTI ConsultingUS, Canada, South America, Australia – Antonia Gray, FTI ConsultingVirginGalacticFin@fticonsulting.comFor investor relations inquiries:VirginGalactic-SVC@sardverb.Forward-Looking Statements

 Use of Non-GAAP Financial Measures (Unaudited) 

This press release references certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP selling, general, and administrative expense and non-GAAP research and development expense. 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. It defines non-GAAP selling, general, and administrative expenses as selling, general, and administrative expenses other than stock-based compensation and non-capitalized transaction costs, and non-GAAP research and development expenses as research and development expenses other than stock-based compensation. None of these non-GAAP financial measures is 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 these non-GAAP financial measures 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 June 30, 2020, March 31, 2020, June 30, 2019 and six months ended June 30, 2020 and 2019, respectively, are set forth below:

A reconciliation of selling, general, and administrative expenses to non-GAAP selling, general, and administrative expenses for the three months ended June 30, 2020, March 31, 2020, June 30, 2019 and six months ended June 30, 2020 and 2019, respectively, are set forth below:

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.