• Contracted With Bell Textron and Qarbon Aerospace as Primary Suppliers to Build Delta Class Spaceships
  • Commercial Launch Remains on Track for Q2 2023

TUSTIN, Calif.–(BUSINESS WIRE)–Virgin Galactic Holdings, Inc. (NYSE: SPCE) (“Virgin Galactic” or the “Company”) today announced its financial results for the third quarter ended September 30, 2022 and provided a business update.

Michael Colglazier, Chief Executive Officer of Virgin Galactic said, “We remain on track to launch commercial service in the second quarter of 2023, and we look forward to validating the modifications to VMS Eve and VSS Unity with multiple scheduled test flights in the coming months. We are also executing on our key strategic initiatives to scale our business as a global Spaceline over the long-term. With Aurora Flight Sciences building our next generation motherships, and the selection of experienced manufacturers, Bell Textron and Qarbon Aerospace, to help build our Delta Class Spaceships, we have our primary suppliers in place to expand our fleet and support our long-term growth.”

Third Quarter 2022 Financial Highlights:

  • Cash position remains strong, with cash and cash equivalents and marketable securities of $1.1 billion as of September 30, 2022.
  • Net loss of $146 million, compared to a $48 million net loss in the third quarter of 2021.
  • GAAP selling, general, and administrative expenses of $46 million, compared to $48 million in the third quarter of 2021. Non-GAAP selling, general and administrative expenses of $38 million in the third quarter of 2022, compared to $40 million in the second quarter of 2021.
  • GAAP research and development expenses of $97 million, compared to $34 million in the third quarter of 2021. Non-GAAP research and development expenses of $94 million in the third quarter of 2022, compared to $31 million in the third quarter of 2021.
  • Adjusted EBITDA totaled $(129) million, compared to $(68) million in the third quarter of 2021.
  • Net cash used in operating activities totaled $(101) million, compared to $(52) million in the third quarter of 2021.
  • Free cash flow totaled $(107) million, compared to $(53) million in the third quarter of 2021.
  • Cash paid for capital expenditures totaled $6 million, compared to $1 million in the third quarter of 2021.
  • Generated $100 million in gross proceeds through the issuance of 15.6 million shares of common stock as part of the at the market offering announced on August 4, 2022.

Business Highlights and Recent Updates:

  • On November 2, 2022, we announced Bell Textron and Qarbon Aerospace as primary suppliers to build Delta Class spaceships. The first Delta Class spaceship is expected to be completed in 2025.
  • On track to launch commercial service in Q2 2023.

Financial Guidance:

The following forward-looking statements reflect our expectations for the fourth quarter of 2022 as of November 3, 2022 and are subject to substantial uncertainty. Our results are based on assumptions that we believe to be reasonable as of this date, but may be materially affected by many factors, as discussed below in “Forward-Looking Statements.”

  • Forecasted free cash flow for the fourth quarter of 2022 is expected to be in the range of $(120) million to $(130) million.

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 +1 844 200 6205 or +1 646 904 5544 and enter the conference ID number 199443. The live audio webcast along with supplemental information will be accessible on the Company’s Investor Relations website at https://investors.virgingalactic.com/events-and-presentations/. A recording of the webcast will also be available following the conference call.

About Virgin Galactic Holdings

Virgin Galactic is an aerospace and space travel company, pioneering human spaceflight for private individuals and researchers with its advanced air and space vehicles. It is developing a spaceflight system designed to connect the world to the love, wonder and awe created by space travel and to offer customers a transformative experience. You can find more information at https://www.virgingalactic.com/.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this press release other than statements of historical fact, including, without limitation, statements regarding our spaceflight systems, expected flight schedule, timing of commercial launch and payload flights, expected completion of the first Delta class spaceship, our objectives for future operations and the Company’s financial forecast, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “strategy,” “future,” “could,” “would,” “project,” “plan,” “target,” and similar expressions are intended to identify forward-looking statements, though not all forward-looking statements use these words or expressions. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including but not limited to the factors, risks and uncertainties included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as such factors may be updated from time to time in our other filings with the Securities and Exchange Commission (the “SEC”), accessible on the SEC’s website at www.sec.gov and the Investor Relations section of our website at www.virgingalactic.com, which could cause our actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change.

USE OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

This press release references certain financial measures that are not prepared in accordance with generally accepted accounting principles in the United States (GAAP), including Adjusted EBITDA, non-GAAP selling, general, and administrative expense, non-GAAP research and development expense and free cash flow. 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-GAAP research and development expenses as research and development expenses other than stock-based compensation. It defines free cash flow as net cash used by operating activities less capital expenditures. None of these non-GAAP financial measures is a substitute for or superior to measures prepared in accordance with GAAP and should not be considered as an alternative to any other 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.

Third Quarter 2022 Financial Results

VIRGIN GALACTIC HOLDINGS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited and in thousands, except for per share data)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 2022

 

September 30, 2021

 

September 30, 2022

 

September 30, 2021

 

 

 

 

 

 

 

 

 

Revenue

 

$

767

 

 

$

2,580

 

 

$

1,443

 

 

$

3,151

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Customer experience

 

 

590

 

 

 

207

 

 

 

737

 

 

 

270

 

Selling, general, and administrative

 

 

46,113

 

 

 

48,268

 

 

 

127,820

 

 

 

128,503

 

Research and development

 

 

97,411

 

 

 

34,289

 

 

 

211,578

 

 

 

103,997

 

Depreciation and amortization

 

 

2,214

 

 

 

2,895

 

 

 

7,981

 

 

 

8,635

 

Total operating expenses

 

 

146,328

 

 

 

85,659

 

 

 

348,116

 

 

 

241,405

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(145,561

)

 

 

(83,079

)

 

 

(346,673

)

 

 

(238,254

)

 

 

 

 

 

 

 

 

 

Interest income

 

 

3,524

 

 

 

240

 

 

 

6,327

 

 

 

785

 

Interest expense

 

 

(3,293

)

 

 

(6

)

 

 

(8,924

)

 

 

(19

)

Change in fair value of warrants

 

 

 

 

 

34,432

 

 

 

 

 

 

(34,650

)

Other income, net

 

 

(203

)

 

 

70

 

 

 

7

 

 

 

110

 

Loss before income taxes

 

 

(145,533

)

 

 

(48,343

)

 

 

(349,263

)

 

 

(272,028

)

Income tax expense

 

 

(21

)

 

 

(25

)

 

 

(69

)

 

 

(74

)

Net loss

 

 

(145,554

)

 

 

(48,368

)

 

 

(349,332

)

 

 

(272,102

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(180

)

 

 

3

 

 

 

(313

)

 

 

11

 

Unrealized loss on marketable securities

 

 

(585

)

 

 

(437

)

 

 

(8,227

)

 

 

(437

)

Total comprehensive loss

 

$

(146,319

)

 

$

(48,802

)

 

$

(357,872

)

 

$

(272,528

)

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.55

)

 

$

(0.19

)

 

$

(1.34

)

 

$

(1.11

)

Diluted

 

$

(0.55

)

 

$

(0.32

)

 

$

(1.34

)

 

$

(1.11

)

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

263,907,259

 

 

 

254,749,195

 

 

 

260,255,202

 

 

 

244,157,923

 

Diluted

 

 

263,907,259

 

 

 

255,147,228

 

 

 

260,255,202

 

 

 

244,157,923

 

VIRGIN GALACTIC HOLDINGS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

 

 

 

September 30, 2022

 

December 31, 2021

 

 

(Unaudited)

 

 

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

394,032

 

 

$

524,481

 

Restricted cash

 

 

40,328

 

 

 

25,549

 

Marketable securities, short-term

 

 

606,713

 

 

 

79,418

 

Inventories

 

 

22,851

 

 

 

29,668

 

Prepaid expenses and other current assets

 

 

22,094

 

 

 

19,476

 

Total current assets

 

 

1,086,018

 

 

 

678,592

 

Marketable securities, long-term

 

 

69,072

 

 

 

301,463

 

Property, plant, and equipment, net

 

 

48,874

 

 

 

47,498

 

Other non-current assets

 

 

55,220

 

 

 

41,281

 

Total assets

 

$

1,259,184

 

 

$

1,068,834

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

 

$

19,872

 

 

$

9,237

 

Accrued liabilities

 

 

43,389

 

 

 

28,787

 

Customer deposits

 

 

103,971

 

 

 

90,863

 

Other current liabilities

 

 

3,336

 

 

 

2,636

 

Total current liabilities

 

 

170,568

 

 

 

131,523

 

Non-current liabilities

 

 

 

 

Convertible senior notes, net

 

 

415,188

 

 

 

 

Other long-term liabilities

 

 

59,885

 

 

 

43,047

 

Total liabilities

 

 

645,641

 

 

 

174,570

 

Stockholders’ equity

 

 

 

 

Preferred stock, $0.0001 par value; 10,000,000 authorized; none issued and outstanding

 

 

 

 

 

 

Common stock, $0.0001 par value; 700,000,000 shares authorized; 274,481,195 and 258,166,417 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

 

 

27

 

 

 

26

 

Additional paid-in capital

 

 

2,096,901

 

 

 

2,019,750

 

Accumulated deficit

 

 

(1,472,975

)

 

 

(1,123,643

)

Accumulated other comprehensive income

 

 

(10,410

)

 

 

(1,869

)

Total stockholders’ equity

 

 

613,543

 

 

 

894,264

 

Total liabilities and stockholders’ equity

 

$

1,259,184

 

 

$

1,068,834

 

VIRGIN GALACTIC HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited and in thousands)

 

 

 

Nine Months Ended

September 30,

 

 

2022

 

2021

Cash flows from operating activities

 

 

 

 

Net loss

 

$

(349,332

)

 

$

(272,102

)

Stock-based compensation

 

 

34,488

 

 

 

48,704

 

Depreciation, amortization and impairment

 

 

12,174

 

 

 

8,635

 

Amortization of debt issuance costs

 

 

1,466

 

 

 

 

Change in fair value of warrants

 

 

 

 

 

34,650

 

Non-cash interest and other operating activities, net

 

 

6,063

 

 

 

(42

)

Change in assets and liabilities

 

 

 

 

Inventories

 

 

6,817

 

 

 

1,178

 

Other current and non-current assets

 

 

2,253

 

 

 

6,342

 

Accounts payable and accrued liabilities

 

 

23,828

 

 

 

1,824

 

Customer deposits

 

 

13,108

 

 

 

2,148

 

Other current and non-current liabilities

 

 

136

 

 

 

3,026

 

Net cash used in operating activities

 

 

(248,999

)

 

 

(165,637

)

Cash flows from investing activity

 

 

 

 

Capital expenditures

 

 

(12,306

)

 

 

(2,452

)

Purchases of marketable securities

 

 

(604,945

)

 

 

(286,132

)

Proceeds from maturities and calls of marketable securities

 

 

294,612

 

 

 

 

Cash used in investing activity

 

 

(322,639

)

 

 

(288,584

)

Cash flows from financing activities

 

 

 

 

Payments of lease obligations

 

 

(132

)

 

 

(105

)

Proceeds from convertible senior notes

 

 

425,000

 

 

 

 

Debt issuance costs

 

 

(11,278

)

 

 

 

Capped call premium

 

 

(52,318

)

 

 

 

Repayment of commercial loan

 

 

(310

)

 

 

(310

)

Proceeds from issuance of common stock

 

 

99,573

 

 

 

500,000

 

Proceeds from issuance of common stock pursuant to stock options exercised

 

 

49

 

 

 

18,856

 

Transaction costs related to issuance of common stock

 

 

(1,137

)

 

 

(6,753

)

Withholding taxes paid on behalf of employees on net settled stock-based awards

 

 

(3,479

)

 

 

(15,779

)

Net cash provided by financing activities

 

 

455,968

 

 

 

495,909

 

Net increase (decrease) in cash and cash equivalents

 

 

(115,670

)

 

 

41,688

 

Cash, cash equivalents and restricted cash at beginning of year

 

 

550,030

 

 

 

678,955

 

Cash, cash equivalents and restricted cash ending balances

 

$

434,360

 

 

$

720,643

 

 

 

 

 

 

Cash and cash equivalents

 

$

394,032

 

 

$

702,565

 

Restricted cash

 

 

40,328

 

 

 

18,078

 

Cash, cash equivalents and restricted cash

 

$

434,360

 

 

$

720,643

 

Use of Non-GAAP Financial Measures (Unaudited)

This press release references certain financial measures that are not prepared in accordance with generally accepted accounting principles in the United States (GAAP), including Adjusted EBITDA, non-GAAP selling, general, and administrative expense, non-GAAP research and development expense and free cash flow. 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. The Company defines non-GAAP selling, general, and administrative expenses as selling, general, and administrative expenses other than stock-based compensation and non-GAAP research and development expenses as research and development expenses other than stock-based compensation. The Company defines free cash flows as net cash used in operating activities less capital expenditures. None of these non-GAAP financial measures is a substitute for or superior to measures of financial performance prepared in accordance with 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 and nine months ended September 30, 2022 and September 30, 2021 , respectively, are set forth below:

Amounts in thousands ($)

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 2022

 

September 30, 2021

 

September 30, 2022

 

September 30, 2021

Net Loss

 

$

(145,554

)

 

$

(48,368

)

 

$

(349,332

)

 

$

(272,102

)

Income tax expense

 

 

21

 

 

 

25

 

 

 

69

 

 

 

74

 

Interest expense

 

 

3,293

 

 

 

6

 

 

 

8,924

 

 

 

19

 

Depreciation & amortization

 

 

2,214

 

 

 

2,895

 

 

 

7,981

 

 

 

8,635

 

Stock-based compensation

 

 

11,510

 

 

 

12,169

 

 

 

34,488

 

 

 

48,704

 

Change in fair value of warrants

 

 

 

 

 

(34,432

)

 

 

 

 

 

34,650

 

Adjusted EBITDA

 

$

(128,516

)

 

$

(67,705

)

 

$

(297,870

)

 

$

(180,020

)

A reconciliation of selling, general, and administrative expenses to non-GAAP selling, general, and administrative expenses for the three and six months ended September 30, 2022 and September 30, 2021, respectively, are set forth below:

Amounts in thousands ($)

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 2022

 

September 30, 2021

 

September 30, 2022

 

September 30, 2021

Selling, general, and administrative

 

$

46,113

 

$

48,268

 

$

127,820

 

$

128,503

Stock-based compensation

 

 

8,158

 

 

8,540

 

 

24,068

 

 

37,004

Non-GAAP selling, general, and administration expenses

 

$

37,955

 

$

39,728

 

$

103,752

 

$

91,499

A reconciliation of research and development expenses to non-GAAP research and development expenses for the three and six months ended September 30, 2022 and September 30, 2021, respectively, are set forth below:

Amounts in thousands ($)

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 2022

 

September 30, 2021

 

September 30, 2022

 

September 30, 2021

Research and development

 

$

97,411

 

$

34,289

 

$

211,578

 

$

103,997

Stock-based compensation

 

 

3,352

 

 

3,629

 

 

10,420

 

 

11,700

Non-GAAP Research and development expenses

 

$

94,059

 

$

30,660

 

$

201,158

 

$

92,297

The following table reconciles forecasted net cash used in operating activities to forecasted free cash flow for the fourth quarter of 2022 (in thousands):

 

 

Forecasted Range

Net cash used in operating activities

 

($ 118,000) – ($ 125,000)

Capital expenditures

 

($ 2,000) – ($ 5,000)

Free cash flow

 

($ 120,000) – ($ 130,000)

 

Contacts

For media inquiries:
Aleanna Crane – Vice President Communications

Virgingalacticpress@virgingalactic.com
575-800-4422

For investor inquiries:
Eric Cerny – Vice President Investor Relations

vg-ir@virgingalactic.com
949.774.7637

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