- Contracted With Bell Textron and Qarbon Aerospace as Primary
Suppliers to Build Delta Class Spaceships
- Commercial Launch Remains on Track for Q2 2023
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)
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version on businesswire.com: https://www.businesswire.com/news/home/20221103006312/en/
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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