- Successfully Completed Six Spaceflights in Six Months With
Overwhelmingly Positive Customer Feedback
- Q3 Cash and Marketable Securities Position of $1.1 Billion
Forecasted to be Sufficient to Bring First Delta Class Spaceships
Into Service and Achieve Positive Cash Flow in 2026
Virgin Galactic Holdings, Inc. (NYSE: SPCE) (“Virgin Galactic”
or the "Company”) today announced its financial results for the
third quarter ended September 30, 2023 and provided a business
update.
Michael Colglazier, Chief Executive Officer of Virgin Galactic
said, "With six spaceflights successfully completed in under six
months, Virgin Galactic has demonstrated the repeatability of our
spaceflight system and also showcased the overwhelmingly positive
experience of our Astronauts. With our third quarter cash and
marketable securities position of approximately $1.1 billion, we
forecast having sufficient capital to bring our first two Delta
ships into service and achieve positive cash flow in 2026."
Third Quarter 2023 Financial Highlights
- Cash position remains strong, with cash, cash equivalents and
marketable securities of $1.1 billion as of September 30, 2023, a
sequential increase of $108 million from the second quarter of
2023.
- Revenue of $1.7 million, compared to $0.8 million in the third
quarter of 2022, driven by commercial spaceflight and membership
fees related to future astronauts.
- GAAP total operating expenses of $116 million, compared to $146
million in the third quarter of 2022. Non-GAAP total operating
expense of $102 million in the third quarter of 2023, compared to
$133 million in the third quarter of 2022.
- Net loss of $105 million, compared to a $146 million net loss
in the third quarter of 2022, with the improvement primarily driven
by lower operating expenses and an increase in interest
income.
- Adjusted EBITDA totaled $(87) million, compared to $(129)
million in the third quarter of 2022, primarily driven by lower
operating expenses and an increase in interest income.
- Net cash used in operating activities totaled $91 million,
compared to $96 million in the third quarter of 2022.
- Cash paid for capital expenditures totaled $13 million,
compared to $6 million in the third quarter of 2022.
- Free cash flow totaled $(105) million, compared to $(102)
million in the third quarter of 2022.
- Generated $211 million in gross proceeds through the issuance
of 62 million shares of common stock as part of the Company's
at-the-market offering program.
Business Updates
- ‘Galactic 06’ spaceflight mission planned for January
2024.
- Spaceship factory in Phoenix, Arizona is on track to open in
mid-2024.
- Production schedule for the Delta Class spaceships remains on
track for revenue service in 2026.
Financial Guidance The following forward-looking
statements reflect our expectations for the fourth quarter of 2023
as of November 8, 2023 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.”
- Revenue for the fourth quarter of 2023 is expected to be
approximately $3 million.
- Free cash flow for the fourth quarter of 2023 is expected to be
in the range of $(125) million to $(135) million.
Non-GAAP Financial Measures In addition to the Company's
results prepared in accordance with generally accepted accounting
principles in the United States (GAAP), the Company is also
providing certain non-GAAP financial measures. A discussion
regarding the use of non-GAAP financial measures and a
reconciliation of such measures to the most directly comparable
GAAP information is presented later in this press release.
Statement of Operations Presentation Following the launch
of commercial service and achievement of technological feasibility,
the Company began presenting the operating expenses supporting the
Company’s commercial spaceline activities as spaceline operations
expense in the accompanying condensed consolidated statements of
operations and comprehensive loss. Expenses incurred prior to the
achievement of technological feasibility were classified as
research and development and selling, general and administrative
expenses. Spaceline operations expense includes costs associated
with commercial spaceflight services and production costs that are
not eligible for capitalization. Spaceline operations expense also
includes costs to support the Company’s Future Astronaut Community
and costs related to payload cargo and engineering services, which
were previously presented as customer experience expense.
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 +1 888 660-6431 or +1 929 203-2118 and enter
the conference ID number 4014201. 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 has developed 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, scaling of our future fleet, providing
repeatable and reliable access to space, development of our Delta
class spaceships, the timing of the opening of our spaceship
factory in Phoenix, our objectives for future operations and the
Company’s financial forecasts, including the expectation for
positive cash flow and the timing thereof, 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, 2022, 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.
Third Quarter 2023 Financial Results
VIRGIN GALACTIC HOLDINGS,
INC.
Condensed Consolidated
Statements of Operations and Comprehensive Loss
(Unaudited; in thousands, except
per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue
$
1,728
$
767
$
3,991
$
1,443
Operating expenses:
Spaceline operations
25,648
590
26,200
737
Research and development
44,848
97,411
241,292
211,578
Selling, general and administrative
42,218
46,113
144,020
127,820
Depreciation and amortization
3,286
2,214
9,723
7,981
Total operating expenses
116,000
146,328
421,235
348,116
Operating loss
(114,272
)
(145,561
)
(417,244
)
(346,673
)
Interest income
12,856
3,524
28,590
6,327
Interest expense
(3,221
)
(3,293
)
(9,648
)
(8,924
)
Other income (expense), net
86
(203
)
164
7
Loss before income taxes
(104,551
)
(145,533
)
(398,138
)
(349,263
)
Income tax expense
53
21
215
69
Net loss
(104,604
)
(145,554
)
(398,353
)
(349,332
)
Other comprehensive income (loss):
Foreign currency translation
adjustment
(60
)
(181
)
9
(314
)
Unrealized income (loss) on marketable
securities
1,022
(585
)
6,008
(8,227
)
Total comprehensive loss
$
(103,642
)
$
(146,320
)
$
(392,336
)
$
(357,873
)
Net loss per share:
Basic and diluted
$
(0.28
)
$
(0.55
)
$
(1.26
)
$
(1.34
)
Weighted-average shares outstanding:
Basic and diluted
375,853
263,907
316,198
260,255
VIRGIN GALACTIC HOLDINGS,
INC.
Condensed Consolidated Balance
Sheets
(Unaudited; in thousands)
September 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
231,030
$
302,291
Restricted cash
38,031
40,336
Marketable securities, short-term
766,047
606,716
Inventories
17,062
24,043
Prepaid expenses and other current
assets
24,051
28,228
Total current assets
1,076,221
1,001,614
Marketable securities, long-term
53,130
30,392
Property, plant and equipment, net
74,066
53,658
Other non-current assets
64,567
54,274
Total assets
$
1,267,984
$
1,139,938
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
27,986
$
16,326
Accrued liabilities
49,888
61,848
Customer deposits
97,923
102,647
Other current liabilities
4,342
3,232
Total current liabilities
180,139
184,053
Non-current liabilities:
Convertible senior notes, net
417,338
415,720
Other long-term liabilities
71,148
59,942
Total liabilities
668,625
659,715
Stockholders' Equity
Common stock
40
28
Additional paid-in capital
2,622,776
2,111,316
Accumulated deficit
(2,022,148
)
(1,623,795
)
Accumulated other comprehensive loss
(1,309
)
(7,326
)
Total stockholders' equity
599,359
480,223
Total liabilities and stockholders'
equity
$
1,267,984
$
1,139,938
VIRGIN GALACTIC HOLDINGS,
INC.
Condensed Consolidated
Statements of Cash Flows
(Unaudited; in thousands)
Nine Months Ended September
30,
2023
2022
Cash flows from operating activities:
Net loss
$
(398,353
)
$
(349,332
)
Stock-based compensation
35,598
34,488
Depreciation and amortization
9,723
7,981
Amortization of debt issuance costs
1,618
1,466
Other non-cash items
(6,500
)
10,256
Change in operating assets and
liabilities:
Inventories
3,996
6,817
Other current and non-current assets
10,297
2,253
Accounts payable and accrued
liabilities
(2,941
)
23,828
Customer deposits
(4,724
)
13,108
Other current and long-term
liabilities
(1,598
)
136
Net cash used in operating activities
(352,884
)
(248,999
)
Cash flows from investing activities:
Capital expenditures
(25,941
)
(12,306
)
Purchases of marketable securities
(872,950
)
(604,945
)
Proceeds from maturities and calls of
marketable securities
702,346
294,612
Net cash used in investing activities
(196,545
)
(322,639
)
Cash flows from financing activities:
Payments of finance lease obligations
(175
)
(132
)
Proceeds from convertible senior notes
—
425,000
Debt issuance costs
—
(11,278
)
Purchase of capped call
—
(52,318
)
Repayment of commercial loan
—
(310
)
Proceeds from issuance of common stock
484,145
99,573
Proceeds from issuance of common stock
pursuant to stock options exercised
—
49
Withholding taxes paid on behalf of
employees on net settled stock-based awards
(3,001
)
(3,479
)
Transaction costs related to issuance of
common stock
(5,106
)
(1,137
)
Net cash provided by financing
activities
475,863
455,968
Net decrease in cash, cash equivalents and
restricted cash
(73,566
)
(115,670
)
Cash, cash equivalents and restricted cash
at beginning of period
342,627
550,030
Cash, cash equivalents and restricted cash
at end of period
$
269,061
$
434,360
Cash and cash equivalents
$
231,030
$
394,032
Restricted cash
38,031
40,328
Cash, cash equivalents and restricted
cash
$
269,061
$
434,360
Use of Non-GAAP Financial Measures
This press release references certain financial measures that
are not prepared in accordance with generally accepted accounting
principles in the United States (GAAP), including, total non-GAAP
operating expenses, Adjusted EBITDA and free cash flow. The Company
defines total non-GAAP operating expenses as total operating
expenses other than stock-based compensation and depreciation and
amortization. The Company defines Adjusted EBITDA as earnings
before interest expense, income 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 free cash flow as net cash
provided 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.
A reconciliation of total operating expenses to total non-GAAP
operating expenses for the three and nine months ended September
30, 2023 and 2022 is set forth below (in thousands):
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Total operating expenses
$
116,000
$
146,328
$
421,235
$
348,116
Stock-based compensation
10,763
11,510
35,598
34,488
Depreciation and amortization
3,286
2,214
9,723
7,981
Total non-GAAP operating expenses
$
101,951
$
132,604
$
375,914
$
305,647
A reconciliation of net loss to Adjusted EBITDA for the three
and nine months ended September 30, 2023 and 2022 is set forth
below (in thousands):
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net loss
$
(104,604
)
$
(145,554
)
$
(398,353
)
$
(349,332
)
Interest expense
3,221
3,293
9,648
8,924
Income tax expense
53
21
215
69
Depreciation and amortization
3,286
2,214
9,723
7,981
Stock-based compensation
10,763
11,510
35,598
34,488
Adjusted EBITDA
$
(87,281
)
$
(128,516
)
$
(343,169
)
$
(297,870
)
The following table reconciles net cash used in operating
activities to free cash flow for the three and nine months ended
September 30, 2023 and 2022 (in thousands):
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net cash used in operating activities
$
(91,497
)
$
(96,038
)
$
(352,884
)
$
(248,999
)
Capital expenditures
(13,325
)
(6,013
)
(25,941
)
(12,306
)
Free cash flow
$
(104,822
)
$
(102,051
)
$
(378,825
)
$
(261,305
)
The following table reconciles forecasted net cash used in
operating activities to forecasted free cash flow for the fourth
quarter of 2023 (in thousands):
Forecasted Range
Net cash used in operating activities
$(100,000) - $(105,000)
Capital expenditures
(25,000) - (30,000)
Free cash flow
$(125,000) - $(135,000)
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version on businesswire.com: https://www.businesswire.com/news/home/20231108060396/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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