Virgin Galactic (SPCE) 6 Aug 212021 Q2 Earnings call transcript

Good afternoon. My name is Nadia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Virgin Galactic's Second Quarter 2021 Earnings Conference Call. [Operator Instructions]. Thank you. will Zaslow, call Investor President conference Relations. today's be Vice Seth of Hosting

today's recorded. Zaslow is like a call As reminder, being go the over Please to conference I to begin. Mr. to ahead. turn now would

you, Galactic Quarter Virgin XXXX Welcome Second Call. good everyone. Conference Thank and to afternoon, Earnings

are with Executive Colglazier, Officer; Officer. and the call Michael Financial On Doug me today Chief Ahrens, Chief

will Following call the we open prepared remarks, questions. for

as about issued our press hour the and is that was on accompany website. Our available remarks. Investor Relations will ago an is presentation slide release today's

presentation, Let contains to me refer Slide you safe X of disclaimer. the which harbor our

uncertainties. we During factors events actual differ assumptions, call, are as could based materially forward-looking current to forward-looking statements from may call. today's and statements. this and These subject statements made Many make certain are on a cause and expectations result, the on risks to

with section cautioned Commission Virgin Risk time information company's Form more to refer time. Galactic For the filed Securities these please about of are filed Readers by the uncertainties, to other documents and the and Factors not from risks XX-K may we and put discussed Please non-GAAP on forward-looking statements, that any obligation today's this and during to financial will that call. to refer update on undue to also forward-looking information statements company note specifically call. the the reliance disclaims be certain Exchange

would With to I to comparable over GAAP most that, financial like measures the the find earnings can measures the our press of You release. non-GAAP reconciliations to Michael. in call now turn

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everyone. and Thanks, Michael, afternoon, good

few quarter, with broader the like on for results our a financial to strategy. Before I review I'd the comments financial begin

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interest incredible our and daily the XX from to objective from just enormous around heard the flight Mexico, cadence but for a reinforced address spaceflights, globally. world. locations near To and that offering New there from long-term Michael, to is to demand response demand, our you begin the is operate Unity As not of multiple

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expenses quarter plus the loss in of the in period. like change fair in million second the and prior million for compared million in income flown compensation completion negative to well XXXX. million quarter attributable to services. the earned $XX increases statement. loss Total net Unity the May value million Total million to back stock-based were EBITDA primarily to to in the net compensation operating stock-based was technical million XX period. of $XXX,XXX negative compared the compared increase to to other the in I'd certain GAAP quarter increase attributable related as operating prior in year generated We expenses non-GAAP the expenses were was for to payloads, of now to of $XX the Turning Michael. payload loss operating in revenue a $XX prior The the The from to the second Slide compared quarter $XX and period. related higher expenses. warrants, year of milestones $XX to was GAAP million $XX were $XX in year as call was hand XX Adjusted revenue in $XX expense. which on noncash

Doug. Thanks,

XX. Slide to Turning

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the is an awe and greater in humanity opening global wonder made travel bringing to and human are access an exciting for the we to that the consumer it's time at This and this response. space level incredible goal. an sector door We moment unprecedented and quarter, space progress to And enormous There's towards for exploration. company, tremendous also momentum of innovation this and large. a

are not history We watching just made. being

We clear to of a The sleeves towards begin part question-and-answer are achieved portion Operator, are it future, exciting am ready and the rolled to have it. we've milestones we're of be and I the recently an making we our thrilled happen. progress now up, call.

Instructions]. [Operator

question Spingarn Crédit first today Our comes Suisse. from from Robert

especially and at Doug, this date in to and progress July. the Galactic congratulations to everybody earlier Michael

What the questions. about What you of the talked in for capital couple out that? a what's experience Just campus. building -- the expense

the in that of design right We're now. phase

As really that. experts team you in a of for we've know, world-class brought

on that So we scope landed haven't the of program. full

disclose that. So nothing to on today

place first use will up take for Rob, Spaceport play into we the people that I and that as this a into basically of volume at every to mentioned, rate as its I What spaceport. we that frequency America talking rate, And used port. lodging. we spaceport model, fill we that with short campus spaceports be higher want future own America up more that The that with we're the the will in the while in with program line and for we'll start we is the Spaceport run housing itself. But around in our about place, to reason, training When a the into combines is the to off that think, prepares need think training as one in the and much we real run, short journey. it base for campus forward for space to higher -- run short broadly we departures. the well. campus people be move that's moving why get build will world in have And

I that going the come not about mentioned, memory away down. for people and life, and up this product our just is real is As with

we the That so we want we're about thought thoughtful preparing for so sharing together. campus more sure forward make will and the it about, of to go look as that into about we're And to it people that. design comes talking

then Okay. couple Delta the for commercial ships the on be And to today, that just think I ready should a things And XXX When of have you about XXX when these all be were little could guess a flights I out timing. if plan accommodated which based on fulfilled? if that roughly be deposits Class then XXX flights while by those expect full, we laid you service? the on tickets ago, might

And that sharing those and XXX phase you initial will frequency that by that, Unity why Unity our future the really have leaning ships through Imagine as carried that flight on of of heavily flying on getting demonstrated that's the strongly will today talking up that's Eve. astronauts kind for you our and Eve. ramp-up, we're in Class and of well been the using it. Delta into But flying us and other the run, Unity all and and short for has those carry really spaceships. the is the will sales be so opening be around mothership, the clearly on which demand think long-term Imagine to hitting are Well, Eve we're key we going why big heard XX, lift We as to

late and scope. as with And first also a XXX quickly to will so well. that's let improve path side from the why quickly. Delta in we're facilities to production taking you the those as time move Getting some raising on see the of to out forward the need possible, was our engineering manufacturing big team more those us there. That the people an win where ready us capital be those coming get house, Class to enhancement with period in rates move rates for of funds a up to for but will we're that going to extended the go we into expect us the this for us came as that July And that's

sounds like more that? it time So you put can't beyond really that specifics any frame around

for that share think, be strategy good ships, the for tried what to that out the bringing are look What I I Delta Today, new specific be Delta the I forward one for Yes, production we think towards Class to that to the the sharing and the us we new Delta but the we our today. that churn on is use won't class. all, laid for Class as existing mothership some we we'll expect we also aligning say be. day want energies share rates and a on important it what we programs can do company, and won't be our we'll clearly them. programs that specifics kind program to you We have today, of

comes Our question next of from Doug Harned Bernstein.

capital this the thinking talked and part when need Doug, -- is and of $XXX million of the mentioned future expansion. you the you for about about raise, spaceports

space the factors when this as is white some you about location my a guess you've a opening decision? into So thinking frame do look that of what's to time next sand been when a what up? number financial forward, you're reasons. that for But go thinking place about And would for

I that kick in Doug, do on you one? if mind

Go ahead, Michael.

of in ships initial to Class per America. be ships facility going following Spaceport coming of building out other. towards to clearly multiple through, ships going production and building our each that year move will out first we're a sequence Doug, production we're But a the kind a focus Delta quick right, facility the

the out fill So the heavy then so against out to will behind ships as on be kind for next that, of spaceport. of America, be should that, downpayment able go year first Spaceport one put kind we a able we we finish After forward. to and as that we

to directly, Mexico, to indirect looking What bring year, we as move 'XX. high of reasonably not value we period. the that for a time this are in next the that New both for also in but but research So a I benefits accrue demonstrate These some think be will where the doing our long is business flight lead spaceport will lots in rate I really will community cadence early be through expect important is rate that flight will to items. to that go, would we will market spending we

I to jobs. that other That think will bring think businesses. can for of high the interest will ancillary that we bring communities kind move additional will additional fully functioning And that product, that. I spaceport world have with around

of a standpoint. kind research we know go we from about to that and So how negotiating want

interesting. You asked places be are what that would

of unique. very back of a different having at So in spaceports each be around think up from and the they seeing upon a and out parts very of would our places call to space, different world, bring when look I we people think right? different also the the the campus varied I from future, create will be look I Earth different that we each will Earth other.

do a the And multiple what we year us we the our assets is would part we the someplace has could Southern very so great let's of feel one able take Middle south -- places. of what from motherships the different weather get than What see would not we might can the speak, Europe. to Europe Asia to year, be part the of for fly we where of So be potential East. interesting best spaceships would even weather the do but and might if the the utilization that other great going system and do to we Southern winter, of from great we out or allow are what from do

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in So more you that not limited very limited before every research experiment get can do like airplane or flights X-G duration.

cost. Now multiple magnitude right, of higher on lots go orders that's to in up the of time space and and far side in have of can that, station, microgravity, you

so the open ability outside with that is have themselves to a that's than you're you'd the spaceflight a And see first what space of suborbital station ability X-G the piece, significantly the calmer the seeing that's the And system we has to be a new on market breakthrough. longer a for that big time human-tended. up system and significantly in what experiments

the And oftentimes, size be part, often can microgravity call experiments experiments actually coming cabin. is in So put for the payload flight? the a are for Unity research seat which for flying handheld. There racks as researchers when a of you fit like rack, take tested Serica space will be there's we us how known one human-tended These I'll in seat X Kelly industry do most the the then a within basically on will forward. that have. other in seat capacity And it, use standard Gerard that what's human-tended every their of the payload folks Band will XX. a that we that

of experiments. see when running subpricing. little a So talk about we microgravity $XXX,XXX of that for you where That's it can kind bit, seat that's on those types and subdivide a research you equivalent per

priority have There's fly our lot bit. astronaut many seats, that think, some vary definitely in waiting how of to a markets. of do I future of to been want a each We for will to our our people So communities. space

most science halo community, platform the it to into will and benefit the think I community. we're important it that astronaut But appropriate as scientific it's also the is benefit research think well. research to will private doing I market we'll that market. the So our do It on really brand what for clearly priority give brings a

a So balance. we'll keep

of next Our Myles Walton UBS. comes question from

color pace the flights of time on sort lead the Inspire. or time between on operations the separation for thanks and Michael, of

whole update maybe walk limited So the up. takeaway for of I if maximum sort schedule, should also, in Delta XX flights XX you the Is year, that your implied a the flights I the guess, of to a back can But revenue then until I Class you're there. have? an XX of talking give shows guess in XX. And

-- through to numbers go the you give I Well, happy again.

Allowing Eve is out modification material period this flights targeting as step and a effectively to and we got step. what fly will out as single schedules and probably these a you Imagine and than go the XXx down big the them be moment. as more because, there, period mothership durations Eve, You maintenance inspection flight enhancement come we have know, think able Unity win come is of longer forward-looking for through us, before what we'll today rate what that goes being this the for we to we have pretty for at be

this hear at and ships benefits need Imagine we're Flight market, kind such the as really as That's will why the where going mentioned, actually be manufacturability. the we've of towards demands beginning. the following confidence of manufacturing to shift for The possible. us So total and historical to prototype of built to Delta and fleet we we're move program. addressable pleased the in putting platform quickly that get energy one tied off, out we for to we Class a you wave engineer Unity XX, Unity as to production with design

So you mentioned Inspire.

paused Eve have Delta impacted to ready. But attention be we're Imagine. I when Inspire yours clearly COVID. towards now, would putting prioritized take and forward Inspire pull as We've Unity, has everyone's Class energy our by the and we is where resources will deploy Right capital. our and been the We we still those going against

question one then And Okay. on pricing.

is You I will price. both the dynamic to guess, pricing do as said be? relates And Spacefarers? starting it the you pricing How being $XXX,XXX how the beyond that, curated the then anticipate

Sure.

vehicles. and buy consistent out for all starting astronaut goes experience. on flight. against for price that full $XXX,XXX be for the will flight, premium example, the is of the each will purchase modest that. we kind be, that the of And I'll wants put part, tranche will beginning on seats it, through There carry point that out. We of be of our that kind as right? call we'll a But specific someone reasonably an most said pricing private where the I if tickets You a tranche a to

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of comes Oliver from question next Chen Our Cowen.

potential on your tickets well What's and think relationship should what experiential customer your and you about may The demand the Also, in mind very may about what revenues so right our thinking and long-term surveys that of Congratulations pricing in experience, thinking pricing, given terms in constrained, also, sell? as on? as are about was we more terms constraint. focus and well? in that framework you're community indicated a that customers supply it's given how value of as much beyond And -- broadly tie first the driving of a well. we as there's and lot number What as of the leverage that you supply the pricing? lifetime

Thanks, Oliver.

Let's see.

value it So the value creates obviously value shareholders, appropriate as it want this the experience drive people again of us. for that and price for but understandable a and to a want our dynamic journey who again, self-perpetuate a machine demand-making to such bring family that's and can't the do we that very that and to kind drives repeat and want do help have want for friends great recommend referral We company and becomes price is that a delivers it, itself, and price with to us important. their

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Our next of question Morgan comes from Stanley. Liwag Kristine

it's still while fly and are On or you completely? going able Eve, I to clarify, enhancements will be through want it modifications, grounded to

reasonably to Eve. robust are modifications These

ensure modifications use that So We'll astronaut will the of and XX we've where not And cabin to flight time. out, open its test of It us it back mid- coming do be Eve fully to moving experience. one to Unity basically functioning Unity. then more through Unity want the make then all our comes do flight fly allow up Imagine to it way we will facility the one just as that period And Eve be to bring we Mojave got Unity we'll when we start start extended in right. to We'll able private which on in, and XX, be will back kind our crew during really estimate to this. to this all there primary and both going in through efforts Imagine that we bringing period. back for

expecting of end September our in after be bring the and right this following So that in then XX will is mid-'XX We'll with come we're back Force. expectation. Eve Italian Air Unity

see. I

to mothership a also mothership ability you the terms in these prioritize Delta? is the versus how ability building idea investing being the what to keep priority terms an of projects? of With give more you limiting your build enhance of do flying, spaceships in factor in Can and your us

and to the will important flight all doing ability an that up to as this rate be but time scope equation, what of the that's also and starting advocates future are signing fly from the we we're the us we've we to and linked today the to going inspections XXx additional in because greater to initial they are much they guess, been you they major many as for more people out. Eve and want reason enhancement people to frequently, see our taking that this is go bringing the of And we period factors effect. will us Eve enhancement missionaries additional we movement, because is plan group That we to period derive give back build really following for as It's almost Eve now. between and well as that as astronauts as to want be be can Sure.

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facilities have see the funds can on as build as possible. priorities. us and so are we that using to big capabilities that production the will quick a those rate raised new You manufacturing we develop Those

of Noah Poponak Sachs. from comes question next Our Goldman

us doing better it is more on massive, give because pace Just physically you would specifically with that. Could in how little detail a Eve? you increase achieving help what really you're understand you're just a XXx

and getting do, we for that, test make specific way the do But XXx, as amount along that before way if clarity, in major to reason a we're that we has up Sure. this in that's and to the enhancement what is XXX inspection windows, flights Unity, back, prototype fixed they're enable of to we're built with this And process fashion was flights. build to that And just build we durability. them was used we're built, inspection every meant been prototype fly fly factor. in do Eve to for sure going Eve looking a you after maintenance to and up what facilities. go a facilities, And is we'll in to to building do the they've that a Currently, XX process. up

have tolerate that adding of is really are the And processes. built will in to longer so with time that This here that's portions ships why allow fashion ship. into the it the What we're of inspection doing very frequent durability components. periods

components, enhancement the period, And be place and us before And structural let it might. us will to expect give strengthening a so specifically, the spaceships periods. longer ship us That's of enhancing structural doing major then we'll the that inspection will what support of up way is a want. itself. lets had we do this next And inspection. for go than time, times, Eve inspection, sequentially XXX the that to more And of will powerful that what an come out originally will on flights we confirm will between components be thought it flight really do we fly as we then, ability an many working we everything period

gap? you to of That's supply it. of then, to algorithm clarify And imagine about Can in. Okay. Michael, demand very versus getting manage price you're you thinking I talk wanting to you timing versus ramp want how Because supply. that through, you the you sort versus that's trying triangulate folks just demand helpful. above maintain about supply as of That spoke have how helps

to by, know but that in handle if you near be helpful. So want that to big the how how and least maybe medium term, you it that changes to time could would at intend as goes -- gap to, you be, I speak

Sure.

feedback not group of of that these is than community. probably office. from is of weapons they're is the the our our And people the that together future met envisioning a one astronaut, thing journey, far known brought on shockingly astronaut comes this astronaut into one Virgin true is well many consistent the have part people a secret valuable future flight. journey and Galactic outside is more XXX of of them This think as I've I effectively who a being this of existing

incredibly customers that we'll bring community us, the And more too. to what derive. because people, far bringing and where But it's those from when And a going powerful. is in say they journey. valuable, to flight is they that Right So I well they of it's sign I the life-transitional think existing communities. understood that existing not starts very valuable mind that up moment up to it's of they're the and people. the these XXX be new into these value top expect here that's even than with top, going outside talk find you But XXX because to this the bring

headroom and growth above people so think quite our want of got we we then is forward, a And into what there. will of how and supply to the kind our carry gate bit we how community absorb want to we've that

from been in total kind addressable XX. an We amount of enormous the the shown to market Unity of that's confidence have response

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see Mexico, it. spaceport. America and of get moving New to point you'll Spaceport And stay for So a we'll proportionally the ahead we'll next always steady-state and finally, us then to

helpful. the really it given correct That's sits this and where at Is to reopening short-lived the be demand where moment? to current expect of sit window fairly sales supply

promised, to been go do We want really, this go. what reason haven't you the is shared is can long want how response we people do chance. they the we're X,XXX to are in to that saying who first we to deposits to which Spacefarer give Community. they signed down moved These them what has up, really the and going we we tell But I will be is put strong. wanted think line, What and

will to through meaningful a got we Community we've get number that Spacefarer But we'll the the once it beyond I Spacefarer think so And itself. be do Community, will number.

around We have, it it to will there we I We'll with how I the But a reporting be process, a be way go be good on think, think and will sales along plenty get that. lot done. of time of energy it. out

next of Truist Our Ciarmoli comes question from Michael Securities.

that -- mean this should there? we into thinking to model should price your on that offset laid contribution line? model guys be know of specifically layered the thinking to an being going mean, all does XX% possibly financial we a I on might the be had that bottom the I costs I How is the out drop $XXX,XXX, can to you what you the or pricing, maybe talk the and margin be based overall right margin? $XXX,XXX. other Just contribution about

believe on in levels some is margins. documents So I I think company price potential. a given maybe we've Obviously, before price what of perhaps public quite don't bit has these and know, don't referring at raising early specific the to. you're I went of guidance -- the flow-through

quite do expect we flow see through. to bit of a So

investing experience value add be certain. will the to We for to

be will So money that that through. taking not just all we

the the of be is and a see fleet. be investing efficiency. that's we'll us come getting have versus on that campus generation where business, for And the with about. Class campus for really But that really us down we're is would of what that's will you'll the road. cost We where trade what for get we on so for real flight. imagine, in next that the Delta to focused communicate per That's small the mothership, basis cost of going, easy the flow-through why platform get scale. to the the as from from of because as where will passenger, you we fixed contribute will That's prices come efficiency easy the the cost a part ramp-up basis sense are The astronaut relatively relative per the

So flow be I'm the it expect I to do through, your other delivered a will heavy value think specific you one than the say to answer don't giving to of on only a after we we've customer. amount question but this

Got it. Got it.

I Was equipment on current just guys I flights a planned mean enhancements, maybe counterintuitive the and about? burn kind Just another with the and you mothership mean but Eve my focus through supply constrained of this maybe create current did Delta more a demand discussion new on part, you maybe going talked momentum have keeping about one. that and keep even and and is building? XXX demand passenger list while and that pent-up

Yes.

proposal came to basis do in very thing have July, up a the this So fly the clearly is opportunity frequent much and to right at on powerful, and late Eve the it's more business.

be with evolution And the X our ships. in over So Unity. are now, discussion, now was Imagine. fine we're one company, we that with ship if more of look question -- our And flying time, then you We'll we versus flying to right with be where we're ships in with later. with going

So available, enhancement period newest we over have of right? is impact least the That's extended ships time. the take of the a kind when an time to

now to that harder right? And of us and for time because take to make We as once out. business the sense. people, intended much up know period this don't the down up, private an time and to astronaut kind get first started I'm ramp then okay, want the of really got like, later was of at back is X the They number probably think factor that's were do I So didn't come started Eve biggest our start. to we've done is I

and do not in Delta on able Class on are of things that we get moving also keeping so So generation waiting also now, this during though, to motherships what parallel the next those the on too. focused are we period and down get people, is focused

have last please. question, one we Nadia, for time

Okay.

question Our comes of today Pete final Global. Alembic from Skibizzi

I step-up could take it flights I roughly guys wondering more will we end kind to rate that an of have and reasonable that XXXX tranche starting Spacefarer And if kind this customers, to I'm of to internal tranche, let's to just then is be if guess now annual need questioning say, pretty income it hit we to statement. much but get I'm of of gross a flow margin through know bit XXXX, directionally. of you the just in through view you the a I the talk free positive. a assume to what as pronounced the we'll then to or Michael's takes to of line hit so get of of get cash too about regard little don't about if want curious yet, follow-on first with XXX

So bit free section would person. last the that in little and do a to first XXX maybe, around kick I'll say our I Doug, had priced astronauts, last we $XXX,XXX those the at here. of with flight feel per were future

with very investing it's think, the bit are little they're time very I happy, phases the very, now. And some though were customers in of taken a those early who for of less early even

be through. So greater revenue, through new as then as we coming flights those those will which through we will in, pricing, prices. recognize with come will the obviously revenue on And prior at people revenue who customers come those sales we new our our the that earlier flow fly fly will of a and recognized degree have

will anything think Doug, I an you'd recognizing that? So That add the as to like start probably astronauts. we to point next is tranche to be accurate. fly future you're inflection of there

in about and flight the and which estimate information Unity Imagine number gave you We 'XX. the of 'XX Yes. on rates therefore, can, flights

rate with how future then then fleet expanded the flying right, and points see with in growth, next -- now. of can which the faster of the we're to that the to really times, board number we you of flight so the that the expand taking rate and is Delta stage able expansion passengers astronauts on have And Class, our the fleet. we with to we're our of And turn

important. what and we're why that's really working towards that's so So

as become to half? Do could frame? time little flying up kind a a follow Just think. in be of year last that maybe starts tranche cash the think that -- more that on ballpark because you that back flow it the to level, that, Is less CapEx Just XXXX, that. one reasonable the we're time bit free Is recent in positive? I

Yes.

talked manufacturing we fleet CapEx, the to expand need the about So capacity. our

in the got kick in, depend kicking point crosses kicking original in. price of right, But it's interim where going new customers cross, time readiness Class with things that the the that again, see you'll and in the Delta we in these So ones the we've where period. at fleet the on have and where to, over XXX the and

is, when of more But towards. online, timing what a that. time say when early future little but say the and it's that in the it's exactly we're on again, have to point comes we'll So that working that's in to

and So point the well, everyone we our can -- Thank point, this thank call this Galactic. for your Nadia, at to call you. you at want now. joining conclude in for interest Virgin

Thank and This today's ladies for joining. gentlemen. all call. you, you concludes Thank

You disconnect now lines. may your