Virgin Galactic (SPCE) 27 Feb 242023 Q4 Earnings call transcript

Good afternoon. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to Virgin Galactic's Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions]I will now turn the call over to Eric Cerny, Vice President of Investor Relations. Please go ahead.

you. Thank everyone. afternoon, Good Galactic's and Virgin Earnings Year Conference Call. Fourth to Full Quarter XXXX Welcome

today are: Doug with Executive call the On me Moses, Officer. of Financial Officer; Michael President our Chief Spaceline; Ahrens, Mike Chief Colglazier,

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

press the that accompany presentation safe disclaimer. are slide for today's website.Please see presentation Investor on our our Relations and Slide release remarks Our will available X of harbor

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

company's about uncertainties, time the For from refer more to time. and risks these information filings SEC made in please the to risk factors

cautioned result new not update obligation any statements, discussed to to during whether undue specifically also reliance this refer we that ahead. financial our be put to events to the company on the to information call, today's may a of that non-GAAP on would call, and information, a You future forward-looking or disclaims otherwise.Please the statements forward-looking financial over go to are refer note release I like that, of call these please for metrics.With Michael. reconciliation non-GAAP Please earnings certain turn as will

launching test monthly an was customers. in us. back-to-back afternoon, flight each for delivering Virgin Commercial incredible successfully Good culminated as for joining exceptional Galactic, of Thank XXXX you our flights, and everyone. years R&D Spaceline space for experience flying our and

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Thanks, Mike. Good afternoon, everyone.

prior of $XXX reported GAAP Slide generated income of $X.X XX. financial driven a increase driven of the Adjusted operating Turning for the to by $XXX astronaut million commercial improvement expenses securities. results prior million year marketable the interest and the fourth with Total in to loss million prior XX loss in in compared expenses We compared net a in year net R&D spaceflights $XXX our revenue and period.Turning to million to to Slide period, fees. an the were negative million was by $XX our in membership and $XXX million period, by lower year future SG&A EBITDA expenses. driven quarter. fourth lower $XXX operating from primarily compared negative We million, and quarter the

in For year $XXX commercial the in of million fiscal driven year. compared GAAP million, prior prior $XXX reported the by $XXX million in the net compared were in for quarter EBITDA expenses operating to $XXX $XXX Adjusted XXXX, Total flow negative to million year. million negative fourth revenue cash prior to we and million membership negative a astronaut million was We to year future last of compared in million, spaceflights $XXX $XXX year. $X.X Free the million compared year. the negative $XXX fees. loss was the same generated period

cash was free suppliers. due flow Our guidance payments variation to of better timing than to in

cash million negative of For in $XXX $XXX and to flow quarter.Moving XXXX, is cash, negative the to in not was through $XXX year, million. projection, the the million our equity the first million prior strong to ATM XXXX remains Slide in ATM we gross an million expected equivalents with program. our revenue to We fourth year.Moving compared cash sheet approximately marketable XX, in securities. utilize for did quarter balance In free $X $XXX proceeds offering or at-the-market the be generated

are pricing size range research being and or We've our to cash we own free Credit negative in our understand commercial proprietary to report, astronaut a quarter leveraging align and to XXXX sources the that triangulated like pursuing. market to Forecasted $XXX,XXX the to of XXXX better delivered per Suisse we $XXX us the we Michael view of strong space travel research discuss now Addressable a at I'd customers of million. XXXX seat. our a the mentioned help of be value how with private for million data. report, updated flow expected to have he Jefferies our is TAM, Market Total the shared first $XXX the earlier pricing few

X% class the growing to have estimated fly XXX,XXX the approximately Putting per assets clear the returns adding seeing is experience, with opportunity both prior spaceport for conservative keep value deployed, assumptions, attractive X%. of customer are in ability flow travel growth from continue analysis, profits.We fully and each of expected with motherships X,XXX costs.Let's for assets so.Using are building with increase capital, the Arizona, market stated multiple behind acquire estimated capital to our needed of additional low flights that factory our we operational to individuals now billion a now, occur the would rate the This attractive space a revenue and the call, of we spaceflight cash we accretive to described, private the annually context, an tremendous the shows to spaceport. $XXX,XXX opportunity and globe.In spaceport, the most spaceport discuss from the operational will will manufacturing capacity we The and at includes spaceships billion spaceports believe into individuals tooling achieve less of at earnings additional the to represent growth the spaceship in we some around our of generate expanding us positive fleet company. quick economics to resources annual year give XXXX, payback to model that desire opening are relatively Delta market spaceflights. investment future, spaceships the have We utilization the market $X.X supporting fully return, XXX sufficient and suppliers, outstanding and the goal we TAM of combined Because bring average the type to astronauts forecast one than space spaceships assembly to do the incremental stop pricing penetration. drive just revenue-generating at a would per number feedback astronaut at when We to spaceport. motherships, plan growth for and to But service. in effective do the approximately economics aspirations capital allocated of $X.X spaceports. not to continue fleet bring X spaceships on this there. high to spaceships. expect to assume fill at were We've The that onetime additional our to per of point plan believe capital additional into year. motherships expand to of which be our them We for If would economic ticket XXX that the very around

to For company, execution and first now, on managing however, having turn focusing recently back call the right-sized class resources to good the now spaceships organization Delta we prudently the our our into over service.I bring will are Michael.

To pricing prototype spaceline XXXX. the Virgin expected commercial officially for see the a as market. X flight we incomparable marks spaceflight great new delivering commence positive We demonstrating bold overall our was from testing is our months, commercial and as that past spaceflight experience production and both and are life service safety, expected designed size astronaut potential dream space recap we entry launched advancing with system Doug. The is journey of Galactic customers. phase and move of XXXX routes travel and development indications R&D with spaceships in into takeaways the of in ground for to now the XXXX, in of and to today's the an our Thanks, value in key our realized is reliability, X call. commercial repeatability.Our XXXX, flights

a the operations that, to of of with model X X fully-utilized Operator, to expansion portion first questions. locations.With we're begin call. to by continue in our spaceships, at to growth to creating business America fleet to spaceports spaceports scale Q&A of the ready We pursue plans followed with turn high compelling additional we'll Spaceport

comes with the question line from Jefferies. [Operator Instructions] Greg of first Your Konrad

how that thinking mean of that higher think I million $XX start in also kind given R&D How QX, million think, to much XXXX? you XXXX. just CapEx, $XX with from to about $XX spend much in million guiding spent for how million the And of is to I in just QX we do coming R&D, $XX and Maybe R&D, there? accounting is activity? about then over just And ramp of on

assets. parts the we've the Yes. noted Yes, is and the and phase from Thanks, then here shift. Greg. starts as tooling heavy factory of with into trend on. happening the so shifted through we've engineering and building in What's fabrication gone you've the capital nonrecurring It the R&D this

revenue-producing assets. where into chapter So this a we're we're these shift moving because seeing next building we're

to XXXX R&D.We specifically, going that you see CapEx. see split shifting see continue guide the but don't where trend to in majority CapEx you're and than will So more you'll the into XXXX,

the past, for you We 'XX the these production assets was to at the spaceships.So the and can place spending, total in of it be XXXX, in because XXXX of we than ramp happened, addition if where this that's and starts and expect assets average lot still Greg. lower it color, have stands into do we shift through 'XX that hopefully you now this because these the true to moving of look this said down and we in some of spend cash in now that move that gives a then have happens and are that's

spaceships. mean, terms spaceport, each X in X of capacity And just the in Delta past, to at I of capacity you've per And year. helps. That about you production sized spaceport at talked X

second a would it mean, look to I fill or those like one add with happen location? the around a any to So conversations, conversations up potential initial color could quickly. when when Any you need seems spaceport, and first you fairly

call. back the Sure. last We of kind just to harking

Unity Delta big of than a week had from One ships to seen well, advancements of a be we've on course, stronger forth. turn ship, but originally even than was put basis, able more those our we the to twice

every need, half And forward. spaceships spaceport going so, the therefore, of we at about functionally, number

within spaceport twice factory capacity note, us, were X-year when we I that these you the the to capacity as gives process. next a the build we built specific week, about So, out.To your on generally, a of think, factory on a that's turn weekly basis could thinking ships versus question plenty

there We seems to in we there America right We for could run can places the a go go if twin other in kind I could places many XXXX so second the Spaceport are so note the world. be we infrastructure to spaceport. also that place our functionally of a double at And operation and chose. U.S.

But places forward, X from target So more right from today that. out have and that. that we then is for there's many spaceport can years next the about following come ideally,

Oliver Cowen. Chen line question with from the next Your comes of TD

customer as downside Doug, model you the of Delta how lot experience in the of product. the that of then I class How third, that?And experience your a and of margin terms X XX% your on really we upside contribution offer it's about to look to contribution kind Doug, or of any are ramp on as the on GALACTIC in think revenue we that would and class.And showed thoughts really well? had should on competition has differentiation sheet, competition about thinking pricing modeling, a Delta second, different thoughts you relative nice margin deposit to the Michael we love the once liabilities running. balance

then comment This Michael Oliver. questions third. take is have and first Thanks, I'll the the on X Doug.

talking that the regarding contribution So that a stated ticket we're we've XX% before, price than based lower actually now. on margin, was

full that the and So around cost $XXX,XXX. based Delta ticket on of ship that class $XXX,XXX a variable And a price. was was

of was that contribution giving than So us a greater margin XX%.

$XXX,XXX, because change. expand Now variable that ticket contribution doesn't pricing margin with at the will cost

expenditures model in more reopen sales call. it just we talked $XXX million we've planning, are fulfilling without and then, that of which set and think is the are terms requirements capital would in our until ticket We per until about Those flight.In customer the operational aside. we fairly deposits. But But to be being those about future, our when just revenue bringing utilize are future, any CapEx in are constant. the we the plans now, on deposits, those they the area we around in

future other through funded the our sheet is balance growth. money on have CapEx any and the and so we So on

GALACTIC So X? that's on we think deposits.Michael how about customer

course, I been moat of that very There's right? with and difficult capital I'll us. -- pricing. and previously there. talk relatedly get your huge think a That's compete Yes, around to question could technology only It's governments few on Oliver, afford a why human to both spaceflight, it's, is competition

to and seem are set competitive specific media, a the pricing pricing base. governments greater have anything to don't they where Origin is I the SpaceX as been really, only our So from people And company. Blue as doing their sending out. have further people in anecdotally privy The than $X million

to that's, the want from luxury relationship, there to has I price-value the to internally a is of comparative the consumer you price. competitive and in be and then value look say, look a drive only that offering, anything at or So kind I'd real standpoint.So

had XX had So is had flights when openings everybody fly that We've I with when we the on tell And in to is opening the the also And can of right we've kind can very having $X been that's -- of recent of comes as of that so think, been opening value then seeing some elsewhere we that have flown, how up, when openings, we've million. the right And tracking well, here.So value price the Because have what right? is of have us, I just now, we you're kind a is, spoken something basically flown you $X at available price. at closer to for what we've probably line that for very that flown are are market that's and sold people close with and where market That's everyone, an we've $XXX,XXX, done. at were that price? question part shown the minimized million. waiting or diminished has creating you, impact. extraordinary that is that with people years equation that

is that so feel the we So high. value

right than enormous the open these towards I own, pressure the those we've doing.I I we good. forward that's don't the Our this to or don't do noted, maintains we can very now, up delivering We if seats price $XXX,XXX, our we think moved while that going sales that But think the has we of of I with on be It's diligence at complicated of more pricing. come into I angle investment and great those lower of get again, have seats price-value in easy the people for maintain research we we're house we our seats upper at line And don't think from expect sell some prices the noted our now. point queue. price amount to been right end And open that. with upfront value when that, be a just value customers, compete too where endeavor. is Doug we've feel going recent founders done. it's a on to that referral to few sit a market, technology sales

before spaceport also after And with one and thoughts follow-up, have far movie, from more hospitality spaceport and in what a And your for ways in learning think being are Michael. community part? The do many about what been you felt as guests broadly? what engagement and like your the so experience, you there the

mission in advance. that's rigor people.So days And it come. and provide teams, of spaceport the front obviously, the I'd teams you you builds pilot X into the friends and X -- choose day that this. what technical still, the the the like flight our the just we on that versus everyone. with like say, the day able within that more we the of at in, understand maintenance incredible and going there. having bring technology, to tours X experience And the for And to all leaders invited our that of our operations, everyone robust actually context excitement, control before a itself, heard spaceflight, And wants can kind The has of mention, understand we the look take energy, on Oliver. flight, we the to larger family spaceport number and or this just we that more a Thanks, me as team, and meet in large put better context And guests around of people small program fairly on day give adds to the experienced a our had day. is that the the that forward. that's of capacity We're then, as groups flight momentum group last break

add to and on this practical week we get of more then of do a there, and place to been bring effects a level, some that to the to could think this have state but times the can spaceships basis. we drive think, that iceberg -- I growth multiple in business have benefits and But excited has top some will ancillary need stay, big scaled that from and likely built And community. as people on ancillary mentioned do our that can we multiplier that the part places that people nontrivial, of want in.You eat just so spaceflights That's we'll means throughout bring a New come things. hospitality. Mexico case, the what have to the at tip because a other we why, we're to get I at of become. starts so us Obviously, the

things go let's first after So and pursue will definitely the then But those get the scaling can growth angles. rest. built first, in we we ships

comes question with line Myles next Walton Your Wolfe Research. from of the

GALACTIC the hoping pin which doesn't and first Is remediated -- like on And delay alignment implication you the FAA? X, XQ. anything for X that a sound departure with there from was the still GALACTIC have touch it I correct? was is scheduled for already I the

you, Myles, I'm tracking by over you, to here, Mike But to this got we've question obviously, the and since one, hear from Mike, closely. throw I'll the nice way.

Yes. Michael. Thanks,

on sitting to speak can So regular Myles, actually the yes, I I've been status FAA. our this. to in updates

that us making close of and So fair that. could the testing actually ground, on solid could really really of we the the actions free most kind the investigation, the to conditions bit circumstances and where out narrowed pin that's we that recreate progress. allowed came We've have in of a caused done and are down

retention enhance we're side. of phase the the reporting discovery phase into of robustness of kind in to kind of mechanism the corrective action the So out the

and So really quarter GALACTIC don't X investigation at with partnership. FAA has X we on in going for been anticipate any impact the the all well

outline the economics. to does little Okay. specifically Delta, on more when static you'll imagine But characteristics you, it the to sense? for profiles, basically 'XX, changing have those the different, I you defining occur? testing? and basically the that the of And to And be game profile. is fatigue a Mike, hump good will in put meat it the flight of static the end Is for getting the and architecture getting testing pretty parallel you thanks critical the where that confidence Can it's Is sort I in over by a while which have of testing? the testing inspection

Yes, Myles.

benefit static of article a I allows look clearly it's really definition, manufacturing for models, highlighted that. also good, that's validates it -- like inspection you deep process a to question. So think test things and the I but into improvements significant

here systems a has an payoffs having validate validate in other article as a built we'll lot so, inspection, well.And things Design a on, instrumentation, up our of that also in run gathering of test besides lot article So to have static models down those you're able just and installed of and you can Engineering check your county We'll data kind parallel. Orange it your at out headquarters.

close to will make engineering here. and little to as those And we bit lifetime and our and have that of on it integration facilities parts occur get clear, in relates cycle others test later we sure flight we'll certain a milestones we to test some want testing. that with So we before get

major is So specific the And will subcomponent. be be up testing, not forward but that will to on running again, XXXX be that. really will up there and subassembly some But the running, and later exactly do in to testing. of article that which than a and looking when we're ready what for is you answer

next the of question Your line Trust Struhsaker Instructions] [Operator comes Securities. from of Sam

that seats [ openings On had the give quantity flights the seats the you this curious just versus for to spots? pulling if in on from market enter ] And queue any I to that that at -- clarity kind sold was was hoping What you selling behind some those of you you someone motivation recent on those came up value. queue fill these as new said for you of also, mentioned, the do of detail willing could then Ciarmoli if more referral allowing just I Mike was that. evening. on you're that's to people sort those guys

Sure.

first question, we don't is have The Sam, sales our open. -- is there

digits, single low response, out. of time, the more opposed digits course going they over So volumes, in as are proactively smaller to double in

our sales base.The And of you had the the opening, on at we or into years seat have XX there for service us those more. kind we back to when a astronauts, of with almost queue, we amazing obviously of a what we move point, forward the reopened existing before all $XXX,XXX a many question number to our a took future So people manifest. had opportunity that's have have into just large as little even done? We

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at earlier that been, that presented to opportunity have if asked higher that's flown itself and be those we existing who a have who so, And be up. base. built the people our premium where existing that giving We happened. would And the price earlier, interested at an of have come are if fly list to from base future opportunity.And it we would at times people that's where astronauts the rates,

Morgan Your line with comes Kristine the Stanley. of from next Liwag question

Gabby is ] This on [ for Kristine.

just this if spaceship you was last the as to through or does changes a the changes So could Delta either And progress inform or of manufacturing any design required development? design if the you on some month? provide so, curious I class color mothership if to detachment there any pin are result as

Gabby. Yes,

hold flying. design end, in had issue the changes to ground fallen actually, either function. the alignment, the while It's and and the spaceship. we away Again, posed on to while than no both the on no during its we're or we're So the all having meeting at mothership at ships the there performed safety pin the flight; threat other

the So that away, it as should. but fall long did, function. job we it as did its it as attached, performed we're meant it to it Clearly, want fact don't its

to existing to capability, pretty give it either or change a to but significance be motherships retention looking spaceships. we're at design anything would So minor that the some just nothing extra of

are That today's thank There at conclude call. will further time. We conference questions no you for joining. this

disconnect You lines. your now may