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Virgin Galactic Announces Third Quarter 2021 Financial Results

November, 08, 2021
  • Commercial Service on Track for Q4 2022
  • Strong Ticket Sales at Updated Pricing of $450,000 per Seat
  • Demonstrates Value of Differentiated Community Experience
  • Commenced Fleet Enhancement Program to Increase Flight Rate and Extend Vehicle Service Life Ahead of Commercial Launch

LAS CRUCES, N.M.--(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, 2021.

“We are entering our fleet enhancement period with a clear roadmap for increasing the durability, reliability and predictability of our vehicles in preparation for commercial service next year,” said Michael Colglazier, Chief Executive Officer of Virgin Galactic. "Demand for space travel is strong, and we've been selling seats ahead of the pace we had planned. This demonstrates the incredible market for our product and appreciation for the value of the unique experience we offer. It's a pivotal time for the Company as we transition from a prototyping space innovator to the global, scaled, commercial operation we are becoming."

Business Highlights:

  • Expected start of private astronaut commercial service on track for Q4 2022.
  • On July 11, 2021, successfully completed first fully crewed spaceflight, Unity 22. The flight fulfilled several test objectives including evaluating the cabin and customer experience. The livestream was watched by tens of millions around the world and brought in tens of thousands of requests for information on future Virgin Galactic spaceflights.
  • In August 2021, opened sales to our Spacefarer community, the group of early hand-raisers who had reserved the right to be first in line for tickets. The Company announced a target of 1,000 reservations prior to the launch of private astronaut commercial service. Approximately 700 of these 1,000 have been sold to date. Current pricing of $450,000 per seat has been well received.
  • On October 14, 2021, announced the beginning of planned vehicle enhancement period. This program will increase vehicle service life and flight-rate capability in preparation for commercial service.
  • In October 2021, the Company entered into a lease agreement for a new design and collaboration center where the next generation vehicles will be designed and engineered.

Third Quarter 2021 Financial Highlights:

  • Cash position remains strong at approximately $1.0 billion, which includes cash and cash equivalents of $721 million and marketable securities of $286 million as of September 30, 2021.
  • In July 2021, the Company completed an “at-the-market” equity offering program (the “ATM Offering”). In connection with the ATM Offering, the Company filed a prospectus supplement with the U.S. Securities and Exchange Commission to offer and sell up to $500 million of shares of the Company’s common stock from time to time. The Company ultimately generated $500 million in gross proceeds through the sale of approximately 13.7 million shares of common stock. The Company intends to use the net proceeds generated from the ATM Offering for general corporate purposes, with a priority on expansion of its spaceship fleet.
  • GAAP selling, general, and administrative expenses of $50 million, compared to $31 million in the third quarter of 2020. Non-GAAP selling, general and administrative expenses of $40 million in the third quarter of 2021, compared to $24 million in the third quarter of 2020.
  • GAAP research and development expenses of $36 million, compared to $46 million in the third quarter of 2020. Non-GAAP research and development expenses of $31 million in the third quarter of 2021, compared to $41 million in the third quarter of 2020.
  • Adjusted EBITDA totaled $(68) million, compared to $(66) million in the third quarter of 2020.
  • Net loss of $48 million, compared to a $92 million net loss in the third quarter of 2020.
  • Cash paid for capital expenditures totaled $1 million, compared to $4 million in the third quarter of 2020.

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 (844) 200-6205 and enter the conference ID number 284644. The live audio webcast along with supplemental information will be accessible on the Company’s Investor Relations website at investors.virgingalactic.com. A recording of the webcast will also be available following the conference call.

About Virgin Galactic Holdings

Virgin Galactic Holdings, Inc. is a vertically integrated 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 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 certain forward-looking statements within the meaning of federal securities laws with respect to Virgin Galactic Holdings, Inc. (the "Company"), including statements regarding the Company’s spaceflight systems, markets and expected flight schedule. These forward-looking statements generally are identified by words such as “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to the factors, risks and uncertainties included in Amendment No. 2 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, 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. These filings identify and address other important risks and uncertainties that could cause the Company’s actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and, except as required by law, the Company assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

Third Quarter 2021 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, 2021

 

September 30, 2020

 

September 30, 2021

 

September 30, 2020

 

 

 

 

(As restated)

 

 

 

(As restated)

Revenue

 

$

2,580

 

 

$

 

 

$

3,151

 

 

$

238

 

Cost of revenue

 

207

 

 

 

 

270

 

 

173

 

Gross profit

 

2,373

 

 

 

 

2,881

 

 

65

 

Selling, general, and administrative expenses

 

49,859

 

 

30,936

 

 

133,276

 

 

83,738

 

Research and development expenses

 

35,593

 

 

46,075

 

 

107,859

 

 

117,276

 

Operating loss

 

(83,079

)

 

(77,011

)

 

(238,254

)

 

(200,949

)

Change in fair value of warrants

 

34,432

 

 

(15,280

)

 

(34,650

)

 

(341,772

)

Interest income, net

 

234

 

 

313

 

 

766

 

 

1,979

 

Other income (loss), net

 

70

 

 

(44

)

 

110

 

 

5

 

Loss before income taxes

 

(48,343

)

 

(92,022

)

 

(272,028

)

 

(540,737

)

Income tax expense

 

(25

)

 

(40

)

 

(74

)

 

(34

)

Net loss

 

(48,368

)

 

(92,062

)

 

(272,102

)

 

(540,771

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

3

 

 

48

 

 

11

 

 

(6

)

Unrealized loss on marketable securities

 

(437

)

 

 

 

(437

)

 

 

Total comprehensive loss

 

$

(48,802

)

 

$

(92,014

)

 

$

(272,528

)

 

$

(540,777

)

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic

 

(0.19

)

 

(0.41

)

 

(1.11

)

 

(2.54

)

Diluted

 

(0.32

)

 

(0.41

)

 

(1.11

)

 

(2.54

)

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

254,749,195

 

 

225,253,536

 

 

244,157,923

 

 

213,193,386

 

Diluted

 

255,147,228

 

 

225,253,536

 

 

244,157,923

 

 

213,193,386

 

VIRGIN GALACTIC HOLDINGS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

 

 

September 30, 2021

 

December 31, 2020

 

 

(Unaudited)

 

(As restated)

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

702,565

 

 

$

665,924

 

Restricted cash

 

18,078

 

 

13,031

 

Marketable securities, short-term

 

29,441

 

 

 

Inventories

 

29,306

 

 

30,483

 

Prepaid expenses and other current assets

 

8,963

 

 

18,489

 

Total current assets

 

788,353

 

 

727,927

 

Marketable securities, long-term

 

256,691

 

 

 

Property, plant, and equipment, net

 

48,130

 

 

53,148

 

Other non-current assets

 

24,449

 

 

22,915

 

Total assets

 

$

1,117,623

 

 

$

803,990

 

Liabilities and Stockholders' Equity

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

 

$

7,997

 

 

$

5,998

 

Accrued expenses

 

23,298

 

 

22,982

 

Customer deposits

 

84,769

 

 

83,211

 

Other current liabilities

 

2,416

 

 

2,830

 

Total current liabilities

 

118,480

 

 

115,021

 

Non-current liabilities

 

 

 

 

Warrant liability

 

 

 

135,440

 

Other long-term liabilities

 

29,214

 

 

26,451

 

Total liabilities

 

$

147,694

 

 

$

276,912

 

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; 257,397,850 and 236,123,659 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

25

 

 

23

 

Additional paid-in capital

 

2,013,171

 

 

1,297,794

 

Accumulated deficit

 

(1,042,846

)

 

(770,744

)

Accumulated other comprehensive income

 

(421

)

 

5

 

Total stockholders' equity

 

969,929

 

 

527,078

 

Total liabilities and stockholders' equity

 

$

1,117,623

 

 

$

803,990

 

VIRGIN GALACTIC HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited and in thousands)

 

 

Nine Months Ended September 30,

 

 

2021

 

2020

 

 

 

 

(As restated)

Cash flows from operating activities

 

 

 

 

Net loss

 

$

(272,102

)

 

$

(540,771

)

Stock-based compensation

 

48,704

 

 

18,575

 

Depreciation and amortization

 

8,635

 

 

6,998

 

Change in fair value of warrant liability

 

34,650

 

 

341,772

 

Other operating activities, net

 

(42

)

 

75

 

Change in assets and liabilities

 

 

 

 

Inventories

 

1,178

 

 

1,195

 

Other current and non-current assets

 

6,342

 

 

6,152

 

Accounts payable and accrued expenses

 

1,824

 

 

719

 

Customer deposits

 

2,148

 

 

(172

)

Other current and non-current liabilities

 

3,026

 

 

2,394

 

Net cash used in operating activities

 

(165,637

)

 

(163,063

)

Cash flows from investing activity

 

 

 

 

Capital expenditures

 

(2,452

)

 

(13,661

)

Purchases of marketable securities

 

(286,132

)

 

 

Cash used in investing activity

 

(288,584

)

 

(13,661

)

Cash flows from financing activities

 

 

 

 

Payments of finance lease obligations

 

(105

)

 

(89

)

Proceeds from issuance of common stock pursuant to stock options exercised

 

18,856

 

 

 

Payment of notes payable

 

(310

)

 

 

Proceeds from issuance of common stock

 

500,000

 

 

460,200

 

Transaction costs

 

(6,753

)

 

(20,866

)

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

 

(15,779

)

 

(399

)

Net cash provided by (used in) by financing activities

 

495,909

 

 

438,846

 

Net increase in cash and cash equivalents

 

41,688

 

 

262,122

 

Cash, cash equivalents and restricted cash at beginning of period

 

678,955

 

 

492,721

 

Cash, cash equivalents and restricted cash at end of period

 

$

720,643

 

 

$

754,843

 

 

 

 

 

 

Cash and cash equivalents

 

$

702,565

 

 

$

741,575

 

Restricted cash

 

18,078

 

 

13,268

 

Cash, cash equivalents and restricted cash

 

$

720,643

 

 

$

754,843

 

Use of Non-GAAP Financial Measures (Unaudited)

This press release references certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP selling, general, and administrative expense and non-GAAP research and development expense. 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-capitalized transaction costs, and non-GAAP research and development expenses as research and development expenses other than stock-based compensation. None of these non-GAAP financial measures is a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles in the United States (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, 2021 and September 30, 2020 , respectively, are set forth below:

Amounts in thousands ($)

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 2021

 

September 30, 2020

 

September 30, 2021

 

September 30, 2020

Net Loss

 

$

(48,368

)

 

$

(92,062

)

 

$

(272,102

)

 

$

(540,771

)

Income tax expense

 

25

 

 

40

 

 

74

 

 

34

 

Interest expense

 

6

 

 

9

 

 

19

 

 

26

 

Depreciation & amortization

 

2,895

 

 

2,509

 

 

8,635

 

 

6,998

 

Non-capitalized transaction costs*

 

 

 

 

 

 

 

697

 

Stock-based compensation

 

12,169

 

 

8,625

 

 

48,704

 

 

18,575

 

Change in fair value of warrants

 

(34,432

)

 

15,280

 

 

34,650

 

 

341,772

 

Adjusted EBITDA

 

$

(67,705

)

 

$

(65,599

)

 

$

(180,020

)

 

$

(172,669

)

A reconciliation of selling, general, and administrative expenses to non-GAAP selling, general, and administrative expenses for the three and nine months ended September 30, 2021 and September 30, 2020, respectively, are set forth below:

Amounts in thousands ($)

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 2021

 

September 30, 2020

 

September 30, 2021

 

September 30, 2020

Selling, general, and administrative expenses

 

49,859

 

 

30,936

 

 

133,276

 

 

83,738

 

Stock-based compensation

 

8,540

 

 

5,056

 

 

37,004

 

 

11,472

 

Non-capitalized transaction costs*

 

 

 

 

 

 

 

697

 

Depreciation & amortization

 

1,592

 

 

1,448

 

 

4,774

 

 

3,809

 

Non-GAAP selling, general, and administration expenses

 

$

39,727

 

 

$

24,432

 

 

$

91,498

 

 

$

67,760

 

 

A reconciliation of research and development expenses to non-GAAP research and development expenses for the three and nine months ended September 30, 2021 and September 30, 2020, respectively, are set forth below:

Amounts in thousands ($)

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 2021

 

September 30, 2020

 

September 30, 2021

 

September 30, 2020

Research and development expenses

 

35,593

 

 

46,075

 

 

107,859

 

 

117,276

 

Stock-based compensation

 

3,629

 

 

3,570

 

 

11,700

 

 

7,103

 

Depreciation & amortization

 

1,304

 

 

1,156

 

 

3,861

 

 

3,189

 

Non-GAAP Research and development expenses

 

$

30,660

 

 

$

41,349

 

 

$

92,298

 

 

$

106,984

 

 

_____________

Non-capitalized transaction costs include non-recurring expenses related to preparation and filing of an S-1 registration statement in the first quarter of 2020.

For investor relations inquiries:
Seth Zaslow – Vice President, Investor Relations
seth.zaslow@virgingalactic.com

For media inquiries:
Aleanna Crane – Vice President, Communications
aleanna.crane@virgingalactic.com

Source: Virgin Galactic Holdings, Inc.

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