• 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)

 

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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