Business Wire | Nov 8, 2021 04:07PM EST

Virgin Galactic Announces Third Quarter 2021 Financial Results

Nov. 08, 2021

LAS CRUCES, N.M.--(BUSINESS WIRE)--Nov. 08, 2021--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, September 30, September 30, September 30, 2021 2020 2021 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 49,859 30,936 133,276 83,738 administrativeexpenses

Research anddevelopment 35,593 46,075 107,859 117,276 expenses

Operating loss (83,079 ) (77,011 ) (238,254 ) (200,949 )

Change in fairvalue of 34,432 (15,280 ) (34,650 ) (341,772 )warrants

Interest income, 234 313 766 1,979 net

Other income 70 (44 ) 110 5 (loss), net

Loss before (48,343 ) (92,022 ) (272,028 ) (540,737 )income taxes

Income tax (25 ) (40 ) (74 ) (34 )expense

Net loss (48,368 ) (92,062 ) (272,102 ) (540,771 )

Othercomprehensive loss:

Foreign currencytranslation 3 48 11 (6 )adjustment

Unrealized losson marketable (437 ) - (437 ) - securities

Totalcomprehensive $ (48,802 ) $ (92,014 ) $ (272,528 ) $ (540,777 )loss



Net loss per share:

Basic (0.19 ) (0.41 ) (1.11 ) (2.54 )

Diluted (0.32 ) (0.41 ) (1.11 ) (2.54 )



Weighted-averageshares 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 Balance Sheets

(In thousands, except share data)

September 30, December 2021 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; 700,000,000shares authorized; 257,397,850 and 236,123,659 25 23 shares issued and outstanding as of September 30,2021 and December 31, 2020, respectively

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:

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 18,856 - to stock options exercised

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 (15,779 ) (399 )net settled stock-based awards

Net cash provided by (used in) by financing 495,909 438,846 activities

Net increase in cash and cash equivalents 41,688 262,122

Cash, cash equivalents and restricted cash at 678,955 492,721 beginning of period

Cash, cash equivalents and restricted cash at end $ 720,643 $ 754,843 of period



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 September September September 30, 2021 30, 2020 30, 2021 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 & 2,895 2,509 8,635 6,998 amortization

Non-capitalized - - - 697 transaction costs*

Stock-based 12,169 8,625 48,704 18,575 compensation

Change in fair value (34,432 ) 15,280 34,650 341,772 of warrants

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 September September September 30, 2021 30, 2020 30, 2021 30, 2020

Selling, general, and 49,859 30,936 133,276 83,738 administrative expenses

Stock-based compensation 8,540 5,056 37,004 11,472

Non-capitalized transaction - - - 697 costs*

Depreciation & amortization 1,592 1,448 4,774 3,809

Non-GAAP selling, general, $ 39,727 $ 24,432 $ 91,498 $ 67,760 and administration expenses

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 September September September 30, 2021 30, 2020 30, 2021 30, 2020

Research and development 35,593 46,075 107,859 117,276 expenses

Stock-based compensation 3,629 3,570 11,700 7,103

Depreciation & 1,304 1,156 3,861 3,189 amortization

Non-GAAP Research and $ 30,660 $ 41,349 $ 92,298 $ 106,984 development expenses

_____________

? 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211108005984/en/

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

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