Virgin Galactic Announces First Quarter 2021 Financial Results

Rhea-AI Summary

Virgin Galactic (NYSE: SPCE) reported its Q1 2021 financial results, revealing a net loss of $130 million, an improvement from a $377 million loss in Q1 2020. The company maintains a strong cash position with $617 million in cash and equivalents. Key developments include the unveiling of the VSS Imagine and several executive appointments. Despite ongoing COVID-19 impacts on operations, Virgin Galactic indicates solid momentum toward achieving its strategic objectives, enhancing its leadership team and extending partnerships.

Positive

• Net loss improved to $130 million from $377 million in Q1 2020.
• Strong cash position of $617 million as of March 31, 2021.
• Unveiled VSS Imagine, the first SpaceShip III class vehicle.

Negative

• Continued delays in operations due to COVID-19.
• GAAP selling, general, and administrative expenses rose to $45 million.

Virgin Galactic Holdings, Inc. (NYSE: SPCE) (“Virgin Galactic” or the "Company”), a vertically integrated aerospace and space travel company, today announced its financial results for the first quarter ended March 31, 2021.

“We continue to make strides towards our strategic objectives and have solid momentum as we focus on completing our flight test program,” said Michael Colglazier, Chief Executive Officer of Virgin Galactic. “We are committed to delivering one of the world's most unique and transformational customer experiences, with safety at the core of everything we do. Our greatest asset is our incredibly talented group of employees, and the strength of the leadership team we have assembled for the next phase of our journey."

First Quarter 2021 Business Highlights:

• Unveiled VSS Imagine, the first SpaceShip III class vehicle in Virgin Galactic’s growing fleet, on March 30, 2021.
• Total Future Astronauts remained at approximately 600, as of March 31, 2021.
• Continue to build senior management team:
  • Appointed Doug Ahrens as Chief Financial Officer, effective March 1, 2021.
  • Appointed Swami Iyer as President of Aerospace Systems, effective March 22, 2021.
  • Appointed Stephen Justice as Vice President of Engineering, effective March 1, 2021.
• Established and launched the Virgin Galactic Space Advisory Board, composed of leading experts from the aerospace sector.
• Announced a three-year extension to the global Land Rover partnership.

First Quarter 2021 Financial Highlights:

• Cash position remains strong, with cash and cash equivalents of $617 million as of March 31, 2021.
• Net loss of $130 million, compared to a $377 million net loss in the first quarter of 2020.
• GAAP selling, general, and administrative expenses of $45 million, compared to $27 million in the first quarter of 2020. Non-GAAP selling, general and administrative expenses of $27 million in the first quarter of 2021, compared to $23 million in the first quarter of 2020.
• GAAP research and development expenses of $36 million, compared to $34 million in the first quarter of 2020. Non-GAAP research and development expenses of $32 million in the first quarter of 2020, compared to $33 million in the first quarter of 2020.
• Adjusted EBITDA totaled $(56) million, compared to $(53) million in the first quarter of 2020.
• Cash paid for capital expenditures totaled $1 million, compared to $4 million in the first quarter of 2020.

Recent Updates:

• Completed corrective EMI work on VSS Unity such that the spaceship is ready to start pre-flight procedures for flight
• Timing of next flight test is currently being evaluated

COVID-19 Impact

The Company is continuing to experience ongoing delays to its business and operations due to COVID-19. The Company continues to operate under strict protocols and follows rigorous health and safety procedures, in line with CDC, state and local guidelines, to ensure employee safety.

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 (833) 968-2325 and enter the conference ID number 2488377. 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, as well as a manufacturer of advanced air and space vehicles. The Company is developing a spaceflight system designed to offer customers a unique and 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.

First 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
		March 31, 2021					March 31, 2020
							(As restated)
Revenue		$	—				$	238
Cost of revenue		—					173
Gross profit		—					65
Selling, general, and administrative expenses		44,914					26,755
Research and development expenses		36,363					34,282
Operating loss		(81,277		)			(60,972		)
Change in fair value of warrants		(48,719		)			(316,896		)
Interest income (expense), net		318					1,168
Other income (expense), net		27					(172		)
Loss before income taxes		(129,651		)			(376,872		)
Income tax benefit (expense)		(43		)			46
Net loss		(129,694		)			(376,826		)
Other comprehensive loss:
Foreign currency translation adjustment		27					(54		)
Total comprehensive loss		$	(129,667	)			$	(376,880	)
Net loss per share:
Basic and diluted		$	(0.55	)			$	(1.86	)
Weighted-average shares outstanding:
Basic and diluted		234,191,636					202,409,552

VIRGIN GALACTIC HOLDINGS, INC. Condensed Consolidated Balance Sheets (In thousands, except share data)
		March 31, 2021					December 31, 2020
		(Unaudited)					(As restated)
Assets
Current assets
Cash and cash equivalents		$	616,625				$	665,924
Restricted cash		13,031					13,031
Inventories		30,187					30,483
Prepaid expenses and other current assets		14,486					18,489
Total current assets		674,329					727,927
Property, plant, and equipment, net		50,936					53,148
Other non-current assets		22,762					22,915
Total assets		$	748,027				$	803,990
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable		$	3,738				$	5,998
Accrued expenses		28,351					22,982
Customer deposits		83,015					83,211
Other current liabilities		2,981					2,830
Total current liabilities		118,085					115,021
Non-current liabilities
Warrant liability		184,159					135,440
Other long-term liabilities		25,939					26,451
Total liabilities		$	328,183				$	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; 237,274,430 and 236,123,659 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		23					23
Additional paid-in capital		1,311,607					1,297,794
Accumulated deficit		(891,817		)			(770,744		)
Accumulated other comprehensive income		31					5
Total stockholders' equity		419,844					527,078
Total liabilities and stockholders' equity		$	748,027				$	803,990

VIRGIN GALACTIC HOLDINGS, INC. Condensed Consolidated Statements of Cash Flows (Unaudited and in thousands)
		Three Months Ended
		March 31, 2021					March 31, 2020
							(As restated)
Cash flows from operating activities
Net loss		$	(129,694	)			$	(376,826	)
Stock-based compensation		22,111					4,425
Depreciation and amortization		2,869					2,105
Change in fair value of warrant liability		48,719					316,896
Other operating activities, net		10					1
Change in assets and liabilities
Inventories		296					(1,980		)
Other current and non-current assets		3,692					2,142
Accounts payable and accrued expenses		3,322					(2,978		)
Customer deposits		(196		)			(98		)
Other current and non-current liabilities		102					—
Net cash used in operating activities		(48,769		)			(56,313		)
Cash flows from investing activity
Capital expenditures		(819		)			(4,036		)
Cash used in investing activity		(819		)			(4,036		)
Cash flows from financing activities
Payments of finance lease obligations		(34		)			(23		)
Proceeds from issuance of common stock pursuant to stock options exercised		10,837					—
Transaction costs		—					(697		)
Withholding taxes paid on behalf of employees on net settled stock-based awards		(10,514		)			—
Net cash provided by (used in) by financing activities		289					(720		)
Net decrease in cash and cash equivalents		(49,299		)			(61,069		)
Cash, cash equivalents and restricted cash at beginning of period		678,955					492,721
Cash, cash equivalents and restricted cash at end of period		$	629,656				$	431,652
Cash and cash equivalents		$	616,625				$	419,374
Restricted cash		13,031					12,278
Cash, cash equivalents and restricted cash		$	629,656				$	431,652

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 months ended March 31, 2021 and March 31, 2020 , respectively, are set forth below:

Amounts in thousands ($)		Three Months Ended
		March 31, 2021			March 31, 2020
Net Loss		(129,694	)		(376,826	)
Income tax benefit (expense)		(43	)		46
Interest expense		7			9
Depreciation & amortization		2,869			2,105
Non-capitalized transaction costs*		—			697
Stock-based compensation		22,111			4,425
Change in fair value of warrants		48,719			316,896
Adjusted EBITDA		(55,945	)		(52,740	)

A reconciliation of selling, general, and administrative expenses to non-GAAP selling, general, and administrative expenses for the three months ended March 31, 2021 and March 31, 2020, respectively, are set forth below:

Amounts in thousands ($)		Three Months Ended
		March 31, 2021				March 31, 2020
Selling, general, and administrative expenses		44,914				26,755
Stock-based compensation		18,038				2,870
Non-capitalized transaction costs*		—				697
Non-GAAP selling, general, administration expenses		$	26,876			$	23,188

A reconciliation of research and development expenses to non-GAAP research and development expenses for the three months ended March 31, 2021 and March 31, 2020, respectively, are set forth below:

Amounts in thousands ($)		Three Months Ended
		March 31, 2021				March 31, 2020
Research and development expenses		36,363				34,282
Stock-based compensation		4,074				1,555
Non-GAAP Research and development expenses		$	32,289			$	32,727

_____________
∗		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.

 

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FAQ

What were Virgin Galactic's Q1 2021 financial results for SPCE?

Virgin Galactic reported a net loss of $130 million for Q1 2021, improving from a $377 million loss in Q1 2020.

What is the current cash position of Virgin Galactic as of March 31, 2021?

As of March 31, 2021, Virgin Galactic holds $617 million in cash and cash equivalents.

What impact has COVID-19 had on Virgin Galactic's operations?

Virgin Galactic continues to experience ongoing delays to its business and operations due to COVID-19.

When will Virgin Galactic discuss its Q1 2021 results?

Virgin Galactic will host a conference call to discuss results at 2:00 p.m. Pacific Time on the day of the release.