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SPCE Virgin Galactic

Participants
Michelle Kley Executive Vice President, General Counsel and Secretary
George Whitesides Chief Executive Officer
Jon Campagna Chief Financial Officer
Enrico Palermo Chief Operating Officer
Robert Spingarn Credit Suisse
Adam Jonas Morgan Stanley
Darryl Genovesi Vertical Research Partners
Call transcript
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Operator

Good afternoon. My name is David and I will be your conference operator today. At this time, I would like to welcome everyone to Virgin Galactic's First Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator

call and Michelle Secretary conference President, Executive General Counsel at will today's Kley, be Vice Hosting Virgin Galactic.

today's reminder, a call recorded. being As is

I to conference ahead. would turn Kley. Please go now over to like Ms. the

Michelle Kley

you, quarter earnings first Thank Virgin XXXX good Welcome conference afternoon, to and Galactic's call. everyone.

who Chief Chief the Officer, the be the provide who answer will Whitesides, are prepared call Operating call Jon George and remarks. to the today me Officer; On on is Q&A call. will Palermo, Enrico Campagna, Officer with Also with Jon along George Executive Chief of available portion Financial and during questions

Earlier today, financial the first Relations slide Investor website, a we which quarter provides of highlights made for XXXX. of issued and press and an available business our release presentation on overview a our

today’s will we of securities laws. within certain statements federal forward-looking call, During the meaning make

result, current and forward-looking actual based predictions, to from assumptions statements and, Forward-looking that events statements differ communication. future other in a are subject future are statements could expectations materially cause and Many about factors are projections to on events and this as uncertainties. risks

XXXX. our For refer XX-Q we information from the statements, materially forward-looking differ press about Form first please time with by to of results time Exchange may other factors including from for actual and more cause release documents and Commission, issued to Galactic today earnings filed to that Virgin quarter Securities the the

of the put only they as to statements. undue are statements Forward-looking forward-looking not made. on speak date are Readers reliance cautioned

to turn like Whitesides. I'd over to that, With George call the

George Whitesides

everyone. you, Thank afternoon, Michelle. Good

will your unprecedented our an quarter on Today, sincere performance. will safe will quarter, offering you this operations. detail I the will regarding hope highlights and like also achieved the first would I discuss of families COVID-XX First time. and I foremost, our financial then by start our on during my that provide staying and the are activity and provide quarter. milestones on Jon I on impact update you update business during the we for to

our brief and public refresher on results, one dive initiatives only time. detail me believe technology our the represents quarter. first world's human through spaceflight. and focused exciting we that commercial quarter of significant most the in give on into last let exploration is Before company first Virgin our thesis commercial walked of Galactic of And I investment we the a very space

scalable unit over meaningfully operational Our design is reusable economics. nature business strong The by the model efficient, time our reduce delivering highly spaceflight each of features underpinned spaceships. the of cost

advantage, the We from benefit by investment first expect barriers competitors, our in progress today. greatly our technology, achieved we've entry and the mover substantial made to supported new potential by significant which to we've is for reinforced

up while reopened huge business. to signing financial about progress are In from begun And addition, the our our are commercial of later through confident we we will have with flyer I people to strength interest seen not list. yet we have initiative, One our which Small provide call the future our we Step have details validate sales, the seeing in we in

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I first detail now financial over Jon our to results. CFO, who call additional Campagna, like quarter will turn would some our the to about provide

Jon Campagna

George. Thanks

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final like turn I to back to would the remarks. some over for call now George

George Whitesides

Jon. Thanks

to to Q&A, for talk challenging would we our I beyond. like for and turn about priorities world. is unprecedented and Clearly, the companies and Before individuals time this QX an across

Our our on and test and number one of is The successful the preparing safety priority VSS able. for of we employees, in on our their respect. are milestone flight a Unity which as and communities Friday commercial families, the health in that as was program of focused soon our free operate. We completing we launch completion remain key first flight

As few over progress to weeks, safety successfully I protocols COVID-XX while during on past have to operating our the manufacturing continue tremendous processes earlier, the we and we made facility we pandemic. can work outlined continue ensure

impact base company fly the I their with will to quantify resilient, number which going how remained the put tremendously rapidly spacefarers forward. business. is to has the COVID-XX severity that space money thank challenging during our express with virtually continued fully and underscores us. has to us. community such of team and their This our that like well of past in too to for it as of in early remarkably And expanded an the who customer on unprecedented passion have crisis, encouraged will serve duration would desire face is to It entire have downturns, we customer have the dedication down our times. entire I'm our

speed ourselves the Mach what technologies, I'm about amazing. also I we high be partnership create NASA will will and with technologies. believe in around and leaders civil truly tremendously excited new are our together flight flight high NASA

team months, of is long our the in which Finally, we customer excited our to unveil the coming about announce commercial the cabin. of milestones, expect one awaited

calls. preparing Our sharing look commercial launch future focused you entire space. And to to team on more with access on for earnings forward remains and up opening fully we

to operator very over now hand I'll for Q&A. Thanks the much.

Operator

Credit Thank comes the Spingarn first Your of Suisse. line Instructions] you. [Operator with question Robert from

Your line open. is

Robert Spingarn

guys. afternoon, Good

George Whitesides

Robert. Hi,

Robert Spingarn

like you I'd the around timeline we can driven ramp COVID timeline, tell and whether us or situation unprecedented recognizing getting the are to obviously an with that the about but just into in cautioned George, in to it's commercial shift service? what start normal that,

George Whitesides

was ability think to Well, this under would COVID test Rob, The is that really operate eye a was what of start keeping close flight constraints deal off it on I get I health as the Friday. team last essentially big was a we with I that April. to something on because was heartening And off suggested will out safely fact we flight able and allow time to to that get our progressed through to we this that in were operational that able it me updated the that protocols missions. carry create team flight are operate to

I think the big question out? now is how does play that sort of

questions focused is on. of question are front. – an amount that what on really that there's the how But infinite that's think well, nationally I as we

we flight, overall this flight need during feeling and want before effectively of operations. all COVID I and sort bit, this goes basically, powered timeline. I is But safely big powered of test fact give can the of a able we the how do to flight to see think affect at I because projections sense next how flight were if for that we think fly constraints get I one step we good that We're to how program these do more the a need testing to then for get glide think, what was remainder into see goes. confidence that operate least at of a really that we pretty

Robert Spingarn

to have changes? you adjustment current flight – to state the regime, or you cause about Other stop restrictions you current further point? could under at wait to there for lock and Is down type a anything and that have some words, powered that ordered do and do

George Whitesides

well. answer the flawless. as Sands for no. relevant the New Mexico with really range interfaces and operational in really short Authority, Spaceport the Friday's the FAA, The We at question. as partnership well flight, It close White is, good Yeah, were control work worked other authorities, Albuquerque,

been team, government worked a those did make at our lot doing but did the all have when well different practice team, centers And a communication real, entities sure teams, very and for we the relevant We worked that other with to the it just and it of it great smoothly. job. not

our flights Rob to you under of conduct powered license. as know, license, As AST we're able that part

have we regulatory constraint that in So respect. no

communication late what demonstrated amount and and how in Federal government authorities, of flight authorities, have you figure have can an out is but proper between protocols I a April think work is right now expect government and FAA, continued – health to state we into what folks, that we high that local think did to I we March operational in the the we tremendous successfully. did environment COVID conduct us

know year, how go hopefully, we're long pandemic that recede the this that, operations in don't to course to we can does is over of continue through we've but the going I Now, have that environment. what proven

We follow in that restrict Now, impact. the various of to number all things. it's protocols perfect. obviously, on we're said health did people And and which not have other distancing of terms can an site various trying

to really coming want period we So, how forward of to as the the go quickly see monitor able of progress. things over time to kinds we're how those – are that I

out operator testing. done also in right think that I think I on been well, from and an manufacturer COVID the we've we've front fact industrial perspective

it's think lot. a helped I really

terms so excess provider work that environment. going I you they're have folks to good the a We of with masks when our When combine pretty obviously they to coming are when people which then they're and doing feeling that we're that can and quickly in important. and to that work, had work, confidence the increased come in begin facilities testing were really safe able actions else, things who other they is in to capacity back a everything early think identify all sanitary

So anyway, to that we I affect things we'll forward. need major we'll but don't as constraints, any will we and our operations think there be see go have those to how monitor, need things

Operator

of Jonas Instructions] Your question next [Operator with line the comes Stanley. from Adam Morgan

is line open. Your

Adam Jonas

as an the to company anyway Space release commercial everyone's the Thanks, Act next families. with spaceflight agreement, And to your thanks, Hope on Agreement we call. healthy or ramp community spending and Does the or of press both on you NASA. change and with said, the doing George see operator like In of area and that the the this growth. the either Question George, our continue and of run you'd today's well couple highlight? of R&D tremendous invest it rates in years, alongside over operations. we'll CapEx everybody

George Whitesides

immediate the in months. Not

progress and a areas, great on think question, does to to technology areas the will us areas key So that knows Mach this mean, I what you've make lead is key framework the that have for sort who vehicle. probably these thermal high of of two anybody technology high establishes interface Mach I and propulsion, research on we're issues long in seen quicker are as allow areas about to And the right. which going us are shared for focusing be releases vehicles,

getting they're Mach our really real And And also teams has spaceship. background advantage see that of interested the NASA our that heartening way been interacting think vehicles from data to of, really can in but well. tremendous high amount are so areas we is I like what's these take operating in that

some relationships built So And they've on technologies. we've the great internal Mach high quite some great centers. a at folks Langley working of other and now with got the up team

sure that lead on serve And the quickly to we're moving so longest as I way think technology make will this areas. a

way. of to things teams first we smart years, them. lead working Because really as we're is one ramp great learned to do over issues efforts our the that that the in have on the this sure about you coming months got focus make that you So a long on that and development area I've and able up in

others and Dr. to Aero forward. partnering the branch and at think Kenyon for grateful to going this go on some us with as together I great we're stuff So we're we create

Adam Jonas

one George. of very are, different and one putting my which investors, to your at Thanks, get sort of Origin, with And investors, down as up. about question space they few people Blue you're than prospective you've and road much competitors, follow least what's current I you to And the commercialization space common Blue you paths. discussions when And at highlighted again, And that? about? obviously just investors farther we but very is two different. how you, totally Kind some But very the you difference and explain some what between experience that folks your offer market are the significant customers the recognize tourism do cases, differences. ask in and time that is Jeff talking have perspective of

You're the Soyuz. now in you only unless town game want go to a on

you the to Thanks. highlight? to So time beyond anything want market

George Whitesides

as of seen that while big constrained market other a is are entities, – that on. the and been Yeah. of it's I different focus choice on you a I and enough we've And going a But big term both I supply think areas areas for funnel dependent the done market pursue the fundamentally come Sure. underscore believer or we've of always couple share architectures, be that really what know, two some for this is to that to is basis of sizing longer growth right. investment the teams What – customer have in working to like that market that.

around chosen have is NASA which a and spaceflight, our folks architecture evolution is think they future moon. we level as both have point-to-point chosen we to spaceship great is Friday, the that us Mach tested is, system winged got that really course, to conducive safety. into take air so, the from last by customer to on landing And The suited vehicle well have high great the good really very planetary to that is What they've XX,XXX at vehicles win that the a a up of of that Blue we an where feet, is interplanetary that which week evidenced primary perspective got area for our launch lander we market. near on the we The the enormous experience vehicle good, term gives fact suborbital system. great architecture a from lunar in and comfort exploration, this very

last Because nice feet really be also first the it'd XX,XXX a technologies feet see. landing. then and to that awesome was It and for altitude we're XX,XXX and the airplane using smooth, ride to up

our on runway know, Chief time first You New in land Mackay, Pilot spaceship Mexico. the the for the Dave

thousands our eventually that's safety we've cabin will simple hybrid fact be very and things. a has in think have the hundreds of motor winged of will of architecture astronauts around underscoring fly. rocket that we will got and a And, that confidence great a people future The be posture. ton windows and – like course, our that able float Just the great to we

ours pursue Blue XX like be to experiences, I going around be there's minutes there's a terrific the always, team say, your and they experiences and that we thing, both. well exploration a on about answer I very XX. going obviously, embark is how great on as Adam. think be Earth, as great it do there's on to planet of back point-to-point with stuff that we is question which lunar I as focus I'd will So wish But think exciting so sort And to that's

Operator

line Our next question Darryl Partners. comes with from Vertical of the Genovesi Research

line open. is Your

Darryl Genovesi

think. have so I of XXXX Thanks guess indications I everybody. interest, this time. the or Hi, you George, where for is

no? of for the of How it? said about the sense to? steps what small XXX QX? them these to are during deposit. us think they many of balance? of spoken How give have up Can How those compelled You've Are actually just thinking of sometime you have a call of people about give Or remain next a balance? get that we I'm you've many you said them people phone sort sort to a should

George Whitesides

great question. Yeah, a that's

fact XXX that with is their to getting we're another is I on sign now have great. Having is close The sort registration rapidly is deposits of news through names signed no is just me. so full already as it that folks said things that queue this growing the full The as that plus side to already people we've So working of quick actually XXX no. side X,XXX interest XXX past added headline one the – contracts, we the we to growing folks quickly. good mean, up I that encouraging think can. or the that of

building for I out because Step operations. few we're rapidly Small think do that folks the buy of our the are tickets folks And who first encouraging signing are and that's program the up our the customer years will of who

As you Many folks to conversion. is of have well, work, to team just to we them, and them. is them and commercial are converting these ahead of of doing lot say, of work out the reaching great us, which talking great a many inbound do

and big potential sort now. that of we'll that's So keep to that's what come. pool the course years working great And too. the over of a But we're year targets through doing of we have

Darryl Genovesi

Jon, begin I way out the commercial the chopped lot wood a commercial you just I know thinking general, of service in then to to any margin Jon. relative you're about this you in But difference and start ramp to once Cool one services laid for maybe mean, that the profile, financial do broadly targets of fall? get launched. have still we speaking, some

Jon Campagna

a lot gets it's mean, has spaceships continue – capacity of we've past. of essentially, those built margin I we a add Darryl, the that case We as operations that and our talked that – great costs been higher we have to as in Yeah, no. sort question. the always part about as of to that fixed numbers

to focus margins continue our the plan, definitely achieve it's anticipate. that test to on So higher to we execute spaceships build

Operator

Your comes question the from next of Robert with line Spingarn Credit Suisse.

open. is line Your

Robert Spingarn

up through did this those just into figure. on April? I took you've some those you the deposits and Small have wanted how already the I things in apiece, of how One three them. to and a questions trend is few ask about The follow of clarifying this and think across XXX April, I the talked – Step where you said how, $XXXX did QX

crisis the temporarily. how have changed as curious customer may interest Just

George Whitesides

at to see to exactly have look I Yeah, Rob. data maybe our

but I So not off the But sure if on QX. maybe saw we'll we wouldn't can. kind families head, we to see if going we care in much I into surprised know I'm QX. and sure and focused I'm attentions impact be try get are their that's that to not certainly of my some that people's on fine. top homes taking of their data of

number that head don't like see off top effect now. have but we the of some I may right And that, my so

Robert Spingarn

– there Okay, been kind the on some curious works agreed all of actual of and and before, that's you talked just an opportunity you spending together. little a I'm that upon agreement what how the bit on is what a about or who's then NASA revenue kind contract terms, but or

George Whitesides

in together Rob I publicly of think other of then initial resources. to at start. Act of some the the there's we're point months become and resources, government opportunities these public the a the potentially areas agreement Act Space This think accessible. coming where is over gets that terms those sort both a initial bringing of waiting out work the we'll their some It it our together little essentially period bring is I bit our Space Agreement before and future. we see exciting NASA on agencies. And bringing with technology and together years. They're resources, we And how phase play

Robert Spingarn

you're on and spacecraft. plan question wanted on would virus then understanding, and to Okay, on last but on time cost the whether the a second things imagine slowed on for spaceship, down see my was second or that I progress and the bit, not has your plan,

George Whitesides

our question. Yeah, Maybe We've crack at that he who's Enrico COO. can one. a here, take got good

Enrico Palermo

California. Maybe And protocols of Mojave, in summarized we've extends team George implemented really operation has manufacturing I'm new obviously before managed. our throughout how the our happy as here proud and to, that into operation

work Wheels, that we're progress. more But the of manufacturing. been progress business bolstered the can and early And that earlier, was in activities But we're roll Georgia good on safety on our since impact making then flight all made test by Mexico, of the the back forward George and as fabricating the to we're than we of the year. out. early Wheels the continue bolstered protocols said without spaceship. team severity the significant quantify looking includes achievement then of spaceship next too like New technicians bolstered at able length this and we've So the And the it's pandemics that fact briefed Weight by The assembly. moment on we've to to are XX% by Weight that

Operator

George call the back like Now, I'd to to remarks. turn closing Whitesides, now CEO some for

George Whitesides

appreciate dialing look progress next All call. quarters thanks, earnings And you well, Thanks during bye. support. right. stay the into everyone call. Bye, forward All We to interest webcasting everybody. we our Appreciate in your safe. right, updating on our and or and

Operator

today's call. concludes This conference

disconnect. now may You