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SPCE Virgin Galactic

Participants
Michelle Kley EVP, Legal, General Counsel & Secretary
Michael Colglazier CEO & Director
George Whitesides Chief Space Officer
Jon Campagna CFO
Call transcript
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Operator

Good afternoon. My name is Jason, and I will be your conference operator today. At this time, I would like to welcome everyone to Virgin Galactic's Second Quarter 2020 Earnings Conference Call. [Operator Instructions]. Hosting today's conference call will be Michelle Kley, Executive Vice President, General Counsel and Secretary at Virgin Galactic.

call recorded. today's reminder, a is being As I to Ms. like to conference over turn the would now Kley. Please go ahead.

Michelle Kley

and to Quarter Call. Virgin you, Galactic's Thank good Second XXXX afternoon, Earnings everyone. Welcome Conference

an Executive today XXXX. Jon made and Chief a of release on for today, Financial overview provide available Michael me we Space will Campagna, with our who slide website, remarks. second call Whitesides, Chief the presentation and the Colglazier, On which business Investor and Chief financial prepared Officer; Officer, issued George Officer; press provides are our Relations Earlier a highlights quarter

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

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

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

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

Galactic offering Virgin filed statement on registration of a Form sure I'm we a have of most proposed for today, As underwritten seen, you S-X stock.

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Michael Colglazier

ones start thanking you at continuing the and Virgin to to healthy loved start Michelle, Galactic. safe. joining today. that and of stay your you each I'd week my like us you, marks good everyone. hope I Today Thank are of and for afternoon, by third

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share call join the to hand me end let comments. the George, final Now over will I to at and

George Whitesides

Michael. Thanks,

world experiences and this around scaling is fantastic all he right that person experience the view will through company the has I has say the and weeks past only to company. to my phase. we exactly Michael's that joined deep that He the have tremendously lead closely Before that its begin, company growth I I customer Michael couple and serve now for solidified been working the commercial feel of privileged well. just wanted building

we Today, So discussion start providing of welcome, Michael, our team. a recap will this incredible areas the of and progress. on thank you main quarter for by the joining

well impact program provide our test flight the as production. on ongoing will of updates operations COVID-XX We then as and on fleet our

will developments Jon quarter will close the in highlights by and business We detail financial covering opportunities. new future discuss for our then our business regarding then our performance. provide

And customers growth our share Slide the to to the achieved you able will all summary the customer initiatives. opportunity as had in the paying strong And milestones important our significant America clearance our a excited call. new number high-speed made news orbital in our during today, number quarter to strategy. watch. gain on next unveil cabin, Turning successful of be of of a here We the This pipeline a both each announced morning, as process advanced fly from FAA. customer some virtual our existing spaceship a We last for our from to we stage week hope flights details operations as test steps flight development we license series in to which to short provide stability commercial We development conducted in to of saw community. during of event We progress I'm our in we program. spaceflight initiative. and X. I our commercial hosted and a I spaceflight under launch important the Spaceport well prepare provide our in

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complete of objectives test test commercial also we milestones will addition FAA's own that involve additional We that to continue launch. may to flights the in prior set will our

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update can We've we Turning to fleet the will our provide protocols continue safely to program. had facility Slide to where X, I processes build during many operating adjust manufacturing an COVID-XX and pandemic. of on safety our ensure

safe the progress our our during steps quarter. responded team and our of was proactive business, potential keep pace Although to minimize to to swiftly take impacted our teams disruption

effect operations early shop maintain April the a had to our cautiously have we impacted of and work cumulative second manufacturing delays manufacturing protocols and facility remotely. led have and have restarted progress from full able Thanks with protocols, shutdown third our cells. shop and these floor to while many to small operations enabling middle engineering new The trial work staff of to assembly been the process within work of First, floor spaceships. our in we March of to

definition. structural the progress quarter, closeout continue for and SpaceShipTwo engineering drawings key during on all we integrated systems well as the remaining and fabrication testing metrics However our to vehicle of vehicle preparing as make release second

have and protocols and assembly fleet vehicle ready expect COVID created testing to we SpaceShipTwo the continued commencement of our for have progress to some we delays efforts Although ground our second complete to this process, our expansion of with year. rollout

parts now are For ready vehicle fabrication our and XX% over for spaceship, is the XXXX. complete to in third testing we complete assembly and expecting

download and flight mobile using that space through world the we by Turning can of via Alongside App to space experience Galactic's Slide we also XX, launched on aspiring free July the Play app live interior technology event astronauts the and for reality an on exclusive enthusiasts cabin the available be design XX. virtual interior Last and of augmented to the reveal, accessed unveiled SpaceShipTwo Virgin week, a YouTube. cabin Store around streamed immersive an Store. on

allow a team view overhead has This windows windows view To a the lighting with are vista. soft with about awe-inspiring automated We towards edges with and space, XX flight. and phase of the are with creating cabin cabin's the in earth, this that positioned a the harmonizes XXX-degree design. each in extended around I'm use profound for our mood of milestone life-changing includes what from stunning pointing accomplished the of excited awe cabin

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to Slide XX. Turning

a steady campaign. During marketing of program our the light the registrants community. this the testament our and demand paused the join our continue have up second now One quarter, Small COVID-XX quarter, our around pipeline, sales growth the astronaut restarted Small the Despite of but a to active future response suspending we active we as continue campaigns second in in experience to In our of to Step see for Step continued efforts, temporarily sign positive beginning our see our global to to stability we pandemic, marketing community.

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an help state-of-the-art Our initial a the To to and lead wing passengers the cutting-edge propulsion flying vehicle, way on the type designs of development altitude nonbinding systems memorandum cabin on a in are delta accommodate Mach have the parameters: would sustainable understanding fuel. that to to signed aims design targeted from above with of of aircraft. X towards design certified following process, collaboration further XX,XXX design facilitate support X a sustainable Rolls-Royce based that a we aviation for this vehicle feet XX

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design have up our service about can we leveraging core for the we built product. we Finally, are customers by excited the offer experience

advantages Jon our to more quarter details would results. to this in I about the look CFO, second turn like provide forward you and call now unique future. have the area, I sharing to with our in financial who We Campagna, updates over will

Jon Campagna

Thanks, George.

Slide at XX. Looking

of quarter expenses for commercial XXXX. EBITDA, XX, loss were a sheet the the $X were million America of launch. million in quarter $XX we investments EBITDA The million Capital ended reflect with cash the Adjusted quarter cash was on the in results full $XXX $XX to balance quarter to for to our quarter. compensation. Our quarter which compared and XXXX. excludes $XX of expenditures expenditures to of to million was quarter position primarily our the a R&D for costs of and of Spaceport cash first the for $XX $XX first loss quarter second strong a continue which capital million $XX paid XXXX. as the to GAAP quarter. the million adjusted Non-GAAP compensation, second We R&D XXXX. in commercial million SG&A second negative operations. work compared negative was in in the prepare that consisted the have facility the compared of our vehicle tooling is million. first in prepare Cash for the for XXXX for of net we stock-based ongoing been $XX first the to equivalents compared XXXX, $XX expenses June quarter quarter remain as Non-GAAP $X for in million and This as quarter SG&A stock-based in quarter to million quarter $XX compared expenses company. quarter totaled previous exclude as were million quarter in XXXX. adjusted of first million quarter $XX compared GAAP of expenses non-GAAP $XX first million, were SG&A expenses the and the public in first expenses Non-GAAP R&D million consistent net with

time to those context on Turning statement drivers XX. Slide more income behind in of like our the take to to of through run the to some some I'd line some numbers. provide items

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to Turning R&D.

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expenses $XX the a XXXX, allocation compared cost SG&A the of aforementioned Our due for $XXX,XXX million, R&D. decrease totaled first to primarily quarter of quarter facility the to to

cash with cash The and cash was Slide XX, which flow Turning million, the looking to cash at statement. quarter the burn. in generally line decrease and $XX totaled over equivalents in QX

company-related costs. ongoing as to Although for incremental we cash specific the guidance, last we our we are is quarter, public not noted providing of continue believe this an burn indication approximate

tooling there by decide for in that may invest to $X increase initiatives that an we burn quarter our expenditures rate. lead prior for turn attributed costs. to remarks. readiness over some investments the to expenditures I like to the capital some now to Michael million increased vehicle the from $X paid strategic operational continued America, Spaceport Capital may and in back million. be for However, were would final in call quarter to Cash primarily

Michael Colglazier

Thanks, few recapping moments steps. to our I'd like briefly spend next Jon. a

the priority our of remains As and and and safety we health through one times, which our unprecedented operate. number we communities in families employees the navigate these our

include a the phase of will in from test to program advance the rocket-powered X earlier this call, to flight first Spaceport flight, Spaceport mentioned we conduct by powered conducting expected flight second America, the our from to spaceflight expect we is on George the fall. As America which mission next cabin. specialists After that

conducting first on fully all goes in Branson's us the Richard as functional Richard would cover flight we of occur the of anticipate flight, expected plan XXXX. America, powered Branson this then to variety Spaceport we a third will these help history-making from specialists the and quarter block we which If choreograph the In will accrued addition fly within and cabin, Sir flight. on tests capture will ways to

will As central for diligent continue will test step-by-step remain we as a flight service. always, with throughout progress commercial focus, approach and safety we prepare the to our program

our As as process from we our data adjust of may each schedule such, flights. test

appreciate George support. advanced Before we sharing our point journey interest and successfully you, technology space in congratulate calls. the this the I'd Thank to incredibly work close We bringing to to work Galactic's commercialization Virgin commercialization us our future the call, everyone, look excited efforts, in to I'm of our forward we and towards including in team earnings of develop inflection you on more George travel. orbital and high-speed as human with space recognize your flight. like call. for today's We participation with on flight joining and

Operator

conference call. today's concludes That

You may disconnect. now