Virgin Galactic Holdings, Inc. · NYSE:SPCE
Virgin Galactic — SPAC Merger (July 2019)
67 slides from Virgin Galactic's SPAC merger presentation, Jul 9, 2019
Slide 1: Virgin Galactic: The leader in human spaceflight
SPACE 1S.. Virgin Galactic: The leader in human spaceflight 1
Slide 2: Disclaimer
Disclaimer This investor presentation (this “presentation”) is for informational purposes only. This presentation has been prepared to assist in terested parties in making their own evaluation with respect to the proposed transaction (the “Transaction”) between Social Capital Hedosophia Holdings Cor
Slide 3: December 13, 2018: First crewed space flight built for commercial service
December 13, 2018 First crewed space vehicle built for commercial service to put humans into space First crewed space launch from US soil since 2011 3
Slide 4: February 22, 2019: First passenger flown on a commercial space vehicle
4 February 22, 2019 First passenger flown on a commercial space vehicle First passenger flown at Mach 3+
Slide 5: May 10, 2019: Move-in initiated at Spaceport America
May 10, 2019 Move - in initiated for world’s first purpose - built commercial spaceport, Spaceport America 5
Slide 6: First Astronaut Wings Awarded for a Space Flight Built for Commercial Service
First Astronaut Wings Awarded for a Space Flight Built for Commercial Service 6
Slide 7: Rocket Motor Accepted into National Air and Space Museum
World Record Breaking Rocket Motor Accepted into Permanent Collection of National Air and Space Museum 7
Slide 8: Virgin Businesses
Fix sizing / Futura font 60 Virgin Businesses $21bn Global Annual Revenue 69,000 Employees 35 Countries 8
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Slide 10: Ansari X Prize
10 ANSARI X PRIZE Built on technology of successful spaceship prototype program
Slide 11: VSS Unity
VSS Unity The world’s first private, crewed spacecraft built for commercial service 11
Slide 12: VMS Eve
VMS Eve The world’s largest all composite aircraft in service 12
Slide 13: Only 571 People Have Ever Been to Space
Source: Management. Note : All percentage figures are based on total number of people who have been to space. 305 116 9 78 49 4 2 8 53.4% 20.3% 1.6% 13.7% 8.5% 0.7% 0.4% 1.4% Men: 508 (89%) Women: 63 (11%) Only 571 People Have Ever Been to Space 13
Slide 14: Our Customers
14 Our Customers
Slide 15: Our Team
Our Team Over 800 people representing a unique blend of space and aviation expertise: Virgin Galactic – The world’s first commercial spaceline The Spaceship C ompany – Building spaceships and future aerospace vehicles 15
Slide 16: Our Facilities
16 Our Facilities Purpose - built facilities in California and New Mexico for operations, manufacturing, design and test
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Slide 18: The Space Fleet
The Space Fleet Our next two spaceships on the production line 18
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Slide 20: Our Home – Spaceport America, New Mexico
20 Our Home – Spaceport America, New Mexico The world’s first purpose - built commercial spaceport
Slide 21: Runway Takeoff
Runway Takeoff 21
Slide 22: Climb to 45,000 feet
Climb to 45,000 feet 22
Slide 23: Release & Boost
Release & Boost 23
Slide 24: Unique Feathered Re-Entry Configuration
Unique Feathered Re - Entry Configuration 24
Slide 25: Life Changing Views of Planet Earth from Space
Life Changing Views of Planet Earth from Space 25
Slide 26: Glide Home & Runway Landing
Glide Home & Runway Landing 26
Slide 27: Enabling a First-of-its-Kind Flight Path to Space
Enabling a First - of - its - Kind Flight Path to Space 50 miles (boundary to receive astronaut wings) Passengers experience microgravity 45,000 feet SS2 and WK2 separate 60 second rocket burn accelerating to Mach 3 Re - entry with folded tailbooms Unpowered glide Spaceport America, New Mexico 27 No
Slide 28: Alternative to a traditional IPO for disruptive companies
Alternative to a traditional IPO for disruptive companies to achieve long - term objectives The leader in commercial human spaceflight
Slide 29: Presenters and Senior Leadership
Presenters and Senior Leadership • Responsible for Virgin Galactic and TSC’s financial matters • Prior to joining, was the Controller at ICON Aircraft • Previously held various financial leadership positions at Ericsson in the US and Europe and started his career in the Audit Advisory Practice at PW
Slide 30: Industry Overview
30 Industry Overview 30
Slide 31: Space Continues to Receive Heavy Investment, but is Adapting
Space Continues to Receive Heavy Investment, but is Adapting… (1) Launches per year based on total successful launches by the US since 1958 per The Economist (article source: FAA; Jonathan McDowell / plan et4 589.org; Roscosmos ; press reports ). ( 2 ) “Historical NASA Budget Data”, The Planetary So
Slide 32: Opportunity for an Entirely New Ecosystem of Disruptive Companies
…Creating an Opportunity for a n Entirely New Ecosystem of Disruptive Companies Launch & Transport Human Spaceflight Microgravity Research Habitats & Real Estate Satellites Space Infra & Services Space Energy Space Resources 32
Slide 33: Why Commercial Human Spaceflight is Strategic
Why Commercial Human Spaceflight is Strategic • Proven technology and declining costs • Strong market demand, with significant potential for incremental g rowth globally as concept matures and costs moderate • Applications beyond initial use, including scientific research and defense • Technical fou
Slide 34: Company Overview
Company Overview 34
Slide 35: Virgin Galactic's Vision
Virgin Galactic’s Vision Phase 1 – Broad Commercialization of Spaceflight ▪ Establish new commercial space tourism market ▪ Make space travel achievable for the public ▪ Maintain exclusive nature of experience and capture consumer demand and imagination Phase 2 – Democratization / Expansion ▪ Captur
Slide 36: Virgin Galactic at a Glance
Virgin Galactic at a Glance Virgin Galactic combines a first - of - its - kind commercial operation for human spaceflight with a proprietary, world - class engineering organization • Building a fleet of WhiteKnightTwo carrier aircraft and SpaceShipTwo reusable spaceships that together form Virgin Ga
Slide 37: World-Class Management and Industry-Leading Flight Team
Mike Moses President, Virgin Galactic ▪ 8 years at Virgin Galactic / 24 years of experience ▪ Previous: Enrico Palermo President, TSC ▪ 13 years at Virgin Galactic / 17 years of experience ▪ Previous : World - Class Management and Industry - Leading Flight Team Jon Campagna Chief Financial Officer,
Slide 38: Reusable Horizontal Launch Feathering Re-Entry System
Reusable Horizontal Launch Feathering Re - Entry System Unique, Self - Developed Technology • Designed to carry SS2 up to an altitude of ~45,000 feet • Capable of high - altitude, heavy - lift missions for passenger launch or defense applications • 250+ flights to date , often multiple times per wee
Slide 39: Virgin Galactic's Unmatched Safety Systems
Virgin Galactic’s Unmatched Safety Systems Safety is of paramount importance at Virgin Galactic and the technology has been designed and tested with safety as the primary consideration Safety Mechanism Description Horizontal takeoff and landing • Takeoff and landing on regular runways similar to typ
Slide 40: Limited Competition
Limited Competition Years of Development 15 19 Estimated Investment to Date $1 billion+ NA Technology Reusable rocket - powered spaceplane Reusable rocket system Expected Price / Seat $250,000+ TBD Flight Experience 90 minutes of flight time 11 minutes of flight time Passenger Becomes Astronaut? Air
Slide 41: IPOA Investment Rationale
IPOA Investment Rationale 41
Slide 42: High Net Worth Individuals Increasingly Value Experiences
High Net Worth Individuals Increasingly Value Experiences Virgin Galactic offers a unique value proposition relative to comparably priced ultra luxury travel and transportation experiences Unique Travel Experiences Ultra Luxury Transportation Yacht rental Private island rental Exclusive hotel suite
Slide 43: Virgin Galactic's Customer Value Proposition
Virgin Galactic’s Customer Value Proposition Informed by Virgin Group’s track record of creating unmatched experiences, Virgin Galactic will offer a revolutionary, multi - day journey for customers Day 1 Welcome Day Day 2 Cabin Day Day 3 Rehearsal Day Day 4 Flight Day • Tour spaceport • Flight suit
Slide 44: Large Order Book
~600 $80M Total # of reservations Total value of deposits Large Order Book Commercial Success to Date – Achieved with Limited Advertising Spend Source : Management . 44
Slide 45: Strong Pricing Power
Strong Pricing Power Initial Distribution of Reservation Prices 65 444 85 < $199,999 $200,000 - $249,999 $250,000 (# of Reservations by Price) Source: Management . 45
Slide 46: Proven Willingness to Pay
• Research has found that consumers are willing to spend 1.0% to 1.5% of net worth in a single discretionary purchase (1) • Actual wealth distribution of Virgin Galactic’s reservations validates this research, and suggests upside potential (2) ~70% of Pre - Orders ~30% of Pre - Orders < $20M net wor
Slide 47: Growing Market
Growing Market Source: Credit Suisse Research Institute. Note: Based on interpolation between 2018A and 2023E based on CAGR. (1) High net worth individuals assumes net worth of $10 million or greater. Values rounded to nearest 1,000. Assumes annual growth is equ al of the 2018 - 2023 CAGR of 6.0%. 1
Slide 48: TAM Expands Meaningfully at Lower Prices
TAM Expands Meaningfully at Lower Prices Source: Credit Suisse Research Institute. (1) Illustrative price assumes 1% of net worth at each respective net worth threshold. 150,000 1,781,000 5,067,000 Net worth of $50M+ Net worth of $10M+ Net worth of $5M+ TAM at Lower Ticket Prices (1) (Population lev
Slide 49: Operational Model To Reduce Costs
Operational Model To Reduce Costs Focus Areas Drivers to Reduce Costs Propulsion • High - rate production • Reusable hybrid casings • Liquid rocket motor Staff • Decreased per - flight inspections and maintenance through improvements in design and testing Vehicle build cost and lifetime • Manufactur
Slide 50: Attractive Ancillary Revenue Opportunities
Attractive Ancillary Revenue Opportunities 50 • Premium products and services to existing customers • Unique customer experiences and products while customers are in the backlog • Add - on experiences for customers and family & friends while at Spaceport America • Exclusive events for ‘alumni’ • Cor
Slide 51: Ultimate Application of the Technology: Point-to-Point Travel
Ultimate Application of the Technology: Point - to - Point Travel • Next - generation revolution in transportation • Significant global revenue opportunity • ~$900BN Total commercial aviation market (1 ) • ~$600BN Total commercial passenger travel market (1) , including a considerable portion focuse
Slide 52: Summary of Traction to Date
Summary of Traction to Date • Existing demand largely through inbounds ; to date, limited advertising spend • $80M of deposits (representing ~$120M of revenue potential) • Customers from 60 countries • Commercial sales activities paused since 2014 • Significant pent - up 5 - year demand yet to be se
Slide 53: Summary of Traction to Date (cont'd)
Summary of Traction to Date (cont’d) Source: News reports. • Virgin Galactic has attracted meaningful non - dilutive investment from the New Mexico government, who funded the upfront development costs of Spaceport America ( ~ $200M) • Virgin Galactic pays the New Mexico government ~$5 million in ann
Slide 54: IPOA Investment Rationale
IPOA Investment Rationale • Creates the first and only public company in commercial human spaceflight • Sizeable , growing market driven by favorable behavioral trends • Unique and reusable technology • Once - in - a - lifetime experience at an attainable price • Proven commercial model with early c
Slide 55: Financial Overview
Financial Overview 55
Slide 56: Viable Commercial Model
~600 $80M $0 Total # of reservations Total value of deposits Total debt Viable Commercial Model Commercial Success t o Date – Achieved with Limited Advertising Spend 56
Slide 57: Projected Financial Overview
Projected Financial Overview 66 646 965 1,565 0.0% 0.0% 0.1% 0.1% 2020E 2021E 2022E 2023E Annual passengers flown Cum. % of $10M+ HNW Cumulative passengers flown 66 712 1,677 3,242 Source: Management . ( 1) HNW population estimates (individuals greater than $10+ million net worth) per Credit Suisse
Slide 58: Projected Financial Overview: Revenue
Projected Financial Overview (cont’d) $31M $210M $398M $590M 2020E 2021E 2022E 2023E % growth NM 580% 89% 48% Source: Management . Revenue 58
Slide 59: Projected Financial Overview: EBITDA
($104M) $12M $146M $274M 2020E 2021E 2022E 2023E % EBITDA margin (1) NM 6 % 37% 46% Source: Management. (1) EBITDA and EBITDA margin are non - GAAP measures. Please refer to “Use of Non - GAAP Financial Matters” for additional informati on regarding the non - GAAP measures included in this presentat
Slide 60: Single Flight Unit Economics
Single Flight Unit Economics (Excluding Ancillary Revenue Opportunities) $1.3M $0.8M $121,000 $193,000 $118,000 66% contribution margin A B C D Revenue: assumes flight carries 5 passengers at $250,000 per passenger Rocket motor and fuel costs: assumes price per rocket motor decreases over time via a
Slide 61: Projected Financial Summary
Projected Financial Summary ($ in millions) 2020E 2021E 2022E 2023E CAGR ’20E – ’23E # of Vehicles by YE 2 3 4 5 Total Flights (Annual) 16 115 170 270 Total # of Passengers Flown 66 646 965 1,565 Ticketed Revenue $21 $195 $376 $562 Other Revenue 10 15 21 28 Total Revenue $31 $210 $398 $590 167.3% Re
Slide 62: Transaction Overview
Transaction Overview 62
Slide 63: Transaction Overview
Transaction Overview ( 1) Total shares includes 100.0 million rollover equity shares, 69.0 million IPOA public shares, 17.3 million IPOA founder shares and 1 0.0 million shares from IPOA Founder’s co - investment . Assumes no redemptions . (2 ) EBITDA is a non - GAAP measure. Please refer to “Use of
Slide 64: Transaction Overview: Pro Forma Ownership
Transaction Overview (cont’d) ( 1) Total shares includes 100.0 million rollover equity shares, 69.0 million IPOA public shares, 17.3 million IPOA founder shares and 10.0 million shares from IPOA founder’s co - investment (included in IPOA sponsor investment total). Assumes no redemptions . Pro Forma
Slide 65: Transaction Overview (cont'd)
• First private enterprise to take civilians to space • S upported by $1 billion + of investment to date • Sizable addressable market with backlog of ~600 reservations, $80 million of collected deposits, and significant pent - up customer demand • Best - in - class customer experience, supported by
Slide 66: Transaction Overview (cont'd)
Transaction Overview (cont’d) • Pro forma enterprise value of $1.5 billion • 2.5x CY2023E revenue and 5.5x CY2023E EBITDA • IPOA founder committed to invest $100 million at $10.00 per share in connection with the business combination (1) • Existing Virgin Galactic shareholders receive up to $300 mil
Slide 67: At a Glance
At a Glance Expected Initial Price Point Per Ticket $250,000+ Deposits $ 80M Reservations ~600 TAM (2023E) (1) 2,300,000+ individuals 2023E Financials Revenue $590M EBITDA (2) $ 274M Contribution Margin per Flight 66% Capital Invested to Date $1BN+ Implied EV Multiples 2023E Revenue Multiple 2.5x 20