Virgin Galactic Holdings, Inc. · NYSE:SPCE
Virgin Galactic — FY2019 Earnings Presentation
42 slides from Virgin Galactic's earnings presentation, Feb 25, 2020
Slide 1: Fourth Quarter and Fiscal 2019 Investor Update
Fourth Quarter and Fiscal 2019 Investor Update February 25, 2020
Slide 2: Disclosures
Disclosures Forward-Looking Statements This presentation 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 pe
Slide 3: Virgin Galactic Investment Highlights
Virgin Galactic Investment Highlights 1 First and Only Public Company Focused on Commercial Human Spaceflight 2 Sizeable and Growing Market for High End Luxury Experiences 3 Highly Engaged Customer Base with Demonstrated Willingness to Pay 4 Attractive Business Model with Reusable, Scalable Design 5
Slide 4: Milestones
3 Pa. GAaLacrTric Milestones
Slide 5: December 13, 2018
December 13, 2018 First commercial space vehicle to put humans into space First crewed space launch from US soil since 2011 5
Slide 6: February 22, 2019
February 22, 2019 First non-pilot crew member flown on a commercial space vehicle First non-pilot crew member flown at Mach 3+ First non-pilot crew member to unstrap and float freely in space on a commercial space vehicle 6
Slide 7: May 10, 2019
May 10, 2019 Move-in initiated for world’s first purpose-built commercial spaceport, Spaceport America 7
Slide 8: August 15, 2019
August 15, 2019 Relocated carrier ship, VMS Eve, from Mojave, CA to Las Cruces, NM Spaceport America became operationally functional 8
Slide 9: October 8, 2019
October 8, 2019 Announced strategic partnership with Boeing Announced $20 million strategic investment by Boeing’s HorizonX Ventures 9
Slide 10: October 16, 2019
October 16, 2019 Announced collaboration with Under Armour Unveiled spacewear system for Future Astronauts 10
Slide 11: October 25, 2019
October 25, 2019 Closed transaction with Social Capital Hedosophia
Slide 12: Highly Experienced Board with Deep and Relevant Expertise
Highly Experienced Board with Deep and Relevant Expertise Chamath Palihapitiya Chairman of the Board of Directors Founder, Social Capital Senior Exec., Facebook* George Whitesides Wanda Austin Adam Bain Craig Kreeger CEO of Virgin Galactic, Board Director Board Director Board Director Board Dire
Slide 13: November 15, 2019
November 15, 2019 Kicked off Astronaut Readiness Program 13
Slide 14: January 8, 2020
January 8, 2020 Second spaceship achieved Weight on Wheels Milestone Third spaceship achieved 50% completion of structure and systems fabrication 14
Slide 15: February 13, 2020
February 13, 2020 Relocated first spaceship, VSS Unity, from Mojave, CA to Spaceport America, NM 15
Slide 16: Update on FAA Approval Process
Update on FAA Approval Process FAA issued Reusable Launch Vehicle License in 2016 to allow Virgin Galactic to conduct spaceflight missions The path to final approval is a Verification and Validation (V&V) program that contains 29 elements Virgin Galactic has cleared 20 of 29 V&V elements 10
Slide 17: Test Program Update
Test Program Update Finishing the test flight program Testing and optimizing the end-to-end customer experience Readying the vehicles for long-term, high rate service 17
Slide 18: Business Overview and Strategy
Business Overview and Strategy
Slide 19: Market Backdrop: Commercial Space Travel Coming of Age
Market Backdrop: Commercial Space Travel Coming of Age Commercial Space Industry Size(1) Significant Technological Advancements Recent Proof of Concept By 2040, the commercial space industry is expected to reach 5% of U.S. GDP $1.5tn $385bn $175bn High rates of flight for new entrants Private compan
Slide 20: Market Backdrop: Spending Preferences and Trends Favor Luxury Experiences
Market Backdrop: Spending Preferences and Trends Favor Luxury Experiences 6% YOY growth at constant exchange rates, 2017-18E 5% Personal luxury goods Out-of-home luxury experiences At-home luxury 4% experiences Luxury and expedition- style travel outpaced broader segment growth (7% for ’18E) Luxury
Slide 21: Market Backdrop: Significant Total Addressable Market
Market Backdrop: Significant Total Addressable Market Significant Total Addressable Market Key Drivers Cumulative % of $10m+ HNW served by VG(1) 0.0% 0.0% 0.1% 0.1% 2,378,000 Overall growth in global 2,245,000 markets 2,119,000 2,000,000 1,887,000 1,781,000 Growth in entrepreneurs and self-made
Slide 22: Growth Strategy I: Scaling the Business
Growth Strategy I: Scaling the Business Planned Fleet Expansion Research Payloads Five SS2s by end of 2023 Micro-gravity and suborbital space conditions research at Spaceport America Representative Customers ITALIAN AIRFORCE 22
Slide 23: Growth Strategy II: TAM Expansion
Growth Strategy II: TAM Expansion Lower Prices Significantly Expand the Total Addressable Levers to Reduce VG’s Cost Profile Market (1) Estimated # of individuals 37,087,950 Economies of Scale Manufacturing Efficiencies Labor Efficiencies 1,781,000 3,286,000 Advances in Technology Net worth of $10m+
Slide 24: Growth Strategy III: High Speed Global Mobility
Growth Strategy III: High Speed Global Mobility Hypersonic Point-to-Point Travel Los Angeles <-> Tokyo (hours) New York-London Current business Jet 11 Mach 0.8 Los Angeles-Tokyo 1 hour(1) 2 hours(1) Supersonic Jet 5 Mach 2 Los Angeles- Hypersonic Jet 2 Mach 5 Sydney 2.5 hours(1) Opportunities to a
Slide 25: Growth Strategy III: High Speed Global Mobility (cont.)
Growth Strategy III: High Speed Global Mobility (cont.) Today Future Only team designing, building and flying a Mobility around our planet transformed with a commercial vehicle at supersonic speeds today customer driven, premium end-to-end service saving Project Vision: a precious resource: time
Slide 26: The Spaceship Company: Creating Disruptive Aerospace Solutions
The Spaceship Company: Creating Disruptive Aerospace Solutions Vertically integrated, end-to-end aerospace manufacturer Testing, validation and post-delivery support within Virgin Galactic Headquarters: Mojave Air and Space Port, California Design, manufacturing and production capabilities D
Slide 27: VMS Eve: Proven, Versatile, High Altitude Capability
VMS Eve: Proven, Versatile, High Altitude Capability VMS Eve is a remarkable configuration that is in a class of its own in many respects Serves as mothership for SpaceShipTwo, however has a payload agnostic capability VG is exploring the significant interest received to date to leverage this platfo
Slide 28: Potential Future Applications of VG's Technology and Capabilities
Potential Future Applications of VG’s Technology and Capabilities High Speed Testbed Alternate Mothership Configurations Electric Air Mobility High Altitude Persistent Platforms 28
Slide 29: Fourth Quarter 2019 Business Highlights
Fourth Quarter 2019 Business Highlights Achieved key operational milestones at Spaceport America Entered into new contract with the Italian Air Force Transitioned 70 operations personnel from Mojave, CA Announced collaboration with Under Armour and to NM by 2019 year end, totaling 145 staff in NM un
Slide 30: Transaction with Social Capital Hedosophia, Closed October 5, 2019
Transaction with Social Capital Hedosophia, Closed October 25, 2019 Sources and Uses Ownership Structure post Transaction ($ in millions) Boeing Sources 1% IPOA Sponsor Cash from IPOA: $552 13% Total Sources $552 Rollover IPOA Public Equity Uses Shares 59% Cash to Balance Sheet $452 27% Cash t
Slide 31: Fourth Quarter and Fiscal Year 2019 Financial Highlights
Fourth Quarter and Fiscal Year 2019 Financial Highlights Cash and cash equivalents of $480 million as of December 31, 2019 Revenue of $529,000, generated by providing engineering services Fourth Quarter Ended December 31, Net loss of $73 million (including applicable transaction costs) 2019
Slide 32: Adjusted EBITDA and Capital Expenditures
Adjusted EBITDA and Capital Expenditures We use Adjusted EBITDA as a key measure of our performance Adjusted EBITDA excludes stock-based compensation and non-recurring transaction costs Refer to appendix of presentation for reconciliation to GAAP Net Loss Q4’19 expense increase primarily rel
Slide 33: Direct Sales Funnel
Direct Sales Funnel LEADS Scalable end-to-end customer pipeline for direct sales Total Addressable Market = 1.78M HNW individuals[1] 2018 Sales formally closed after first space flight, constricting supply to drive demand at higher price points Future flyers encouraged to register online, creati
Slide 34: February 25, 2020
February 25, 2020 February 25, 2020 Launching the “One Small Step” initiative in preparation for re-opening sales Launching the “One Small Step” initiative in preparation for re-opening sales Online registrants pay $1,000 refundable deposit to join the waitlist and registrants Online secure thei
Slide 35: on Galactic
3 on Galactic
Slide 36: Appendix
3 Pa. GAaLacrTric Appendix
Slide 37: Reconciliation to Non-GAAP Measures
Reconciliation to Non-GAAP Measures Amounts in thousands ($) Three Months Ended Dec. 31 Twelve Months Ended Dec. 31 2019 2018 2019 2018 Net Loss $ (72,799) $ (45,717) $ (210,935) $ (138,139) Income Tax Expense (Benefit) (61) 32 62 147 Interest Expense 34 2 36 10 Depreciation & Amortization 2,079 1,5
Slide 38: VMS Eve: The Carrier Aircraft
VMS Eve: The Carrier Aircraft Carrier Aircraft Highlights Crew 2 pilots Length 77.7 feet (~24 meters) Wingspan 140.0 feet (~43 meters) Takeoff / Landing Max Payload Weight 30,000 pounds (Takeoff) Max Payload Weight 17,000 pounds (Landing) 9,400 feet (at sea level Min Runway and max weight) Flight Ca
Slide 39: VSS Unity: The Spaceship
VSS Unity: The Spaceship Spaceship Highlights Crew 2 pilots Length 60 feet (~18 meters) Tail Height 18 feet (~5 meters) Wingspan 42 feet (~13 meters) Capacity Max Passengers 6 Equivalent to 6 Max Payload passengers Flight Capabilities Top Speed > Mach 3 Flight Duration Up to ~90 minutes 50+, includi
Slide 40: Hybrid Rocket Motor: The Motor
Hybrid Rocket Motor: The Motor Recognized as "most powerful hybrid rocket used in manned flight” by the Guinness Book of World Records Robust, yet simple human spaceflight rocket motor Max thrust: 72,000 lbs 100+ motors built to date Easy-to-store, replaceable fuel cartridge Displayed at t
Slide 41: Feathering Re-Entry Mechanism
Feathering Re-Entry Mechanism Patented, foldable boom tail Once back in atmosphere, feather lowers and spaceship glides home Shuttlecock aerodynamic profile for deceleration and stable re-entry 41
Slide 42: Virgin Galactic's Commitment to Safety
Virgin Galactic’s Commitment to Safety Horizontal Takeoff and Landing Two Pilots Mothership Engine Reliability Hybrid Rocket Motor Takeoff and landing on regular Creates redundancy in operations Highly reliable and rigorously Robust yet simple design with runways similar to a typical airliner and in
Virgin Galactic Holdings — FY2019 Earnings Presentation on 6ix