• Revenue: $402,000 driven by future astronaut membership fees.
• Total Operating Expenses: $82 million, down from $116 million in the prior year period.
• Capital Expenditures: $39 million, up from $13 million in the prior year period.
• Free Cash Flow: Negative $118 million, compared to negative $105 million in the same period last year.
• Cash and Marketable Securities: $744 million.
• Projected Free Cash Flow for Q4 2024: Expected to be in the range of negative $115 million to $125 million.

• Warning! GuruFocus has detected 5 Warning Signs with SPCE.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Virgin Galactic Holdings Inc (NYSE:SPCE) has moved into the build phase of its spaceship program, with tools being completed and parts beginning to be produced.
• The company plans to expand its fleet beyond the first two spaceships, aiming to capture economies of scale from existing investments.
• Virgin Galactic Holdings Inc (NYSE:SPCE) has a strong cash position, providing flexibility in timing and pace of acquiring growth capital.
• The company expects to achieve positive operating cash flow with the first two spaceships, which will fund further fleet expansion.
• Partnerships with Bell Textron and Carbon Aerospace are progressing well, with effective collaboration on design and manufacturing challenges.

Negative Points

• Revenue for the quarter was only $402,000, indicating limited income generation at this stage.
• Total operating expenses were $82 million, highlighting significant costs relative to revenue.
• Free cash flow was negative $118 million, reflecting substantial cash burn as the company invests in development.
• The company projects an uptick in spending in Q1 2025, indicating continued high expenditure in the near term.
• Complexity in manufacturing certain parts has led to design revisions, potentially impacting timelines and costs.

Q & A Highlights

Q: What's your latest thinking on reopening ticket sales given the additional capacity from spaceship three and four? A: Michael Colglazier, CEO: We plan to open ticket sales when we are within a year or less of flying private citizens on our Delta ships, likely towards the back half of 2025. We want to ensure we are taking advantage of yielding and maintaining a two-year time window for customers from sign-up to flight.

Q: Do you foresee more equity issuance for the mothership program, and is there a minimum cash balance you aim to maintain? A: Douglas Ahrens, CFO: We have enough cash to get the first two Delta ships into service and become cash flow positive. Growth capital will be targeted at a second mothership and additional Delta ships. We don't have an immediate need for growth capital but see an opportunity to accelerate growth. There's no specific minimum cash balance, but the growth capital will ensure a strong balance sheet.

Q: How are tariffs and sourcing risks affecting production, and how are partnerships with Bell and Carbon progressing? A: Michael Colglazier, CEO: We are insulated from tariffs as our supply chain is primarily U.S.-based. Partnerships with Bell and Carbon are strong, and we are in the build phase. We are managing design revisions and maintaining our schedule with their support.

Q: Has there been any change to expectations around 2025 free cash flow usage? A: Douglas Ahrens, CFO: There is no change to our expectations. We anticipate a trend down in 2025 due to the lifecycle of Delta, with a peak in CapEx for tooling and parts fabrication. We expect to exit 2025 with spending below $100 million per quarter, with more than half of the spend in CapEx.

Q: Can you clarify the timing for the second mothership and the impact of growth capital on the schedule? A: Michael Colglazier, CEO: The timing for the second mothership remains 2028, consistent with previous plans. Growth capital will ensure we stay ahead of costs and bring in the third and fourth Delta ships by 2028, allowing us to drive profits and leverage economies of scale.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.