Virgin Galactic(US:SPCE)2024-05-07 23:11Financial Data and Key Metrics - Total operating expenses were $113 million, down from $164 million in the prior year, primarily due to lower R&D and SG&A expenses, reflecting restructuring efforts [8] - Free cash flow was negative $126 million in Q1 2024, compared to negative $139 million in the same period last year [8] - The company generated $7 million in gross proceeds through an at-the-market (ATM) equity offering program in Q1 2024 [17] - Revenue for Q2 2024 is expected to be approximately $3.5 million, with forecasted free cash flow in the range of negative $110 million to $120 million [17] - The balance sheet remains strong with $867 million in cash, cash equivalents, and marketable securities [8] Business Line Data and Key Metrics - The company expects to achieve a run rate of $450 million annually within a year after Delta enters service, based on a ticket price of $600,000 per seat and 750 astronauts flown annually with the first two Delta ships [7][13] - The average price per seat for the upcoming Galactic 7 flight is over $800,000, demonstrating pricing leverage [10] - The company has a backlog of over 600 astronauts at lower price points, with some tickets sold at $450,000 [19] - The company plans to fly 125 flights per year, carrying 750 astronauts annually, with the first two Delta ships [7][13] Market Data and Key Metrics - The company expects to begin commercial service with the first two Delta ships in 2026, with a target of 125 flights per year [6][9] - The company is targeting 2028 for the delivery of the first next-gen mothership, which will support the scaling of operations [4][59] - The company plans to expand to additional spaceports globally, with each operational spaceport estimated to generate over $1 billion in annual revenue [85] Company Strategy and Industry Competition - The company is focusing on scaling operations at Spaceport America with a fleet of four to five spaceships, followed by the creation of fully utilized spaceports globally [9][85] - The company is leveraging partnerships with Bell and Carbon for the manufacturing and engineering of Delta spaceships, maintaining design authority [4][5] - The company is prioritizing cash management to bring Delta ships into service, with a focus on achieving positive operating cash flow [14] Management Commentary on Operating Environment and Future Outlook - The company expects to achieve a contribution margin above 75% for each spaceflight, leading to meaningful operating cash flow [84] - The company is confident in its long-term high-growth business model, with plans to scale operations and expand globally [9][85] - The company is managing its capital and spending levels to ensure long-term success, with a focus on delivering the next-gen mothership by 2028 [59] Other Important Information - The company is nearing completion of its final assembly factory in Phoenix, with occupancy expected this summer [15] - The company is developing a targeted maintenance plan and operations schedule for Eve, supporting three space missions per week, a 50% increase over prior estimates [2][71] - The company is using an Iron Bird test asset to verify the operation of Delta subsystems, streamlining flight tests [60] Q&A Session Summary Question: Backlog and Pricing Strategy - The company has a backlog of over 600 astronauts at lower price points, with plans to cycle through the backlog within 12 months after Delta enters service [19] - The company plans to reopen ticket sales in 2025 to maintain a two-year backlog, balancing pricing power and customer planning [22][29] Question: Physical Plant Improvements - The company plans to add a launch hangar at Spaceport America to support operations with additional motherships and spaceships [23][30] - Training facilities will also be expanded as the company increases flight frequency [68] Question: Cash Burn and Capex - The company expects 2024 to be the peak cash burn year, with increased spending on tooling and parts fabrication for Delta [34][45] - Capex is expected to ramp up in the second half of 2024 as the company transitions from R&D to parts fabrication [67] Question: Mothership Program and Boeing Legal Issues - The company is targeting 2028 for the delivery of the first next-gen mothership, with no material impact from ongoing legal issues with Boeing [46][35] - The company is confident in its position regarding intellectual property and work received from Boeing [35] Question: Delta Ship Rollout and Mothership Timing - The first two Delta ships are expected to enter commercial service simultaneously in 2026, with the third Delta ship planned for 2028 to align with the next mothership [64][78] - The company is balancing the arrival of new motherships with additional Delta ships to optimize fleet growth [39]