Virgin Galactic Holdings, Inc. (NYSE:SPCE) reported its second-quarter financial results after the closing bell on Wednesday.
Below are the transcripts from the Q2 earnings call.
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OPERATOR
Ladies and gentlemen, thank you for standing by. My name is Desiree and I will be your conference operator today. At this time I would like to welcome everyone to the Virgin Galactic Hldgs’ second quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to ask a question again, press star one. I would now like to turn the conference over to Eric Cerny of Investor Relations. You may begin.
Eric Cerny (Investor Relations)
Thank you. Good afternoon everyone. Welcome to Virgin Galactic Hldgs’ second quarter 2025 earnings conference call. On the call with me today are Michael Colglazier, Chief Executive Officer and Doug Ahrens, Chief Financial Officer. Following our prepared remarks, we will open the call for questions. Our press release and slide presentation that will accompany today’s remarks are available on our Investor Relations website. Please see Slide 2 of the presentation for our safe harbor disclaimer. During today’s call we may make certain forward looking statements. These statements are based on current expectations and assumptions and as a result are subject to risks and uncertainties. Many factors could cause actual events to differ materially from the forward looking statements made on this call. For more information about these risks and uncertainties, please refer to the risk factors in the company’s SEC filings made from time to time. You are cautioned not to put undue reliance on forward looking statements and the Company specifically disclaims any obligation to update the forward looking statements that may be discussed during this call, whether as a result of new information, future events or otherwise. Please also note that we will refer to certain non GAAP financial information on today’s call, please refer to the earnings release for a reconciliation of these non GAAP financial metrics. Turning to our agenda for today’s call on Page 3. Today’s call will include an overview of the business, an update on progress in developing our next generation spaceships and a financial update. I’ll now turn the call over to our CEO Michael Colglazier.
Michael Colglazier (Chief Executive Officer)
Thanks Eric and hello everyone. It’s been a busy quarter with our entire company focused on producing our next generation human spaceflight vehicles. Our internal teams and our partners have made significant advancements across all parts of. The program and I’m exceptionally proud of. The team for their diligence in delivering quality and nimble problem solving as they. Advance the work while handling the complexities. Of a large scale aerospace program. I hope you’ve all been following our. We Build Spaceships series on our social channels. Each episode takes the viewer into our production process with a somewhat documentary style approach with the intention of showcasing the. Many layers of technical development that go. Into our spaceships while also introducing you to some of the amazing people who are dedicating their skills to open access to human spaceflight. We’ve been dropping new episodes on two to three week intervals and this is a great way to follow along with our progress. We continue to track for launch of our commercial spaceflight business in 2026. With both research and private astronaut flights expected to commence in the fall next year, most parts of our spaceship program are tracking as expected and are within the scheduled time contingencies we have planned for each phase. Our fuselage schedule has slipped a bit and that’s why you are seeing us adjust planned timing of our first research spaceflight into the fall of 26 versus the summer. We still expect private astronaut flights to begin later that fall. As we continue to advance our spaceship program and move forward with our strategic plan, we are managing the business prudently while keeping strength in our balance sheet with over half a billion dollars in cash, cash equivalents, and marketable securities. As expected, we continue to reduce our quarterly cash spending and we’ve been able to reduce operating expenses and redirect resources as part of our disciplined approach. I’ll kick things off with updates from our spaceship program and then I’ll touch on our launch vehicle program before handing the call over to Doug for a financial overview. Turning to Slide 4. As I said, we continue tracking our first commercial space flights for the fall of 2026. To accomplish this, we’re in constant forward motion with parts fabrication and assembly at our supplier facilities and within our spaceship factory in Phoenix, Arizona. I’m excited to say that our Phoenix Factory now has 100% of the program’s assembly tooling on the floor. Much of this day to day progress is being documented and shared in our new series We Build Spaceships and we also provide highlights on a quarterly basis with our Galactic 10 videos, the latest of which was released earlier today. I encourage all of our customers, investors and fans to watch these videos as they offer a deeper look into our spaceship production process. Slide 5 is a reminder that our spaceship production process has several key components and the next few slides will highlight progress in each of these areas. On slide 6, I’ll start with our rocket systems. Our hybrid rocket motor’s power comes from the oxidizer combining with solid fuel to create combustion. The image on the left is our completed oxidizer tank that will be going into our first spaceship. Having finished production and testing, this tank is now on the shop floor to be fit with a carbon fiber shell that will enable it to be cleanly installed between the forward and aft fuselage sections. The image on the right is of our propulsion systems relief valve. This is a small but critical component that ensures the safety of the propulsion system’s oxidizer tank. This part has recently been qualified for flight, which means we’ve demonstrated through testing, documentation and regulated processes that the manufactured part meets all design, safety and regulatory requirements for its intended use in our spaceship system. This approach is replicated across hundreds of examples and reflects our diligent focus on quality and safety. On slide seven is one of these examples, this one involving our flight controls. Our engineers have expanded our test bench and system qualification efforts, and they are now testing signals from the pilot’s sidestick that are sent to the spaceship central computer where our software then relays the commands to an actuator that drives the horizontal stabilizer. This is an example of the end to end testing we use to prove out the sophistication of our flight control Software. On slide 8, our mechanical systems work is coming together nicely and testing is underway at our safety and test facility in Irvine, California. Recently, the nose landing gear was delivered to this facility to start its testing process. We are also testing our pneumatic system, including the wing leading edge bottles which mount behind the front edge of our wings. These bottles hold compressed air that provides breathable air for the cabin, maneuvers the vehicle in space, and drives our landing gear and feather actuators. These and dozens of other mechanical systems will be tested thoroughly at the center in parallel with the assembly of our first spaceship, which helps us move with confidence into the ground and flight testing phases of the program. On slides 9 through 12, you’ll see examples of the many composite parts that are being built, shipped and assembled. Over the past few months. We’ve seen a great deal of progress with composite parts making their way through the fabrication process and into the factory. Slide 9 shows the bulkheads fabricated for the cabin within the fuselage of the new vehicle, including the forward and aft bulkheads. The forward bulkhead was the first to arrive at our spaceship factory and the aft bulkhead arrived this week. On this slide, you can see the full fabrication process from the bulkhead sitting in its fabrication tool to non destructive inspection to assembly in Phoenix. Slide 10 shows progress with our feather boom skins, which are the external surfaces of our spaceship’s tail. The feather Boom is our largest sub assembly and all four boom skins are in various stages of fabrication. These are significant parts that are designed and built by our partner Bell Aerospace, and these are big steps forward. Slide 11 shows the wing skins which are also making great progress. The image on the left shows the lower wing skins which are already in the spaceship factory working through sub assembly. The image on the right shows our upper wing skins at our partner Carbon Aerospaces facility. Inspections have been completed on one of the upper skins and it will ship to Phoenix soon and the other upper skin has been trimmed and will go into inspection shortly. While we’re talking about the wing on slide 12, you can see the leading edge shear webs which make up the forward structure of the wing. These parts have been received and are in place in the wing up assembly tool at the factory. You will also see the aft spar has moved into the wing up tool and this is a great step. During last quarter’s call, I mentioned we had a delay in the fabrication of this part and we plan to manage it without impacting the critical path of the overall project. Since then, our engineers redesigned the part, we reworked the manufacturing work instructions with our partners at Carbon and then built, inspected and shipped the new part. Now that part is delivered and in the wing assembly tool and the team is able to move the wing assembly forward. Another example of how we are resolving the inevitable challenges in a project of this scale involves a deficiency in the first article of our fuselage skin which I mentioned in the opening. While each part is different, the process of resolving this fuselage part is very similar to what we just did. In resolving the wing spar, we first do inspections and imaging of the part to assess the root cause of the manufacturing challenge. That root cause analysis highlights whether we need to make a design adjustment, a material adjustment, a layup or curing process adjustment, or a combination of the above. It’s a pretty typical process and one that our team of internal and production partner experts are used to tackling. While we continue to carry schedule contingency for the remaining phases of our spaceship program, we expect the fuselage scan will have a modest impact on the timeline for completing assembly of our first spaceship. This is why we’ve adjusted the expected timing of our first spaceflight to the fall of 26, with private astronaut flights still expected to commence later in the fall of 26. So what should you expect to see as we continue to move forward on our timeline for spaceflight? On the first half of Q4, you should expect to see the completed wing assembly. The second half of Q4, you should expect to see the feather assembly complete. The fuselage will probably bring up the rear in December or January. We plan to start our glide flight test program next summer. We expect this will be the most time intensive part of the flight test program. We expect to celebrate our first spaceflight and the commencement of commercial operations in the fall of 2026 with private astronaut Journeys to Space. Also in the fall of 2026, we’ll be sharing insights into all stages of our spaceship program development progress through our We Build Spaceship series. Our next episode will drop later this month and we expect to continue releasing new episodes on a cadence of every two to three weeks throughout the year to showcase our progress and keep our customers, investors and fans well informed. Moving to slide 13. Before handing the call over to Doug, just a brief note on the development of our next generation launch vehicle, which is an important aspect of our long term growth strategy. We made great progress on our spaceship program and we are now able to direct more of our engineering talent towards the design of our next spaceship launch vehicle. Of course, the vast majority of our engineering and technical operations teams remain laser focused on delivery of our first two spaceships. As that …