Virgin Orbit Announces Second Quarter 2022 Financial Results

LONG BEACH, Calif.–()–Virgin Orbit (Nasdaq: VORB) (“Virgin Orbit” or the “Company”), the responsive space flight and services company, today announced its financial results for the second quarter ended June 30, 2022.

Virgin Orbit’s Chief Executive Officer, Dan Hart, commented, “We had another strong quarter of execution, culminating in our latest launch on July 1st. Our ‘Straight Up’ mission, which was our fourth successful launch in 18 months, delivered seven satellites for the DoD. We continue to see strong efficiency gains as we scale production and increase launch rate.”

Mr. Hart continued, “Looking ahead, we have turned our attention to our upcoming launch from spaceport Cornwall, where we are enabling the United Kingdom to have space launch access for the first time. We believe this historic event will showcase our unique capabilities for establishing international spaceports as we continue to build momentum with our space agency and MoD partners around the world.”

Second Quarter 2022 Financial Highlights:

Revenue of $0.0 million, compared to $1.7 million in second quarter 2021. Less than 24 hours later, on July 1, 2022, the first day of the third quarter, over $12 million of revenue was recognized for completion of our fourth consecutive successful launch.

Net loss of ($33.3 million), compared to a net loss of ($44.6 million) in second quarter 2021.

Adjusted EBITDA of ($34.4 million), compared to ($39.7 million) in the same prior year period.

Net cash used from operations of ($50.7 million), compared to ($37.8 million) in the same prior year period, as the Company continues to invest in the business.

Capital expenditures of ($5.3 million), compared to ($6.6 million) in the same prior year period.

Free cash flow of ($55.9 million), compared to ($44.3 million) in the same prior year period, and a 16% improvement from first quarter 2022.

Cash and cash equivalents of $122.1 million as of June 30, 2022.

As of June 30, 2022, total non-binding and binding backlog was $581.9 million of which $163.2 million was binding.

Conference Call Information:

The Company will conduct a conference call starting at 4:30 pm ET on Friday, August 12, 2022 to review the results for the second quarter ended June 30, 2022 and provide a business update.

Participants may access the call at 1-877-407-0792, international callers may use 1-201-689-8263, and request to join the Virgin Orbit earnings call. A live webcast along with supplemental information will also be available at https://investors.virginorbit.com/news-events/ir-calendar.

A telephonic replay will be available shortly after the conclusion of the call and until Friday, August 26, 2022. Participants may access the replay at 1-844-512-2921, and international callers may use 1-412-317-6671 and enter access code 13731912. An archived replay of the call will be available on the investors portion of the Virgin Orbit website at https://investors.virginorbit.com/.

ABOUT VIRGIN ORBIT

Virgin Orbit operates one of the most flexible and responsive space launch systems ever built. Founded by Sir Richard Branson in 2017, the company began commercial service in 2021, and has already delivered commercial, civil, national security, and international satellites into orbit. Virgin Orbit’s LauncherOne rockets are designed and manufactured in Long Beach, California, and are air-launched from a modified 747- 400 carrier aircraft that allows Virgin Orbit to operate from locations all over the world in order to best serve each customer’s needs.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the federal securities laws, including statements regarding the Company’s expectations for certain operational and financial results for the year ending December 31, 2022, expectations as to the rate and timing and success of future launches, expectations as to the anticipated benefits of the Company’s air launch capabilities, and anticipated growth. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to the Company’s ability to access adequate sources of capital and continue as a going concern; its ability to grow market share in the developing space economy; its ability to convert backlog and potential revenue into revenue; its expected timing for and success of future missions; market acceptance of its current and planned products and services and ability to achieve sufficient production volumes and anticipated mission timing, as well as the factors, risks and uncertainties described in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (the “SEC”), as well as in the Company’s subsequent filings with the SEC, including but not limited to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022, accessible on the SEC’s website at www.sec.gov and the Investor Information section of the Company’s website at www.virginorbit.com. These filings identify and address other important risks and uncertainties that could cause the Company’s actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Virgin Orbit assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Virgin Orbit gives no assurance that it will achieve its expectations.

Second Quarter 2022 Financial Results

VIRGIN ORBIT HOLDINGS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except for per share data)

(Unaudited)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

Revenue

$

5

 

 

$

1,693

 

 

$

2,116

 

 

$

7,228

 

Cost of revenue

 

3,427

 

 

 

14,292

 

 

 

20,868

 

 

 

16,673

 

Gross loss

 

(3,422

)

 

 

(12,599

)

 

 

(18,752

)

 

 

(9,445

)

Selling, general and administrative expenses

 

27,845

 

 

 

20,480

 

 

 

60,271

 

 

 

39,963

 

Research and development expenses

 

9,135

 

 

 

11,616

 

 

 

19,938

 

 

 

29,447

 

Operating loss

 

(40,402

)

 

 

(44,695

)

 

 

(98,961

)

 

 

(78,855

)

Other (expense) income :

 

 

 

 

 

 

 

Change in fair value of equity investments

 

(4,635

)

 

 

 

 

 

(8,820

)

 

 

 

Change in fair value of liability classified warrants

 

11,680

 

 

 

 

 

 

11,680

 

 

 

 

Interest expense, net

 

(52

)

 

 

(6

)

 

 

(80

)

 

 

(13

)

Other income

 

121

 

 

 

53

 

 

 

323

 

 

 

1,895

 

Total other (expense) income, net:

 

7,114

 

 

 

47

 

 

 

3,103

 

 

 

1,882

 

Loss before income taxes

 

(33,288

)

 

 

(44,648

)

 

 

(95,858

)

 

 

(76,973

)

Provision for income taxes

 

4

 

 

 

 

 

 

4

 

 

 

 

Net loss

 

(33,292

)

 

 

(44,648

)

 

 

(95,862

)

 

 

(76,973

)

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

(28

)

 

 

13

 

 

 

(89

)

 

 

(20

)

Total comprehensive loss

$

(33,320

)

 

$

(44,635

)

 

$

(95,951

)

 

$

(76,993

)

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

Basic and diluted

$

(0.10

)

 

$

(0.16

)

 

$

(0.29

)

 

$

(0.28

)

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

Basic and diluted

 

334,961,932

 

 

 

284,074,351

 

 

 

334,915,940

 

 

 

278,185,084

 

 

VIRGIN ORBIT HOLDINGS, INC.

Condensed Consolidated Balance Sheets

As of June 30, 2022 and December 31, 2021

(In thousands, except per share data)

 

 

As of

 

June 30,

2022

 

December 31,

2021

 

(Unaudited)

 

 

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

122,072

 

 

$

194,154

 

Restricted cash

 

828

 

 

 

828

 

Accounts receivable, net

 

11,263

 

 

 

2,080

 

Inventory

 

66,529

 

 

 

33,927

 

Prepaid expenses and other current assets

 

15,122

 

 

 

7,789

 

Total current assets

 

215,814

 

 

 

238,778

 

Property, plant and equipment, net

 

65,838

 

 

 

61,425

 

Right-of-use assets

 

12,986

 

 

 

14,685

 

Investments

 

4,678

 

 

 

13,498

 

Other noncurrent assets

 

1,404

 

 

 

3,354

 

Total assets

$

300,720

 

 

$

331,740

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

9,064

 

 

$

10,334

 

Current portion of lease obligation

 

1,348

 

 

 

1,642

 

Current portion of provision for contract losses

 

4,750

 

 

 

 

Accrued liabilities and other current liabilities

 

22,611

 

 

 

23,832

 

Deferred revenue

 

37,329

 

 

 

12,150

 

Total current liabilities

 

75,102

 

 

 

47,958

 

Lease obligation, net of current portion

 

12,595

 

 

 

14,078

 

Deferred revenue, net of current portion

 

20,753

 

 

 

28,991

 

Convertible debt

 

50,000

 

 

 

 

Public and private placement warrant liabilities

 

8,508

 

 

 

20,188

 

Provision for contract losses, net of current portion and other long-term liabilities

 

9,645

 

 

 

7,555

 

Total liabilities

 

176,603

 

 

 

118,770

 

Commitments and contingencies (Note 17)

 

 

 

Stockholders’ equity

 

 

 

Preferred stock, $0.0001 par value, 25,000,000 shares authorized; none issued and outstanding

 

 

 

 

 

Common stock, $0.0001 par value, 2,000,000,000 shares authorized; 335,102,523 and 334,919,914 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.

 

36

 

 

 

34

 

Additional paid-in capital

 

1,040,489

 

 

 

1,033,393

 

Accumulated deficit

 

(916,316

)

 

 

(820,454

)

Accumulated other comprehensive loss

 

(92

)

 

 

(3

)

Total stockholders’ equity

 

124,117

 

 

 

212,970

 

Total liabilities and stockholders’ equity

$

300,720

 

 

$

331,740

 

 

VIRGIN ORBIT HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

For the Three and Six Months Ended June 30, 2022 and 2021

(In thousands)

(Unaudited)

 

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

Cash flows from operating activities

 

 

 

Net loss

$

(95,862

)

 

$

(76,973

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

 

6,567

 

 

 

7,236

 

Stock-based compensation

 

6,446

 

 

 

2,748

 

Inventory write-down

 

1,581

 

 

 

 

Write-off of right-of-use assets

 

70

 

 

 

 

Non-cash investment in Sky and Space

 

 

 

 

(1,706

)

Change in fair value of equity investments

 

8,820

 

 

 

 

Change in fair value of liability classified warrants

 

(11,680

)

 

 

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(9,182

)

 

 

2,225

 

Contract assets

 

(3,067

)

 

 

(2,452

)

Inventory

 

(27,342

)

 

 

(11,342

)

Prepaid expenses and other current assets

 

(4,267

)

 

 

(1,734

)

Deferred transaction costs

 

 

 

 

(90

)

Other noncurrent assets

 

1,953

 

 

 

(43

)

Due to related party, net

 

(8

)

 

 

(83

)

Accounts payable

 

(1,271

)

 

 

4,947

 

Other long-term liabilities

 

(691

)

 

 

(437

)

Accrued liabilities

 

(1,212

)

 

 

(626

)

Deferred revenue

 

16,942

 

 

 

1,107

 

Other, net

 

(112

)

 

 

(20

)

Net cash used in operating activities

 

(112,315

)

 

 

(77,243

)

Cash flows from investing activities:

 

 

 

Purchase of property and equipment

 

(10,257

)

 

 

(11,749

)

Net cash used in investing activities

 

(10,257

)

 

 

(11,749

)

Cash flows from financing activities:

 

 

 

Payments of finance lease obligations

 

(161

)

 

 

(113

)

Proceeds from the exercise of stock options

 

651

 

 

 

778

 

Advances to stock option holders

 

 

 

 

18

 

Parent Company contributions

 

 

 

 

85,939

 

Proceeds from convertible debt

 

50,000

 

 

 

 

Net cash provided by financing activities

 

50,490

 

 

 

86,622

 

Net decrease in cash and cash equivalents and restricted cash

 

(72,082

)

 

 

(2,370

)

Cash and cash equivalents and restricted cash at the beginning of the period

 

194,982

 

 

 

26,786

 

Cash and cash equivalents and restricted cash at the end of the period

$

122,900

 

 

$

24,416

 

 

 

 

 

Cash and cash equivalents

$

122,072

 

 

$

23,588

 

Restricted cash

 

828

 

 

 

828

 

Cash and cash equivalents and restricted cash

$

122,900

 

 

$

24,416

 

 

Virgin Orbit Holdings, Inc.

Use of Non-GAAP Financial Measures

(Unaudited)

Reconciliation of Adjusted (Non-GAAP) Results

This press release references Adjusted EBITDA and free cash flow, financial measures that are not prepared in accordance with generally accepted accounting principles in the United States (GAAP). The Company defines Adjusted EBITDA as earnings before interest expense, taxes, depreciation and amortization, stock-based compensation expense, and certain other items the Company believes are not indicative of its core operating performance. The Company defines free cash flow as net cash used in operating activities less capital expenditures. Non-GAAP financial measures are not a substitute for or superior to measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to any other performance measures derived in accordance with GAAP.

The Company believes that presenting Adjusted EBITDA and free cash flow provides useful supplemental information to investors about the Company in understanding and evaluating its operating results, enhancing the overall understanding of its past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by its management in financial and operational-decision making. However, there are a number of limitations related to the use of Adjusted EBITDA, and free cash flow or any other non-GAAP measures and their nearest GAAP equivalents. For example, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance, and therefore any non-GAAP measures the Company uses may not be directly comparable to similarly titled measures of other companies.

A reconciliation of the Company’s free cash flow guidance to the most directly comparable GAAP financial measure cannot be provided without unreasonable efforts and is not provided herein because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations.

Adjusted EBITDA Reconciliation

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

(In thousands)

Net Loss

 

(33,292

)

 

 

(44,648

)

 

$

(95,862

)

 

$

(76,973

)

 

 

 

 

 

 

 

 

Depreciation and amortization

 

3,219

 

 

$

3,607

 

 

 

6,567

 

 

 

7,236

 

Stock-based compensation

 

2,632

 

 

$

1,327

 

 

 

6,446

 

 

 

2,748

 

Inventory write-down

 

 

 

$

 

 

 

1,581

 

 

 

 

Write-off of ROU assets

 

70

 

 

 

 

 

 

70

 

 

 

 

Non-cash investment in Sky and Space

 

 

 

 

 

 

 

 

 

 

(1,706

)

Change in fair value of equity investments

 

4,635

 

 

 

 

 

 

8,820

 

 

 

 

Change in fair value of liability classified warrants

 

(11,680

)

 

 

 

 

 

(11,680

)

 

 

 

Interest expense, net

 

52

 

 

 

6

 

 

 

80

 

 

 

13

 

Provision for income taxes

 

4

 

 

 

 

 

 

4

 

 

 

 

Adjusted EBITDA

$

(34,360

)

 

$

(39,708

)

 

$

(83,974

)

 

$

(68,682

)

Free Cash Flow Reconciliation

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

(In thousands)

Net cash used in operating activities

$

(50,688

)

 

$

(37,776

)

 

$

(112,315

)

 

$

(77,243

)

Capital expenditures

 

(5,261

)

 

 

(6,561

)

 

 

(10,257

)

 

 

(11,749

)

Free cash flow

$

(55,949

)

 

$

(44,337

)

 

$

(122,572

)

 

$

(88,992

)

 

Contacts

INQUIRIES:

Media, Virgin Orbit:

Alison Patch, Senior Director of Communications

Alison.patch@virginorbit.com

949-616-2504

Investor Relations, Virgin Orbit:

Stephen Zhang, Vice President of Investor Relations

Stephen.Zhang@virginorbit.com

562-384-4400