Virgin Orbit Holdings, Inc.

Greetings and welcome to Virgin Orbit 1Q 2022 earnings conference call. At this time, all participants are in listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. And I'd like to turn the conference over to your host, Stephen Zhang from Investor Relations. Please go ahead, sir.

Good afternoon. I'd like to welcome everyone to Virgin Orbit's first quarter 2022 earnings call. Conducting the call today are Dan Hart, Chief Executive Officer, and Britta O'Rear, Chief Financial Officer. 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 filings with the Securities and Exchange Commission, which are made by Virgin Orbit from time to time. Readers are cautioned not to put any undue reliance on forward-looking statements, and the company specifically disclaims any obligation to update the forward-looking statements that may be discussed during the call. Please also note on today's call, we will refer to certain non-GAAP financial information that we view as important in assessing the performance of our business. You can find reconciliations of the non-GAAP financial measures with the most comparable GAAP measures in our earnings press release and presentation materials that are available on the investor's page of Virgin Orbit's website. With that, I'll turn the call over to Dan.

Thank you, Steve. Good afternoon to everybody on the line, and thank you for joining us for the first quarter 2022 earnings conference call. Today, I would like to begin with our recent accomplishments, followed by a look ahead at our key priorities and business initiatives this year. I'll wrap things up with a brief overview of our differentiated technology and the benefits of air launch technology before I turn the call over to Brita for a closer look at the numbers. To kick things off, let's start with our recent milestone. We started the year with our third consecutive successful mission. This launch carried seven satellites to orbit for the DoD, NASA, and a commercial customer. The rocket was released from the aircraft by Flight Lieutenant Matthew Standard, who is currently seconded to Virgin Orbit from the Royal Air Force, illustrating our growing partnerships with allies. The mission demonstrated the robustness of our air launch technology. Despite heavy clouds that we believe would have violated the launch criteria for a ground launch rocket, our 747 took off and flew through the weather without a problem, as 747s have done routinely for decades. We also achieved an orbit that, to our knowledge, has never been achieved from ground launch in California, demonstrating the ability to access orbits that are otherwise unreachable. On this mission, we were able to integrate and launch a satellite within 22 days of notification after a last-minute request from commercial satellite maker Spire Global. We believe this rapid response capability will be vitally important with commercial and national security customers. On the business development side, we were selected by NASA to be one of the providers for the Vader Venture Class Acquisition of Dedicated Rideshare Program. a program with a total value of $300 million across all providers. In January, we announced a multi-phased agreement with the Sultanate of Oman, which starts with the launch of Oman's first satellite on our Cornwall launch later this year, which is expected to be the first orbital launch ever from Europe. The next phase of the collaboration focuses on a yet-to-be-definitized deep space mission with a launch target as early as Q3 2024. Both missions will directly correspond with the Oman Vision 2040, being part of a broader education outreach initiative with the goal of stimulating long-term growth in the space economy. The same agreement also lays the foundation for collaboration on delivering additional small satellites to low Earth orbit, as well as evaluating the establishment of a dedicated launch capability in Oman. In total, the estimated work with Oman has a potential market value of $50 million, with the possibility of significantly exceeding that if domestic launch and other opportunities are included. In March, in the midst of the Ukrainian crisis, we hosted a visit from the Polish Minister of Economic Development and the President of the Polish Space Agency. During this meeting, we signed an agreement to work towards establishing a sovereign launch from Poland using Launcher 1. Air launch is likely the only viable option for sovereign launch from Poland, as commented by the President of the Polish Space Agency, given that the geography of the area would not allow a ground launch system to operate safely. We estimate that potential market opportunity for initial launch operations, space work development, and planetary missions from Poland could be in excess of $150 million. Growing geopolitical tensions have prompted a number of other government-based agencies to approach us to provide sovereign launch capabilities for their countries and regions for civil, commercial, and national security missions. And we'll talk more about those opportunities on the upcoming slides. Last month, we renamed our U.S. government subsidiary, formerly VoxBase, to Virgin Orbit National Systems. Rebranding highlights our focus and growing presence in the national security space market, in particular, responsive space, which is emerging as a growing military imperative. We also welcomed Craig Kooning and Kim Kreider to the Virgin Orbit National System's Board of Directors. They joined Sue Mashiko to create an experienced, diverse board. Their combination as leaders in both the space industry and the national security space community will provide valuable insight into the critical needs of U.S. national security space and for our allies. Yesterday, we announced an agreement to secure two additional 747 aircraft. Expanding the fleet enhances our mission capabilities as we position ourselves to meet the growing needs of our U.S. national security and allied government customers across our responsive space, missile defense, hypersonic, and spaceport markets. This will also augment our ability to serve a rapidly growing commercial market. The first aircraft is targeted for delivery as early as 2023 and will be modified to Virgin Orbit specifications by L3Harris. Now turning to our priorities this year. Our first mission is to continue to drive flawless launch execution so that we fulfill our commitments to our customers and demonstrate the unique capabilities of our air launch system. In this vein, we kicked off the year by completing our third consecutive successful mission for national security, civil, and commercial customers. We'll continue to deliver launch execution with our next rocket that was recently shipped to the Mojave Air and Space Port for final testing prior to our upcoming mission called Straight Up, which serves the United States Space Force and the DoD's space test program. We look forward to welcoming our spacecraft customers and integrating their payloads in our processing facility. We are targeting our next launch for the end of June. The next mission is planned to be the first orbital launch in history from Europe and is expected to launch from Cornwall, UK in quarter three. This mission will bring a domestic launch capability to the UK, a strategic ally that already has a thriving satellite manufacturing industry. This mission will demonstrate our unique and differentiated space port capability to provide launch services and equipment and enable access to space globally. Following the launch from Cornwall, we are planning additional launches from our Mojave base as we continue to ramp our launch program to meet growing demand from customers across the market segments. Our next priority is to expand our production rate and efficiency. We're making investments across the organization to ramp production to meet the growing demands of our increasing launch cadence in 2022 and beyond. On the aircraft side, we've secured two additional 747s through our agreement mentioned earlier. These assets will enable increased launch frequency and global expansion. We continue to execute on our product development roadmap as we invest in the producibility and performance of our rocket in order to reduce our cost and to expand our capabilities. This includes pursuing engine enhancements, developing third-stage variants, and assessing reusability options. Over the last year, we've upgraded our launch equipment to be more efficient and more mobile, which we believe will be a key enabler in the ability to deliver on our spaceport opportunities. As we drive to expand the backlog, we will be building on the growing momentum for responsive launch from the national security community. Also, in response to the geopolitical climate, we will support allied nations with our spaceport services. Turning to business development, we see near-term opportunities in several areas. Starting with commercial launch, analysts expect the market to grow at a 13% CAGR over the next 10 years. We have active campaigns across the small satellite market, both domestically and internationally. We see similar opportunities in the government launch side, and in particular, responsive launch where we believe we have a distinct advantage over our competitors given our mobile unwarned launch capability. Our ability to launch from anywhere at any time to any orbit with rapid call-up we believe is an enduring advantage which we are actively pursuing. Congress recognizes the need for responsive launch and has recently approved a dedicated $50 million budget line to support tactically responsive space as part of the 2022 budget. Several countries have engaged us in in-depth discussions to provide launch capability from their sovereign territory. Our differentiated ability to transform airports into spaceports uniquely addresses our customers' desires for sovereign launch while capitalizing on existing infrastructure and simplifying regulatory requirements. For some of these countries, our technology is the only option available to enable launch safely from their borders. Revenue streams from spaceports would include an upfront equipment sale for materials such as ground support equipment and a potential aircraft, followed by ongoing launch support services. Other revenue opportunities include O&M and licensing fees. We continue to see a growing demand for small satellite launch and services in our other business segments. We're currently tracking over $4 billion in identified opportunities with customers, of which we are actively pursuing over $1.5 billion worth of business. In addition, through the end of Q1 2022, we've accumulated a binding and non-binding backlog of over half a billion dollars, of which 157 million is comprised of binding contracts. We are actively working to convert the non-binding backlog to definitive agreements. In the emerging spaceport market, We have seen a natural progression starting with senior-level discussions leading to funded studies, the output of which will provide the requisite information to provide definitive agreements. Before Brita dives into the numbers, let me summarize how starting space launch with an aircraft provides several distinctive advantages. The first advantage comes from the form of economics. By the time our rocket begins its portion of the flight, it has already achieved a high velocity and traveled above two-thirds of the Earth's atmosphere. Given that head start, the rocket design can be simplified, which increases reliability and efficiency, and as such, reduces cost. These simplifications are most pronounced in our propulsion system and our flight termination system. From a recurring launch operations perspective, Unlike land launch, which requires refurbishment after each launch, as soon as our 747 land is ready to be refueled and restart pre-launch operations for the next flight. Through our first four missions, Launcher One has yet to scrub a launch, which we believe is a testament to our system's flexibility and resilience. As we have shown in flight, our carrier aircraft is capable of operating in a wide variety of weather conditions, adding robustness to our system while having little reliance on expensive and complex range infrastructure. Our two major competitors, who use a traditional ground launch approach, have scrubbed launches multiple times due to weather, range issues, and launch tracking and flight termination systems, considerations which are significantly mitigated by our air launch system. With our technology, almost any 747 compatible airport could become a spaceport, giving our customers a unique level of global access to space. And finally, air launch also gives us the important resilience and responsiveness capability that can serve the national security community, including the ability to start rocket flight from almost any location on Earth. This allows our national security customers to create an element of unpredictability around their launches, giving them a tactical advantage. Existing land launch systems are constantly monitored, and even if transported to another location, will quickly be identified and understood by our adversaries. We believe that Virgin Orbit is well positioned for future growth as the space economy continues to develop rapidly across commercial, national security, and international spaceports. Now I will turn the call over to Brita, who will take you through the numbers. Brita?