Virgin Galactic Holdings, Inc.

Good afternoon. My name is Desiree and I will be your conference operator today. At this time, I would like to welcome everyone to Virgin Galactic's first quarter 2026 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 withdraw your question, press star key. Thank you. I will now turn the call over to Eric Cerny, Vice President of Investor Relations.

Thank you. Good afternoon, everyone. Welcome to Virgin Galactic's first quarter 2026 earnings conference call. On the call with me today are Michael Colglaser, 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 two 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. Your caution 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 our earnings release for a reconciliation of these non-GAAP financial metrics. I would now like to turn the call over to our CEO, Michael Colglazier, who will begin on page three of our presentation.

Thanks, Eric, and good afternoon, everyone. It's been a quick month and a half since our last earnings call, and I'm happy to share we've been advancing the many efforts across the company in line with our plans and prior guidance. We delivered the first of our new spaceships from our assembly hangar to our test and launch hangar. Ground testing of that spaceship is underway. and we remain on track to commence flight testing in Q3 and spaceflight in Q4. With commercial spaceflight operations continuing to draw closer on the horizon, we've accelerated efforts across the company to prepare for the ramp of activity. We're hiring our next group of world-class spaceship pilots as we prepare for flight tests and ongoing spaceflight operations. We've provided our roughly 650 founding astronauts who make up roughly a year's worth of advanced bookings with expected flight windows in 2027 and early 2028. We've received excellent reception and early booking response to the newly priced spaceflight expeditions we released to the market in April. And we've begun construction of our rocket motor assembly line in Phoenix, which is expected to be operational in Q4. In addition, we've also managed the financial strength of the company. Spending continues to decline quarter by quarter, debt retirements are being made on or ahead of schedule, and cash balances are being maintained at appropriate levels as we work through the final quarters of our pre-revenue phase. Our agenda today will be relatively light, reflecting both the short-term, since our Q4 earnings call, and the consistency of progress against our prior statements and objectives. Turning to page four. Since our last call we finished the major structural task with our first spaceship we were all pleased to reach the weight on wheels milestone in April, as we move the ship from our assembly hangar to our test and launch hangar which is co located on the grounds of our phoenix campus outstanding work by our entire team. structural assembly continues to progress as planned for both our static test article and our second spaceship. and the images on page five showcase some of the larger parts of our static test article coming together. As you saw during the build of our first spaceship, the final assembly process moved quite rapidly. This rapid assembly process continues with the static test article, which, as a reminder, is built for extensive use in our testing program, but which will not be flying. Our second operational spaceship will follow the static test article, and this ship has begun fabrication. We will again leverage the same rapid assembly process for the second spaceship, and we expect the second ship will enter service between late Q4 2026 and early Q1 2027. This timing keeps us on track with our plans to substantially increase the number of space flights per month during the first two quarters of 2027. Turning to page six, to talk about our ground test efforts. At a technical level, our ground test approach is comprehensive and takes advantage of industry best practices, with testing progressing in parallel across multiple locations. We've made purposeful changes in our approach to ground testing versus the process that was used with our original spaceship, Unity, and the upfront investments we made in this area are now paying off. We purposely invested in off-ship testing infrastructure to significantly increase the number of systems tests that can be accomplished prior to and during the final spaceship assembly. Our safety and test center in Irvine, California, has been running parts of our ground test campaign for many months. The image on this page showcases our Ironbird test platform, one of the many off-ship infrastructure investments we've made. These investments have enabled us to complete large amounts of the ground test program in dedicated facilities with purpose-built test rigs and equipment. This parallel off-ship testing activity reduces expected time spans for the on-ship ground test elements, with much of the on-ship testing focused on verification of systems installations rather than first-time checkouts of hardware. At a practical level, this means we can now advance our new spaceships from structural assembly through on-chip ground testing and end-of-flight test in much less time than what was required with our Unity spaceship, while having a more robust ground test program overall. Moving to page 7, I hope you've all seen our recently released episode of We Build Spaceships, which provides a great overview of our ground testing efforts. The link to the video is on this page. And I'll summarize by highlighting the various facilities where this important work is taking place. First, at our Safety and Test Center in Irvine, we continue to conduct key qualification tests of our hardware. Qualification testing puts the hardware components through the paces of the conditions they see in flight, including temperature and vibration, as well as extreme conditions they could be subject to. This past quarter, we completed dozens of component qualifications, including our central computer. This computer is the heart of the digital flight control system, which translates pilot inputs into commands to move the flight control surfaces at the back of the spaceship. We are also testing systems on our Ironbird, a test platform that allows full system level testing of how hardware responds in flight. Second, at the Southwest Research Institute in San Antonio, Texas. We've completed testing of our flight control surfaces under loaded flight conditions, and we're now preparing to structurally test our wing, fuselage, and feather sub-assemblies. These tests are part of our overall structural testing effort, which is conducted to verify that our as-built configurations meet or exceed the design standards we have set out to achieve. These tests also allow detailed correlation of the various analytical models that we use to predict behaviors in flight test and commercial service. Third, our team continues to qualify various software and avionics systems at our engineering headquarters in Orange County, California, and at vendor facilities across the country. Software plays a vital role in our spaceship, especially in our new flight control architecture, and we are using industry best practices to ensure our code is ready and safe. And fourth, in the test and launch hangar in Phoenix, our team is now completing installation of many electrical and mechanical systems that are embedded inside the ship, while also conducting a range of on-ship production acceptance tests on systems that have been put in place, verifying the quality of each system as it's installed. In June, the team will begin integrated vehicle ground testing, which is used to check out complete end-to-end performance of the spaceship. Turning to page eight, I'd like to talk briefly about our flight test program. When our ground tests in Phoenix are complete, we'll carry the new spaceship to Spaceport America using our launch vehicle, EVE. Once we are in New Mexico, we will start the glide flight phase of testing. This will be akin to the glide testing we did with our Unity ship. However, the duration will be substantially shorter given the faster turn times of our new Delta-class vehicles. We continue to expect the flight test phase to commence with glide test in Q3, progressing to rocket-powered flights in Q4. As I mentioned on our last call, one of the many ways we are preparing for the first flight test of our new spaceship is by bringing our prototype spaceship, Unity, back for an encore performance. Unity's glide characteristics and energy management profile provide an outstanding real-world proxy which, in addition to extensive simulator training, we'll prepare our pilots to put our new spaceships through the required flight test points. This image from earlier this week shows Unity in its preflight configuration with our launch vehicle, Eve. We're expecting Unity to be back in the skies later this month for the first of several glide flights above Spaceport America. Moving to page nine. Our key schedule milestone dates remain consistent with the expectations we shared during our last earnings call, which is great news. As those who track the aerospace industry know, keeping forward momentum in line with expectations is notoriously challenging with these complex programs. And our ability to maintain consistent progress against our schedule is due to the massive effort, ingenuity, and nimble adaptations from our Virgin Galactic team. Great job to all of you at VG who are listening in. Page 10 highlights some of our preparations for commercial spaceflight operations. Talent is key to our business, and most of our hiring needed for commercial spaceflight operations will come in the third and fourth quarters as we continue to manage our costs prudently. A few key roles will be needed earlier, including the expansion of our truly world-class pilot core. The licensing process for our new spaceships is well underway, and we are working closely with the FAA to ensure all elements are submitted according to plan and the licensing process moves ahead accordingly. We anticipate the various elements associated with the new Part 450 licensing regime will continue throughout the year, and we expect to receive our license prior to our first powered flight in Q4. We have approximately 650 founding astronauts booked for Virgin Galactic spaceflight expeditions. They are an amazing group of people, and collectively, they represent around a year of advanced bookings for the business. which is a tremendous asset as we begin operations. With clarity on flight windows growing substantially as we near the start of commercial spaceflight operations, we have given each of our founding astronauts a rough expectation of their flight window via a newly introduced astronaut portal. We expect the majority of our founding astronauts will complete their spaceflight expedition during 2027, with the remainder flying to space in the first half of 2028. We recently opened a limited number of bookings for Virgin Galactic spaceflight expeditions, each priced at $750,000 with flight dates expected in mid-2028. The response has been strong and global in nature, and we've received qualified inquiries from customers across more than 20 countries. We're now actively progressing through the booking process with individuals, research organizations, and government agencies. As a reminder, Booking a spaceflight expedition is a deliberate process that typically unfolds across several months as customers move from initial engagement to in-depth conversations, continuing through a detailed review of terms and conditions, and ultimately to the booking of their expedition. This process is consistent with other high consideration, high value experiences. With that said, many of the conversations we are having are moving to the contracting phase more quickly than we would typically expect, and we are very encouraged by the PACE receipt. We've secured deposits for a meaningful portion of the available seats at this price point, and I expect we will close this limited tranche of spaceflight expeditions at the $750,000 price during our glide flight program in Q3. As we shared previously, Once this tranche is allocated, we will pause new bookings and begin onboarding this next cohort of astronauts. Following that, we plan to open a subsequent tranche, likely at a higher price point. And finally, before I hand the call over to Doug, I am happy to share that construction has begun on our new rocket motor assembly line located adjacent to our spaceship assembly hangars at our Phoenix campus. We have a substantial number of motors already in inventory that will carry us through flight test and into the start of commercial spaceflight operations. But we plan to ensure a steady, ongoing supply to support our growing spaceflight cadence. In this regard, we plan to have the new rocket motor assembly line operational in Q4. This timing aligns with the completion of our second spaceship, allowing us to shift our talented team in Phoenix from spaceship assembly to rocket motor assembly without missing a beat. Doug, let me pass the call over to you for the financial update.