Q1 2024 Virgin Galactic Holdings Inc Earnings Call

Operator: Good afternoon, my name is Tania, and I will be your conference operator today. At this time, I would like to welcome everyone to Virgin Galactic's first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Good afternoon My name is Jake.

I will be your conference operator today at this time I would like to welcome everyone to Virgin Galactic <unk> first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session and if you'd like to ask a question. During this time. Please press star followed by the <unk>.

Operator: Number one on your telephone keypad.

Speaker Change: If you would like to withdraw your question simply press Star one again.

Operator: After the speaker's remarks, there will be a question and answer session. And if you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. I will now turn the call over to Eric Cerny, Vice President of Investor Relations. Please go ahead.

Operator: I will now turn the call over to Eric Cerny, Vice President of Investor Relations. Please go ahead.

Eric Cerny: Thank you. Good afternoon, everyone. Welcome to Virgin Galactic's first quarter 2024 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.

Eric Cerny: Good afternoon, everyone welcome to Virgin Galactic <unk> first quarter 2024 earnings conference call on the call with me today are Michael Cole Glazer, Chief Executive Officer, and Doug Aron Chief Financial Officer. Following our prepared remarks, we will open the call for questions.

Eric Cerny: Press release, and slide presentation that will accompany today's remarks are available on our Investor Relations website.

Eric Cerny: 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.

Eric Cerny: These statements are based on current expectations and assumptions and, as a result, are subject to risks and uncertainty. 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.

Eric Cerny: Many factors could cause actual events to differ materially from the forward looking statements made on this call.

Eric Cerny: 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.

Eric Cerny: 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. With that, I'd like to now turn the call over to Michael.

Eric Cerny: 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.

Eric Cerny: 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 with that I'd like to now turn the call over to Michael.

Michael A. Colglazier: Thanks, Eric, and good afternoon, everyone. On slide three, you'll see the agenda for today. I'll share several updates about our commercial space line and the progress we're making toward our long-term business objectives. On the immediate horizon is our next spaceflight, Galactic 7, scheduled for June 8. Galactic 7 will be our last commercial flight with VSS Unity, and this will mark an important turning point for Virgin Galactic.

Michael: Thanks, Eric and good afternoon, everyone.

Michael A. Colglazier: On slide three you'll see the agenda for today I will share several updates about our commercial space line and the progress, we're making toward our long term business objectives.

Michael A. Colglazier: On the immediate horizon is our next space flight Galactic seven scheduled for June eight.

Michael A. Colglazier: Seven will be our last commercial flight with VSS unity and this will mark an important turning point for Virgin Galactic and the spaceflight will be a celebratory moments as we reflect on the many successes of our past finding first commercial space yet.

Michael A. Colglazier: The spaceflight will be a celebratory moment as we reflect on the many successes of our pathfinding first commercial spaceship. The learnings we have built over our last seven spaceflights have enormously benefited our spaceship design. In addition, we have also learned a great deal about the performance of our mothership, VMS Eve, which has been an incredible asset for the company following the ship's major enhancement program that was completed in 2023. One of the many benefits of using a specialized airplane for our first stage of spaceflight is the frequency of flight operations that can be achieved with an aircraft versus a liquid rocket booster.

Michael A. Colglazier: The learnings we have built over our last seven space slides have enormously benefited our spaceship designs.

Michael A. Colglazier: In addition, we have also learned a great deal about the performance of our mother ship Vms Eve, which has been an incredible asset for the company. Following the ships major enhancement program that was completed in 2023.

Michael A. Colglazier: One of the many benefits of using a specialized airplane for our first stages spaceflight is the frequency of flight operations that can be achieved with an aircraft versus a liquid rocket booster.

Michael A. Colglazier: Using flight and engineering data from EAVS service history, our technical operation teams are developing a targeted maintenance plan and operations schedule for EAVS, and I'm pleased to share that we now expect VMS EAVS to support three space missions per week, a 50 percent increase over prior base case estimation. This is fantastic news.

Michael A. Colglazier: Using flight and engineering data from each service history, our technical operation teams are developing a targeted maintenance plan and operation scheduled for Eve.

Michael A. Colglazier: And I am pleased to share that we now expect Vms Eve to support three space missions per week, a 50% increase over prior base case estimation. This.

Michael A. Colglazier: This is fantastic news.

Michael A. Colglazier: We expect Eve and our first two Delta ships will be able to carry approximately 125 astronauts to space each year. To put that in perspective, Eve and the first two Delta ships will bring more people to space in a single year than the total number of astronauts who have ever journeyed to space to date. Economically, that equates to roughly $450 million in annualized revenue within the first 12 months following its entry into commercial service.

Michael A. Colglazier: We expect <unk> and our first two delta shifts will be able to execute approximately 125 space flight carrying $750. So astronauts space each year.

Michael A. Colglazier: To put that in perspective <unk> in the first two delta ships will bring more people to space in a single year and the total number of astronauts who have ever journey to space to date.

Michael A. Colglazier: Economically that equates to roughly $450 million in annualized revenue within the first 12 months following entry into commercial service.

Michael A. Colglazier: Of course, those numbers are expected to grow substantially as we scale our operations by adding new ships and expanding across multiple spaceships. During today's call, I'll ask Doug Ahrens, our Chief Financial Officer, to shed more light on our financial operating model, giving you a sense of what our economics are estimated to look like with the initial rollout of our first two delta shifts and in the years to follow. With that said, let's get started on slide four.

Michael A. Colglazier: Of course, those numbers are expected to grow substantially as we scale, our operations by adding new ships and expand across multiple space ports.

Michael A. Colglazier: During today's call I'll ask Doug Aron, our Chief financial Officer to shed more light on our financial operating model, giving you a sense of what our economics are estimated to look like with the initial rollout of our first two delta shifts and in the years to follow.

Douglas T. Ahrens: With that let's get started on slide four.

Michael A. Colglazier: At Virgin Galactic, nothing is more exciting than seeing a spaceflight in action and witnessing the incredible impact that the journey to space has on our astronauts and their families. On June 8th, we will again watch Unity soar above the planet from Spaceport America. This time, with a blended manifest of research and private astronomers, this will be our seventh commercial flight and our twelfth spaceflight overall. A research astronaut on board will conduct several human-tended experiments.

Michael A. Colglazier: At Virgin Galactic nothing is more exciting than seen a spaceflight inaction and witnessing the incredible impact that the journey to space has on our astronauts to their families.

Michael A. Colglazier: On June eight we will again watch the entity soar above the planet for the Spaceport America. This time with a blended manifest of research and private astronauts.

Michael A. Colglazier: This will be our seventh commercial flight in our 12 spaceflight overall.

Michael A. Colglazier: Our research astronaut onboard will conduct several human tended to experiment and we will also have several autonomous rack mounted payloads onboard in connection with Nasa's flight opportunities program and academic institutions.

Michael A. Colglazier: And we will also have several autonomous rack-mounted payloads on board in connection with NASA's Flight Opportunities Program and academic institutions. Three private astronauts will also join this flight, two from the U.S. and one from Italy. Given the combined nature of this particular manifest, Galactic 7 is expected to realize an average per-seat price of over $800,000, the highest of our commercial flights flown to date.

Michael A. Colglazier: Three private astronauts will also join this flight to from the U S and one from Italy.

Michael A. Colglazier: Given the blended nature of this particular manifest galactic <unk> is expected to realize an average per seat price of over $800000. The highest of our commercial flights flown to date.

Michael A. Colglazier: The value of our spaceflights for our customers is enormous, and we are seeing ongoing strength in our pricing, which we expect will continue as we introduce the Delta ships and grow the business. When we see Unity fly next month, it will be a very exciting and proud moment. Unity has helped to revolutionize commercial human spaceflight, and it has served Virgin Galactic incredibly well, demonstrating the safety and repeatability of our spaceflight system while informing the design of our next generation ships.

Michael A. Colglazier: The value of our space flights for our customers is enormous and we are seeing ongoing strength in our pricing, which we expect will continue as we introduce the delta shifts and grow the business.

Michael A. Colglazier: When we see unity fly next month, it will be a very exciting and proud moment.

Michael A. Colglazier: <unk> has helped to revolutionize commercial human spaceflight and has served Virgin galactic incredibly well demonstrating the safety repeatability of our space flight system, while informing the design of our next generation chips.

Michael A. Colglazier: Unity will continue to play a role in training, and the ship will reside at Spaceport America to commemorate its historic role in commercial space travel. As you know, Unity reached the point where it was turning monthly, completing six spaceflights in six months last year, a significant accomplishment for our Pathfinder Spaceship. At the same time, we have always known that VMS-E, a specialized airplane, is able to turn much faster. One of the great advantages of our space flight system is this combination of carrier airplane and mated space shuttle.

Michael A. Colglazier: Unity will continue to play a role in training and the ship will reside at Spaceport America to commemorate his historic role in commercial space travel.

Michael A. Colglazier: As you know unity reached the point, where it was turning monthly completing six space flights in six months last year.

Michael A. Colglazier: A significant accomplishment for our Pathfinder spaceship.

Michael A. Colglazier: At the same time, we have always known that Vms E. A specialized airplane is able to turn much faster.

Michael A. Colglazier: One of the great advantages of our spaceflight system is this combination of carrier airplane and made spaceship.

Michael A. Colglazier: In addition to providing the benefit of a runway takeoff and landing, the mothership design enables the efficient turnaround capabilities of an aircraft. As we put our mothership through the paces with regular flights and inspections, Eve has performed brilliantly.

Michael A. Colglazier: In addition to providing the benefit of a runway takeoff and landing the mother ship design enables the efficient turnaround capabilities of an aircraft.

Michael A. Colglazier: As we've put our mother ship through the paces with regular flights and inspections. He has performed brilliantly.

Michael A. Colglazier: As I mentioned at the opening, our technical operations team, using flight and engineering data from Eaves' service history, is developing a targeted maintenance plan and operations schedule that supports three space missions per week, a 50% increase over our prior base case estimation. The third flight per week will prove highly beneficial to our business model when we resume commercial service. With the launch of just our first two Delta ships, we expect to operate a robust and meaningful business with positive operating cash flow.

Michael A. Colglazier: As I mentioned at the opening our technical operations team using flight and engineering data from East service history are developing a targeted maintenance plan and operations schedule that supports three space submissions per week or 50% increase over our prior base case estimations.

Michael A. Colglazier: The third flight per week will prove highly beneficial to our business model when we resumed commercial service.

Michael A. Colglazier: With the launch of just our first two delta ships, we expect to operate a robust and meaningful business with positive operating cash flow.

Michael A. Colglazier: This is why we have prioritized the cash we already have on hand to bring these ships into service. On a related note, EVE's impressive flight capacity will also serve us well with our Next Generation Mothership Program.

Michael A. Colglazier: This is why we have prioritized the cash we already have on hand to bring these shifts into service.

Michael A. Colglazier: On a related note.

Michael A. Colglazier: <unk> impressive flight capacity will also serve us well with our next generation Mothership program as.

Michael A. Colglazier: As we stated last year, we re-sequenced the Next Mothership program to better manage our capital and spending levels in the near term, and we are continuing to exercise that optionality. We've been pleased with our development approach to our Delta spaceships, where Virgin Galactic maintains design authority and leverages the manufacturing and engineering expertise of a few key industry partners. We expect to follow a similar approach with our next mothership program, and we will be shifting our engineering talent toward our next mothership design following the conclusion this summer of the bulk of our Delta spaceship design.

Michael A. Colglazier: As we stated last year, we re sequenced. The next mother ship program to better manage our capital and spending levels in the near term and we are continuing to exercise that optionality.

Michael A. Colglazier: We've been pleased with our development approach to our Delta space ships, where Virgin Galactic maintains design authority and Leverages, the manufacturing and engineering expertise with key industry partners we.

Michael A. Colglazier: We expect to follow a similar approach with our next mothership program and we will be shifting our engineering talent towards our next mother ship design. Following the conclusion. This summer of the bulk of our Delta space ship design.

Michael A. Colglazier: As we balance our desire for rapid growth with our spending pace ahead of meaningful revenue, we will target 2028 for delivery of the first of our next-gen motherships. This timing enables us to manage our existing capital confidently, which in turn sets us up for long-term success.

Michael A. Colglazier: As we balance our desire for rapid growth with our spending pace ahead of meaningful revenue, we will target 2028 for delivery of the first of our Nextgen mother ships.

Michael A. Colglazier: This timing enables us to manage our existing capital constantly which in turn sets us up for long term success.

Michael A. Colglazier: Importantly, our growth strategy remains the same: scale our commercial space travel business first by adding ships to our fleet in New Mexico and then expanding to additional spaceports in excellent locations around the globe. Turning to slide five, let's talk about progress and tangible milestones we're hitting within our Delta program. As you can see in the chart on slide five, there are multiple phases to our Delta program, beginning with design, then moving to tooling, parts fabrication, subassemblies, final assemblies, and then on to flight test and commercial service. While sequential, these phases have purposeful overlap throughout the development process.

Michael A. Colglazier: Importantly, our growth strategy remains the same to scale, our commercial space travel business first by adding shifts to our fleet in new Mexico, and then expanding to additional space ports and excellent locations around the globe.

Michael A. Colglazier: Turning to slide five let's talk about progress and tangible milestones, we're hitting within our Delta program.

Michael A. Colglazier: As you can see in the chart on slide five there are multiple phases to our Delta program beginning with design then moving to tooling parts fabrication sub assemblies final Assembly and then on to flight test in commercial service.

Michael A. Colglazier: While sequential these phases have purposeful overlap throughout the development process.

Michael A. Colglazier: Currently, we are working through the latter part of our design phase, which we expect to wrap up this summer. Along the way, as designs of individual parts are completed, we have been releasing those designs to begin developing the tools that will be used in the parts fabrication process. Similarly, as those initial tools are completed and delivered, our partners at Bell and Carbon are able to start fabricating parts, and they are beginning to accumulate the components that will be necessary for their respective subsystems.

Michael A. Colglazier: Currently we are working through the latter part of our design phase, which we expect to wrap up this summer.

Michael A. Colglazier: Along the way as designs of individual parts are completed we have been releasing those designs to begin development of the tools that will be used in the parts fabrication process.

Michael A. Colglazier: Similarly, as those initial tools are completed and delivered our partners of Bell and carbon are able to start fabricating parts and they are beginning to accumulate the components that will be necessary for their respective sub assemblies.

Michael A. Colglazier: The images on slide 6 show some of the tools that have been delivered or are in development, as well as an example of what a finished part looks like within its tooling. This particular part is a door for the landing gear within the wing.

Michael A. Colglazier: The images on slide six shows some of the tools that have been delivered or are in development as well as an example of what a finished part looks like within its tooling.

Michael A. Colglazier: This particular part is a door for the landing here within the wing tool.

Michael A. Colglazier: Tool delivery and parts fabrication are beginning to accelerate as we work to complete the bulk of the design phase this summer and move more fully into the build phase. Most of you know that Bell is supplying the unique feathering system and flight control surfaces for Delta, while Carbon is producing the fuselage and wing components. I met recently with teams from both companies, and I am excited about the emphasis that they put on quality and performance of these key components while aligning with our overall production schedule.

Michael A. Colglazier: Total delivery and parts fabrication are beginning to accelerate as we work to complete the bulk of the design phase This summer and move more fully into the build phase. Most of you know that Bella supplying the unique feathering system and flight control surfaces for Delta, while carbon is producing the fuselage and wing components.

Michael A. Colglazier: Met recently with teams from both companies and I am excited about the emphasis that they put on quality and performance of these key components, while aligning with our overall production schedule.

Michael A. Colglazier: In parallel with design, tooling, and parts fabrication, we have been building out the facilities needed for both our test assets and our final assembly factory. The facility in Phoenix that will house our final assembly operation is nearing completion, seen here on slide. We expect to take occupancy of the building this summer, and we'll begin setting up the factory floor for assembly and developing our training tools and processes in preparation for the final assembly stage in the first half of 2025.

Michael A. Colglazier: In parallel with design tooling and parts fabrication, we have been building out the facilities needed for both our test assets and our final Assembly factory.

Michael A. Colglazier: The facility in Phoenix that will house, our final Assembly operation is nearing completion.

Michael A. Colglazier: Here on slide seven.

Michael A. Colglazier: We expect to take occupancy of the building this summer and will begin setting up the factory floor for assembly and developing our training tools and processes in preparation for the final assembly staged in the first half of 2025.

Michael A. Colglazier: Also on slide 7, you can see a mock-up of our cabin interior for Delta, which we are using to confirm human factors in addition to fit and finish. We have a host of upgrades we are adding to our Delta cabins, and we're looking forward to revealing the full interior design and functionality later this year. You've heard us talk about our test asset called the Iron Bird, and the design of the full build out of this system is shown on slide 8.

Michael A. Colglazier: Also on slide seven you can see the mockup of our cabin interior for Delta.

Michael A. Colglazier: Which we are using to confirm human factors in addition to fit and finish.

Michael A. Colglazier: We have a host of upgrades, we are adding to our delta cabin interiors and we're looking forward to revealing the full interior design and functionality later this year.

Michael A. Colglazier: You've heard us talk about our test asset called the iron Bert and the design of the full build out of the system as shown on slide eight.

Michael A. Colglazier: We recently opened the test facility that houses this Ironbird system, and it's up and running in Irvine near our Southern California headquarters. The Ironbird allows us to test and verify the operation of dozens of Delta subsystems, including avionics, feather actuation, and pneumatics, on the ground and in parallel to the assembly of our ship. Again, the purpose of this system is to provide the widest possible scope of ground testing prior to performing flight tests, making flight tests more streamlined and efficient.

Michael A. Colglazier: We recently opened the test facility that houses the Firebird system, and it's up and running in Irvine narrow Southern California headquarters.

Michael A. Colglazier: The iron Bird allows us to test and verify the operation of dozens of Delta subsystems, including avionics feather actuation and pneumatics on.

Michael A. Colglazier: On the ground and in parallel to the assembly of our ships.

Michael A. Colglazier: Again, the purpose of this system is to provide the widest possible scope of ground testing prior to performing flight test.

Michael A. Colglazier: Flight tests more streamlined and efficient.

Michael A. Colglazier: Turning to slide nine regarding the schedule, our overall plan remains intact, with commercial service expected to begin with our first two Delta ships in 2026. Sharing some color underneath the macro timeline, we have been adapting our detailed schedule to take advantage of opportunities and to react to sub-elements of the plan that need more time for completion. As with most large aerospace programs, we find schedule improvement opportunities while also identifying elements that are extending beyond their originally allotted time duration, and we worked to integrate both of these into the overall plan.

Michael A. Colglazier: Turning to slide nine regarding scheduled.

Michael A. Colglazier: Our overall plan remains intact with commercial service expected to begin with our first two delta shifts in 2026.

Michael A. Colglazier: Sharing some color underneath the macro timeline, we've been adapting our detailed schedule to take advantage of opportunities and to react to sub elements of the plan that need more time for completion.

Michael A. Colglazier: As with most large aerospace programs, we find scheduled improvement opportunities. While also identifying elements that are extending beyond their originally allotted time durations and we work to integrate both of these into the overall plan.

Michael A. Colglazier: The key, with regard to schedule, is to adapt the sequencing and application of resources to ensure the critical path of the program remains on track. At a tactical level, we are realizing schedule improvements in the final assembly timelines as we compare our detailed build plan activities versus our initial estimates. Our final assembly process for Delta is much different and improved versus our prototype work with Unity and Imagine, and we are seeing the benefits of our digital threat approach manufacturing strategy with Bell and Carbon, while the build planning has been positive for our schedule. We have had elements within our design phase extend longer.

Michael A. Colglazier: The key with regard to schedule is to adapt the sequencing and application of resources to ensure the critical path of the program remains on track.

Michael A. Colglazier: At a tactical level, we are realizing schedule improvement to the final assembly timelines as we compare our detailed build plant activities versus our initial estimates.

Michael A. Colglazier: Our final assembly process for Delta is much different and improved versus our prototype work with unity and imagine.

Michael A. Colglazier: And we are seeing the benefits of our digital thread approach manufacturing strategy with bell and carbon.

Michael A. Colglazier: While the build planning has been a positive for our schedule, we have had elements within our design phase extend longer.

Michael A. Colglazier: Net-net, the benefits we have found and the time extensions we have realized have bounced back, and our overall program schedule remains intact with schedule contingencies and buffers still in place to handle unexpected items that will surely arise over the course of the upcoming work. Our team at Virgin Galactic, and our partners at Bell and Carbon, are all committed to the success of the program. And the collaboration between the groups, as we work through the typical ups and downs of a complex program, has been great to witness.

Michael A. Colglazier: Net net the benefits we have found and time extensions, we have realized a balanced out and our overall program schedule remains intact with schedule contingencies and buffers still in place to handle unexpected items that will surely arise over the course of the upcoming work.

Michael A. Colglazier: Our team at Virgin Galactic and our partners at Bell and carbon are all committed to the success of the program and the collaboration between the groups as we worked through the typical ups and downs of a complex program have been great to witness.

Michael A. Colglazier: I'll now turn the call over to Doug so we can share more detail about the financial operating model and how our first two Delta ships will have a meaningful impact on our business in the near term, generating strong operating cash flows, even before we fully build out our fleet in New Mexico or expand to additional markets.

Michael A. Colglazier: I'll now turn the call over to Doug. So we can share more detail about the financial operating model and how our first two delta ships have a meaningful impact on our business in the near term.

Michael A. Colglazier: <unk> strong operating cash flows even before we fully build out our fleet, new Mexico or expand to additional spaceports, Doug over to you.

Douglas T. Ahrens: Thank you, Michael. Good afternoon, everyone.

Doug: Thank you Michael Good afternoon, everyone, let's go to slide 10.

Douglas T. Ahrens: Let's go to slide 10. The planned increase in flight cadence for our mothership, Eve, will be a game-changer when the first two Delta ships enter commercial service. With steady-state operations, flying EVE three times a week means we have the capacity to conduct approximately 125 flights per year, allowing for potential weather or operational inefficiencies. At that pace, with six seats per spaceflight, we plan to fly 750 astronauts to space annually with our first two Delta ships.

Doug: Planned increase in flight cadence for our Mothership Eve is a game changer when the first two delta shifts in our commercial service with steady state operations Flying Ive three times a week means we have the capacity to conduct approximately 125 flights per year, allowing for potential weather or operational inefficiencies at that pace.

Douglas T. Ahrens: With six seats per space flight.

Douglas T. Ahrens: We plan to fly 750 astronauts space annually with our first two delta ships.

Douglas T. Ahrens: Not only does this enable us to serve the existing ticket holders fairly rapidly, but it also enables us to begin serving new customers at a higher price point. Applying the recently announced price of $600,000 per seat, within a year after Delta enters service, we expect to be able to achieve a run rate of $450 million annually. This is a sizable business that can be achieved with the mothership we have, plus the addition of the first two Delta-class spaceships.

Douglas T. Ahrens: Not only does this enable us to serve the existing ticket holders fairly rapidly, but it also enables us to begin serving new customers at higher price points.

Douglas T. Ahrens: Applying the recently announced pricing of $600000 procedure within a year after delta into service, we expect to be able to achieve a run rate of $450 million annually.

Douglas T. Ahrens: This is a sizeable business that can be achieved with the mother ship. We have plus. The addition of the first two delta class spaceships.

Douglas T. Ahrens: We have shared with you previously that we expect to see contribution margins above 75% for each spaceflight. This is the margin we project after accounting for the variable costs of each flight, such as the rocket motor, fuel, hospitality expenses for the astronauts, etc.

Douglas T. Ahrens: We have shared with you previously that we expect to see contribution margins above 75% for each space flight.

Douglas T. Ahrens: This is the margin we project after accounting for the variable cost of each flight such as with rocket motor fuel hospitality expenses for the astronauts et cetera.

Douglas T. Ahrens: This contribution margin will be more than enough to cover the fixed costs of running the business, leading to meaningful operating cash flow. This is the first stepping stone in our economic growth story, as these profits can be reinvested to further expand our fleet and drive additional growth. At that stage, we plan to build incremental Delta ships at a recurring cost of $50 to $60 million each. These are highly accretive assets. The costs of our future ships are so low because the designs are already done, and the tools have already been built.

Douglas T. Ahrens: This contribution margin will be more than enough to cover the fixed cost of running the business leading to meaningful operating cash flow.

Douglas T. Ahrens: This is the first stepping stone in our economic growth story as these profits can be reinvested to further expand our fleet and drive additional growth.

Douglas T. Ahrens: At that stage, we plan to build incremental delta ships at a recurring cost of $50 to $60 million. Each these are highly accretive assets.

Douglas T. Ahrens: Cost of our future ships are so low because of the designs are already done the tools were already have been built the supply chain will be in place and our spaceship Assembly factory will be up and running.

Douglas T. Ahrens: The supply chain will be in place, and our spaceship assembly factory will be up and running. These are the investments we are making right now and which give us the infrastructure needed to further drive substantial growth. Our intentions are to continue to expand Spaceport America and then to add more spaceports in other locations around the world.

Douglas T. Ahrens: These are the investments, we are making right now and which give us the infrastructure needed to further drive substantial growth.

Douglas T. Ahrens: Our intentions are to continue to expand at Spaceport America, and then to add more space ports and other locations around the world as we've said before we estimate that each operational spaceport can generate over $1 billion of revenue annually.

Douglas T. Ahrens: As we've said before, we estimate that each operational spaceport can generate over $1 billion in revenue annually. Turning to slide 11, I want to run through a very high-level recap of our financial results for the first quarter. We generated revenue of $2 million, driven by commercial spaceflight and future astronaut membership fees. Total operating expenses were $113 million, compared to $164 million in the prior year period, primarily driven by lower R&D and SG&A expenses, partly reflective of our restructuring efforts last year.

Douglas T. Ahrens: Turning to slide 11, I want to run through a very high level recap of our financial results for the first quarter.

Douglas T. Ahrens: We generated revenue of $2 million, driven by our commercial space flight and future astronaut membership fees.

Douglas T. Ahrens: Total operating expenses were $113 million compared to $164 million in the prior year period, primarily driven by lower R&D and SG&A expenses, partly reflective of our restructuring efforts last year.

Douglas T. Ahrens: Free cash flow was negative $126 million in the first quarter, compared to negative $139 million in the same period last year. Turning to slide 12, our balance sheet remains strong with $867 million in cash, cash equivalents, and marketable securities. During the first quarter, we generated $7 million in gross proceeds through an at-the-market, or ATM, equity-offering program. Moving to our projections, revenue for the second quarter of 2024 is expected to be approximately $3.5 million. Forecasted free cash flow for the second quarter of 2024 is expected to be in the range of negative $110 million to $120 million. I'll now turn the call back over to Michael.

Douglas T. Ahrens: Free cash flow was negative $126 million in the first quarter compared to negative $139 million in the same period last year.

Douglas T. Ahrens: Turning to slide 12, our balance sheet remains strong with $867 million in cash cash equivalents in marketable securities.

Douglas T. Ahrens: During the first quarter, we generated $7 million in gross proceeds through an aftermarket or ATM equity offering program.

Douglas T. Ahrens: Moving to our projections revenue for the second quarter of 2024 is expected to be approximately $3 5 million.

Douglas T. Ahrens: Forecasted free cash flow for the second quarter of 2024 is expected to be in the range of negative $110 million to $120 million.

Douglas T. Ahrens: I'll now turn the call back over to Michael.

Michael: Thanks Deb.

Michael A. Colglazier: To recap today's call, we are planning to fly the last commercial flight of VSS Unity on June 8, taking a researcher and three private astronauts to space and delivering an incomparable and life-changing experience to each of them. This will mark our 7th commercial flight and 12th space flight in total, again demonstrating the Virgin Galactic spaceflight system is safe, reliable, and repeatable with an experience beyond compare. I also shared that we expect our existing mothership will have the capacity to fly up to three times a week with the first two Delta jets, or upwards of 125 times a year, supporting a strong revenue business in the first stage of Delta's operations.

Michael: To recap today's call we are planning to fly the last commercial flight of VSS unity on June eight taking a researcher and three private astronauts to space and delivering an incomparable and life changing experience to each of them.

Michael A. Colglazier: This will mark our seventh commercial flight and 12 space flight in total again, demonstrating the Virgin Galactic space flight system as safe reliable and repeatable with an experience beyond compare.

Michael A. Colglazier: I also shared that we expect our existing mother ship will have the capacity to fly up to three times a week with the first two delta shifts or upwards of 125 times a year supporting a strong revenue business in the first stage of Delta operations.

Michael A. Colglazier: We are making important progress with our Delta suppliers and are seeing steady progress with designs, tooling development, initial parts fabrication, and preparations to open our final assembly factory this fall. Our Delta schedule remains on track for commercial service in 2020. At the same time, we remain committed to our long-term, high-growth business model, the scaling of operations at Spaceport America with a fleet of fortified spaceships, followed by the creation of fully utilized spaceports and continuous operations from multiple locations around the world. Operator, we're ready to begin the Q&A portion of the call. Thank you.

Michael A. Colglazier: We are making important progress with our delta suppliers and are seeing steady progress with designs tooling development initial parts fabrication and preparations to open our final Assembly factory this summer.

Michael A. Colglazier: Our Delta schedule remains on track for commercial service in 2026.

Michael A. Colglazier: At the same time, we remain committed to our long term high growth business model are scaling operations at Spaceport America with a fleet of four to five spaceships, followed by the creation of fully utilized spaceports and continuous operations from multiple locations around the world.

Michael A. Colglazier: That will turn to questions operator, we're ready to begin the Q&A portion of the call.

Operator: Thank you. Once again, if you have a question, it is star 1 on your telephone keypad. Your first question comes from the line of Greg Konrad with Jeffreys. Your line is open.

Gregory Arnold Konrad: Thank you once again, if you have a question. It is star one on your telephone keypad.

Operator: Your first question comes from the line of Greg Konrad with Jefferies. Your line is open.

Gregory Arnold Konrad: Good evening.

Gregory Arnold Konrad: Hi, Greg.

Gregory Arnold Konrad: I appreciate the incremental details. Just on the $450 million annual run rate of revenue, it seems like that assumes the $600 K ticket price. How much backlog of lower tickets are there to cycle through before you get to that higher price point? Or how should we think about near-term revenue, just given some launch prices?

Gregory Arnold Konrad: I appreciate the incremental details just on the $450 million annual run rate of revenue and it seems like that assumes the 600 K ticket price how much backlog of lower tickets are there to kind of cycle through.

Gregory Arnold Konrad: Before you kind of get to that higher price point or how should we think about near term revenue just given some launch pricing.

Douglas T. Ahrens: Hi Greg, this is Doug. Yeah, so we have approximately 600, a little more than 600 astronauts at the lower price points, and then we have some that were sold for $450,000. So one of the important things we noted is that at the flight rate of 125 flights a year, we can fly up to 750 astronauts per year. So that will move through our backlog of customers fairly quickly. So what we gave you was our annualized run rate at about 12 months out after we've moved through, you know, the backlog we already have, and then we applied the ticket pricing that we've recently announced of $600,000 because that's what we're projecting at this time.

Gregory Arnold Konrad: Yes, Hi, Greg This is Doug.

Douglas T. Ahrens: Yes, so we have approximately.

Douglas T. Ahrens: 600, a little over 600 astronauts at the lower price points and then we have some that were sold at 450 K.

Douglas T. Ahrens: So one of the important things. We noted is that the flight rate of 125 flights a year.

Douglas T. Ahrens: Can fly up to 750 astronauts per year, so that will move through our backlog of customers fairly quickly. So we gave you was our annualized run rate at about 12 months out after we have moved through.

Douglas T. Ahrens: The backlog, we already have and then we applied the ticket pricing that we've recently announced 600 K because that's what we're projecting at this time, it's worth noting though that.

Douglas T. Ahrens: It's worth noting though that, you know, we said that this flight coming up, Galactic 7, the average price per seat is over $800,000. So it's showing the pricing leverage we have. So we think it's a fair number to use to say $600,000 for the future at that point in time.

Douglas T. Ahrens: Yes, we said that this fight coming up <unk>, 7%.

Douglas T. Ahrens: Average price proceed is over 800000, so it's showing that the pricing leverage we have so we think it's a.

Douglas T. Ahrens: Fair number to use to say 600 K.

Douglas T. Ahrens: For the future for that point in time.

Michael A. Colglazier: And then just to confirm, you know, the first two Delta class spaceships roll out at the same time or enter commercial service at the same time. And then, you know, appreciated the detail around the mothership 2028. How much does that become a pacing item? Just given it seems like maybe you'll be able to exceed that from a Delta standpoint in 2027.

Douglas T. Ahrens: And then just to confirm the first two delta class.

Michael A. Colglazier: These ships rollout at the same time, our enter commercial at the same time and then.

Michael A. Colglazier: I appreciate the detail around the mother ship 2020, how much does that become a pacing item just given it seems like maybe you'll be able to exceed that from a delta standpoint in 2027.

Michael A. Colglazier: Okay.

Michael A. Colglazier: Hey Gregory, it's Michael. So Eve, which is excellent, will still remain the bottleneck against the capacity of the Delta ship. So when we bring a second mothership out, at that point, those two Delta ships would become the bottlenecks. We'd want to pair the arrival of that new mothership with a fast follow with additional delta ships, for sure. And we kind of keep that balanced as we grow the fleet.

Michael: Hi, Greg, it's Michael So Ive, which is excellent.

Michael A. Colglazier: We will remain the bottleneck against the capacity of the Delta ships. So when we bring a second mother ship out.

Michael A. Colglazier: At that point those two delta shifts will become the bottleneck. So we'd want to pair the arrival of that new mother ship.

Michael A. Colglazier: With a fast follow with additional Delta ships for sure and we kind of keep that balanced as we grow the fleet up.

Michael A. Colglazier: But with Eve at-week, three times a week, the way we can do that allows, you know, some weeks we'll have a back-to-back flight. Then there'll be a number where we'll run more than three flights a week. There'll be other weeks where we will run less than three a week because we're doing regularly scheduled maintenance. Within that operation, there may be opportunity to go up above where we are, but we feel good with what we're stating today at 125 by the time we factor in weather days and rain days and inefficiencies that will come out. So that's probably a good gate until we get to 28, that 125 flights as a kind of planning target for your modeling. And then it really opens up as we add additional.

Michael A. Colglazier: But with ease.

Michael A. Colglazier: Yes.

Michael A. Colglazier: Three times a week the way we can do that.

Michael A. Colglazier: Allows.

Michael A. Colglazier: Some weeks, we will have a back to back slightly then there'll be.

Michael A. Colglazier: A number where we'll run more than three week there'll be other weeks, where we will run less than three week, because we're doing a regularly scheduled maintenance piece within that operation there may be opportunity to go up above where we are but we feel good with what we are stating today at 125 by the time, we factor weather days and rain day.

Michael A. Colglazier: <unk> and inefficiencies that will come out so that's probably a good game until we get to 28 125 flights is.

Michael A. Colglazier: Kind of planning target for your modeling.

Michael A. Colglazier: And then it really opens up as we add additional mother ships.

Michael A. Colglazier: So just a quick follow-up to that. Should we assume, not assume, the third Delta enters service until 2028 then? Yeah, we would match the...

Speaker Change: So just a quick follow up to that so should we assume not assume the third delta enter service until 2028.

Michael A. Colglazier: Yeah, we would match the third Delta ship with the addition of the next mothership.

Michael A. Colglazier: Yes, we would match the third Delta shift with the addition of the next mother ship.

Speaker Change: Thank you.

Speaker Change: Youre welcome.

Operator: Your next question comes from the line of Miles Walton with Wolf Research. Your line is open.

Michael A. Colglazier: Your next question comes from the line of Myles Walton with Wolfe Research. Your line is open.

Myles Alexander Walton: Thanks, Good evening.

Myles Alexander Walton: Michael, the way you're describing it, you're going to actually burn through your backlog of customers reasonably quickly. So I'm curious, what is your thought process on reopening the sales window initially and then also just from a running the business perspective? How do you want to run with a backlog, such that you can sort of run at a predictable pace as opposed to something else and also provide your flying customers with enough lead time for them to plan around their trips?

Myles Alexander Walton: Michael the way the way, you're describing it youre going to actually burn through your backlog.

Myles Alexander Walton: Customers reasonably quickly so I'm curious what is your thought process on <unk>.

Myles Alexander Walton: Reopening.

Myles Alexander Walton: Initially the sales window and then also just from running the business perspective.

Myles Alexander Walton: How do you want to run with a backlog.

Myles Alexander Walton: Such that you can.

Myles Alexander Walton: You sort of run through a predictable pace as opposed to something else and also provide.

Myles Alexander Walton: Selling customers with enough lead time for them to plan around.

Myles Alexander Walton: Their trips.

Michael A. Colglazier: Right. Thanks for the question, Miles. Consistently, I think it's helpful to have, on both the customer side and the business side, a two-year run. And on the customer side, that first year is really recognizing the journey that spaceflight is. It's not just the ups and downs in any sense.

Myles Alexander Walton: Right.

Speaker Change: Thanks for the question miles consistently.

Michael A. Colglazier: Consistently I think it is helpful to have on both the customer side and the business side.

Michael A. Colglazier: Two year run.

Michael A. Colglazier: And the customer side that first year is really recognizing the journey that the space Slide is it's not just the up and down moment by any sense. It is a journey and we will build people through that journey from the moment they sign on.

Michael A. Colglazier: It is a journey, and we will guide people through that journey from the moment they sign on. I think once you go past two to three years, that journey starts to get a little long for people, and they're getting antsy. But two years, I think, is appropriate.

Michael A. Colglazier: Once you go past two to three years that journey starts to get a little long for people and they are getting Nancy but two years I think is appropriate and then we'd like to give people in a steady state basis.

Michael A. Colglazier: And then we'd like to give people, on a steady state, around 12 months of notice that says, okay, your flight's going to be 12 months from now in that month, so people can start to prepare schedules and friends and family who will come. So if you look at our existing backlog of customers with us starting in 26, that means within 26 and 27, we should really process through the existing backlog. So if I, you know, by the time we get to 28, and especially when we have that next mothership... If we're going to have a two-year backlog in front of that, we want everybody kind of on board by the beginning of 2026. So, you know, just backing that up.

Michael A. Colglazier: Around 12 months of notice says Okay. Your flight is going to be 12 months from now in that month. So people can start to prepare schedules and friends or family who will come.

Michael A. Colglazier: So if you look at our our existing backlog of customers with a starting in 2006 that means within 26 and 27, we should really process through the existing folks so if I.

Michael A. Colglazier: By the time, we get to 28, and especially when you have that next mothership.

Michael A. Colglazier: If we're going to have a two year backlog in front of that we want everybody kind of onboard by the beginning of 2006. So just backing that up you'll see us start the sales process within the 25 period, we won't wait until the end of 2005 to do that because we'd like to have.

Michael A. Colglazier: You'll see us start the sales process within the 25 period. We won't wait till the end of 25 to do that because we'd like to have, you know, another couple of years of backlog in place by the time we start 26. And we're balancing getting people on board in time to have, like I said, both the journey for them as well as, you know, a nice, comfortable backlog for us to focus on executing our operations.

Michael A. Colglazier: Another years of backlog in place by the time, we started 26 and and we're balancing getting people on board.

Michael A. Colglazier: Time to have <unk>.

Michael A. Colglazier: Both the journey for them as well as a nice comfortable backlog for us to focus on executing our operations at the same time, if we tried to bring people in to early I think we lose some of the pricing pressure that.

Michael A. Colglazier: At the same time, if we try to bring people in too early, I think we lose some of the pricing pressure that we've obviously been demonstrating with these last flights. So we want to keep a balance there so that we maintain the power of pricing that befits the quality of the experience we're delivering but still allow other customers and us to plan. So hopefully, that two-year window explains that.

Michael A. Colglazier: We're obviously been demonstrating with these lads flights. So we want to keep a balance there so that we maintain the power pricing.

Michael A. Colglazier: Fits the quality of the experience, we're delivering but still allow both our customers and us for planning so hopefully that two year window.

Michael A. Colglazier: That explains that.

Michael A. Colglazier: That's a perfect explanation. Maybe one on the details of the accounting. CapEx, I know you were looking for $40 to $50 million in the quarter. It was light, but R&D was heavy. I'm going to guess that that was because you didn't transition fully to capitalizing versus R&D. Is that the way to read it?

Speaker Change: That does yes, that's perfect explanation.

Michael A. Colglazier: Maybe one on on the.

Michael A. Colglazier: Details of the accounting Capex I know you were looking for $40 million to $50 million in the quarter. It was light, but R&D was heavy I'm going to guess that that was because you didn't transitioned fully to capitalizing versus R&D is that the way to read it.

Michael A. Colglazier: Right, yeah, it's just an accounting convention of when we flip the switch, but you'll see that start to ramp up this year, especially in the second half. So you'll start to see most of CapEx start to exceed OpEx. As we wrap up the design work here, and we're building more tooling, and then parts fabrication happens, you'll see the shift, you know, take place.

Speaker Change: Yes, it's just an accounting convention when we flip the switch, but youll see that start to ramp up this year, especially in the second half so youll.

Michael A. Colglazier: We'll start to see majority capex will start to exceed Opex as we wrap up the design work here and we're building more tooling and then parts fabrication happens youll see the shift.

Michael A. Colglazier: Take place.

Michael A. Colglazier: Okay, and sorry, just one last one, which is if you will be cycling through a thousand customers a year in 28 and their constituencies, what kind of physical plant improvement and timeline for investment are you going to have to make within Spaceport America on the experiential side?

Michael A. Colglazier: Okay.

Speaker Change: Just one last one which is if you will be cycling through 1000 customers.

Michael A. Colglazier: Here in 2008.

Speaker Change: In there.

Michael A. Colglazier: <unk>, what kind of physical plant improvements and timeline for investment or you can have to make within spaceport America on the experiential side.

Michael A. Colglazier: That's a great question. Plants at Spaceport America, for those who haven't been there, we have one major hanger that can handle our operations for the mothership and a number of spaceships. As we grow and as we bring in another mothership, we do expect to work with the Spaceport of New Mexico and add what we would call kind of a launch hangar. That would be an additional hangar primarily for the mated pair of a spaceship and mothership.

Speaker Change: So there is a great question.

Michael A. Colglazier: And that hangar will also be where we do the maintenance on the mothership. So we'll add an additional hangar there. It's not an architectural statement of what's the primary hangar base in New Mexico. That building is not only a hangar, it's our customer operations, it's training all the time. So it's an airplane hanger that needs to be built. So that would be one of the pieces of infrastructure that's there. The other piece will come in the training facilities that are there as we start to fly, really even with these two Delta ships and we're flying more than once a week. We will break training out into an additional training facility and use the spaceport and the third floor where we have been doing training. That will really become kind of a launch day focus, and we'll bring a training facility separately.

Michael A. Colglazier: Yes, Ed Spaceport America for those who havent been there we have one major hanger that can handle our operations for the mother ship and a number of space ships.

Michael A. Colglazier: As we grow and as we bring in another mother ship we.

Michael A. Colglazier: We do expect to work with the spaceport in new Mexico, and add what we would call kind of a launch CAGR that would be at additional hanger, primarily for the mated pair of spaceship and mother ship and that hanger would also be where we do the maintenance on the mother ships. So we will add additional hanger there it's not now.

Michael A. Colglazier: The architectural statement of whats the primary hanger base in new Mexico that building is not only a hanger, it's our customer operations. It's training all those things so it's a it's.

Michael A. Colglazier: Its an airplane hangar that needs to be built so that would be one of the pieces of infrastructure. That's there. The other piece will come in in the training facilities that are there as we start to fly.

Michael A. Colglazier: Really even with these two delta shifts similar fly more than once a week, we will break training out into an additional training facility and use the space port.

Michael A. Colglazier: And the third floor, where we are.

Michael A. Colglazier: <unk> had been doing training that will really become kind of a launch day focus and we'll bring a training facilities separately. So we have choices about whether to build those out or to rent facilities for that but we expect those to be in.

Michael A. Colglazier: So we have choices about whether to build those out or to rent facilities for that, but we expect those to be in the Las Cruces, New Mexico area as well. So those are the two. I'm looking over to Doug if there's anything other than a major investment but an aircraft hangar we scale and training. Thank you.

Michael A. Colglazier: The Las Cruces, New Mexico area as well so those are two I'm looking over to Doug If there's anything other program a major investment.

Michael A. Colglazier: An aircraft hangar as we scale and training facilities okay.

Speaker Change: Thank you.

Michael A. Colglazier: Okay.

Operator: Once again, ladies and gentlemen, if you have a question, it is star one on your telephone keypad. Your next question comes from the line of Michael Leshock with T-Bank. Your line is open.

Michael A. Colglazier: Once again, ladies and gentlemen, if you have a question. It is star one on your telephone keypad.

Michael David Leshock: Your next question comes from the line of Michael Ms Shock with Keybanc. Your line is open.

Michael David Leshock: Hey, good afternoon.

Michael David Leshock: Hello, Mike.

Michael David Leshock: I think that you've previously said 2024 is kind of the peak cash burn year in support of Delta. And then looking at your 2Q guide, it implies somewhere around 130 million quarterly burn rate, give or take, for 3Q and 4Q each. So it likely would be a step up in the burn sequentially at some point this year if 24 is the peak burn year. So is that still your view? And do you have any line of sight when you expect to see the peak quarterly cash burn, just assuming the Delta class schedule progresses as expected? Yes.

Michael David Leshock: I think that you've previously said 2024 is kind of the peak cash burn year in support of Delta.

Michael David Leshock: And then looking at your <unk> guide it implies somewhere around 130 quarterly $130 million quarterly burn rate give or take for <unk> and <unk> each.

Michael David Leshock: So it likely would be a step up in the burn sequentially at some point. This year. If if 24 is the peak burn year.

Michael David Leshock: So is that still your view and do you have any line of sight. When you expect to see the peak quarterly cash burn just assuming delta class schedule progresses as expected.

Douglas T. Ahrens: Thanks, Mike. Yeah, we do expect the peak burn to be here in 2024. That's still the case.

Speaker Change: Yes, Thanks, Mike.

Speaker Change: Yes, we do expect the peak burn to be here in 2024, that's still the case, so youll see a ramp and we haven't guided specifically beyond Q2, but we do see a trend coming for Q3, and Q4 that we would be increasing our spending on capex as I mentioned previously because we're still going to be gone.

Douglas T. Ahrens: Through.

Douglas T. Ahrens: The tooling completion and moving heavily into parts fabrication. So the the peak is.

Douglas T. Ahrens: So you'll see a ramp. We haven't guided specifically beyond Q2, but we do see a trend coming for Q3 and Q4 that we would be increasing our spending on CapEx, as I mentioned previously, because we're still going to be going through the tooling completion and moving heavily into parts fabrication. So the peak is still to come, but this year.

Douglas T. Ahrens: Still to come but in this year for Delta.

Michael A. Colglazier: Okay, and then I think you said you're targeting 28 for the second mothership, which should get over 125 flights per year on those first two Delta ships. Just wondering if the ongoing legal issues with Boeing have the potential to impact any plans on the mothership front, or if you could share any update there. Thanks.

Speaker Change: Okay, and then I think you said you're targeting 28 for the second mother ship.

Michael A. Colglazier: Should get over over 125 flights per year on those first two delta shifts.

Michael A. Colglazier: Just wondering if the ongoing legal issues with Boeing have the potential to impact any plans on the mothership front or if you could share any update any update there. Thanks.

Michael A. Colglazier: Sure. The very short answer is no; the issues with Boeing are not material and are not going to impact how we progress our mothership program. Our position with Boeing is very clear, and if you haven't had a chance, there's a very thorough overview of that in the countersuit that we put out. But, in short, our position is that we received unacceptable work from Boeing. The intellectual property that was in debate is either owned outright or duly licensed by us, and all the elements of that are laid out in that case.

Michael A. Colglazier: Sure. The very short answer is no the issues with Boeing are not material and are not going to be impacting.

Michael A. Colglazier: How we progress our mother ship program.

Michael A. Colglazier: Our position with Boeing is very clear and if you haven't had a chance.

Michael A. Colglazier: There is a very thorough.

Michael A. Colglazier: <unk> overview of that and the countersuit that we've put out but in short.

Michael A. Colglazier: We are positioned we received unacceptable work from Boeing.

Michael A. Colglazier: The intellectual property that was in debate is either owned outright or duly licensed by us and all the elements of that are laid out in that case with that said again, it's not a material piece it will not be a distraction for us in any way as we move forward with our mother ship program.

Michael A. Colglazier: With that said, again, it's not a material piece. It will not be a distraction for us in any way as we move forward with our mothership, but it's a good read if you want to read the back.

Michael A. Colglazier: But.

Michael A. Colglazier: It's a good read if you want to read the background there.

Michael David Leshock: Yeah, I did. It was surprising to see.

Speaker Change: Yes. It did it was surprising to see for me.

Michael A. Colglazier: Okay, and then I think just lastly for me, previously you allocated a portion of ticket sales to Virtuoso. Did they sell their portion fully, and is that something, a partnership that you're going to continue to leverage when you open up ticket sales again?

Speaker Change: Okay, and then I think just lastly for me.

Michael A. Colglazier: Previously you allocated a portion of ticket sales to virtuoso did they sell their portion fully and is that something a partnership that youre going to continue to leverage when you open up ticket sales again.

Michael A. Colglazier: They have, Virtuoso has not fully used their allocation. Like us, they've kind of, we've pulled back on the sales piece until we get closer.

Michael A. Colglazier: They have virtuoso is not fully used their allocation.

Michael A. Colglazier: Like us they've kind of pulled back on the sales piece until we get closer.

Michael A. Colglazier: I think the opportunity for companies like Virtuoso, where they have a very healthy and active base, in particular in adventure travel and high-end travel, is a relevant potential channel for us. I clearly will be doing a lot of this myself, but I do think there's help in, as this becomes known and normal. We had a huge deal just this last year of six flights in six months, and that seemed like a huge deal.

Michael A. Colglazier: I think the opportunity for companies like virtuoso where they have a.

Michael A. Colglazier: Very healthy inactive base in particular in adventure travel and high end travel is a relevant potential channel for us.

Michael A. Colglazier: Clearly, we will be doing a lot direct but.

Michael A. Colglazier: But I do think there is there has helped and as this becomes known and normal.

Michael A. Colglazier: We had a huge deal just in this last year of six flights in six months and that seem like a huge deal.

Michael A. Colglazier: We're going to show up on the 26th and start operations at a pace of 125 human space flights a year, and it's going to be a completely different idea of what's going on here. The word will be out, people will be known, and in that place, wide distribution and access to people is sometimes helpful, and so I think we'll continue to test efforts like we did with Virtuoso, but I do expect the bulk will probably be direct sales.

Michael A. Colglazier: We're going to show up in to the 26 and start operations on a pace of 125 human space flight a year and it's going to be completely different idea of what's going on here. The word will be out people will be known.

Michael A. Colglazier: And at that place.

Michael A. Colglazier: Wide distribution access to people is sometimes helpful and so I think we'll continue to test efforts like we've done with virtuoso, but I do expect the bulk will probably be direct sales.

Speaker Change: Got it thanks guys.

Speaker Change: Thank you Mike.

Michael A. Colglazier: Yes.

Operator: This concludes the Q&A session as well as today's conference. We thank you for joining us. You may now disconnect your lines.

Speaker Change: This concludes the Q&A session as well as today's conference. We thank you for joining you may now disconnect your line.

Operator: Yeah.

Operator: Okay.

Operator:

Operator: Yeah.

Operator: Okay.

Operator: