Virgin Orbit Holdings, Inc. (NASDAQ:VORB) Q3 2022 Earnings Call Transcript

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Operator: Thank you. Our next question or comment comes from the line of Austin Moeller from Canaccord Genuity. Mr. Moeller, your line is open.

Austin Moeller: Hi, good afternoon, Dan and Brita. So I mean, Virgin will have three launches this year and given that long reads can build at a sort of maximum build rate around 20 rockets per year, what do you see as key bottlenecks keeping you from ramping the number next year closer to two times the current, which would be maybe like six to eight? Is it more the supply side or more the demand payload readiness side?

Dan Hart: It’s really mainly the supply side. It is going through that ramp. I mean, we have the capacity. But what you do as you go through LRIP typically, low rate initial production is you make improvements, you make €“ you find whatever weak points there are in your components, in your build, in your tooling and you improve on those. And so any change is usually a headwind against ramping, but those changes are important because they give you a more efficient build process, overall. And for the long-term, it gives you a more capable and more reliable product in the long-term, too. So as we go through, we will make €“ and we are making small changes like that to make sure that the factory runs efficiently and the product is reliable.

And if you look at big companies who make airplanes and things, they sometimes call those early vehicles, they are teenagers. They take a little bit longer and €“ it pays off as you get into rate because then your rate really picks up. And so we’re right in that steady phase where we are ramping but we’ll hit a knee in the curve once some of these developments and changes we’ve done.

Austin Moeller: Okay. That makes sense. And one more, can you talk about the status of the L3Harris upgrade work on the two new 747 motherships?

Dan Hart: We’ve been really focused mostly on the ramp. We will probably defer the mothership a bit as we really focus on ramp. We do not need it for another 1.5 years to two years given the capability of Cosmic Girl. At the same time, we’re keeping them warm. We do have some customers who are interested in also having aircraft. And so as we expand in the market, and get signals there, we have the ability to ramp those up quickly.

Austin Moeller: Okay, great. Thank you for the color there.

Operator: Thank you. I’m showing no additional questions in the queue at this time. I’d like to turn the conference back over to management for any closing comments.

Dan Hart: Well, let’s see. I’d just like to thank everybody for joining us today. It’s an exciting time for the company. I happen to be in Cornwall right now, having just left the team as returning branches on an air field. And yes, stay tuned. We will be pressing forward, and we’ll keep everybody informed. Everybody have a great day.

Operator: Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.

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