Revenue Up 8%$31 Million of Common Share
Repurchases in the Quarter Bring Total to $106 Million
DigitalGlobe, Inc. (NYSE: DGI), a leading global provider of
commercial high-resolution earth observation and advanced
geospatial solutions, today reported financial results for the
quarter ended March 31, 2015.
First Quarter Financial Summary:
- Grew revenue 8.2% to $169.4
million.
- Net loss less preferred stock dividends
was $(0.08) per diluted share.
- Grew U.S. Government revenue 17.6% to
$114.8 million.
- Diversified Commercial revenue
decreased (7.3)% to $54.6 million, with approximately 2 percentage
points of impact attributable to continued challenges in
Russia.
- Adjusted EBITDA was $73.1 million,
yielding a margin of 43.2%.
- Cash flow from operations was $56.9
million, up 42.6% .
- Free cash flow was $25.6 million,
yielding a free cash flow margin of 15.1%.
Recent Operational Highlights:
- Gary W. Ferrera began his role as the
company’s Executive Vice President and Chief Financial Officer on
March 2, 2015.
- The company repurchased 1,009,700
shares of its common stock for $31.1 million at an average price of
$30.79.
“First quarter revenue was in line with our expectations, with
strong growth in our U.S. Government business offset by an expected
decline in our Diversified Commercial business,” said Jeffrey R.
Tarr, CEO of DigitalGlobe. “We expect our Diversified Commercial
growth to improve in the second half as we monetize WorldView-3 and
generate results from a number of new products and initiatives. We
were also pleased with the strength of our free cash flow, which
was up nearly $48 million year-over-year, enabling us to repurchase
$31 million of stock in the quarter.”
Performance against key metrics:
For the three months ended March 31, ($ in
millions) 2015
2014 Revenue $ 169.4 $ 156.5 Net (loss) income
$ (4.9) $ 0.4 Adjusted EBITDA $ 73.1 $ 67.9 Adjusted EBITDA margin
43.2 % 43.4 % Net cash flows provided by operating activities $
56.9 $ 39.9 Free cash flow $ 25.6 $ (22.1) Free cash flow margin
15.1 % (14.1) %
Reiterated 2015 Outlook:
- Revenue in a range of $725 million to
$750 million.
- Adjusted EBITDA in a range of $355
million to $375 million.
- Capital expenditures of approximately
$110 million.
Conference Call Information:
DigitalGlobe’s management will host a conference call today,
April 30, 2015 at 5 p.m. ET to discuss its 2015 first quarter
financial and operating results.
The conference call dial-in numbers are as follows:U.S./Canada
dial-in: (855) 212-2368International dial-in: (315)
625-6886Passcode: 30256553
A replay of the call will be available through May 30, 2015 at
the following numbers:U.S./Canada dial-in: (855)
859-2056International dial-in: (404) 537-3406Passcode: 30256553
DigitalGlobe will also sponsor a live and archived webcast of
the conference call on the Investor Relations portion of its
website. Click here to directly access the live webcast.
Supplemental earnings materials, including conference call
slides and management scripts, are available on the Investor
Relations section of the company’s website at
www.digitalglobe.com.
About DigitalGlobe
DigitalGlobe is a leading provider of commercial high-resolution
earth observation and advanced geospatial solutions that help
decision makers better understand our changing planet in order to
save lives, resources and time. Sourced from the world's leading
constellation, our imagery solutions deliver unmatched coverage and
capacity to meet our customers' most demanding mission
requirements. Each day customers in defense and intelligence,
public safety, civil agencies, map making and analysis,
environmental monitoring, oil and gas exploration, infrastructure
management, navigation technology, and providers of location-based
services depend on DigitalGlobe data, information, technology and
expertise to gain actionable insight.
DigitalGlobe is a registered trademark of DigitalGlobe.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained herein and in other of our reports,
filings, and public announcements may contain or incorporate
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, as amended.
Forward-looking statements relate to future events or future
financial performance. We generally identify forward-looking
statements by terminology such as “may,” “will,” “should,”
“expects,” “plans,” “anticipates,” “could,” “intends,” “target,”
“projects,” “contemplates,” “believes,” “estimates,” “predicts,”
“potential,” “continue” or “looks forward to” or the negative of
these terms or other similar words, although not all
forward-looking statements contain these words.
Any forward-looking statements are based upon our historical
performance and on our current plans, estimates and expectations.
The inclusion of this forward-looking information should not be
regarded as a representation by us that the future plans, estimates
or expectations will be achieved. Such forward-looking statements
are subject to various risks and uncertainties and assumptions. A
number of important factors could cause our actual results or
performance to differ materially from those indicated by such
forward looking statements, including: the loss, reduction or
change in terms of any of our primary contracts or decisions by
customers not to exercise renewal options; the availability of
government funding for our products and services both domestically
and internationally; changes in government and customer priorities
and requirements (including cost-cutting initiatives, the potential
deferral of awards, terminations or reduction of expenditures to
respond to the priorities of Congress and the administration, or
budgetary cuts resulting from Congressional committee
recommendations or automatic sequestration under the Budget Control
Act of 2011); the risk that U.S. government sanctions against
specified companies and individuals in Russia may limit our ability
to conduct business with potential or existing customers; the
outcome of pending or threatened litigation; the loss or impairment
of any of our satellites; delays in the construction and launch of
any of our satellites or our ability to achieve and maintain full
operational capacity of all our satellites; delays in
implementation of planned ground system and infrastructure
enhancements; loss or damage to the content contained in our
imagery archives; interruption or failure of our ground system and
other infrastructure; decrease in demand for our imagery products
and services; increased competition, including possibly from
companies with substantial financial and other resources and
services, that may reduce our market share or cause us to lower our
prices; our inability to fully integrate acquisitions or to achieve
planned synergies; changes in satellite imaging technology; our
failure to obtain or maintain required regulatory approvals and
licenses; changes in U.S. or foreign law or regulation that may
limit our ability to distribute our imagery products and services;
the costs associated with being a public company; and other
important factors, all as described more fully in our filings with
the Securities and Exchange Commission, including our Annual Report
on Form 10-K for the year ended December 31, 2014.
We undertake no obligation to update any forward-looking
statement to reflect events or circumstances after the date on
which the statement is made or to reflect the occurrence of
unanticipated events. Readers are cautioned not to place undue
reliance on any of these forward-looking statements.
Non-U.S. GAAP Financial Measures
EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA are not
recognized terms under U.S. GAAP and may not be defined similarly
by other companies. EBITDA and Adjusted EBITDA should not be
considered alternatives to net income as indications of financial
performance or as alternatives to cash flow from operations as
measures of liquidity. There are limitations to using non-U.S. GAAP
financial measures, including the difficulty associated with
comparing companies in different industries that use similar
performance measures whose calculations may differ from ours.
EBITDA and Adjusted EBITDA are key measures used in our internal
operating reports by management and our Board of Directors to
evaluate the performance of our operations and are also used by
analysts, investment banks and lenders for the same purpose.
EBITDA, excluding certain acquisition costs, is a measure being
used as a key element of the company-wide bonus incentive plan.
We believe that the presentation of EBITDA and Adjusted EBITDA
enables a more consistent measurement of period to period
performance of our operations and facilitates comparison of our
operating performance to companies in our industry. We believe that
EBITDA and Adjusted EBITDA measures are particularly important in a
capital intensive industry such as ours, in which our current
period depreciation is not a good indication of our current or
future period capital expenditures. The cost to construct and
launch a satellite and to build the related ground infrastructure
may vary greatly from one satellite to another, depending on the
satellite’s size, type and capabilities. Current depreciation
expense is not indicative of the revenue generating potential of
the satellites.
EBITDA excludes interest income, interest expense and income
taxes because these items are associated with our capitalization
and tax structures. EBITDA also excludes depreciation and
amortization expense because these non-cash expenses reflect the
impact of prior capital expenditure decisions which are not
indicative of future capital expenditure requirements.
Adjusted EBITDA further adjusts EBITDA to exclude the loss on
abandonment of asset because this is not related to our primary
operations. Additionally, it excludes restructuring costs and
integration costs as these are non-core items. Restructuring and
integration costs incurred in 2014 consist of charges related to
the acquisition of GeoEye. Restructuring charges incurred in 2015
relate to our restructuring plan announced in February 2015.
Integration costs consist primarily of professional fees incurred
to assist us with system and process improvements associated with
integrating operations.
We use EBITDA and Adjusted EBITDA in conjunction with
traditional U.S. GAAP operating performance measures as part of our
overall assessment of our performance and we do not place undue
reliance on these non-U.S. GAAP measures as our only measures of
operating performance. EBITDA and Adjusted EBITDA should not be
considered as substitutes for other measures of financial
performance reported in accordance with U.S. GAAP.
Free Cash Flow. Free cash flow is defined as net cash provided
by operating activities less net cash flows used in investing
activities excluding acquisition of businesses, net of cash
acquired. Free cash flow is not a recognized term under U.S. GAAP
and may not be defined similarly by other companies. Free cash flow
should not be considered an alternative to “operating income
(loss),” “net income (loss),” “net cash flows provided by (used in)
operating activities” or any other measure determined in accordance
with U.S. GAAP. Since free cash flow includes investments in
operating assets, we believe this non-GAAP liquidity measure is
useful in addition to the most comparable U.S. GAAP measure — “net
cash flows provided by (used in) operating activities” because it
provides information about the amount of cash generated after
acquisitions of businesses that is then available to repay debt
obligations, make investments, fund acquisitions, and for certain
other activities. There are limitations to using non-U.S. GAAP
financial measures, including the difficulty associated with
comparing companies in different industries that use similar
performance measures whose calculations may differ from ours.
DigitalGlobe, Inc.
Consolidated Statements of Operations
For the three months ended March 31, (in
millions, except per share data) 2015 2014
Revenue $ 169.4 $ 156.5 Costs and expenses: Cost of revenue,
excluding depreciation and amortization 39.3 39.5 Selling, general
and administrative 57.0 53.0 Depreciation and amortization 67.3
57.6 Restructuring charges 2.2 1.1 Loss on abandonment of asset
— 1.2 Income from operations 3.6 4.1
Other income, net — 0.1 Interest expense, net (12.7 )
— (Loss) income before income taxes (9.1 ) 4.2 Income tax
benefit (expense) 4.2 (3.8 ) Net (loss) income
(4.9 ) 0.4 Preferred stock dividends (1.0 ) (1.0 )
Net loss less preferred stock dividends (5.9 ) (0.6 )
Loss per share: Basic loss per share $ (0.08 ) $ (0.01 )
Diluted loss per share $ (0.08 ) $ (0.01 ) Weighted average common
shares outstanding: Basic 72.4 75.0
Diluted 72.4 75.0
DigitalGlobe, Inc.
Reconciliation of Net Income (Loss) to
EBITDA and Adjusted EBITDA
For the three months ended March 31, (in
millions) 2015 2014 Net (loss) income $ (4.9 ) $
0.4 Depreciation and amortization 67.3 57.6 Interest expense, net
12.7 — Income tax (benefit) expense (4.2 ) 3.8
EBITDA 70.9 61.8 Restructuring charges (1) 2.2 1.1
Integration costs (1) — 3.8 Loss on abandonment of asset —
1.2
Adjusted EBITDA $ 73.1 $ 67.9 (1)
Restructuring and integration costs incurred in 2014 consist
of charges related to the acquisition of GeoEye. Restructuring
charges incurred in 2015 relate to our restructuring plan announced
in February 2015.
EBITDA margin is calculated by dividing EBITDA by U.S. GAAP
revenue. Adjusted EBITDA margin is calculated by dividing Adjusted
EBITDA by U.S. GAAP revenue. We have not provided a reconciliation
of our Adjusted EBITDA outlook to the comparable forward-looking
U.S. GAAP financial measure because we are unable to provide a
forward-looking estimate of the reconciling items between such
non-U.S. GAAP forward-looking measure and the comparable
forward-looking U.S. GAAP measure. Certain factors that are
materially significant to our ability to estimate these items are
out of our control and/or cannot be reasonably predicted.
Accordingly, a reconciliation to the comparable forward-looking
U.S. GAAP measure is not available without unreasonable effort.
DigitalGlobe, Inc.
Reconciliation of Net Cash Flows Provided
by Operating Activities to Free Cash Flow
For the three months ended March 31,
(in millions) 2015 2014 Net cash
flows provided by operating activities $ 56.9 $ 39.9 Net cash flows
used in investing activities (31.3 ) (97.7 ) Acquisition of
businesses, net of cash acquired — 35.7
Free cash flow $ 25.6 $ (22.1 )
Free Cash Flow margin is calculated by dividing Free Cash Flow
by U.S. GAAP revenue.
DigitalGlobe, Inc.
Consolidated Balance Sheets
March 31, December 31, (in millions, except
par value) 2015 2014 ASSETS CURRENT
ASSETS: Cash and cash equivalents $ 114.9 $ 117.8 Restricted
cash 2.3 2.3
Accounts receivable, net of allowance for
doubtful accounts of $1.5 and $0.5,respectively
130.0 133.6 Short-term deferred contract costs 8.5 9.1 Prepaid and
current assets 18.3 22.6 Deferred taxes 24.1
24.1 Total current assets 298.1 309.5
Property and equipment, net of accumulated
depreciation of $985.8 and$1,095.5, respectively
2,138.3 2,174.7 Goodwill 484.5 484.5
Intangible assets, net of accumulated
amortization of $22.1 and $19.5,respectively
40.4 43.0 Long-term restricted cash 4.0 4.0 Long-term deferred
contract costs 45.1 41.8 Other assets 35.1
37.7 Total assets $ 3,045.5 $ 3,095.2
LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT
LIABILITIES: Accounts payable $ 12.7 $ 4.4 Current portion of
long-term debt 5.5 5.5 Other accrued liabilities 51.2 62.2 Current
portion of deferred revenue 85.0 91.0
Total current liabilities 154.4 163.1 Deferred rev
enue 321.3
335.1 Long-term debt, net of discount 1,130.9 1,132.1 Long-term
deferred tax liability, net 96.0 101.9 Other liabilities
19.6 9.5 Total liabilities $ 1,722.2 $
1,741.7
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY DigitalGlobe, Inc. stockholders’
equity:
Series A convertible preferred stock,
$0.001 par value; 0.08 sharesauthorized; 0.08 shares issued and
outstanding at March 31, 2015 andDecember 31, 2014
— —
Common stock; $0.001 par value; 250.0
shares authorized; 76.5 sharesissued and 72.5 shares outstanding at
March 31, 2015 and 76.1shares issued and 73.2 shares outstanding at
December 31, 2014
0.2 0.2
Treasury stock, at cost; 4.0 shares at
March 31, 2015 and 2.9 sharesat December 31, 2014
(111.7 ) (80.1 ) Additional paid-in capital 1,490.3 1,484.0
Accumulated deficit (57.3 ) (52.4 ) Total
DigitalGlobe, Inc. stockholders’ equity 1,321.5 1,351.7
Noncontrolling interest 1.8 1.8 Total
stockholders’ equity 1,323.3 1,353.5
Total liabilities and stockholders’ equity $ 3,045.5 $
3,095.2
DigitalGlobe, Inc.
Consolidated Statements of Cash Flows
For the three months ended March 31, (in
millions) 2015 2014 CASH FLOWS FROM OPERATING
ACTIVITIES: Net (loss) income $ (4.9 ) $ 0.4
Adjustments to reconcile net (loss) income
to net cash provided by operatingactivities:
Depreciation and amortization expense 67.3 57.6
Amortization of aerial image library,
deferred contract costs and leaseincentive
4.5 5.0
Non-cash stock-based compensation expense,
net of capitalized stock-based compensation expense
4.6 3.9
Amortization of debt issuance costs and
accretion of debt discount, net ofcapitalized interest
1.7 — Deferred income taxes (5.9 ) 3.8 Excess tax benefit from
share-based compensation (0.9 ) — Other 0.4 1.2
Changes in working capital, net of assets
acquired and liabilities assumed inbusiness combinations:
Accounts receivable, net 3.6 0.1 Deferred contract costs (4.8 )
(0.4 ) Other current and non-current assets 4.8 6.7 Accounts
payable 5.8 (12.1 ) Accrued liabilities 0.5 (12.7 ) Deferred
revenue (19.8 ) (13.6 ) Net cash flows provided by
operating activities 56.9 39.9
CASH
FLOWS FROM INVESTING ACTIVITIES: Construction in progress
additions (30.1 ) (61.8 ) Property and equipment additions (1.2 )
(2.2 ) Acquisition of businesses, net of cash acquired — (35.7 )
Decrease in restricted cash — 2.0 Net
cash flows used in investing activities (31.3 ) (97.7
)
CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of debt
(1.4 ) (1.4 ) Principal payments on capital lease obligations (0.2
) (0.2 ) Repurchase of common stock (31.1 ) — Proceeds from
exercise of stock options 4.3 1.8 Preferred stock dividend payment
(1.0 ) (1.0 ) Excess tax benefit from share-based compensation
0.9 — Net cash flows used in financing
activities (28.5 ) (0.8 ) Net decrease in cash and
cash equivalents (2.9 ) (58.6 ) Cash and cash equivalents,
beginning of period 117.8 229.1 Cash
and cash equivalents, end of period $ 114.9 $ 170.5
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest, net of capitalized
amounts of $11.5 million and $21.1million, respectively
9.6 —
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Changes to non-cash property, equipment
and construction in progressaccruals, including interest
3.2 12.0 Non-cash preferred stock dividend accrual (1.0 ) (1.0 )
DigitalGlobeInvestor Contact:David Banks,
303-684-4210ir@digitalglobe.comorMedia Contact:Nancy
Coleman, 303-684-1674nancy.coleman@digitalglobe.com
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