Maxar Technologies (NYSE:MAXR) (TSX:MAXR) (“Maxar” or the
“Company”), a trusted partner and innovator in Earth Intelligence
and Space Infrastructure, today announced financial results for the
quarter ended June 30, 2019. All dollar amounts in this press
release are expressed in U.S. dollars.
Key points from the quarter include:
- Consolidated revenues of $490 million
- Net income of $2.45 per share
- Adjusted EBITDA1 of $129 million and Adjusted EBITDA1 margin of
26 percent
1
This is a non-GAAP financial measure.
Refer to section “Non-GAAP Financial Measures” in this earnings
release
“We made solid progress this quarter on our near-term priorities
to position Maxar for sustained top and bottom-line growth. We
continued to track options to reduce debt and leverage levels,
re-engineer the Space Solutions business, position our Imagery,
Services, and MDA businesses for long-term growth, and create a
leaner, more agile organization with a reduced cost structure,”
stated Dan Jablonsky, President and Chief Executive Officer.
Jablonsky continued, “This quarter, we garnered some important
wins, including NASA’s Power Propulsion Element for the Artemis
program, we signed a study contract with National Reconnaissance
Office to assess Maxar’s current and future capabilities and added
an additional country to the installed base for the Company’s Rapid
Access Program. Our Services business generated a greater than one
book-to-bill again this quarter, and MDA started work on the
Canadian Surface Combatant program and signed an award with the
Canadian government for flight-ready repeaters that will be
launched on the US Air Force’s GPS III satellites. Finally, we
continued to advance our organizational re-engineering to
strengthen our financial position and drive long-term value for our
shareholders and customers.”
“Second quarter results were largely consistent with
expectations,” stated Biggs Porter, Chief Financial Officer. “Cash
flows and earnings benefited from the recovery of insurance
proceeds related to the loss of the World-View 4 while Adjusted
EBITDA experienced quarter over quarter growth given recent
restructuring efforts and improved profitability.”
Total revenues decreased to $490 million from $579 million, or
by $89 million, for the three months ended June 30, 2019, compared
to the same period of 2018. The decrease in revenues was primarily
driven by a $73 million decrease in the Space Systems segment and
an $11 million decrease in the Imagery segment. These decreases
were partially offset by an $8 million increase in revenues in the
Services segment.
For the three months ended June 30, 2019, net income of $146
million compared to net loss of $40 million in the comparative
period of 2018. The increase is primarily driven by the receipt of
satellite insurance proceeds in the second quarter of 2019.
For the second quarter of 2019, Adjusted EBITDA was $129 million
and Adjusted EBITDA as a percentage of consolidated revenues
(“Adjusted EBITDA margin percentage”) was 26.3%. This is compared
to Adjusted EBITDA of $133 million and Adjusted EBITDA margin
percentage of 22.9% for the second quarter of 2018. The decline was
driven largely by lower Adjusted EBITDA from the Imagery segment
and higher corporate and other unallocated expenses, partially
offset by an increase in the Space Systems segment.
The Company had total order backlog of $2.2 billion as of June
30, 2019 compared to $2.4 billion as at December 31, 2018. Backlog
decreased primarily due to declines in backlog in our Imagery
segment partially offset by an increase in our Space Systems
segment and Services segment backlog as a result of new awards
during the quarter. Imagery backlog declined primarily due to the
recognition of EnhancedView revenue during the quarter and the loss
of our WorldView-4 satellite. As of June 30, 2019 and December 31,
2018 unfunded contract options totaled $1.2 billion,
respectively.
Financial Highlights
In addition to results reported in accordance with U.S. GAAP,
the Company uses certain non-GAAP financial measures as
supplemental indicators of its financial and operating performance.
These non-GAAP financial measures include EBITDA and Adjusted
EBITDA. The Company believes these supplementary financial
measures reflect the Company’s ongoing business in a manner that
allows for meaningful period-to-period comparisons and analysis of
trends in its business.
Three months
ended
Six months
ended
June 30,
June 30,
2019
2018
2019
2018
($ millions, except per share
amounts)
Revenues
$
490
$
579
$
994
$
1,136
Net income (loss)
146
(40
)
87
(25
)
Adjusted EBITDA1
129
133
246
284
Net income (loss) per share, diluted
$
2.45
$
(0.70
)
$
1.46
$
(0.44
)
Weighted average number of common shares
outstanding (millions):
Basic
59.6
57.2
59.6
56.8
Diluted
59.6
57.2
59.6
56.8
1
This is a non-GAAP financial measure.
Refer to section “Non-GAAP Financial Measures” in this earnings
release.
Revenues by segment are as follows:
Three months
ended
Six months
ended
June 30,
June 30,
2019
2018
2019
2018
($ millions)
Revenues
Space Systems
$
257
$
330
$
531
$
623
Imagery
201
212
401
423
Services
74
66
142
136
Intersegment eliminations
(42
)
(29
)
(80
)
(46
)
Total Revenues
$
490
$
579
$
994
$
1,136
The Company analyzes financial performance by segment, which
combine related activities within the Company.
Three months
ended
Six months
ended
June 30,
June 30,
2019
2018
2019
2018
Adjusted EBITDA:
Space Systems
$
28
$
13
$
38
$
41
Imagery
123
133
244
267
Services
6
6
13
10
Intersegment eliminations
(10
)
(7
)
(13
)
(9
)
Corporate and other expenses
(18
)
(12
)
(36
)
(25
)
Adjusted EBITDA1
$
129
$
133
$
246
$
284
1
This is a non-GAAP financial measure.
Refer to section “Non-GAAP Financial Measures” in this earnings
release.
Space Systems
Three months
ended
Six months
ended
June 30,
June 30,
2019
2018
2019
2018
($ millions)
Revenues
$
257
$
330
$
531
$
623
Adjusted EBITDA
$
28
$
13
$
38
$
41
Adjusted EBITDA margin percentage
10.9
%
3.9
%
7.2
%
6.6
%
Revenues from the Space Systems segment decreased to $257
million from $330 million, or by $73 million, for the three months
ended June 30, 2019, compared to the same period of 2018. Revenues
from Space Solutions decreased primarily as a result of the impact
of reduced volume in our geostationary satellite manufacturing
business (“GeoComm”) business and an increase in estimated costs to
complete. An increase in estimated costs to complete directly
impacts revenues, as revenues are recognized over time under the
cost-to-cost method. Revenues from MDA also decreased which was
primarily related to lower revenues on the RCM program in Canada
which launched in June 2019.
Adjusted EBITDA increased to $28 million from $13 million, or by
$15 million, for the three months ended June 30, 2019, compared to
the same period of 2018. The increase in the Space Systems segment
is primarily related to reduced research and development spend of
$18 million, headcount reductions from restructuring initiatives
resulting in $5 million of cost reductions, a recovery of a
previously reserved amount of $7 million, and no liquidating
damages incurred to date during 2019 compared to $5 million of
liquidated damages at Space Solutions that occurred in 2018. These
increases were partially offset by decreases from the effects of
lower revenues within the Space Systems segment.
Imagery
Three months
ended
Six months
ended
June 30,
June 30,
2019
2018
2019
2018
($ millions)
Revenues
$
201
$
212
$
401
$
423
Adjusted EBITDA
$
123
$
133
$
244
$
267
Adjusted EBITDA Margin
61.2
%
62.7
%
60.8
%
63.1
%
Imagery segment revenues decreased to $201 million from $212
million, or by $11 million, for the three months ended June 30,
2019, compared to the same period of 2018. The decrease was
primarily driven by a $14 million decrease due to the loss of
WorldView-4 revenue and a $4 million decrease due to a delay in the
signing of a contract with an existing international customer.
These decreases were partially offset by $8 million in revenue
growth from the U.S. government.
Adjusted EBITDA decreased to $123 million from $133 million, or
by $10 million, for the three months ended June 30, 2019, compared
to the same period of 2018. The decrease was primarily driven by
the impact of the loss of revenue generated from the WorldView-4
satellite and the impact due to the delayed contract signing of an
existing international customer, both of which had higher
margins.
Services
Three months
ended
Six months
ended
June 30,
June 30,
2019
2018
2019
2018
($ millions)
Revenues
$
74
$
66
$
142
$
136
Adjusted EBITDA
$
6
$
6
$
13
$
10
Adjusted EBITDA Margin
8.1
%
9.1
%
9.2
%
7.4
%
Services segment revenues increased to $74 million from $66
million, or by $8 million, for the three months ended June 30,
2019, compared to the same period of 2018. The increase was
primarily driven by growth from new contract awards and expansion
of programs with the U.S. government.
Adjusted EBITDA was $6 million for both the three months ended
June 30, 2019 and 2018. The impact of the increase in revenues on
Adjusted EBITDA which was partially offset by a change in an
expense related to a lease.
Corporate and other expenses
Corporate and other expenses include items such as corporate
office costs, regulatory costs, executive and director
compensation, foreign exchange gains and losses, retention costs,
and fees for legal and consulting services.
Corporate and other expenses for the three months ended June 30,
2019, were $18 million compared to $12 million for the same period
of 2018. The increase of $6 million or 50% is primarily
attributable to a $6 million increase in retention costs, a $2
million increase in selling, general and administrative expenses
which were partially offset by $6 million in higher foreign
exchange gains.
MAXAR TECHNOLOGIES INC.
Unaudited Condensed Consolidated
Statements of Operations
(In millions of United States dollars,
except per share amounts)
Three Months
Ended
Six Months
Ended
June 30,
June 30,
2019
2018
2019
2018
Revenues:
Product
$
190
$
257
$
384
$
485
Service
300
322
610
651
Total revenues
$
490
$
579
$
994
$
1,136
Costs and expenses:
Product costs, excluding depreciation and
amortization
$
165
$
254
$
362
$
441
Service costs, excluding depreciation and
amortization
121
77
231
196
Selling, general and administrative
80
133
183
236
Depreciation and amortization
99
113
197
224
Impairment losses
12
—
12
—
Satellite insurance recovery
(183
)
—
(183
)
—
Operating income
196
2
192
39
Interest expense, net
49
50
98
103
Other (income) expense, net
(3
)
4
3
5
Income (loss) before taxes
150
(52
)
91
(69
)
Income tax expense (benefit)
2
(9
)
1
(41
)
Equity in loss (income) from joint
ventures, net of tax
2
(3
)
3
(3
)
Net income (loss)
$
146
$
(40
)
$
87
$
(25
)
Income (loss) per common share:
Basic
$
2.45
$
(0.70
)
$
1.46
$
(0.44
)
Diluted
$
2.45
$
(0.70
)
$
1.46
$
(0.44
)
MAXAR TECHNOLOGIES INC.
Unaudited Condensed Consolidated Balance
Sheets
(In millions of United States dollars,
except per share amounts)
June 30,
December
31,
2019
2018
Assets
Current assets:
Cash and cash equivalents
$
63
$
35
Trade and other receivables, net
490
464
Inventory
24
31
Advances to suppliers
10
42
Income taxes receivable
24
14
Prepaid and other current assets
54
51
Total current assets
665
637
Non-current assets:
Orbital receivables
405
407
Deferred tax assets
112
103
Property, plant and equipment, net
785
747
Intangible assets, net
1,120
1,232
Non-current operating lease assets
124
—
Goodwill
1,763
1,751
Other assets
109
124
Total assets
$
5,083
$
5,001
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
172
$
209
Accrued liabilities
58
116
Accrued compensation and benefits
82
100
Contract liabilities
267
361
Current portion of long-term debt
17
17
Current operating lease liabilities
33
—
Other current liabilities
56
46
Total current liabilities
685
849
Non-current liabilities:
Pension and other postretirement
benefits
192
196
Contract liabilities
29
60
Operating lease liabilities
133
—
Long-term debt
3,127
3,030
Other non-current liabilities
186
222
Total liabilities
4,352
4,357
Stockholders’ equity:
Common stock ($0.0001 par value, 240
million common shares authorized and 59.6 million outstanding at
June 30, 2019; nil par value, unlimited authorized common shares
and 59.4 million outstanding at December 31, 2018)
—
1,713
Additional paid-in capital
1,776
59
Accumulated deficit
(1,125
)
(1,211
)
Accumulated other comprehensive income
79
82
Total Maxar stockholders' equity
730
643
Noncontrolling interest
1
1
Total stockholders' equity
731
644
Total liabilities and stockholders'
equity
$
5,083
$
5,001
MAXAR TECHNOLOGIES INC.
Unaudited Condensed Consolidated
Statements of Cash Flows
(In millions of United States dollars)
Six Months
Ended
June 30,
2019
2018
Cash flows provided by (used in):
Operating activities:
Net income (loss)
$
87
$
(25
)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation of property, plant and
equipment
60
78
Amortization of intangible assets
137
146
Stock-based compensation expense
4
9
Amortization of debt issuance costs and
other noncash interest expense
4
5
Impairment losses
15
—
Foreign exchange losses
3
8
Deferred income tax expense (benefit)
6
(26
)
Other
(3
)
6
Changes in operating assets and
liabilities:
Trade and other receivables
(12
)
(64
)
Accrued compensation and benefits
(22
)
(15
)
Trade and other payables
(35
)
(31
)
Accrued liabilities
(60
)
24
Contract liabilities
(126
)
(113
)
Advances to suppliers
32
20
Deferred tax assets
(9
)
(14
)
Deferred tax liabilities
(5
)
27
Other liabilities
(7
)
(17
)
Other
(10
)
(19
)
Cash provided by (used in) operating
activities
59
(1
)
Investing activities:
Purchase of property, plant and
equipment
(99
)
(83
)
Purchase or development of software
(28
)
(37
)
Cash collected on note receivable
—
5
Disposal of subsidiary and short-term
investments
3
5
Cash used in investing activities
(124
)
(110
)
Financing activities:
Net proceeds from revolving credit
facility
112
141
Repayments of long-term debt
(13
)
(13
)
Settlement of securitization liability
(8
)
(6
)
Payment of dividends
(1
)
(32
)
Change in overdraft balance
—
1
Cash provided by financing activities
90
91
Increase (decrease) in cash, cash
equivalents, and restricted cash
25
(20
)
Effect of foreign exchange on cash, cash
equivalents, and restricted cash
1
—
Cash, cash equivalents, and restricted
cash, beginning of year
43
42
Cash, cash equivalents, and restricted
cash, end of period
$
69
$
22
Reconciliation of cash flow
information:
Cash and cash equivalents
$
63
$
12
Restricted cash included in prepaid and
other current assets
5
9
Restricted cash included in other
assets
1
1
Total cash, cash equivalents, and
restricted cash
$
69
$
22
NON-GAAP FINANCIAL MEASURES
In addition to results reported in accordance with U.S. GAAP, we
use certain non-GAAP financial measures as supplemental indicators
of our financial and operating performance. These non-GAAP
financial measures include EBITDA, Adjusted
EBITDA and Adjusted EBITDA margin.
We define EBITDA as earnings before interest,
taxes, depreciation and amortization, and Adjusted
EBITDA as EBITDA adjusted for certain items affecting
comparability as specified in the calculation. Adjusted
EBITDA margin is defined as Adjusted EBITDA as a percentage
of revenues. Management believes that exclusion of items in
Adjusted EBITDA assists in providing a more complete understanding
of our underlying results and trends, and management uses these
measures along with the corresponding U.S. GAAP financial measures
to manage our business, evaluate our performance compared to prior
periods and the marketplace, and to establish operational goals.
Adjusted EBITDA is a measure being used as a key element of our
incentive compensation plan. The Syndicated Credit Facility also
uses Adjusted EBITDA in the determination of our debt leverage
covenant ratio. The definition of Adjusted EBITDA in the Syndicated
Credit Facility includes a more comprehensive set of
adjustments.
We believe that these non-GAAP measures, when read in
conjunction with our U.S. GAAP results, provide useful information
to investors by facilitating the comparability of our ongoing
operating results over the periods presented, the ability to
identify trends in our underlying business, and the comparison of
our operating results against analyst financial models and
operating results of other public companies.
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 (loss) as indications of financial performance or as
alternate to cash flows from operations as measures of liquidity.
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have limitations
as analytical tools and should not be considered in isolation or as
a substitute for our results reported under U.S. GAAP. The table
below reconciles our net (loss) income before taxes to Adjusted
EBITDA for the three and six months ended June 30, 2019 and
2018.
Three Months Ended June
30,
Six months ended June
30,
2019
2018
2019
2018
($ millions)
Net income (loss)
$
146
$
(40
)
$
87
$
(25
)
Income tax expense (benefit)
2
(9
)
1
(41
)
Interest expense, net
49
50
98
103
Depreciation and amortization
99
113
197
224
EBITDA
$
296
$
114
$
383
$
261
Acquisition and integration related
expense
2
6
6
10
Restructuring
2
13
22
13
Impairment losses
12
—
15
—
Satellite insurance recovery
(183
)
—
(183
)
—
CEO severance
—
—
3
—
Adjusted EBITDA
$
129
$
133
$
246
$
284
Adjusted EBITDA:
Space Systems
28
13
38
41
Imagery
123
133
244
267
Services
6
6
13
10
Intersegment eliminations
(10
)
(7
)
(13
)
(9
)
Corporate and other expenses
(18
)
(12
)
(36
)
(25
)
Adjusted EBITDA
$
129
$
133
$
246
$
284
Cautionary Note Regarding Forward-Looking
Statements
Certain statements and other information included in this
release constitute "forward-looking information" or
"forward-looking statements" (collectively, "forward-looking
statements") under applicable securities laws. Statements including
words such as "may", "will", "could", "should", "would", "plan",
"potential", "intend", "anticipate", "believe", "estimate" or
"expect" and other words, terms and phrases of similar meaning are
often intended to identify forward-looking statements, although not
all forward-looking statements contain these identifying words.
Forward-looking statements involve estimates, expectations,
projections, goals, forecasts, assumptions, risks and
uncertainties, as well as other statements referring to or
including forward-looking information included in this
presentation.
Forward-looking statements are subject to various risks and
uncertainties which could cause actual results to differ materially
from the anticipated results or expectations expressed in this
presentation. As a result, although management of the Company
believes that the expectations and assumptions on which such
forward-looking statements are based are reasonable, undue reliance
should not be placed on the forward-looking statements because the
Company can give no assurance that they will prove to be correct.
The risks that could cause actual results to differ materially from
current expectations include, but are not limited to, the risk
factors and other disclosures about the Company and its business
included in the Company's continuous disclosure materials filed
from time to time with U.S. securities and Canadian regulatory
authorities, which are available online under the Company's EDGAR
profile at www.sec.gov, under the Company's SEDAR profile at
www.sedar.com or on the Company's website at www.maxar.com.
The forward-looking statements contained in this release are
expressly qualified in their entirety by the foregoing cautionary
statements. All such forward-looking statements are based upon data
available as of the date of this presentation or other specified
date and speak only as of such date. The Company disclaims any
intention or obligation to update or revise any forward-looking
statements in this presentation as a result of new information or
future events, except as may be required under applicable
securities legislation.
*****
Unless stated otherwise or the context otherwise requires,
references to the terms “Company,” “Maxar,” “we,” “us,” and “our”
to refer collectively to Maxar Technologies Inc. and its
consolidated subsidiaries. Financial information and results of
operations presented in this Annual Report on Form 10-K for the
periods prior to January 1, 2019 relate to Maxar Technologies Inc.,
our predecessor issuer, and relate to Maxar Technologies Inc. after
January 1, 2019.
Investor/Analyst Conference Call
Maxar President and Chief Executive Officer, Dan Jablonsky, and
Executive Vice President and Chief Financial Officer, Biggs Porter,
will host an earnings conference call the same day, reviewing the
second quarter results, followed by a question and answer session.
The call is scheduled to begin promptly at 3:30 p.m. MT (5:30 p.m.
ET).To participate, dial:
Participant Toll Free Dial-In: 1-866-211-3067 Participant
International Dial-In: 1-647-689-6610
The Conference Call will also be Webcast live and then archived
at:
https://event.on24.com/wcc/r/2017728/29A5EA46A7C5760A237D89ED9F769A18
Telephone replay will be available from Tuesday, August 6, 2019
at 6:30 p.m. MT (8:30 p.m. ET) to Tuesday, August 20, 2019 at 9:59
p.m. MT (11:59 p.m. ET) at the following numbers: Toll free North
America: 1-800-585-8367 International Dial-In: 1-416-621-4642
Passcode: 4096205#
About Maxar
Maxar is a trusted partner and innovator in Earth Intelligence
and Space Infrastructure. We deliver disruptive value to government
and commercial customers to help them monitor, understand and
navigate our changing planet; deliver global broadband
communications; and explore and advance the use space. Our unique
approach combines decades of deep mission understanding and a
proven commercial and defense foundation to deploy solutions and
deliver insights with unrivaled speed, scale and cost
effectiveness. Maxar’s 5,900 team members in 30 global locations
are inspired to harness the potential of space to help our
customers create a better world. Maxar trades on the New York Stock
Exchange and Toronto Stock Exchange as MAXR. For more information,
visit www.maxar.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190806005909/en/
Jason Gursky | VP Investor Relations | 1-303-684-2207 |
jason.gursky@maxar.com Turner Brinton | Media Relations |
1-303-684-4545 | turner.brinton@maxar.com
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