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, 2021. All dollar amounts in this press
release are expressed in U.S. dollars, unless otherwise noted.
Key points from the quarter include:
- Net income from continuing operations of $45 million
- Diluted net income per share of $0.60
- Consolidated revenues of $473 million
- Adjusted EBITDA1 of $132 million
1 This is a non-GAAP financial measure. Refer to section
“Non-GAAP Financial Measures” in this earnings release.
“We continued this quarter to make progress toward achieving our
longer-term targets, including efforts to drive sustainable growth
in both our Earth Intelligence and Space Infrastructure segments,”
stated Dan Jablonsky, President and Chief Executive Officer. “In
Earth Intelligence, we received multiple awards from the US and
international government customers, including programs supporting
persistent change monitoring and space domain awareness, as well as
imagery and 3D data sales. Importantly, early in the third quarter,
we received our first commitment for Legion capacity from a US ally
and our 11th renewal of the Enhanced View program for the period
starting September 1st of this year. Commercial awards included a
data sale to a large social media company. In Space Infrastructure,
wins in the quarter included a contract modification with NASA for
work on the Power Propulsion Element and study contracts for
National Security classified work as we continue to look to shape
new programs and further diversify the business. Also, as announced
earlier today, we received an award from Sirius XM to produce their
XM-9 satellite.”
“We generated solid year-over-year revenue growth driven by
performance on previously awarded programs in Space Infrastructure
and robust book-ship activity in Earth Intelligence. Margin
performance was also solid given improving execution and mix.
Year-to-date free cash flow is exceeding our internal expectations
even though this quarter was negatively impacted by the timing of
receipts that were collected early in the current quarter,” stated
Biggs Porter, Chief Financial Officer. “We are maintaining 2021
guidance for all metrics, including revenue, Adjusted EBITDA and
cash flow.”
Total revenues increased to $473 million from $439 million, or
by $34 million, for the three months ended June 30, 2021, compared
to the same period in 2020. The increase was primarily driven by a
$33 million increase in revenue in our Space Infrastructure
segment. We also had an increase in revenue in our Earth
Intelligence segment; however, the increase was partially offset by
a $30 million decrease in the recognition of deferred revenue
related to the EnhancedView Contract.
For the three months ended June 30, 2021, our net income from
continuing operations was $45 million compared to $0 million for
the three months ended June 30, 2020. The increase was primarily
driven by an increase in revenue of $34 million as mentioned above
and a $15 million decrease in interest on long-term debt primarily
driven by lower principal balances on Term Loan B and the 2023
Notes due to a repayment made on Term Loan B in the second quarter
of 2020 as well as a redemption made on the 2023 Notes in the first
quarter of 2021. The increase was also driven by a $10 million
income tax benefit, primarily due to a change in the 2020 estimated
Base Erosion and Anti-Abuse Tax driven by a change in tax strategy
enabled by a reduction in forecasted interest expense and tax on
foreign earnings. This was partially offset by an increase in
product and service costs of $25 million, driven by an increase in
product costs within our Space Infrastructure segment and an
increase in service costs within our Earth Intelligence
segment.
For the three months ended June 30, 2021, Adjusted EBITDA was
$132 million and Adjusted EBITDA margin was 27.9%. This is compared
to Adjusted EBITDA of $138 million and Adjusted EBITDA margin of
31.4% for the same period of 2020. The decrease was primarily
driven by lower Adjusted EBITDA from the Earth Intelligence and
higher corporate and other expenses, partially offset by higher
Adjusted EBITDA from the Space Infrastructure segment.
We had total order backlog of $1.5 billion as of June 30, 2021
compared to $1.9 billion as of December 31, 2020. The decrease in
backlog was driven by decreases in both the Earth Intelligence and
Space Infrastructure segments. Our unfunded contract options
totaled $0.9 billion as of June 30, 2021 and December 31, 2020,
respectively.
Financial Highlights
In addition to results reported in accordance with U.S. GAAP, we
use certain non-GAAP financial measures as supplemental indicators
of its financial and operating performance. These non-GAAP
financial measures include EBITDA and Adjusted EBITDA. We believe
these supplementary financial measures reflect our ongoing business
in a manner that allows for meaningful period-to-period comparisons
and analysis of trends in its business.
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
($ millions, except per share amounts)
Revenues
$
473
$
439
$
865
$
820
Income (loss) from continuing
operations
45
—
(39
)
(78
)
Income from discontinued operations, net
of tax
—
306
—
336
Net income (loss)
$
45
$
306
$
(39
)
$
258
EBITDA1
132
441
199
533
Adjusted EBITDA1
132
138
199
215
Diluted net income (loss) per common
share:
Income (loss) from continuing
operations
$
0.60
$
—
$
(0.57
)
$
(1.29
)
Income from discontinued operations, net
of tax
—
4.94
—
5.56
Diluted net income (loss) per common
share
$
0.60
$
4.94
$
(0.57
)
$
4.27
Weighted average number of common shares
outstanding (millions):
Basic
72.2
60.6
68.5
60.4
Diluted
74.7
62.0
68.5
60.4
1 This is a non-GAAP financial measure. Refer to section
“Non-GAAP Financial Measures” in this earnings release.
Revenues by segment were as follows:
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
($ millions)
Revenues:
Earth Intelligence
$
283
$
278
$
533
$
549
Space Infrastructure
206
184
361
316
Intersegment eliminations
(16
)
(23
)
(29
)
(45
)
Total revenues
$
473
$
439
$
865
$
820
We analyze financial performance by segment, which combine
related activities within the Company.
Three Months Ended
Six Months Ended
June 30,
June 30,
($ millions)
2021
2020
2021
2020
Adjusted EBITDA:
Earth Intelligence
$
131
$
146
$
238
$
279
Space Infrastructure
27
11
15
(28
)
Intersegment eliminations
(7
)
(7
)
(12
)
(14
)
Corporate and other expenses
(19
)
(12
)
(42
)
(22
)
Adjusted EBITDA1
$
132
$
138
$
199
$
215
1 This is a non-GAAP financial measure. Refer to section
“Non-GAAP Financial Measures” in this earnings release.
Earth Intelligence
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
($ millions)
Revenues
$
283
$
278
$
533
$
549
Adjusted EBITDA
$
131
$
146
$
238
$
279
Adjusted EBITDA margin (as a % of total
revenues)
46.3
%
52.5
%
44.7
%
50.8
%
Revenues from the Earth Intelligence segment increased to $283
million from $278 million, or by $5 million, compared to the same
period in 2020. The increase was primarily driven by a $24 million
increase in revenue from international defense and intelligence
customers, a $6 million increase from new commercial programs and a
$5 million increase in revenue from new contracts with the U.S.
government. These increases were partially offset by a $30 million
decrease in the recognition of deferred revenue related to the
EnhancedView Contract. We recognized $30 million of deferred
revenue from the EnhancedView Contract for the three months ended
June 30, 2020, compared to none for the three months ended June 30,
2021, as it was fully recognized as of August 31, 2020.
Adjusted EBITDA from the Earth Intelligence segment decreased to
$131 million from $146 million, or by $15 million, for the three
months ended June 30, 2021, compared to the same period of 2020.
The decrease was primarily driven by a decrease in the recognition
of deferred revenue related to the EnhancedView Contract as
mentioned above. The decrease was also driven by an increase in
service costs and selling, general and administrative costs for the
three months ended June 30, 2021, as compared to the same period of
2020. These decreases were partially offset by growth on contracts
with international defense and intelligence customers and the U.S.
government.
Space Infrastructure
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
($ millions)
Revenues
$
206
$
184
$
361
$
316
Adjusted EBITDA
$
27
$
11
$
15
$
(28
)
Adjusted EBITDA margin (as a % of total
revenues)
13.1
%
6.0
%
4.2
%
(8.9
)%
Changes in revenues from year to year are influenced by the
size, timing and number of satellite contracts awarded in the
current and preceding years and the length of the construction
period for satellite contracts awarded. Revenues on satellite
contracts are recognized using the cost-to-cost method of
accounting to determine the percentage of completion over the
construction period, which typically ranges between 20 to 36 months
and up to 48 months in certain situations. Adjusted EBITDA margins
can vary from quarter to quarter due to the mix of our revenues and
changes in our estimated costs to complete as our risks are retired
and as our estimated costs to complete are increased or decreased
based on contract performance.
Revenues from the Space Infrastructure segment increased to $206
million from $184 million, or by $22 million, for the three months
ended June 30, 2021, compared to the same period in 2020. Revenues
increased primarily as a result of an increase in revenues from
commercial programs of $36 million due to higher volumes related to
new programs and lower EAC growth and no COVID-19 program impacts
for the three months ended June 30, 2021. The increase is partially
offset by a $14 million decrease in revenues from U.S. government
contracts.
Adjusted EBITDA from the Space Infrastructure segment increased
to $27 million from $11 million, or by $16 million, for the three
months ended June 30, 2021, compared to the same period of 2020.
The increase in the Space Infrastructure segment was primarily
related to a $24 million increase in commercial program margins due
to new programs and fewer negative EAC impacts during the period as
compared to the three months ended June 30, 2020, which included
negative EAC impacts due to COVID-19. The increase in commercial
program margins has been driven by a change in program mix related
to the completion of less profitable programs offset by new, more
profitable programs. The remaining $8 million change is related to
an increase in indirect costs and selling, general and
administrative costs.
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,
2021 increased to $19 million from $12 million, or by $7 million,
compared to the same period in 2020. The increase was primarily
driven by a $6 million increase in selling, general and
administrative costs primarily due to an increase in labor related
expenses driven by an increase in headcount and employee
compensation.
Intersegment eliminations
Intersegment eliminations are related to projects between our
segments, including our WorldView Legion satellite constellation.
Intersegment eliminations were $7 million for the three months
ended June 30, 2021 and 2020, respectively.
MAXAR TECHNOLOGIES INC.
Consolidated Statements of Operations (In millions, except per
share amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Revenues:
Product
$
190
$
157
$
332
$
264
Service
283
282
533
556
Total revenues
473
439
865
820
Costs and expenses:
Product costs, excluding depreciation and
amortization
156
144
304
289
Service costs, excluding depreciation and
amortization
100
87
193
180
Selling, general and administrative
88
79
172
147
Depreciation and amortization
73
89
147
179
Impairment loss
—
—
—
14
Operating income
56
40
49
11
Interest expense, net
24
48
102
97
Other income, net
(3
)
(4
)
(4
)
(7
)
Income (loss) before taxes
35
(4
)
(49
)
(79
)
Income tax benefit
(10
)
(2
)
(10
)
—
Equity in income from joint ventures, net
of tax
—
(2
)
—
(1
)
Income (loss) from continuing
operations
45
—
(39
)
(78
)
Discontinued operations:
Income from operations of discontinued
operations, net of tax
—
2
—
32
Gain on disposal of discontinued
operations, net of tax
—
304
—
304
Income from discontinued operations, net
of tax
—
306
—
336
Net income (loss)
$
45
$
306
$
(39
)
$
258
Basic net income (loss) per common
share:
Income (loss) from continuing
operations
$
0.62
$
—
$
(0.57
)
$
(1.29
)
Income from discontinued operations, net
of tax
—
5.05
—
5.56
Basic net income (loss) per common
share
$
0.62
$
5.05
$
(0.57
)
$
4.27
Diluted net income (loss) per common
share:
Income (loss) from continuing
operations
$
0.60
$
—
$
(0.57
)
$
(1.29
)
Income from discontinued operations, net
of tax
—
4.94
—
5.56
Diluted net income (loss) per common
share
$
0.60
$
4.94
$
(0.57
)
$
4.27
MAXAR TECHNOLOGIES INC.
Consolidated Balance Sheets (In millions, except per share
amounts)
June 30,
December 31,
2021
2020
Assets
Current assets:
Cash and cash equivalents
$
10
$
27
Trade and other receivables, net
400
327
Inventory
43
31
Advances to suppliers
16
24
Prepaid and other current assets
64
59
Total current assets
533
468
Non-current assets:
Orbital receivables, net
333
361
Property, plant and equipment, net
896
883
Intangible assets, net
840
895
Non-current operating lease assets
151
163
Goodwill
1,627
1,627
Other non-current assets
90
86
Total assets
$
4,470
$
4,483
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
112
$
115
Accrued liabilities
63
65
Accrued compensation and benefits
76
105
Contract liabilities
272
278
Current portion of long-term debt
13
8
Current operating lease liabilities
42
41
Other current liabilities
45
51
Total current liabilities
623
663
Non-current liabilities:
Pension and other postretirement
benefits
186
192
Contract liabilities
—
1
Operating lease liabilities
144
158
Long-term debt
2,121
2,414
Other non-current liabilities
96
119
Total liabilities
3,170
3,547
Commitments and contingencies
Stockholders’ equity:
Common stock ($0.0001 par value, 240
million common shares authorized; 72.4 million and 61.2 million
outstanding at June 30, 2021 and December 31, 2020,
respectively)
—
—
Additional paid-in capital
2,211
1,818
Accumulated deficit
(803
)
(763
)
Accumulated other comprehensive loss
(109
)
(120
)
Total Maxar stockholders' equity
1,299
935
Noncontrolling interest
1
1
Total stockholders' equity
1,300
936
Total liabilities and stockholders'
equity
$
4,470
$
4,483
MAXAR TECHNOLOGIES INC.
Consolidated Statements of Cash Flows (In millions)
Six Months Ended
June 30,
2021
2020
Cash flows (used in) provided by:
Operating activities:
Net (loss) income
$
(39
)
$
258
Income from operations of discontinued
operations, net of tax
—
32
Gain on disposal of discontinued
operations, net of tax
—
304
Loss from continuing operations
(39
)
(78
)
Adjustments to reconcile net income (loss)
to net cash (used in) provided by operating activities:
Depreciation and amortization
147
179
Stock-based compensation expense
21
13
Amortization of debt issuance costs and
other non-cash interest expense
7
8
Loss from early extinguishment of debt
41
7
Cumulative adjustment to SXM-7 revenue
25
—
Impairment loss
—
14
Other
9
2
Changes in operating assets and
liabilities:
Trade and other receivables
(72
)
40
Accounts payable and liabilities
(60
)
(65
)
Contract liabilities
(6
)
(38
)
Other
(23
)
(16
)
Cash provided by operating activities -
continuing operations
50
66
Cash used in operating activities -
discontinued operations
—
(30
)
Cash provided by operating activities
50
36
Investing activities:
Purchase of property, plant and equipment
and development or purchase of software
(105
)
(128
)
Return of capital from discontinued
operations
—
20
Cash used in investing activities -
continuing operations
(105
)
(108
)
Cash provided by investing activities -
discontinued operations
—
723
Cash (used in) provided by investing
activities
(105
)
615
Financing activities:
Repurchase of 2023 Notes, including
premium
(384
)
(169
)
Net proceeds from issuance of common
stock
380
—
Net proceeds from Revolving Credit
Facility
53
—
Net proceeds from issuance of 2027
Notes
—
147
Settlement of securitization liability
(6
)
(7
)
Repayments of long-term debt
(4
)
(521
)
Other
(6
)
1
Cash provided by (used in) financing
activities - continuing operations
33
(549
)
Cash used in financing activities -
discontinued operations
—
(24
)
Cash provided by (used in) financing
activities
33
(573
)
(Decrease) increase in cash, cash
equivalents, and restricted cash
(22
)
78
Effect of foreign exchange on cash, cash
equivalents, and restricted cash
—
(5
)
Cash, cash equivalents, and restricted
cash, beginning of year
32
110
Cash, cash equivalents, and restricted
cash, end of period
$
10
$
183
Reconciliation of cash flow
information:
Cash and cash equivalents
$
10
$
179
Restricted cash included in prepaid and
other current assets
—
1
Restricted cash included in other
non-current assets
—
3
Total cash, cash equivalents, and
restricted cash
$
10
$
183
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, Adjusted EBITDA as EBITDA adjusted
for certain items affecting comparability as specified in the
calculation and Adjusted EBITDA margin as Adjusted EBITDA divided
by revenue. Certain items affecting comparability include
restructuring, impairments, satellite insurance recovery, gain
(loss) on sale of assets, CEO severance and transaction and
integration related expense. Transaction and integration related
expense includes costs associated with de-leveraging activities,
acquisitions and dispositions and the integration of acquisitions.
Management believes that exclusion of these items 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 that may result in
a different calculation therein.
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, Adjusted EBITDA and Adjusted EBITDA margin 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 (loss) income as indications of
financial performance or as alternate to cash flows from operations
as measures of liquidity. EBITDA and Adjusted EBITDA have
limitations as an analytical tool 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 income to EBITDA and
Adjusted EBITDA and presents Adjusted EBITDA margin for the three
and six months ended June 30, 2021 and 2020.
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
($ millions)
Net income (loss)
$
45
$
306
$
(39
)
$
258
Income tax benefit
(10
)
(2
)
(10
)
—
Interest expense, net
24
48
102
97
Interest income
—
—
(1
)
(1
)
Depreciation and amortization
73
89
147
179
EBITDA1
$
132
$
441
$
199
$
533
Income from discontinued operations, net
of tax
—
(306
)
—
(336
)
Transaction and integration related
expense
—
3
—
4
Impairment loss
—
—
—
14
Adjusted EBITDA1
$
132
$
138
$
199
$
215
Adjusted EBITDA:
Earth Intelligence
$
131
$
146
$
238
$
279
Space Infrastructure
27
11
15
(28
)
Intersegment eliminations
(7
)
(7
)
(12
)
(14
)
Corporate and other expenses
(19
)
(12
)
(42
)
(22
)
Adjusted EBITDA1
$
132
$
138
$
199
$
215
Net income (loss) margin
9.5
%
69.7
%
(4.5
)%
31.5
%
Adjusted EBITDA margin
27.9
%
31.4
%
23.0
%
26.2
%
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.
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 Wednesday, August 4, 2021,
reviewing the second quarter results, followed by a question and
answer session. The call is scheduled to begin promptly at 3:00
p.m. MT (5:00 p.m. ET).
Investors and participants must register for the call in advance
by visiting:
http://www.directeventreg.com/registration/event/5162864
After registering, participants will receive dial-in
information, a passcode, and registrant ID. At the time of the
call, participants must dial in using the numbers in the
confirmation email and enter their passcode and ID.
The Conference Call will be Webcast live and then archived at:
http://investor.maxar.com/events-and-presentations/default.aspx
Telephone replay of the conference call will also be available
from Wednesday, August 4, 2021 at 6:00 p.m. MT (8:00 p.m. ET) to
Wednesday, August 18, 2021 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: 5162864#
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 of space. Our
unique approach combines decades of deep mission understanding and
a proven commercial and defense foundation to deploy solutions and
deliver insights with speed, scale, and cost effectiveness. Maxar’s
4,400 team members in more than 20 global locations are inspired to
harness the potential of space to help our customers create a
better world. Maxar’s stock trades on the New York Stock Exchange
and Toronto Stock Exchange under the symbol “MAXR”. For more
information, visit www.maxar.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20210804006041/en/
Jason Gursky | VP Investor Relations and Corporate Treasurer |
1-303-684-2207 | jason.gursky@maxar.com Turner Brinton | Media
Relations | 1-303-684-4545 | turner.brinton@maxar.com
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