DigitalGlobe (NYSE:DGI), a leading global provider of commercial
high-resolution earth imagery products and services, today reported
financial results for the first quarter ended
March 31, 2010.
First quarter 2010 revenue was $77.1 million, an increase
of 14.7% compared with the same period last year. First quarter
2010 net income was $1.5 million, or $0.03 per diluted share,
compared with net income of $10.6 million, or $0.24 per
diluted share, for the same period last year. First quarter 2010
Adjusted EBITDA, a non-GAAP financial measure, was
$43.6 million, compared with first quarter 2009 Adjusted
EBITDA of $40.5 million.
“We are pleased with our first quarter results. Our double-digit
top-line growth was driven by strength across both the defense and
intelligence and the commercial segments. The addition of
WorldView-2 to our constellation has effectively doubled our
collection and refresh capabilities, enabling us to reliably meet
the growing demands for rapid, large scale collection across all
markets,” said Jill Smith, Chairman and Chief Executive Officer.
“Additionally, the unique multi-spectral capabilities of
WorldView-2 and our expanding web services and cloud offerings mean
that we can move beyond imagery to deliver information and insight
products that help solve our customers’ problems. As a result, we
remain confident in our growth outlook for 2010 and beyond.”
First Quarter Business Highlights
- Defense and Intelligence segment
revenue was $62.6 million, up 9%, driven primarily by the company’s
Direct Access Program (DAP). The company brought a second DAP
customer into operation in the quarter, and a third in April. The
company expects its fourth DAP customer to be operational by the
third quarter of 2010.
- Commercial segment revenue was
$14.5 million, up 46%, driven by strength in consumer and
international civil government, and a rebound in indirect sales
through resellers.
- The company effectively doubled
its collection and refresh capabilities with the addition of
WorldView-2 to the constellation and added unique 8-band
multi-spectral capabilities.
- The ImageLibrary surpassed 1
billion square kilometers, more than one-third of which is less
than one year old.
- The company expanded its web
services and cloud computing offerings with the launch of its
European node to support customers in the region. The company
expects to launch an Asian node later this year.
Full-Year 2010 Outlook
The company reaffirmed its full-year 2010 outlook:
- Full year 2010 total revenue is
expected to be between $330 million and
$360 million.
- Full year 2010 diluted earnings
per share are expected to be between $0.25 and $0.55.
- Full year 2010 Adjusted EBITDA
is expected to be between $185 million and
$210 million.
- Capital expenditures for 2010
are expected to be between $30 million and
$35 million.
Conference Call Information
DigitalGlobe’s management will host a conference call today at 5
p.m. EDT to discuss first quarter 2010 results.
The conference call dial-in numbers are as follows:U.S./Canada
dial-in: 866-921-3936International dial-in: 706-679-9623Passcode:
6805-2446
A replay of the call will be available through June 3, 2010 at
the following numbers:US/Canada dial-in: 800-642-1687International
dial-in: 706-645-9291Passcode: 6805-2446
DigitalGlobe will also sponsor a live and archived webcast of
the conference call on its website, www.digitalglobe.com.
Supplemental earnings materials are also available at this
website.
About DigitalGlobe
Longmont, Colorado-based DigitalGlobe
(http://www.digitalglobe.com) is a leading global provider of
commercial high-resolution earth imagery products and services.
Sourced from our own advanced satellite constellation, our imagery
solutions support a wide variety of uses within defense,
intelligence, and homeland security applications, mapping and
analysis, environmental monitoring, oil and gas exploration,
infrastructure management, internet portals and navigation
technology.
With our collection sources and comprehensive ImageLibrary
(containing more than 1 billion square kilometers of earth
imagery and imagery products) we offer a range of on- and off-line
products and services designed to enable customers to easily access
and integrate our imagery into their business operations and
applications.
DigitalGlobe is a registered trademark of DigitalGlobe.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This presentation and 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 our 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” or “continue” 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 or reduction of any
of our primary contracts; the loss or impairment of our satellites;
loss or damage to the content contained in our ImageLibrary;
interruption or failure of our ground system and other
infrastructure, decrease in demand for our imagery products and
services; increased competition that may reduce our market share or
cause us to lower our prices; our failure to obtain or maintain
required regulatory approvals and licenses; changes in U.S. 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.
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-GAAP Financial Measures
Adjusted EBITDA is a key measure used in internal operating
reports by management and the board of directors to evaluate the
performance of our operations and is also used by analysts,
investment banks and lenders for the same purpose. Adjusted EBITDA
is a measure of our current period operating performance, excluding
charges for capital, depreciation related to prior period capital
expenditures and items which are considered non-core in nature.
We believe that the elimination of certain non-cash and
non-operating items enables a more consistent measurement of period
to period performance of our operations, as well as a comparison of
our operating performance to companies in our industry. We believe
this measure is 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
build the related ground infrastructure may vary greatly from one
satellite to another, depending on the satellite’s size, type and
capabilities. For example, our QuickBird satellite, which we are
currently depreciating, cost significantly less than our
WorldView-1 or WorldView-2 satellites. Current depreciation expense
is not indicative of the revenue generating potential of the
satellites.
Adjusted EBITDA excludes interest income, expense, net income
taxes and loss from early extinguishment of debt because these
items are associated with our capitalization and tax structures.
Adjusted EBITDA 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 excludes non-cash stock
compensation expense because these are non-cash expenses and loss
on derivative instrument because these items are not related to our
primary operations.
We use Adjusted EBITDA in conjunction with traditional GAAP
operating performance measures as part of our overall assessment of
our performance and we do not place undue reliance on this measure
as our only measure of operating performance. Adjusted EBITDA is
not a recognized term under generally accepted accounting
principles, or GAAP, in the United States and may not be defined
similarly by other companies. Adjusted EBITDA should not be
considered an alternative to net income, as an indication of
financial performance, or as an alternative to cash flow from
operations as a measure of liquidity. There are limitations to
using non-GAAP financial measures, including the difficulty
associated with comparing companies that use similar performance
measures whose calculations may differ from ours.
DigitalGlobe, Inc.
Condensed Consolidated
Statements of Operations
(unaudited)
(in millions, except share and per share data) For the Three
Months Ended March 31, 2009 2010 Revenue $ 67.2 $ 77.1 Costs
and expenses: Cost of revenue, excluding depreciation and
amortization 6.4 10.1 Selling, general and administrative 22.6 24.8
Depreciation and amortization 18.7 29.1
Income from operations 19.5 13.1 Loss on derivative instruments
(1.8 ) - Interest income (expense), net - (9.9
) Income before income taxes 17.7 3.2 Income tax (expense) benefit
(7.1 ) (1.7 ) Net income $ 10.6 $ 1.5
Earnings per share: Basic earnings per share $ 0.24 $ 0.03
Diluted earnings per share $ 0.24 $ 0.03
Weighted average common shares outstanding: Basic 43,499,757
43,676,118 Diluted 43,989,202
46,144,617
DigitalGlobe, Inc.
Unaudited Reconciliation of
GAAP Net Income to Adjusted EBITDA
($ in millions) Three months endedMarch 31, 2009 2010
Net income $ 10.6 $ 1.5 Depreciation and amortization 18.7 29.1
Interest (income), expense net - 9.9 Loss on derivative instrument
1.8 - Income tax expense 7.1 1.7 Non-cash stock compensation
expense 2.3 1.4 Adjusted EBITDA $ 40.5 $ 43.6
Adjusted EBITDA is not a recognized term under generally
accepted accounting principles, or GAAP, in the United States and
may not be defined similarly by other companies. Adjusted EBITDA
should not be considered an alternative to net income, as an
indication of financial performance, or as an alternative to cash
flow from operations as a measure of liquidity. There are
limitations to using non-GAAP financial measures, including the
difficulty associated with comparing companies that use similar
performance measures whose calculations may differ from ours.
DigitalGlobe, Inc.
Condensed Consolidated Balance
Sheets
(unaudited)
(in millions, except share and per share data)
ASSETS December 31, 2009 March 31, 2010
CURRENT
ASSETS: Cash and cash equivalents $ 97.0 $ 142.3 Restricted
cash 7.3 7.3 Accounts receivable, net of allowance for doubtful
accounts of $1.2 and $0.9, respectively 49.7 42.4 Prepaid and
current assets 12.0 9.5 Income tax receivable 3.9 3.9 Deferred
taxes 1.7 1.7 Total current assets
171.6 207.1 Property and equipment, net of accumulated depreciation
of $361.1 and $389.9, respectively 891.0 877.8 Goodwill 8.7 8.7
Intangibles, net of accumulated amortization of $7.2 and $6.6,
respectively 1.8 1.3 Aerial image library 5.4 4.3 Long-term
restricted cash 16.7 16.1 Long-term deferred contract costs 36.2
41.4 Other assets, net 9.1 8.7 Total
assets $ 1,140.5 $ 1,165.4
LIABILITIES AND
STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts
payable $ 4.3 $ 2.1 Accrued interest 6.2 15.5 Other accrued
liabilities 17.9 19.8 Current portion of deferred revenue
32.8 39.0 Total current liabilities 61.2 76.4
Long-term accrued liability - 8.5 Deferred revenue 239.6 231.1
Deferred lease incentive 5.4 5.2 Long-term debt 343.5 344.1
Long-term deferred tax liability 11.3 12.8
Total liabilities $ 661.0 $ 678.1
COMMITMENTS AND
CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock,
$0.001 par value; 24,000,000 shares authorized; no shares issued
and outstanding at December 31, 2009 and March 31, 2010 $ - $ -
Common stock; $0.001 par value; 250,000,000 shares authorized;
45,122,593 shares issued and outstanding at December 31, 2009 and
45,615,563 shares issued and outstanding at March 31, 2010 0.2 0.2
Treasury stock, at cost; 44,039 shares at December 31, 2009 and at
March 31, 2010 (0.7 ) (0.7 ) Additional paid-in capital 496.0 502.3
Accumulated deficit (16.0 ) (14.5 ) Total
stockholders' equity 479.5 487.3 Total
liabilities and stockholders' equity $ 1,140.5 $ 1,165.4
DigitalGlobe, Inc.
Condensed Consolidated
Statements of Cash Flows
(unaudited)
($ in millions) For the Three Months Ended March 31, 2009
2010
CASH FLOWS FROM OPERATING ACTIVITIES: Net income
$ 10.6 $ 1.5 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization
expense 18.7 29.1 Non-cash recognition of pre-FOC payments (6.6 )
(6.4 ) Non-cash amortization 1.1 1.2 Non-cash stock compensation
expense 2.3 1.4 Amortization of debt issuance costs - 1.1 Deferred
income taxes 6.0 1.6 Changes in: Accounts receivable, net (2.9 )
7.3 Accounts receivable from related party (0.8 ) - Aerial image
library (0.4 ) (0.1 ) Other assets (2.1 ) 2.3 Accounts payable 0.5
(1.6 ) Accounts payable and accrued liabilities to related parties
0.9 - Accrued liabilities (6.2 ) 8.0 Deferred contract costs from
related party (0.7 ) - Deferred contract costs - (5.3 ) Deferred
revenue 3.8 4.0 Deferred revenue related party 1.9
- Net cash flows provided by operating activities
26.1 44.1
CASH FLOWS FROM INVESTING
ACTIVITIES: Construction in progress additions (15.6 ) (3.3 )
Other property, equipment and intangible additions (2.1 ) (1.0 )
Settlements from derivative instrument (0.1 ) - Decrease in
restricted cash - 0.6 Net cash flows
used in investing activities (17.8 ) (3.7 )
CASH
FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of
debt, net of issuance costs (0.7 ) - Costs associated with initial
public offering (0.4 ) (0.3 ) Payments for repurchase of common
stock (0.1 ) - Proceeds from exercise of stock options -
5.2 Net cash flows provided by (used in)
financing activities (1.2 ) 4.9 Net increase
(decrease) in cash and cash equivalents 7.1 45.3 Cash and cash
equivalents, beginning of period 60.8 97.0
Cash and cash equivalents, end of period $ 67.9 $
142.3
SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid
for income taxes $ 0.3 $ 0.1
NON-CASH INVESTING AND FINANCING
ACTIVITIES: Changes to non-cash property and equipment
accruals, including interest $ 22.6 $ 14.3 Non-cash deferred
financing costs incurred $ 0.2 $ -
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