DigitalGlobe, Inc. (NYSE: DGI), a leading global provider of
commercial high-resolution earth imagery products and services,
today reported financial results for the fourth quarter and year
ended December 31, 2010.
Fourth quarter 2010 revenue was $83.6 million, an increase of
14.7% compared with the same period last year. Included in fourth
quarter revenue is $6.4 million of amortized revenue related to
NextView, the predecessor to the EnhancedView contract with the
U.S. Government. Not included in fourth quarter revenue is $24.8
million of deferrals related to the service level agreement (SLA)
portion of EnhancedView. Fourth quarter 2010 net income was $1.3
million, or $0.03 per diluted share, compared with net income of
$13.8 million, or $0.30 per diluted share, for the same period last
year.
Fourth quarter 2010 Adjusted EBITDA, a non-GAAP financial
measure, was $62.5 million, compared with fourth quarter 2009
Adjusted EBITDA of $36.3 million. Adjusted EBITDA includes
current-quarter deferrals related to EnhancedView and, for both
periods, excludes approximately $6.4 million of amortized revenue
related to NextView.
Full-year 2010 revenue was $322.2 million, an increase of 14.3%
compared with 2009. Included in full-year revenue is $25.5 million
of amortized revenue related to NextView. Not included in full-year
revenue is $33.1 million of deferrals related to the service level
agreement (SLA) portion of EnhancedView. Full-year 2010 net income
was $4.1 million, or $0.09 per diluted share, compared with net
income of $47.4 million, or $1.06 per diluted share for 2009.
Full-year 2010 Adjusted EBITDA, a non-GAAP financial measure, was
$182.4 million, compared with 2009 Adjusted EBITDA of $143.9
million.
"2010 was a milestone year for DigitalGlobe," said Jill Smith,
Chairman and Chief Executive Officer. "We achieved great financial
success, won a significant, long-term award from the U.S.
Government, and substantially extended two important lines of
business -- Direct Access and Commercial. We expect continued
growth financially and operationally during 2011, delivering even
greater value to our customers as we move toward the provision of
information and insight products."
Fourth Quarter Business Highlights
- The Defense and Intelligence segment revenue was $63.2 million,
up 9.9% compared with fourth quarter 2009, driven primarily by the
company's Direct Access Program (DAP). This excludes $24.8 million
of deferrals related to EnhancedView, and includes $6.4 million
related to NextView.
- The company's DAP product line generated $9.3 million in
revenue for the fourth quarter. For the year, DAP generated $34.4
million in revenue.
- Commercial segment revenue increased to $20.4 million, up 32.5%
compared with fourth quarter 2009, powered by growth in every
market domain. Full-year commercial segment revenue of $70.1
million is up 37.7% compared with 2009.
- The company extended its commercial customer footprint in China
during the quarter by inking new contracts with three Chinese
companies: China Mobile, YF International, and Hazens.
2011 Outlook For the full year 2011, the
company expects:
- Revenue in a range of $345 million to $365 million. This
excludes any deferrals related to EnhancedView and includes
amortized revenue related to NextView.
- Diluted earnings per share of $0.20 to $0.40, assuming an
average diluted share count of approximately 47 million.
- Adjusted EBITDA of $223 million to $243 million. This includes
any deferrals related to EnhancedView and excludes amortized
revenue related to NextView.
- Capital expenditures for 2011 of at least $275 million, with
all but approximately $35 million related to the company's
construction of WorldView-3 and other EnhancedView-related
infrastructure investments.
Important factors, including those discussed in the company's
filings with the Securities and Exchange Commission, could cause
actual results to differ from the company's expectations and those
differences may be material.
Conference Call Information DigitalGlobe's
management will host a conference call today at 5 p.m. EST to
discuss fourth quarter 2010 results.
The conference call dial-in numbers are as follows: U.S./Canada
dial-in: 866-921-3936 International dial-in: 706-679-9623 Passcode:
38540323
A replay of the call will be available through March 28, 2011 at
the following numbers: U.S./Canada dial-in: 800-642-1687
International dial-in: 706-645-9291 Passcode: 38540323
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 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. For more information, please visit
www.digitalglobe.com.
DigitalGlobe is a registered trademark of DigitalGlobe.
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS Certain statements contained herein 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, reduction or
change in terms of any of our primary contracts; the loss or
impairment of our satellites; delays in the construction and launch
of WorldView-3; delays in implementation of planned ground system
and infrastructure enhancements; 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 this 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 defined as net income or loss adjusted for depreciation
and amortization, net interest income or expense, income tax
expense (benefit), loss on disposal of assets, restructuring, loss
on early extinguishment of debt, loss on derivative instruments,
non-cash stock compensation expense, EnhancedView deferred revenue
and EnhancedView outstanding invoices not yet paid by NGA, and
amortization of pre-FOC payments related to NextView. EnhancedView
outstanding invoices not yet paid by NGA represent an irrevocable
right to be paid in cash by NGA.
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 in different
industries that use similar performance measures whose calculations
may differ from ours.
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 also a key driver of the company-wide bonus incentive plan.
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 generally
non-core in nature, and including EnhancedView deferred revenue and
EnhancedView outstanding invoices not yet paid by NGA, revenue and
excluding the amortization of pre-FOC payments related to our
NextView contract.
We believe that the elimination of material non-cash,
non-operating items enables a more consistent measurement of period
to period performance of our operations. In addition, we believe
that elimination of these items in combination with the addition of
the non-refundable EnhancedView deferred revenue and EnhancedView
outstanding invoices not yet paid by NGA, as well as amortization
of pre-FOC payments related to NextView facilitate comparison of
our operating performance to companies in our industry. We believe
this Adjusted EBITDA 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 and WorldView-2 satellites. Current depreciation
expense is not indicative of the revenue generating potential of
the satellite.
Adjusted EBITDA excludes interest income, interest expense,
income taxes and loss on early extinguishment of debt because these
items are associated with our capitalization and tax structures.
Adjusted 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 excludes non-cash stock
compensation expense, because these items are non-cash expenses and
loss on derivative instrument and disposal of assets because these
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
should not be considered a substitute for other measures of
financial performance reported in accordance with GAAP.
FINANCIAL TABLES TO FOLLOW
DigitalGlobe, Inc.
Condensed Consolidated Statements of Operations
Three Months Ended Year Ended
December 31, December 31,
------------------ ------------------
(in millions, except per share data) 2009 2010 2009 2010
------------------------------------ -------- -------- -------- --------
Historical results of operations: (unaudited)
Defense and Intelligence revenue $ 57.5 $ 63.2 $ 231.0 $ 252.1
Commercial revenue 15.4 20.4 50.9 70.1
-------- -------- -------- --------
Total revenue 72.9 83.6 281.9 322.2
Cost of revenue excluding
depreciation and amortization 8.9 10.5 31.1 41.7
Selling, general and administrative 23.0 31.3 88.6 112.5
Depreciation and amortization 18.2 29.6 74.4 118.9
-------- -------- -------- --------
Income from operations 22.8 12.2 87.8 49.1
Loss from early extinguishment of
debt - - (7.7) -
Loss on derivative instruments - - (1.8) -
Interest income (expense), net - (9.0) 0.1 (39.6)
-------- -------- -------- --------
Income before income taxes 22.8 3.2 78.4 9.5
Income tax expense (9.0) (1.9) (31.0) (5.4)
-------- -------- -------- --------
Net income $ 13.8 $ 1.3 $ 47.4 $ 4.1
======== ======== ======== ========
Earnings per Share:
Basic earnings per share $ 0.32 $ 0.03 $ 1.07 $ 0.09
Diluted earnings per share $ 0.30 $ 0.03 $ 1.06 $ 0.09
Weighted average common shares
outstanding
Basic 43.2 45.9 44.2 45.7
Diluted 45.6 46.4 44.9 46.1
DigitalGlobe, Inc.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(unaudited)
Three months ended Year ended
December 31, December 31,
------------------ ------------------
(in millions, except per share data) 2009 2010 2009 2010
------------------------------------ -------- -------- -------- --------
Net income $ 13.8 $ 1.3 $ 47.4 $ 4.1
Depreciation and amortization 18.2 29.6 74.4 118.9
Loss on derivative instrument - - 1.8 -
Loss from early extinguishment of
debt - - 7.7 -
Interest expense - 9.0 (0.1) 39.6
Income taxes 9.0 1.9 31.0 5.4
Amortization of Pre-FOC payment
related to NextView (6.4) (6.3) (25.5) (25.5)
EnhancedView deferred revenue(1) - 24.8 - 24.8
EnhancedView outstanding invoices
not yet paid by NGA - - - 8.3
Stock compensation expense 1.7 2.2 7.2 6.8
------------------------------------ -------- -------- -------- --------
Adjusted EBITDA $ 36.3 $ 62.5 $ 143.9 $ 182.4
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.
(1) Fourth quarter EnhancedView deferred revenue includes $8.3
million invoiced in the third quarter for which cash was received
in the fourth quarter.
DigitalGlobe, Inc.
Condensed Consolidated Balance Sheets
(in millions) As of December 31,
--------------------
2009 2010
--------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 97.0 $ 179.3
Restricted cash 7.3 6.7
Accounts receivable, net of allowance for doubtful
accounts of $1.2 and $1.0, respectively 49.7 45.3
Prepaid and current assets 12.0 19.4
Income taxes receivable 3.9 -
Deferred taxes 1.7 62.7
--------- ---------
Total current assets 171.6 313.4
Property and equipment, net of accumulated
depreciation of $361.1 and $478.2, respectively 891.0 879.1
Goodwill 8.7 8.7
Intangibles, net of accumulated amortization of $7.2
and $8.9, respectively 1.8 0.3
Aerial image library, net of accumulated amortization
of $17.1 and $21.1, respectively 5.4 1.9
Long-term restricted cash 16.7 13.6
Long-term deferred contract costs 36.2 42.1
Other assets, net 9.1 7.2
--------- ---------
Total assets $ 1,140.5 $ 1,266.3
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4.3 $ 15.0
Accrued interest 6.2 6.2
Other accrued liabilities 17.9 26.3
Current portion of deferred revenue 32.8 38.9
--------- ---------
Total current liabilities 61.2 86.4
Long-term accrued liability - 6.0
Deferred revenue 239.6 246.2
Deferred lease incentive 5.4 4.6
Long-term debt, net of discount 343.5 346.1
Long-term deferred tax liability 11.3 76.7
--------- ---------
Total liabilities $ 661.0 $ 766.0
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 December 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 46,073,691 shares issued and
outstanding at December 31, 2010 0.2 0.2
Treasury stock, at cost; 44,039 shares at December 31,
2009 and December 31, 2010 (0.7) (0.7)
Additional paid-in capital 496.0 512.7
Accumulated deficit (16.0) (11.9)
--------- ---------
Total stockholders' equity 479.5 500.3
--------- ---------
Total liabilities and stockholders' equity $ 1,140.5 $ 1,266.3
--------- ---------
DigitalGlobe, Inc.
Condensed Consolidated Statements of Cash Flows
(in millions) For the Year Ended December 31,
-------------------------------
2008 2009 2010
------------------------------------------- --------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 53.8 $ 47.4 $ 4.1
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense 75.7 74.4 118.9
EnhancedView deferred revenue - - 24.8
Recognition of pre-FOC payments (25.5) (25.5) (25.5)
Amortization of aerial image library,
deferred contract costs and lease
incentive 1.5 5.3 7.1
Non-cash stock compensation expense 4.2 7.2 6.8
Amortization of debt issuance costs 0.3 - 4.4
Write off of debt financing fees - 5.3 -
Deferred income taxes 34.7 33.6 4.4
Changes in working capital, net of
investing activities:
Accounts receivable, net (3.2) (2.6) 4.3
Accounts receivable from related party 3.0 (0.3) -
Income tax receivable - (3.9) 3.9
Aerial image library (2.6) (6.1) -
Prepaids and other assets 1.9 (6.3) (3.9)
Accounts payable (1.5) 1.5 (1.8)
Accounts payable and accrued liabilities
to related parties (1.1) 3.5 -
Accrued liabilities 8.1 (5.0) 10.6
Deferred contract costs from related
party (10.3) (15.3) -
Deferred contract costs - - (14.2)
Deferred revenue, excluding EnhancedView (1.9) 28.0 13.4
Deferred revenue related party 6.5 2.1 -
Deferred lease incentive 0.8 - 0.2
--------- --------- ---------
Net cash flows provided by operating
activities 144.4 143.3 157.5
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction in progress additions (131.8) (155.9) (78.3)
Other property, equipment and intangible
additions (10.2) (10.9) (10.6)
Decrease (increase) in restricted cash (0.1) (21.5) 3.8
Settlements from derivative instrument (1.4) (2.8) -
--------- --------- ---------
Net cash flows used in investing
activities (143.5) (191.1) (85.1)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt, net of
issuance costs 38.5 330.9 -
Proceeds from initial public offering,
net of issuance costs (2.7) 21.7 (0.3)
Repayment of notes - (270.0) -
Repurchase of common stock - (0.5) -
Proceeds from exercise of stock options 1.2 1.9 10.2
--------- --------- ---------
Net cash flows provided by financing
activities 37.0 84.0 9.9
--------- --------- ---------
Net increase in cash and cash equivalents 37.9 36.2 82.3
Cash and cash equivalents, beginning of
period 22.9 60.8 97.0
--------- --------- ---------
Cash and cash equivalents, end of period $ 60.8 $ 97.0 $ 179.3
--------- --------- ---------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest, net of capitalized
amounts of $27.0, $37.4 and $7.8,
respectively $ - $ - $ 30.2
Cash received (paid) for income taxes $ (2.2) $ (2.4) $ 4.2
NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Changes to non-cash construction in
progress accruals, including interest $ 10.1 $ 9.7 $ 16.6
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