DigitalGlobe, Inc. (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, 2011.
First quarter 2011 revenue was $77.1 million, flat compared
with the same period last year. Included in first 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 first quarter revenue is $24.8 million of deferrals
related to the service level agreement (SLA) portion of
EnhancedView.
The company reported a first quarter 2011 net loss of $(0.7)
million, or $(0.02) per diluted share, compared with net income of
$1.5 million, or $0.03 earnings per diluted share, for the same
period last year.
First quarter 2011 Adjusted EBITDA, a non-GAAP financial
measure, was $55.4 million, an increase of 49% compared with first
quarter 2010 Adjusted EBITDA of $37.2 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.
Cash Flow from Operations was $60.5 million in the first
quarter, up 37% compared with first quarter 2010. In the quarter,
the company signed its fifth direct access program (DAP) customer
and expects to bring that customer into service in early 2012.
“We are generating significant cash flow as evidenced by the
strong growth in adjusted EBITDA, and are focused on improving
revenue growth," said Jeff Tarr, the company’s new President and
Chief Executive Officer. "Looking toward the future, we were
pleased to sign our fifth direct access customer. This multi-year
agreement is expected to come on line in early 2012 and to drive
revenue from this important product line up to approximately $50
million annually.”
First Quarter Business Highlights
- Defense and Intelligence segment
revenue was $61.7 million, down 1.4% compared with first quarter
2010. This excludes $24.8 million of deferrals related to
EnhancedView SLA, and includes $6.4 million related to
NextView.
- The company’s DAP product line
generated $9.4 million in revenue for the first quarter.
- Commercial segment revenue was $15.4
million, up 6.2% compared with first quarter 2010.
- The company signed a five-year
agreement with Turksat, the leading communications provider in
Turkey. Turksat will re-sell imagery to both government and
commercial customers in that country.
2011 Outlook
For the full year 2011, the company expects:
- Revenue in a range of $330 million to
$355 million. This excludes any deferrals related to EnhancedView
and includes amortized revenue related to NextView.
- Diluted earnings per share of $0.10 to
$0.20, assuming an average diluted share count of approximately 47
million.
- Adjusted EBITDA of $223 million to $243
million.
- 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. EDT to discuss first quarter 2011 results.
The conference call dial-in numbers are as follows:U.S./Canada
dial-in: 866-921-3936International dial-in: 706-679-9623Passcode:
59049114
A replay of the call will be available through June 3, 2011 at
the following numbers:U.S./Canada dial-in:
800-642-1687International dial-in: 706-645-9291Passcode:
59049114
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 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 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 (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, 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
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.
DigitalGlobe, Inc.
Unaudited Condensed Consolidated
Statements of Operations
Three Months Ended March 31, (in millions, except share and
per share data) 2010 2011 Revenue Defense and Intelligence revenue
$ 62.6 $ 61.7 Commercial revenue 14.5 15.4 Total revenue 77.1 77.1
Cost of revenue excluding depreciation and amortization 10.1 11.8
Selling, general and administrative 24.8 30.1 Depreciation and
amortization 29.1 29.2 Income from operations 13.1 6.0 Other income
(expense), net - 0.1 Interest income (expense), net (9.9) (7.7)
Income (loss) before income taxes 3.2 (1.6) Income tax (expense)
benefit (1.7) 0.9 Net income (loss) $ 1.5 $ (0.7) Earnings (loss)
per share: Basic earnings (loss) per share $ 0.03 $ (0.02) Diluted
earnings (loss) per share $ 0.03 $ (0.02) Weighted average common
shares outstanding: Basic 43.7 46.1 Diluted 46.1 46.1
DigitalGlobe, Inc.
Reconciliation of GAAP Net Income to
Adjusted EBITDA
(unaudited)
Three months ended
March 31,
(in millions, except per share data) 2010 2011
Net income (loss) $ 1.5 $ (0.7 ) Depreciation and
amortization 29.1 29.2 Interest expense 9.9 7.7 Income tax expense
(benefit) 1.7 (0.9 ) Amortization of Pre-FOC payment related to
NextView (6.4 ) (6.4 ) EnhancedView deferred revenue(1) – 16.5
EnhancedView outstanding invoices not yet paid by NGA – 8.3 Stock
compensation expense 1.4 1.7 Adjusted
EBITDA $ 37.2 $ 55.4
Adjusted EBITDA is not a recognized term under generally
accepted accounting principles (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) First quarter EnhancedView deferred revenue includes $8.3
million invoiced in the fourth quarter of 2010 for which cash was
received in the first quarter of 2011.
DigitalGlobe, Inc.
Unaudited Condensed Consolidated
Balance Sheets
(in millions, except share and per share data)
December 31,
2010
March 31,
2011
ASSETS CURRENT ASSETS: Cash and cash equivalents $
179.3 $ 163.7 Restricted cash 6.7 4.7 Accounts receivable, net of
allowance for doubtful accounts of $1.0 and $2.6, respectively 45.3
36.8 Prepaid and current assets 19.4 16.3 Deferred taxes
62.7 56.0 Total current assets 313.4
277.5 Property and equipment, net of accumulated depreciation of
$478.2 and $507.4, respectively 879.1 920.2 Goodwill 8.7 8.7
Intangibles, net of accumulated amortization of $8.7 and $8.7,
respectively 0.3 0.3 Aerial image library, net of accumulated
amortization of $21.1 and $21.7, respectively 1.9 2.2 Long-term
restricted cash 13.6 12.5 Long-term deferred contract costs 42.1
43.2 Other assets, net 7.2 6.9
Total assets $ 1,266.3 $ 1,271.5
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES: Accounts payable $ 15.0 $ 9.2 Accrued interest 6.2
15.5 Other accrued liabilities 26.3 20.3 Current portion of
deferred revenue 38.9 40.3 Total
current liabilities 86.4 85.3 Long-term accrued liability 6.0 1.8
Deferred rev
enue 246.2 262.5 Deferred lease incentive 4.6
4.3 Long-term debt, net of discount 346.1 346.7 Long-term deferred
tax liability, net 76.7 69.1
Total liabilities $ 766.0 $ 769.7
COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value;
24,000,000 shares authorized; no sharesissued and outstanding at
December 31, 2010 and March 31, 2011
– –
Common stock; $0.001 par value;
250,000,000 shares authorized; 46,243,757shares issued and
outstanding at December 31, 2010 and 46,244,050 shares issuedand
outstanding at March 31, 2011
0.2 0.2 Treasury stock, at cost; 44,039 shares at December 31, 2010
and 50,395 shares March 31, 2011 (0.7 ) (0.9 ) Additional paid-in
capital 512.7 515.1 Accumulated deficit (11.9 )
(12.6 ) Total stockholders’ equity 500.3
501.8 Total liabilities and stockholders’
equity $ 1,266.3 $ 1,271.5
DigitalGlobe, Inc.
Condensed Consolidated Statements of
Cash Flows
(in millions) For the Three Months Ended March 31,
2010 2011
CASH FLOWS FROM OPERATING
ACTIVITIES: Net income (loss) $ 1.5 $ (0.7 ) Adjustments to
reconcile net income (loss) to net cash provided by operating
activities: Depreciation and amortization expense 29.1 29.2
EnhancedView deferred revenue
– 24.8 Recognition of pre-FOC
payments (6.4 ) (6.4 ) Amortization of aerial image library,
deferred contract costs and lease incentive 1.2 1.7 Non-cash stock
compensation expense 1.4 1.7 Amortization of debt issuance costs
and debt discount 1.1 1.0 Deferred income taxes 1.6 (1.0 ) Changes
in working capital, net of investing activities: Accounts
receivable, net 7.3 8.5 Aerial image library (0.1 )
–
Prepaids and other assets 2.3 1.9 Accounts payable (1.6 ) (0.6 )
Accrued liabilities 8.0 3.4 Deferred contract costs (5.3 ) (2.4 )
Deferred revenue 4.0 (0.6 ) Net cash flows
provided by operating activities 44.1 60.5
CASH FLOWS FROM INVESTING ACTIVITIES: Construction in
progress additions (3.3 ) (78.3 ) Other property, equipment and
intangible additions (1.0 ) (1.3 ) Decrease in restricted cash
0.6 3.1 Net cash flows used in
investing activities (3.7 ) (76.5 )
CASH FLOWS
FROM FINANCING ACTIVITIES: Proceeds from initial public
offering, net of issuance costs (0.3 )
– Proceeds from
exercise of stock options 5.2 0.6 Cash paid for treasury stock
– (0.2 ) Net cash flows provided by
financing activities 4.9 0.4 Net
increase (decrease) in cash and cash equivalents 45.3 (15.6 ) Cash
and cash equivalents, beginning of period 97.0
179.3 Cash and cash equivalents, end of period 142.3
163.7
SUPPLEMENTAL CASH FLOW
INFORMATION: Cash paid for income taxes 0.1 0.8
NON-CASH
INVESTING AND FINANCING ACTIVITIES: Changes to non-cash
construction in progress accruals, including interest 14.3 9.3
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