Maxar Technologies Inc. (“Maxar” or the “Company”) (NYSE:MAXR)
(TSX:MAXR), a global technology innovator powering the new space
economy, today reported financial results for the quarter ended
March 31, 2019. All dollar amounts in this press release are
expressed in U.S. dollars.
Key points from the quarter include:
- Consolidated revenues of $504
million
- Net loss of $0.99 per share
- Adjusted EBITDA1 of $117 million and
Adjusted EBITDA1 margin of 23 percent
- Quarterly dividend of $0.01
1
This is a non-GAAP financial measure.
Refer to section “Non-GAAP Financial Measures” in this earnings
release.
“We remain focused on our near-term priorities to position Maxar
for sustained top and bottom-line growth. We are working on
reducing debt and leverage levels, re-engineering the satellite
business based out of Palo Alto, positioning our Imagery, Services,
and MDA businesses for long-term growth, and creating a leaner,
more agile organization with a reduced cost structure,” stated Dan
Jablonsky, President and Chief Executive Officer.
Jablonsky continued, “This quarter, our Palo Alto satellite
business experienced quarter-over-quarter profit improvement,
Imagery signed on several new subscription-based customers,
Services captured a number of new wins, and MDA garnered its first
contract for work on the Canadian Surface Combatant
program. We continued to advance our organizational
restructuring to strengthen our financial position and drive
long-term value for our shareholders and customers.”
“First quarter results were consistent with expectations,”
stated Biggs Porter, Chief Financial Officer. “Cash flows and
capital expenditures reflect the timing of interest and milestone
payments and the ramp of the WorldView Legion program. After the
quarter end, our insurance carriers accepted the Company’s $183
million claim for loss arising from the WorldView-4 satellite
on-orbit failure and we have collected $154 million in proceeds. We
expect a full recovery of the remaining balance by the end of the
second quarter.”
Consolidated revenues for the first quarter of 2019 were $504
million compared to $557 million for the same period of last year.
The decrease in revenues was primarily driven by the Space Systems
segment given lower GEO Comsat revenues and the expected wind-down
of work on the multi-year RCM project, and a decrease in the
Imagery Segment given the loss of the Company’s WorldView-4
satellite.
For the quarter ended March 31, 2019, net loss of $59 million
compared to net income of $15 million in the comparative period of
2018. The decrease is primarily driven by a lower tax benefit,
higher restructuring costs, and lower Adjusted EBITDA from the
Imagery segment given the loss of the Company’s WorldView-4
satellite.
For the first quarter of 2019, Adjusted EBITDA was $117 million
and Adjusted EBITDA as a percentage of consolidated revenues
(“Adjusted EBITDA margin percentage”) was 23.2%. This is compared
to Adjusted EBITDA of $151 million and Adjusted EBITDA margin
percentage of 27.1% for the first quarter of 2018. The decline was
driven largely by lower Adjusted EBITDA from the Imagery segment
given the loss of the Company’s WorldView-4 satellite and lower
revenues and profits in the Space Systems segment.
The Company had total order backlog of $1.9 billion as of March
31, 2019 compared to $2.4 billion as at December 31, 2018. Backlog
decreased primarily due to declines in backlog in our Space Systems
and Imagery segments. Space Systems backlog decreased primarily as
a result of revenue recognized on existing contracts and no new
satellite 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. Unfunded
contract options as of March 31, 2019 totaled $1.3 billion vs. $1.2
billion in 2018. The increase in unfunded contract options was
primarily driven by awards in our Services segment.
Financial Highlights
In addition to results reported in accordance with U.S. GAAP,
the Company uses certain non-GAAP financial measures as
supplemental indicators of its financial and operating performance.
These non-GAAP financial measures include EBITDA and Adjusted
EBITDA. The Company believes these supplementary financial measures
reflect the Company’s ongoing business in a manner that allows for
meaningful period-to-period comparisons and analysis of trends in
its business.
Three months ended March
31, 2019 2018 ($ millions, except
per share amounts) Revenue $ 504 $ 557 Net (loss) earnings (59 ) 15
Adjusted EBITDA1 117 151 Net (loss) earnings per share,
diluted $ (0.99 ) $ 0.26 Weighted average number of common
shares outstanding (millions): Basic 59.5 56.4 Diluted 59.5 56.7
1
This is a non-GAAP financial measure. Refer to section
“Non-GAAP Financial Measures” in this earnings release.
Revenue by segment is as follows:
Reported Three months
ended March 31, 2019 2018 ($
millions) Revenue Space Systems $ 274 $ 293 Imagery 200 211
Services 68 70 Intersegment eliminations (38 ) (17 )
Total Revenue $ 504 $ 557
The Company analyzes financial performance by segment, which
combine related activities within the Company.
Three months ended March
31, 2019 2018 Adjusted EBITDA:
Space Systems 10 28 Imagery 121 134 Services 7 4 Intersegment
eliminations (3 ) (2 ) Corporate and other unallocated expenses
(18 ) (13 ) Adjusted EBITDA1 $ 117 $ 151
1
This is a non-GAAP financial measure. Refer to section
“Non-GAAP Financial Measures” in this earnings release.
Space Systems Results
Reported Three months
ended March 31, 2019 2018 ($
millions) Revenue $ 274
$
293
Adjusted EBITDA $ 10
$
28
Adjusted EBITDA margin percentage 3.6 % 9.6 %
Space Systems segment revenues decreased $19 million in the
first quarter of 2019 compared to the same period of 2018. Revenues
decreased primarily due to an increase in estimated costs to
complete programs as well as impacts of lower volume in our Palo
Alto factory and lower revenues on the RADARSAT Constellation
Mission (“RCM”) program in Canada. These decreases were partially
offset by increased intercompany revenue on the construction of the
Company’s WorldView Legion constellation.
Adjusted EBITDA decreased $18 million in the Space Systems
segment in the first quarter of 2019 compared to the same period of
2018. The decrease from 2018 to 2019 is primarily related to an
increase in estimated costs to complete certain satellite build
programs, as well as impacts of lower volume in our Palo Alto
factory. Adjusted EBITDA was also lower due to a decrease in RCM
revenue and the change in product mix. These increases were
partially offset by a decrease in selling, general and
administrative expense due to headcount reductions as a result of
prior year restructuring initiatives.
Imagery Segment Results
Reported Three months
ended March 31, 2019 2018 ($
millions) Revenue $ 200
$
211
Adjusted EBITDA $ 121
$
134
Adjusted EBITDA Margin 60.5 % 63.5 %
Revenues from the Imagery segment decreased $11 million in the
first quarter of 2019 compared to the same period of 2018. The
decrease was primarily driven by the loss of WorldView-4 revenue
and higher than normal seasonal revenue from international defense
and intelligence customers in first quarter of 2018, in part offset
by growth from our commercial customers and the U.S.
government.
Adjusted EBITDA decreased $13 million in the first quarter of
2019 compared to the same period of 2018. The decrease was
primarily driven by the loss of WorldView-4 which had higher
margins.
Services Results
Reported Three months
ended March 31, 2019 2018 ($
millions) Revenue $ 68
$
70
Adjusted EBITDA $ 7
$
4
Adjusted EBITDA Margin 10.3 % 5.7 %
Services segment revenues remained relatively unchanged in the
first quarter of 2019 compared to the same period in 2018. Adjusted
EBITDA increased for the first quarter of 2019 compared to the same
period of 2018 primarily as a result of the loss on the sale of a
subsidiary recognized in the first quarter of 2018 and did not
recur in 2019.
MAXAR TECHNOLOGIES INC.
Unaudited Condensed Consolidated
Statements of Operations
(In millions of United States dollars,
except per share amounts)
Three Months Ended
March 31, 2019 2018 Revenues:
Product $ 194 $ 228 Service 310 329
Total revenues 504 557 Costs and expenses: Product costs, excluding
depreciation and amortization 197 187 Service costs, excluding
depreciation and amortization 110 119 Selling, general and
administrative 103 103 Depreciation and amortization 98
111 Operating (loss) income (4 ) 37 Interest
expense, net 49 53 Other expense, net 6 1
(Loss) before taxes (59 ) (17 ) Income tax benefit (1 ) (32
) Equity in loss from joint ventures, net of tax 1
— Net (loss) income $ (59 ) $ 15 (Loss)
earnings per common share: Basic $ (0.99 ) $ 0.27 Diluted $ (0.99 )
$ 0.26
MAXAR TECHNOLOGIES INC.
Unaudited Condensed Consolidated Balance
Sheets
(In millions of United States dollars,
except per share amounts)
March
31,
December 31, 2019 2018 Assets
Current assets: Cash and cash equivalents $ 45 $ 35 Trade and other
receivables, net 467 464 Inventory 26 31 Advances to suppliers 17
42 Income taxes receivable 16 14 Prepaid and other current assets
61 51 Total current assets 632
637 Non-current assets: Orbital receivables
400 407 Deferred tax assets 108 103 Property, plant and equipment,
net 768 747 Intangible assets, net 1,175 1,232 Non-current
operating lease assets 129 — Goodwill 1,751 1,751 Other assets
115 124 Total assets $ 5,078 $
5,001 Liabilities and stockholders’ equity Current
liabilities: Accounts payable $ 190 $ 209 Accrued liabilities 62
116 Accrued compensation and benefits 101 100 Contract liabilities
309 361 Current portion of long-term debt 19 17 Current operating
lease liabilities 33 — Other current liabilities 52
46 Total current liabilities 766
849 Non-current liabilities: Pension and other
postretirement benefits 194 196 Contract liabilities 43 60
Operating lease liabilities 137 — Long-term debt 3,174 3,030 Other
non-current liabilities 184 222 Total
liabilities 4,498 4,357 Stockholders’
equity: Common stock ($0.0001 par value, 240 million common shares
authorized and 59.6 million outstanding at March 31, 2019; nil par
value, unlimited authorized common shares and 59.4 million
outstanding at December 31, 2018) — 1,713 Additional paid-in
capital 1,774 59 Accumulated deficit (1,271 ) (1,211 ) Accumulated
other comprehensive income 76 82 Total
Maxar stockholders' equity 579 643 Noncontrolling interest 1
1 Total stockholders' equity 580
644 Total liabilities and stockholders' equity $
5,078 $ 5,001
MAXAR TECHNOLOGIES INC.
Unaudited Condensed Consolidated
Statements of Cash Flows
(In millions of United States dollars)
Three Months Ended
March 31, 2019 2018 Cash flows
provided by (used in): Operating activities: Net (loss) income $
(59 ) $ 15 Adjustments to reconcile net (loss) income to net cash
used in operating activities: Depreciation of property, plant and
equipment 30 37 Amortization of intangible assets 68 74 Stock-based
compensation expense (recovery) 1 (1 ) Amortization of debt
issuance costs and other noncash interest expense 2 2 Inventory
impairment 3 — Foreign exchange losses 6 1 Deferred income tax
(benefit) — (24 ) Other 4 2 Changes in operating assets and
liabilities: Trade and other receivables 6 (35 ) Accrued
compensation and benefits 1 (26 ) Trade and other payables (11 )
(47 ) Accrued liabilities (56 ) 22 Contract liabilities (71 ) (26 )
Advances to suppliers 25 15 Deferred tax assets (5 ) (18 ) Deferred
tax liabilities 2 31 Other liabilities 4 (28 ) Other (8 )
(7 ) Cash used in operating activities (58 )
(13 ) Investing activities: Purchase of property, plant and
equipment (59 ) (43 ) Purchase or development of intangible assets
(14 ) (17 ) Disposal of subsidiary and short-term investments
— 5 Cash used in investing activities
(73 ) (55 ) Financing activities: Net proceeds
from revolving credit facility 150 90 Repayments of long-term debt
(6 ) (5 ) Settlement of securitization liability (4 ) (4 ) Payment
of dividends (1 ) (16 ) Change in overdraft balance —
2 Cash provided by financing activities 139
67 Increase (decrease) in cash, cash
equivalents, and restricted cash 8 (1 ) 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 $ 52 $ 41 Reconciliation
of cash flow information: Cash and cash equivalents 45 25
Restricted cash included in prepaid and other current assets 6 7
Restricted cash included in other assets 1 9
Total cash, cash equivalents, and restricted cash $ 52
$ 41
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 months ended March 31, 2019 and 2018.
Three months ended March 31,
2019 2018 ($ millions) Net (loss)
income $ (59 ) $ 15 Income tax benefit (1 ) (32 ) Interest expense,
net 49 53 Depreciation and amortization 98 111
EBITDA $ 87 $ 147 Acquisition and integration
related expense 4 4 Restructuring 20 — Inventory impairment 3 — CEO
severance 3 — Adjusted EBITDA $ 117
$ 151 Adjusted EBITDA: Space Systems 10 28
Imagery 121 134 Services 7 4 Intersegment eliminations (3 ) (2 )
Corporate and other unallocated expenses (18 ) (13 )
Adjusted EBITDA $ 117 $ 151
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, Daniel Jablonsky,
and Executive Vice President and Chief Financial Officer, Biggs
Porter, will host an earnings conference call on May 9, 2019,
reviewing the first 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:
Toll free North America: 1-866-211-3067Toronto:
1-647-689-6610
The Conference Call will also be Webcast live and then archived
at:https://event.on24.com/wcc/r/1983809/3460E7909E09A4D6F6D105596068098E
Telephone replay will be available from Thursday May 9, 2019 at
6:30 p.m. MT (8:30 p.m. ET) to Thursday May 23, 2019 at 9:59
p.m. MT (11:59 p.m. ET) at the following numbers:Toll free North
America: 1-800-585-8367Toronto: 1-416-621-4642Passcode:
4188454#
About Maxar
As a global leader of advanced space technology solutions, Maxar
is at the nexus of the new space economy, developing and sustaining
the infrastructure and delivering the information, services and
systems that unlock the promise of space for commercial and
government markets. The operations of DigitalGlobe, SSL and Radiant
Solutions were unified under the Maxar brand in February; MDA
continues to operate as an independent business unit within the
Maxar organization. As a trusted partner with 5,900 employees in
over 30 global locations, Maxar provides vertically integrated
capabilities and expertise including satellites, Earth imagery,
robotics, geospatial data and analytics to help customers
anticipate and address their most complex mission-critical
challenges with confidence. Every day, billions of people rely on
Maxar to communicate, share information and data, and deliver
insights that Build a Better World. Maxar trades on the New York
Stock Exchange and Toronto Stock Exchange as MAXR. For more
information, visit www.maxar.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20190509005953/en/
Jason GurskyMaxar VP Investor
Relations1-303-684-2207jason.gursky@maxar.comTurner BrintonMaxar Media
Relations1-303-684-4545turner.brinton@maxar.com
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