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 March 31, 2021. All dollar amounts in this press
release are expressed in U.S. dollars, unless otherwise noted.
Key points from the quarter include:
- Net loss of $84 million, inclusive of a $28 million charge
related to the SXM-7 satellite program and a $41 million loss on
debt extinguishment from the early repayment of our 2023 Notes
- Diluted loss per share of $1.30
- Consolidated revenues of $392 million and Adjusted EBITDA1 of
$67 million, both inclusive of the $28 million SXM-7 charge
- Completed the public offering of 10 million shares of common
stock at a public offering price of $40 per share and used the
proceeds to repay $350 million in principal borrowings on our 2023
Notes
- Total debt of $2.1 billion at March 31, 2021 compared to $2.4
billion at the end of 2020
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
and to reduce our debt and leverage,” stated Dan Jablonsky,
President and Chief Executive Officer. “In Earth Intelligence we
signed several renewals with commercial and international
government customers and booked awards with the US Army and
National Geospatial Intelligence Agency to support training,
tactical, and intelligence missions. In Space Infrastructure, key
wins included a contract modification with NASA and several study
contracts supporting national security missions.”
“Revenue and earnings were negatively impacted by a $28 million
charge related to the Sirius-XM7 satellite program. Without this
charge, we performed in-line with our expectations for the quarter.
Importantly, we issued ten million shares this quarter and used the
proceeds to reduce indebtedness. This transaction strengthens our
financial position and further positions us for continued growth,”
stated Biggs Porter, Chief Financial Officer.
On March 22, 2021, we completed the public offering of 10
million shares of common stock, par value $0.0001 per share, of the
Company, at a public offering price of $40 per share (“Offering”).
We received proceeds of $380 million, net of $20 million of
transaction fees as of March 31, 2021. We completed the Offering
pursuant to the Underwriting Agreement. On March 26, 2021, we
redeemed $350 million aggregate principal of our 2023 Notes using a
portion of the net proceeds from the Offering. Additionally, we
paid premiums of approximately $34 million related to the early
redemption.
Total revenues increased to $392 million from $381 million, or
by $11 million, for the three months ended March 31, 2021, compared
to the same period in 2020. The increase was primarily driven by an
increase in revenue in our Space Infrastructure segment partially
offset by a decrease in revenue in our Earth Intelligence segment.
The decrease in Earth Intelligence was primarily driven by a $30
million decrease in the recognition of revenue related to the
EnhancedView Contract. We recognized $30 million of deferred
revenue from the EnhancedView Contract for the three months ended
March 31, 2020, compared to none for the three months ended March
31, 2021.
For the three months ended March 31, 2021, our net loss was $84
million compared to net loss of $78 million for the three months
ended March 31, 2020. The change in net loss was primarily driven
by an increase in interest expense due to a $41 million loss on
debt extinguishment from the partial redemption of our 2023 Notes,
partially offset by a $10 million decrease in interest on long-term
debt primarily driven by a lower principal balance on Term Loan B
due to repayments made on these borrowings in the second quarter of
2020. The increase in net loss was also due to a $14 million
decrease in revenues period over period related to our contract
with Sirius XM and the non-performance of the SXM-7 satellite. Our
increase in net loss was partially offset by increases in revenue
within the Space Infrastructure segment outside of the Sirius XM
contract previously mentioned and a $14 million recognition of
impairment on orbital receivables for the three months ended March
31, 2020 that did not reoccur for the same period in 2021.
For the three months ended March 31, 2021, Adjusted EBITDA was
$67 million and Adjusted EBITDA as a percentage of consolidated
revenues (“Adjusted EBITDA margin percentage”) was 17.1%. This is
compared to Adjusted EBITDA of $77 million and Adjusted EBITDA
margin percentage of 20.2% for the same period of 2020. The
decrease was primarily driven by lower Adjusted EBITDA from the
Earth Intelligence segment primarily as a result of a $30 million
decrease in deferred revenue recognized related to the EnhancedView
Contract. The decrease was also driven by higher corporate and
other expenses for the three months ended March 31, 2021, compared
to the same period of 2020. These decreases were partially offset
by higher Adjusted EBITDA from the Space Infrastructure
segment.
We had total order backlog of $1.8 billion as of March 31, 2021
compared to $1.9 billion as of December 31, 2020. The decrease in
backlog was primarily driven by decreases in the Space
Infrastructure segment. Our unfunded contract options totaled $0.9
billion as of March 31, 2021 and December 31, 2020,
respectively.
Financial Highlights
In addition to results reported in accordance with U.S. GAAP, we
use certain non-GAAP financial measures as supplemental indicators
of its financial and operating performance. These non-GAAP
financial measures include EBITDA and Adjusted EBITDA. We believe
these supplementary financial measures reflect our ongoing business
in a manner that allows for meaningful period-to-period comparisons
and analysis of trends in its business.
Three Months Ended
March 31,
2021
2020
($ millions, except per share amounts)
Revenues
$
392
$
381
Loss from continuing operations
(84
)
(78
)
Income from discontinued operations, net
of tax
—
30
Net loss
$
(84
)
$
(48
)
EBITDA1
67
92
Adjusted EBITDA1
67
77
Diluted net income (loss) per common
share:
Loss from continuing operations
$
(1.30
)
$
(1.30
)
Income from discontinued operations, net
of tax
—
0.50
Diluted net loss per common share
$
(1.30
)
$
(0.80
)
Weighted average number of common shares
outstanding (millions):
Basic
64.8
60.1
Diluted
64.8
60.1
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
March 31,
2021
2020
($ millions)
Revenues:
Earth Intelligence
$
250
$
271
Space Infrastructure
155
132
Intersegment eliminations
(13
)
(22
)
Total revenues
$
392
$
381
We analyze financial performance by segment, which combine
related activities within the Company.
Three Months Ended
March 31,
($ millions)
2021
2020
Adjusted EBITDA:
Earth Intelligence
$
107
$
133
Space Infrastructure
(12
)
(39
)
Intersegment eliminations
(5
)
(7
)
Corporate and other expenses
(23
)
(10
)
Adjusted EBITDA1
$
67
$
77
1 This is a non-GAAP financial measure. Refer to section
“Non-GAAP Financial Measures” in this earnings release.
Earth Intelligence
Three Months Ended
March 31,
2021
2020
($ millions)
Revenues
$
250
$
271
Adjusted EBITDA
$
107
$
133
Adjusted EBITDA Margin
42.8
%
49.1
%
Revenues from the Earth Intelligence segment decreased to $250
million from $271 million, or by $21 million, compared to the same
period in 2020. The decrease was primarily driven 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
March 31, 2020, compared to none for the three months ended March
31, 2021, as it was fully recognized as of August 31, 2020. The
decrease was partially offset by a $4 million increase in new
commercial programs and a $4 million increase in revenue from
international defense and intelligence customers.
Adjusted EBITDA from the Earth Intelligence segment decreased to
$107 million from $133 million, or by $26 million, for the three
months ended March 31, 2021, compared to the same period of 2020.
The decrease was primarily driven by a decrease in the recognition
of revenue related to the EnhancedView Contract as mentioned above.
The decrease was partially offset by higher margins due to a
favorable program mix.
Three Months Ended
March 31,
2021
2020
($ millions)
Revenues
$
155
$
132
Adjusted EBITDA
$
(12
)
$
(39
)
Adjusted EBITDA Margin
(7.7
)%
(29.5
)%
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 $155
million from $132 million, or by $23 million, for the three months
ended March 31, 2021, compared to the same period in 2020. Revenues
increased primarily as a result of an increase in revenues from
commercial programs of $37 million due to higher volumes related to
new programs and lower EAC growth primarily due to no COVID-19
program impacts for the three months ended March 31, 2021. Revenues
were negatively impacted by a $14 million decrease year over year
related to our contract with Sirius XM Holdings Inc. (“Sirius XM”).
The three months ended March 31, 2021, included a $25 million
cumulative adjustment to revenue primarily related to the loss of
final milestone and expected orbital payments due to the
non-performance of the SXM-7 satellite and other adjustments. After
exhausting efforts to fully recover the satellite and further
discussions with Sirius XM, in April 2021, we made the
determination to record the cumulative adjustment to revenue. In
addition, there were $3 million of costs incurred in the first
quarter related to attempts to repair and fully recover the SXM-7
satellite. The aggregate impact for the three months ended March
31, 2021, was $28 million which compares favorably to the
previously disclosed potential exposure of $38 million. The $28
million decrease was partially offset by the non-reoccurrence of a
$14 million adjustment to revenue due to the identification of a
design anomaly on the commercial satellite program, which was
recorded for the three months ended March 31, 2020.
Adjusted EBITDA from the Space Infrastructure segment changed to
a loss $12 million from a loss of $39 million, or by $27 million,
for the three months ended March 31, 2021, compared to the same
period of 2020. The increase in the Space Infrastructure segment
was primarily related to a $44 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 March 31,
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. These increases
were partially offset by the $14 million reduction in revenue
related to the above-mentioned SXM-7 satellite impacts.
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 March
31, 2021 increased to $23 million from $10 million, or by $13
million, compared to the same period in 2020. The increase was
driven by a $4 million increase in stock-based compensation expense
primarily driven by a higher stock price and a $3 million increase
in labor related expenses primarily driven by an increase in
headcount and employee compensation related to the shift of our
information technology function to corporate effective January 1,
2021, as we have centralized this function. The increase was also
driven by a $2 million foreign exchange loss for the three months
ended March 31, 2021, compared to a $2 million foreign exchange
gain for the three months ended March 31, 2020.
Intersegment eliminations
Intersegment eliminations are related to projects between our
segments, including our WorldView Legion satellite constellation.
Intersegment eliminations have decreased to $5 million from $7
million, or by $2 million, for the three months ended March 31,
2021 compared to the same period in 2020, primarily related to a
decrease in intersegment satellite construction activity.
MAXAR TECHNOLOGIES INC.
Consolidated Statements of Operations
(In millions, except per share
amounts)
Three Months Ended
March 31,
2021
2020
Revenues:
Product
$
142
$
107
Service
250
274
Total revenues
392
381
Costs and expenses:
Product costs, excluding depreciation and
amortization
148
145
Service costs, excluding depreciation and
amortization
93
93
Selling, general and administrative
84
68
Depreciation and amortization
74
90
Impairment loss
—
14
Operating loss
(7
)
(29
)
Interest expense, net
78
49
Other income, net
(1
)
(3
)
Loss before taxes
(84
)
(75
)
Income tax expense
—
2
Equity in loss from joint ventures, net of
tax
—
1
Loss from continuing operations
(84
)
(78
)
Income from discontinued operations, net
of tax
—
30
Net loss
$
(84
)
$
(48
)
Basic net income (loss) per common
share:
Loss from continuing operations
$
(1.30
)
$
(1.30
)
Income from discontinued operations, net
of tax
—
0.50
Basic net loss per common share
$
(1.30
)
$
(0.80
)
Diluted net income (loss) per common
share:
Loss from continuing operations
$
(1.30
)
$
(1.30
)
Income from discontinued operations, net
of tax
—
0.50
Diluted net loss per common share
$
(1.30
)
$
(0.80
MAXAR TECHNOLOGIES INC.
Consolidated Balance Sheets
(In millions, except per share
amounts)
March 31,
December 31,
2021
2020
Assets
Current assets:
Cash and cash equivalents
$
22
$
27
Trade and other receivables, net
318
327
Inventory
38
31
Advances to suppliers
27
24
Prepaid and other current assets
58
59
Total current assets
463
468
Non-current assets:
Orbital receivables, net
339
361
Property, plant and equipment, net
889
883
Intangible assets, net
867
895
Non-current operating lease assets
156
163
Goodwill
1,627
1,627
Other non-current assets
84
86
Total assets
$
4,425
$
4,483
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
104
$
115
Accrued liabilities
77
65
Accrued compensation and benefits
76
105
Contract liabilities
284
278
Current portion of long-term debt
8
8
Current operating lease liabilities
41
41
Other current liabilities
48
51
Total current liabilities
638
663
Non-current liabilities:
Pension and other postretirement
benefits
189
192
Contract liabilities
1
1
Operating lease liabilities
151
158
Long-term debt
2,098
2,414
Other non-current liabilities
101
119
Total liabilities
3,178
3,547
Commitments and contingencies
Stockholders’ equity:
Common stock ($0.0001 par value, 240
million common shares authorized; 71.7 million and 61.2 million
outstanding at March 31, 2021 and December 31, 2020,
respectively)
—
—
Additional paid-in capital
2,207
1,818
Accumulated deficit
(847
)
(763
)
Accumulated other comprehensive loss
(114
)
(120
)
Total Maxar stockholders' equity
1,246
935
Noncontrolling interest
1
1
Total stockholders' equity
1,247
936
Total liabilities and stockholders'
equity
$
4,425
$
4,483
MAXAR TECHNOLOGIES INC.
Consolidated Statements of Cash Flows
(In millions)
Three Months Ended
March 31,
2021
2020
Cash flows (used in) provided by:
Operating activities:
Net loss
$
(84
)
$
(48
)
Income from operations of discontinued
operations, net of tax
—
30
Loss from continuing operations
(84
)
(78
)
Adjustments to reconcile net income (loss)
to net cash (used in) provided by operating activities:
Impairment loss
—
14
Depreciation and amortization
74
90
Amortization of debt issuance costs and
other non-cash interest expense
4
4
Stock-based compensation expense
11
3
Loss from early extinguishment of debt
41
—
Cumulative adjustment to SXM-7 revenue
25
—
Other
4
(1
)
Changes in operating assets and
liabilities:
Trade and other receivables
3
47
Accounts payable and liabilities
(49
)
(39
)
Contract liabilities
6
(52
)
Other
(8
)
(1
)
Cash provided by (used in) operating
activities - continuing operations
27
(13
)
Cash used in operating activities -
discontinued operations
—
(2
)
Cash provided by (used in) operating
activities
27
(15
)
Investing activities:
Purchase of property, plant and equipment
and development or purchase of software
(50
)
(60
)
Return of capital from discontinued
operations
—
11
Cash used in investing activities -
continuing operations
(50
)
(49
)
Cash used in investing activities -
discontinued operations
—
(3
)
Cash used in investing activities
(50
)
(52
)
Financing activities:
Net proceeds of revolving credit
facility
25
15
Repurchase of 2023 Notes, including
premium
(384
)
—
Net proceeds from issuance of common
stock
380
—
Repayments of long-term debt
(2
)
(7
)
Settlement of securitization liability
(3
)
(4
)
Other
1
—
Cash provided by financing activities -
continuing operations
17
4
Cash used in financing activities -
discontinued operations
—
(15
)
Cash provided by (used in) financing
activities
17
(11
)
Decrease in cash, cash equivalents, and
restricted cash
(6
)
(78
)
Cash, cash equivalents, and restricted
cash, beginning of year
32
109
Cash, cash equivalents, and restricted
cash, end of period
$
26
$
31
Reconciliation of cash flow
information:
Cash and cash equivalents
$
22
$
27
Restricted cash included in prepaid and
other current assets
4
1
Restricted cash included in other
non-current assets
—
3
Total cash, cash equivalents, and
restricted cash
$
26
$
31
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 and Adjusted EBITDA.
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. 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 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
(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 (loss) income to EBITDA and Adjusted EBITDA for the three
months ended March 31, 2021 and 2020.
Three Months Ended
March 31,
2021
2020
($ millions)
Net loss
$
(84
)
$
(48
)
Income tax expense
—
2
Interest expense, net
78
49
Interest income
(1
)
(1
)
Depreciation and amortization
74
90
EBITDA1
$
67
$
92
(Income) loss from discontinued
operations, net of tax
—
(30
)
Transaction and integration related
expense
—
1
Impairment loss
—
14
Adjusted EBITDA1
$
67
$
77
Adjusted EBITDA:
Earth Intelligence
$
107
$
133
Space Infrastructure
(12
)
(39
)
Intersegment eliminations
(5
)
(7
)
Corporate and other expenses
(23
)
(10
)
Adjusted EBITDA1
$
67
$
77
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 Monday, May 3, 2021,
reviewing the first 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/8738468.
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 Monday, May 3, 2021 at 6:00 p.m. MT (8:00 p.m. ET) to Monday,
May 17, 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: 8738468#
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210503005693/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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