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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Maxar Technologies Inc | TSX:MAXR | Toronto | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 70.54 | 70.34 | 70.98 | 0 | 01:00:00 |
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:
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 56.71
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 $ 557The 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 $ 1511
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 $ 41NON-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 $ 151Cautionary 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.
View source 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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