Maxar Technologies Reports Third Quarter 2020 Results

WESTMINSTER, Colo. — (BUSINESS WIRE) — November 5, 2020 — 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 September 30, 2020. All dollar amounts in this press release are expressed in U.S. dollars, unless otherwise noted.

Key points from the quarter include:

  • Consolidated revenues from continuing operations of $436 million
  • Net income of $85 million, including an $85 million gain on remeasurement of the previously held equity interest in Vricon
  • Diluted income per share from continuing operations of $1.32
  • Adjusted EBITDA1 from continuing operations of $112 million and Adjusted EBITDA1 margin of 25.7%
  • Closed the acquisition of Vricon, Inc. to purchase the remaining 50% ownership interest on July 1, 2020

1 This is a non-GAAP financial measure. Refer to section “Non-GAAP Financial Measures” in this earnings release.

“We generated solid year-over-year revenue growth this quarter as demand has remained resilient and our customers continue to rely on us for important national security and commercial missions. We also enjoyed significant backlog growth on a diversified set of awards with both government and commercial customers across our Earth Intelligence and Space Infrastructure segments,” said Dan Jablonsky, CEO. “Our results this quarter further reflect progress on our multi-year strategy to position Maxar for sustained revenue, profit and cash flow growth. We are executing well against our strategic priorities for the year while continuing to respond to the global COVID-19 pandemic by focusing on the protection of the health and safety of our team members, families, customers and communities.”

“Our leverage continued to improve this quarter and we ended the quarter with over $500 million in liquidity, which we believe provides ample flexibility to execute on our multi-year growth plan,” stated Biggs Porter, CFO. “Performance in the quarter was solid, with both year-over-year revenue and profit growth on a consolidated basis and positive free cash flow. While the existence of the COVID pandemic remains a risk to our operations and the operations of our customers, we have thus far been able to manage the crisis roughly in line with expectations. Given that, we are maintaining our outlook for 2020 consolidated revenue, Adjusted EBITDA, and Capex, and we are tightening the range of guidance for operating cash flow.”

On July 1, 2020, we closed the acquisition of Vricon Inc. (“Vricon”) and purchased the remaining 50% ownership interest in Vricon (“Vricon Acquisition”) for $142 million, or $119 million, net of cash at closing. To fund the transaction, we issued $150 million in aggregate principal amount of new senior secured notes due 2027.

Total revenues from continuing operations increased to $436 million from $413 million, or by $23 million, for the three months ended September 30, 2020, compared to the same period of 2019. The increase was primarily driven by an increase in the Space Infrastructure segment which was partially offset by a decrease in the Earth Intelligence segment.

For the three months ended September 30, 2020, net income from continuing operations was $85 million compared to a net loss of $25 million in the same period of 2019. The increase was primarily driven by an $85 million gain on remeasurement of the previously held equity interest in Vricon and an increase in revenues.

For the third quarter of 2020, Adjusted EBITDA was $112 million and Adjusted EBITDA as a percentage of consolidated revenues (“Adjusted EBITDA margin percentage”) was 25.7%. This is compared to Adjusted EBITDA of $109 million and Adjusted EBITDA margin percentage of 26.4% for the third quarter of 2019. The increase was driven largely by higher Adjusted EBITDA from the Space Infrastructure segment partially offset by lower Adjusted EBITDA from the Earth Intelligence segment.

Our results of operations for the three months ended September 30, 2020 include the current estimated impact of COVID-19. We had COVID-19 related EAC growth of $3 million within the Space Infrastructure segment, which negatively impacted our earnings during the three months ended September 30, 2020. The changes in the EACs are due to increases in estimated program costs associated with the COVID-19 operating posture and the estimated impact of certain items such as supplier delays and increased labor hours along with actuals realized during the three months ended September 30, 2020.

We had total order backlog of $2.2 billion as of September 30, 2020 compared to $1.6 billion as of December 31, 2019. The increase in backlog was primarily driven by a $532 million increase in the Space Infrastructure segment due to new contracts and expansion of existing programs with the U.S. government. There was also an increase in the Earth Intelligence segment driven by the exercise of the $300 million EnhancedView Contract option, partially offset by revenue recognized during the year. Our unfunded contract options totaled $0.9 billion and $1.4 billion as of September 30, 2020 and December 31, 2019, 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 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

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

($ millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

436

 

$

413

 

 

$

1,256

 

$

1,256

Income (loss) from continuing operations

 

 

84

 

 

(41

)

 

 

6

 

 

30

Income from discontinued operations, net of tax

 

 

1

 

 

16

 

 

 

337

 

 

36

Net income

 

$

85

 

$

(25

)

 

 

343

 

 

66

EBITDA 1

 

 

192

 

 

119

 

 

 

725

 

 

501

Adjusted EBITDA 1

 

 

112

 

 

109

 

 

 

327

 

 

316

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

1.32

 

$

(0.69

)

 

$

0.10

 

$

0.50

Income from discontinued operations, net of tax

 

 

0.02

 

 

0.27

 

 

 

5.39

 

 

0.60

Diluted income per common share

 

$

1.34

 

$

(0.42

)

 

$

5.49

 

$

1.10

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding (millions) :

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

61.0

 

 

59.6

 

 

 

60.6

 

 

59.6

Diluted

 

 

63.4

 

 

59.6

 

 

 

62.5

 

 

60.0

 

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
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Earth Intelligence

$

274

 

 

$

282

 

 

$

823

 

 

$

799

 

Space Infrastructure

 

181

 

 

 

162

 

 

 

497

 

 

 

553

 

Intersegment eliminations

 

(19

)

 

 

(31

)

 

 

(64

)

 

 

(96

)

Total revenues

$

436

 

 

$

413

 

 

$

1,256

 

 

$

1,256

 

   

We analyze financial performance by segment, which combine related activities within the Company.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2020

 

2019

 

2020

 

2019

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Earth Intelligence

 

$

128

 

 

$

145

 

 

$

407

 

 

$

394

 

Space Infrastructure

 

 

12

 

 

 

(3

)

 

 

(16

)

 

 

2

 

Intersegment eliminations

 

 

(7

)

 

 

(12

)

 

 

(21

)

 

 

(20

)

Corporate and other expenses

 

 

(21

)

 

 

(21

)

 

 

(43

)

 

 

(60

)

Adjusted EBITDA 1

 

$

112

 

 

$

109

 

 

$

327

 

 

$

316

 

 

1 This is a non-GAAP financial measure. Refer to section “Non-GAAP Financial Measures” in this earnings release.

 

  Earth Intelligence

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

($ millions)

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

274

 

$

282

 

$

823

 

$

799

 

Adjusted EBITDA

$

128

 

$

145

 

$

407

 

$

394

 

Adjusted EBITDA Margin

 

46.7

%

 

51.4

%

 

49.5

%

 

49.3

%


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