Maxar Technologies Reports Fourth Quarter and Full-Year 2020 Results

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 $224 million from $153 million, or by $71 million, for the three months ended December 31, 2020, compared to the same period in 2019. Revenues increased primarily as a result of the impact of increased volumes on commercial programs of $47 million during the three months ended December 31, 2020, compared to the same period in 2019. The increase was also driven by an increase in volume related to U.S. government contracts of $24 million, compared to the same period in 2019.

Revenues increased to $721 million from $706 million, or by $15 million, for the year ended December 31, 2020, compared to the same period in 2019. Revenues increased primarily as a result of an increase in volume related to U.S. government contracts of $137 million during the year ended December 31, 2020, compared to the same period in 2019. This increase in revenue was partially offset by the impact of reduced volumes on commercial programs of $122 million including a $9 million impact due to increases in estimated costs and an associated change in the EAC profit margin of a commercial satellite program due to the identification of a design anomaly in the final stage of a testing process. Revenues were also negatively impacted by $27 million of estimated COVID-19 related EAC growth during the period and are included in the above-mentioned results. The increases 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. These costs are considered incremental and separable from normal operations.

Adjusted EBITDA for the Space Infrastructure segment increased to $13 million of income from a loss of $19 million, or by $32 million, for the three months ended December 31, 2020, compared to the same period in 2019. The increase in the Space Infrastructure segment is primarily related to higher margins on commercial programs of $36 million driven by a change in program mix related to the completion of less profitable programs offset by new, more profitable programs. The increase was partially offset by an increase in labor of $4 million and a $2 million increase in stock compensation.

Adjusted EBITDA changed to a loss of $3 million from a loss of $17 million, or by $14 million, for the year ended December 31, 2020, compared to the same period in 2019. The increase in the Space Infrastructure segment is primarily related to higher margins and favorable EACs outside of the estimated COVID-19 impacts discussed below, on commercial programs of $68 million. This has been driven by a change in program mix related to the completion of less profitable programs offset by new, more profitable programs along with $8 million less of program losses on a developmental program for the year ended December 31, 2020, compared to the same period in 2019. The increase in commercial programs are partially offset by an estimated $27 million negative impact related to our COVID-19 operating posture. The increase is also partially offset by a $16 million increase in costs due to a change in the compensation structure from retention payments to bonuses which were not included in segment Adjusted EBITDA in 2019, a $9 million negative impact on the above-mentioned commercial satellite program with a design anomaly and a recovery of a previously reserved amount of $7 million in 2019 which did not reoccur in 2020. The remainder of the change was related to a decrease in cost of product and services and selling, general, and administrative expenses.

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 decreased to $18 million from $26 million, or by $8 million, for the three months ended December 31, 2020, compared to the same period in 2019. The decrease was primarily driven by a $6 million decrease in retention costs related to a 2019 program within the Space Infrastructure segment and a decrease in selling, general and administrative costs of $2 million for the three months ended December 31, 2020, compared to the same period in 2019.

Corporate and other expenses decreased to $61 million from $86 million, or by $25 million, for the year ended December 31, 2020, compared to the same period in 2019. The decrease was primarily driven by a $24 million decrease in retention costs related to a 2019 program within the Space Infrastructure segment. The decrease was also driven by a $5 million foreign exchange gain for the year ended December 31, 2020, compared to a $2 million foreign exchange loss for the year ended December 31, 2019. These decreases were partially offset by a $13 million increase in stock-based compensation expense primarily driven by a higher stock price.

Intersegment eliminations

Intersegment eliminations are related to projects between our segments, including WorldView Legion. Intersegment eliminations have decreased to $6 million from $9 million, or by $3 million, for the three months ended December 31, 2020 compared to the same period in 2019, primarily related to a decrease in intersegment satellite construction activity.

Intersegment eliminations have decreased to $27 million from $29 million, or by $2 million, for the year ended December 31, 2020 compared to the same period in 2019, primarily related to a decrease in intersegment satellite construction activity

MAXAR TECHNOLOGIES INC.

Consolidated Statements of Operations

(In millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

 

December 31,

 

 

2020

 

2019

 

 

2018

Revenues:

 

 

 

 

 

 

 

 

 

Product

 

$

633

 

 

$

560

 

 

$

697

 

Service

 

 

1,090

 

 

 

1,106

 

 

 

1,107

 

Total revenues

 

 

1,723

 

 

 

1,666

 

 

 

1,804

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Product costs, excluding depreciation and amortization

 

 

615

 

 

 

593

 

 

 

775

 

Service costs, excluding depreciation and amortization

 

 

378

 

 

 

382

 

 

 

313

 

Selling, general and administrative

 

 

332

 

 

 

325

 

 

 

446

 

Depreciation and amortization

 

 

348

 

 

 

376

 

 

 

439

 

Impairment losses

 

 

47

 

 

 

14

 

 

 

586

 

Satellite insurance recovery

 

 

 

 

 

(183

)

 

 

 

Loss (gain) on sale of assets

 

 

1

 

 

 

(136

)

 

 

(33

)

Operating income (loss)

 

 

2

 

 

 

295

 

 

 

(722

)

Interest expense, net

 

 

175

 

 

 

219

 

 

 

200

 

Other (income) expense, net

 

 

(104

)

 

 

(1

)

 

 

1

 

(Loss) income before taxes

 

 

(69

)

 

 

77

 

 

 

(923

)

Income tax (benefit) expense

 

 

(22

)

 

 

5

 

 

 

(48

)

Equity in income from joint ventures, net of tax

 

 

(1

)

 

 

(11

)

 

 

(2

)

(Loss) income from continuing operations

 

 

(46

)

 

 

83

 

 

 

(873

)

Discontinued operations:

 

 

 

 

 

 

 

 

 

Income (loss) from operations of discontinued operations, net of tax

 

 

32

 

 

 

26

 

 

 

(377

)

Gain on disposal of discontinued operations, net of tax

 

 

317

 

 

 

 

 

 

 

Income (loss) from discontinued operations, net of tax

 

 

349

 

 

 

26

 

 

 

(377

)

Net income (loss)

 

$

303

 

 

$

109

 

 

$

(1,250

)

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per common share:

 

 

 

 

 

 

 

 

 

(Loss) income from continuing operations

 

$

(0.76

)

 

$

1.39

 

 

$

(15.03

)

Income (loss) from discontinued operations, net of tax

 

 

5.75

 

 

 

0.44

 

 

 

(6.49

)

Basic net income (loss) per common share

 

$

4.99

 

 

$

1.83

 

 

$

(21.52

)

 

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per common share:

 

 

 

 

 

 

 

 

 

(Loss) income from continuing operations

 

$

(0.76

)

 

$

1.38

 

 

$

(15.03

)

Income (loss) from discontinued operations, net of tax

 

 

5.75

 

 

 

0.43

 

 

 

(6.49

)

Diluted net income (loss) per common share

 

$

4.99

 

 

$

1.81

 

 

$

(21.52

)

MAXAR TECHNOLOGIES INC.

Consolidated Balance Sheets

(In millions, except per share amounts)

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

2020

 

2019

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

27

 

 

$

59

 

Trade and other receivables, net

 

 

327

 

 

 

357

 

Inventory

 

 

31

 

 

 

20

 

Advances to suppliers

 

 

24

 

 

 

42

 

Prepaid and other current assets

 

 

59

 

 

 

32

 

Current assets held for sale

 

 

 

 

 

751

 

Total current assets

 

 

468

 

 

 

1,261

 

Non-current assets:

 

 

 

 

 

 

Orbital receivables, net

 

 

361

 

 

 

382

 

Property, plant and equipment, net

 

 

883

 

 

 

758

 

Intangible assets, net

 

 

895

 

 

 

991

 

Non-current operating lease assets

 

 

163

 

 

 

176

 

Goodwill

 

 

1,627

 

 

 

1,455

 

Other non-current assets

 

 

86

 

 

 

134

 

Total assets

 

$

4,483

 

 

$

5,157

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

115

 

 

$

153

 

Accrued liabilities

 

 

65

 

 

 

130

 

Accrued compensation and benefits

 

 

105

 

 

 

93

 

Contract liabilities

 

 

278

 

 

 

271

 

Current portion of long-term debt

 

 

8

 

 

 

30

 

Current operating lease liabilities

 

 

41

 

 

 

40

 

Other current liabilities

 

 

51

 

 

 

49

 

Current liabilities held for sale

 

 

 

 

 

230

 

Total current liabilities

 

 

663

 

 

 

996

 

Non-current liabilities:

 

 

 

 

 

 

Pension and other postretirement benefits

 

 

192

 

 

 

191

 

Contract liabilities

 

 

1

 

 

 

4

 

Operating lease liabilities

 

 

158

 

 

 

173

 

Long-term debt

 

 

2,414

 

 

 

2,915

 

Other non-current liabilities

 

 

119

 

 

 

116

 

Total liabilities

 

 

3,547

 

 

 

4,395

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock ($0.0001 par value, 240 million common shares authorized; 61.2 million and 59.9 million outstanding at December 31, 2020 and 2019, respectively)

 

 

 

 

 

 

Additional paid-in capital

 

 

1,818

 

 

 

1,784

 

Accumulated deficit

 

 

(763

)

 

 

(1,064

)

Accumulated other comprehensive (loss) income

 

 

(120

)

 

 

41

 

Total Maxar stockholders' equity

 

 

935

 

 

 

761

 

Noncontrolling interest

 

 

1

 

 

 

1

 

Total stockholders' equity

 

 

936

 

 

 

762

 

Total liabilities and stockholders' equity

 

$

4,483

 

 

$

5,157

 

MAXAR TECHNOLOGIES INC.

Consolidated Statements of Cash Flows

(In millions)

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

 

December 31,

 

 

2020

 

2019

 

2018

Cash flows (used in) provided by:

 

 

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

303

 

 

$

109

 

 

$

(1,250

)

(Income) loss from operations of discontinued operations, net of tax

 

 

(32

)

 

 

(26

)

 

 

377

 

Gain on disposal of discontinued operations, net of tax

 

 

(317

)

 

 

 

 

 

 

(Loss) income from continuing operations

 

 

(46

)

 

 

83

 

 

 

(873

)

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

 

Impairment losses including inventory

 

 

47

 

 

 

17

 

 

 

651

 

Depreciation and amortization

 

 

348

 

 

 

376

 

 

 

439

 

Gain from remeasurement of equity interest in acquiree

 

 

(85

)

 

 

 

 

 

 

Amortization of debt issuance costs and other non-cash interest expense

 

 

16

 

 

 

11

 

 

 

9

 

Stock-based compensation expense

 

 

43

 

 

 

20

 

 

 

20

 

Loss from early extinguishment of debt

 

 

7

 

 

 

22

 

 

 

 

Loss (gain) on sale of assets

 

 

1

 

 

 

(136

)

 

 

(33

)

Deferred income tax benefit

 

 

(17

)

 

 

 

 

 

(48

)

Equity in income from joint ventures, net of tax

 

 

(1

)

 

 

(11

)

 

 

(2

)

Other

 

 

2

 

 

 

7

 

 

 

28

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

 

33

 

 

 

(20

)

 

 

(19

)

Accounts payables and liabilities

 

 

(84

)

 

 

17

 

 

 

86

 

Contract liabilities

 

 

5

 

 

 

(117

)

 

 

(158

)

Other

 

 

(26

)

 

 

(11

)

 

 

14

 

Cash provided by operating activities - continuing operations

 

 

243

 

 

 

258

 

 

 

114

 

Cash (used in) provided operating activities - discontinued operations

 

 

(54

)

 

 

59

 

 

 

25

 

Cash provided by operating activities

 

 

189

 

 

 

317

 

 

 

139

 

Investing activities:

 

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment and development or purchase of software

 

 

(308

)

 

 

(314

)

 

 

(206

)

Acquisition, net of cash acquired

 

 

(120

)

 

 

 

 

 

 

Sale of assets

 

 

 

 

 

280

 

 

 

68

 

Return of capital from discontinued operations

 

 

20

 

 

 

28

 

 

 

 

Other

 

 

2

 

 

 

 

 

 

9

 

Cash used in investing activities - continuing operations

 

 

(406

)

 

 

(6

)

 

 

(129

)

Cash provided by (used in) investing activities - discontinued operations

 

 

723

 

 

 

(7

)

 

 

(21

)

Cash provided by (used in) investing activities

 

 

317

 

 

 

(13

)

 

 

(150

)

Financing activities:

 

 

 

 

 

 

 

 

 

Net payment of revolving credit facility

 

 

 

 

 

(595

)

 

 

 

Net proceeds from issuance of 2023 Notes, 2027 Notes, and other long-term debt

 

 

147

 

 

 

980

 

 

 

104

 

Repurchase of 2023 Notes, including premium

 

 

(169

)

 

 

 

 

 

 

Repayments of long-term debt

 

 

(525

)

 

 

(523

)

 

 

(24

)

Refinancing fees paid to creditors

 

 

 

 

 

(20

)

 

 

 

Repurchase of orbital receivables

 

 

 

 

 

(24

)

 

 

 

Settlement of securitization liability

 

 

(11

)

 

 

(20

)

 

 

(15

)

Proceeds from securitization of orbital receivables

 

 

 

 

 

 

 

 

18

 

Other

 

 

3

 

 

 

(6

)

 

 

(68

)

Cash (used in) provided by financing activities - continuing operations

 

 

(555

)

 

 

(208

)

 

 

15

 

Cash used in financing activities - discontinued operations

 

 

(24

)

 

 

(30

)

 

 

(2

)

Cash (used in) provided by financing activities

 

 

(579

)

 

 

(238

)

 

 

13

 

(Decrease) increase in cash, cash equivalents, and restricted cash

 

 

(73

)

 

 

66

 

 

 

2

 

Effect of foreign exchange on cash, cash equivalents, and restricted cash

 

 

(5

)

 

 

 

 

 

(1

)

Cash, cash equivalents, and restricted cash, beginning of year

 

 

109

 

 

 

43

 

 

 

42

 

Cash, cash equivalents, and restricted cash, end of year

 

$

31

 

 

$

109

 

 

$

43

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of cash flow information:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

27

 

 

$

105

 

 

$

35

 

Restricted cash included in prepaid and other current assets

 

 

4

 

 

 

1

 

 

 

7

 

Restricted cash included in other non-current assets

 

 

 

 

 

3

 

 

 

1

 

Total cash, cash equivalents, and restricted cash

 

$

31

 

 

$

109

 

 

$

43

 


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