Maxar Technologies Reports Third Quarter 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 $181 million from $162 million, or by $19 million, for the three months ended September 30, 2020, compared to the same period of 2019. Revenues increased primarily as a result of the impact of an increase in volume related to U.S. government contracts of $27 million during the three months ended September 30, 2020, compared to the same period in 2019. The increase was partially offset by reduced volumes on commercial programs of $6 million and COVID-19 EAC growth of $3 million which negatively impacted revenue for the three months ended September 30, 2020. 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.

Adjusted EBITDA increased to $12 million of income from a loss of $3 million, or by $15 million, for the three months ended September 30, 2020, compared to the same period of 2019. The increase was primarily driven by a decrease in significant losses of $16 million on a commercial satellite program which includes significant development efforts in 2020 as compared to the same period in 2019. The increase was also impacted by increased margins on certain programs partially offset by a $3 million negative impact related to our COVID-19 operating posture and higher 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 for the three months ended September 30, 2020 and September 30, 2019 were $21 million. There was a $12 million increase in selling, general and administrative expenses for the three months ended September 30, 2020, compared to the same period in 2019 driven by an increase in employee compensation and stock-based compensation expense. The increase was partially offset by an $11 million decrease in retention costs related to a 2019 program within the Space Infrastructure segment.

Intersegment eliminations

Intersegment eliminations are related to projects between our segments, including WorldView Legion. Intersegment eliminations have decreased to $7 million from $12 million, or by $5 million, for the three months ended September 30, 2020 compared to the same period in 2019, primarily related to a decrease in intersegment satellite construction activity.

 

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2020

 

2019

 

2020

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

161

 

 

$

129

 

 

$

425

 

 

$

439

 

 

Service

 

 

275

 

 

 

284

 

 

 

831

 

 

 

817

 

 

Total revenues

 

 

436

 

 

 

413

 

 

 

1,256

 

 

 

1,256

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Product costs, excluding depreciation and amortization

 

 

145

 

 

 

140

 

 

 

434

 

 

 

452

 

 

Service costs, excluding depreciation and amortization

 

 

95

 

 

 

89

 

 

 

275

 

 

 

284

 

 

Selling, general and administrative

 

 

90

 

 

 

81

 

 

 

237

 

 

 

232

 

 

Depreciation and amortization

 

 

95

 

 

 

93

 

 

 

274

 

 

 

284

 

 

Impairment loss

 

 

 

 

 

 

 

 

14

 

 

 

 

 

Satellite insurance recovery

 

 

 

 

 

 

 

 

 

 

 

(183

)

 

Reduction of gain on sale leaseback

 

 

4

 

 

 

 

 

 

4

 

 

 

 

 

Operating income

 

 

7

 

 

 

10

 

 

 

18

 

 

 

187

 

 

Interest expense, net

 

 

36

 

 

 

50

 

 

 

133

 

 

 

148

 

 

Other (income) expense, net

 

 

(91

)

 

 

(1

)

 

 

(98

)

 

 

2

 

 

Income (loss) before taxes

 

 

62

 

 

 

(39

)

 

 

(17

)

 

 

37

 

 

Income tax (benefit) expense

 

 

(22

)

 

 

1

 

 

 

(22

)

 

 

3

 

 

Equity in loss (income) from joint ventures, net of tax

 

 

 

 

 

1

 

 

 

(1

)

 

 

4

 

 

Income (loss) from continuing operations

 

 

84

 

 

 

(41

)

 

 

6

 

 

 

30

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations of discontinued operations, net of tax

 

 

 

 

 

16

 

 

 

32

 

 

 

36

 

 

Gain on disposal of discontinued operations, net of tax

 

 

1

 

 

 

 

 

 

305

 

 

 

 

 

Income from discontinued operations, net of tax

 

 

1

 

 

 

16

 

 

 

337

 

 

 

36

 

 

Net income (loss)

 

$

85

 

 

$

(25

)

 

$

343

 

 

$

66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

1.38

 

 

$

(0.69

)

 

$

0.10

 

 

$

0.50

 

 

Income from discontinued operations, net of tax

 

 

0.02

 

 

 

0.27

 

 

 

5.56

 

 

 

0.60

 

 

Basic net income (loss) per common share

 

$

1.40

 

 

$

(0.42

)

 

$

5.66

 

 

$

1.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income (loss) 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 net income (loss) per common share

 

$

1.34

 

 

$

(0.42

)

 

$

5.49

 

 

$

1.10

 

 

 

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Balance Sheets

(In millions, except per share amounts)

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2020

 

2019

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

60

 

 

$

59

 

Trade and other receivables, net

 

 

361

 

 

 

357

 

Inventory

 

 

27

 

 

 

20

 

Advances to suppliers

 

 

49

 

 

 

42

 

Prepaid and other current assets

 

 

46

 

 

 

32

 

Current assets held for sale

 

 

 

 

 

751

 

Total current assets

 

 

543

 

 

 

1,261

 

Non-current assets:

 

 

 

 

 

 

Orbital receivables, net

 

 

358

 

 

 

382

 

Property, plant and equipment, net

 

 

844

 

 

 

758

 

Intangible assets, net

 

 

926

 

 

 

991

 

Non-current operating lease assets

 

 

170

 

 

 

176

 

Goodwill

 

 

1,632

 

 

 

1,455

 

Other non-current assets

 

 

92

 

 

 

134

 

Total assets

 

$

4,565

 

 

$

5,157

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

124

 

 

$

153

 

Accrued liabilities

 

 

78

 

 

 

130

 

Accrued compensation and benefits

 

 

87

 

 

 

93

 

Contract liabilities

 

 

275

 

 

 

271

 

Current portion of long-term debt

 

 

9

 

 

 

30

 

Current operating lease liabilities

 

 

41

 

 

 

40

 

Other current liabilities

 

 

59

 

 

 

49

 

Current liabilities held for sale

 

 

 

 

 

230

 

Total current liabilities

 

 

673

 

 

 

996

 

Non-current liabilities:

 

 

 

 

 

 

Pension and other postretirement benefits

 

 

191

 

 

 

197

 

Contract liabilities

 

 

2

 

 

 

4

 

Operating lease liabilities

 

 

166

 

 

 

173

 

Long-term debt

 

 

2,413

 

 

 

2,915

 

Other non-current liabilities

 

 

122

 

 

 

110

 

Total liabilities

 

 

3,567

 

 

 

4,395

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock ($0.0001 par value, 240 million common shares authorized; 61.0 million and 59.9 million outstanding at September 30, 2020 and December 31, 2019, respectively)

 

 

 

 

 

 

Additional paid-in capital

 

 

1,800

 

 

 

1,784

 

Accumulated deficit

 

 

(741

)

 

 

(1,082

)

Accumulated other comprehensive (loss) income

 

 

(61

)

 

 

59

 

Total Maxar stockholders' equity

 

 

998

 

 

 

761

 

Noncontrolling interest

 

 

 

 

 

1

 

Total stockholders' equity

 

 

998

 

 

 

762

 

Total liabilities and stockholders' equity

 

$

4,565

 

 

$

5,157

 

 

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Statements of Cash Flows

(In millions)

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30,

 

 

2020

 

2019

Cash flows (used in) provided by:

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

Net income

 

$

343

 

 

$

66

 

Income from operations of discontinued operations, net of tax

 

 

(32

)

 

 

(36

)

Gain on disposal of discontinued operations, net of tax

 

 

(305

)

 

 

 

Income from continuing operations

 

 

6

 

 

 

30

 

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

 

 

 

 

 

 

Impairment losses including inventory

 

 

14

 

 

 

3

 

Depreciation and amortization

 

 

274

 

 

 

284

 

Loss from extinguishment of debt

 

 

7

 

 

 

 

Gain from remeasurement of equity interest in acquiree

 

 

(85

)

 

 

 

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

 

 

12

 

 

 

6

 

Deferred income tax benefit

 

 

(17

)

 

 

 

Stock-based compensation expense

 

 

24

 

 

 

9

 

Other

 

 

3

 

 

 

11

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Trade and other receivables

 

 

(3

)

 

 

(26

)

Advances to suppliers

 

 

(7

)

 

 

35

 

Accounts payables and accrued liabilities

 

 

(41

)

 

 

(80

)

Contract liabilities

 

 

1

 

 

 

(141

)

Other

 

 

(7

)

 

 

3

 

Cash provided by operating activities - continuing operations

 

 

181

 

 

 

134

 

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

 

 

(49

)

 

 

12

 

Cash provided by operating activities

 

 

132

 

 

 

146

 

Investing activities:

 

 

 

 

 

 

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

 

 

(224

)

 

 

(203

)

Acquisition, net of cash acquired

 

 

(118

)

 

 

 

Return of capital from discontinued operations

 

 

20

 

 

 

 

Cash used in investing activities - continuing operations

 

 

(322

)

 

 

(203

)

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

 

 

723

 

 

 

(4

)

Cash provided by (used in) investing activities

 

 

401

 

 

 

(207

)

Financing activities:

 

 

 

 

 

 

Net proceeds of revolving credit facility

 

 

 

 

 

107

 

Net proceeds from issuance of 2027 Notes

 

 

147

 

 

 

 

Repurchase of 2023 Notes, including premium

 

 

(169

)

 

 

 

Repayments of long-term debt

 

 

(523

)

 

 

(21

)

Settlement of securitization liability

 

 

(7

)

 

 

(7

)

Payment of dividends

 

 

(2

)

 

 

(2

)

Other

 

 

4

 

 

 

 

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

 

 

(550

)

 

 

77

 

Cash used in financing activities - discontinued operations

 

 

(24

)

 

 

(2

)

Cash (used in) provided by financing activities

 

 

(574

)

 

 

75

 

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

 

 

(41

)

 

 

14

 

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

 

 

(5

)

 

 

 

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

 

 

110

 

 

 

43

 

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

 

$

64

 

 

$

57

 

 

 

 

 

 

 

 

Reconciliation of cash flow information:

 

 

 

 

 

 

Cash and cash equivalents

 

$

60

 

 

$

52

 

Restricted cash included in prepaid and other current assets

 

 

4

 

 

 

1

 

Restricted cash included in other non-current assets

 

 

 

 

 

4

 

Total cash, cash equivalents, and restricted cash

 

$

64

 

 

$

57

 


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