Maxar Technologies a trusted partner and innovator in Earth Intelligence and Space Infrastructure, announced financial results for the quarter ended March 31, 2020 and a multi-hundred million dollar contract award to build multiple 1300-Class communications satellites for an undisclosed customer. 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 $381 million
- Net loss of $48 million
- Diluted loss per share from continuing operations of $1.30
- Adjusted EBITDA1 from continuing operations of $77 million and Adjusted EBITDA1 margin of 20.2 percent
- Net loss and Adjusted EBITDA included charges of $18 million related to COVID-19 and $14 million related to a recent design anomaly detected in a final satellite test procedure
- Excluding the $32 million in charges described above, net loss would have been $16 million and Adjusted EBITDA would have been $109 million
This is a non-GAAP financial measure. Refer to section “Non-GAAP Financial Measures” in this earnings release.
“Our results this quarter reflect progress on our multi-year strategy to strengthen our company and position it for revenue, profit and cash flow growth. Importantly, we closed the MDA divestiture, which helped improve our balance sheet. We generated solid revenue growth in Earth Intelligence, and quarter-over-quarter consolidated backlog growth, demonstrating solid demand from customers and continued success of our diversification strategy,” said Dan Jablonsky, CEO. “And the bookings momentum has continued into the second quarter with today’s signing of a contract to build multiple 1300-Class communications satellites. This brings our bookings total in Space Infrastructure to over $700 million year-to-date and puts us on a path for another year of backlog growth for this segment.”
Jablonsky continued, “As we respond to the global Coronavirus pandemic, we are focused on protecting the health and safety of our team members, families, customers and communities while continuing to deliver the products and services needed by our partners to complete their critical missions.”
“We ended the quarter with roughly $500 million in liquidity and no significant debt maturities until the end of 2023,” stated Biggs Porter, CFO. “This quarter’s results were negatively impacted by an increase in estimated costs to complete programs and scheduling penalties in our Space Infrastructure segment because of the social distancing restrictions put in place across the world to help combat COVID-19. Separately we discovered a design anomaly on a commercial satellite program in late April prior to shipment. This was during the final stage of our thorough test process and resulted in schedule revisions and cost growth. Our results included negative impacts of $32 million in the quarter related to these items. Excluding these items, our results are in line with expectations.”
On April 8, 2020, we completed the previously announced sale of the MDA Business to Neptune Acquisition Inc., a corporation existing under the laws of the Province of British Columbia and an affiliate of Northern Private Capital Ltd., for $729 million (C$1 billion) subject to customary purchase price adjustments, including for working capital, cash and debt. This divestiture represents a strategic shift in our business and, in accordance with U.S. GAAP, qualifies as a discontinued operation. As a result, the operating results and cash flows related to the MDA Business have been reflected as discontinued operations in the Unaudited Condensed Consolidated Statements of Operations.
Total revenues from continuing operations decreased to $381 million from $431 million, or by $50 million, for the three months ended March 31, 2020, compared to the same period of 2019. The decrease was primarily driven by a $78 million decrease in the Space Infrastructure segment which was partially offset by a $17 million increase in the Earth Intelligence segment.
For the three months ended March 31, 2020, net loss from continuing operations of $78 million compared to a net loss of $68 million in the same period of 2019. The increase in net loss is primarily driven by a decrease in revenue of $50 million for the three months ended March 31, 2020 compared to the same period in 2019. The increase is also driven by a $14 million recognition of impairment on orbital receivables, primarily due to an increase in credit risk associated with our largest orbital customer, for the three months ended March 31, 2020. We did not recognize any orbital impairments for the three months ended March 31, 2019. The overall increased loss was partially offset by a decrease in product and service costs of $25 million and a decrease in selling, general and administrative expenses of $17 million. The increased loss was also partially offset by a $2 million foreign exchange gain for the three months ended March 31, 2020 compared to a foreign exchange loss of $5 million for the three months ended March 31, 2019.
For the first quarter of 2020, Adjusted EBITDA was $77 million and Adjusted EBITDA as a percentage of consolidated revenues (“Adjusted EBITDA margin percentage”) was 20.2%. This is compared to Adjusted EBITDA of $99 million and Adjusted EBITDA margin percentage of 22.9% for the first quarter of 2019. The decrease was driven largely by lower Adjusted EBITDA from the Space Infrastructure segment, partially offset by higher Adjusted EBITDA from the Earth Intelligence segment.
Our results of operations for the three months ended March 31, 2020 include the current estimated impact of COVID-19. We had COVID-19 related EAC growth of $18 million within the Space Infrastructure segment which negatively impacted our earnings during the three months ended March 31, 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 March 31, 2020. These costs are considered incremental and separable from normal operations.
We had total order backlog of $1.7 billion as of March 31, 2020 compared to $1.6 billion as of December 31, 2019. Backlog increased primarily due to an increase in our Space Infrastructure segment backlog as a result of new awards during the year, partially offset by declines in our Earth Intelligence segment. The decrease in backlog within the Earth Intelligence segment is primarily driven by the timing of the exercise of the EnhancedView Contract option year. The decrease was partially offset by increases in geospatial services. Our unfunded contract options totaled $1.4 billion as of March 31, 2020 and December 31, 2019, respectively.