DigitalGlobe Reports First Quarter 2017 Results

Net income margin is calculated by dividing net income by U.S. GAAP revenue. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by U.S. GAAP revenue.


DigitalGlobe, Inc. Consolidated Statements of Operations

	For the three months ended
	March 31,
(in millions, except per share data)	2017			2016
Revenue	$	209.7		$	175.4
Costs and expenses:
Cost of revenue, excluding depreciation and amortization		61.3			34.5
Selling, general and administrative		63.1			46.4
Depreciation and amortization		79.5			71.0
Restructuring charges		0.3			2.9
Income from operations		5.5			20.6
Interest expense, net		(9.5	)		(5.1	)
Loss from early extinguishment of debt		(0.5	)		—
(Loss) income before income taxes		(4.5	)		15.5
Income tax benefit (expense)		2.3			(6.0	)
Equity in earnings from joint ventures, net of tax		—			(0.9	)
Net (loss) income		(2.2	)		8.6
Preferred stock dividends		(1.0	)		(1.0	)
Net (loss) income less preferred stock dividends		(3.2	)		7.6
Income allocated to participating securities		—			(0.3	)
Net (loss) income available to common stockholders	$	(3.2	)	$	7.3

(Loss) earnings per share:
Basic (loss) earnings per share	$	(0.05	)	$	0.11
Diluted (loss) earnings per share	$	(0.05	)	$	0.11
Weighted average common shares outstanding:
Basic		61.7			64.9
Diluted		61.7			65.1

DigitalGlobe, Inc. Reconciliation of Net Income to EBITDA and Adjusted EBITDA

	For the three months ended
	March 31,
(in millions)	2017			2016
Net (loss) income	$	(2.2	)	$	8.6
Depreciation and amortization		79.5			71.0
Interest expense, net		9.5			5.1
Income tax (benefit) expense		(2.3	)		6.0
EBITDA		84.5			90.7
Restructuring charges		0.3			2.9
Other re-engineering charges		—			0.9
Joint venture losses, net		—			0.9
Merger and integration costs		10.2			—
Loss from early extinguishment of debt		0.5			—
Adjusted EBITDA	$	95.5		$	95.4

DigitalGlobe, Inc. Reconciliation of Net Cash Flows Provided by Operating Activities to Free Cash Flow

	March 31,
(in millions)	2017			2016
Net cash flows provided by operating activities	$	38.7		$	59.5
Capital expenditures (1)		(20.9	)		(38.6	)
Free cash flow (2)	$	17.8		$	20.9

(1)		Note that capital expenditures includes capitalized interest and capital expenditures.
(2)		We modified our definition of free cash flow in the fourth quarter of fiscal year 2016. Prior period amounts have been revised to conform to the current definition.

DigitalGlobe, Inc. Consolidated Balance Sheets

	March 31,			December 31,
(in millions, except par value)	2017			2016
ASSETS
Current assets:
Cash and cash equivalents	$	77.2		$	109.3
Restricted cash		3.1			2.4
Accounts receivable, net of allowance for doubtful accounts of $1.6 and $1.6, respectively		121.5			114.6
Deferred contract costs		11.7			10.3
Prepaid and other current assets		23.3			23.8
Total current assets		236.8			260.4
Property and equipment, net of accumulated depreciation of $1,462.9 and $1,387.8, respectively		1,950.9			2,002.5
Goodwill		578.1			578.1
Intangible assets, net of accumulated amortization of $43.3 and $39.0, respectively		82.7			87.0
Long-term restricted cash		9.1			4.8
Long-term deferred contract costs		49.4			49.3
Other assets		29.6			27.8
Total assets	$	2,936.6		$	3,009.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	14.8		$	15.0
Current portion of long-term debt		12.8			47.2
Deferred revenue		84.8			86.3
Other accrued liabilities		53.7			70.7
Total current liabilities		166.1			219.2
Long-term debt, net of discount and debt issuance costs		1,240.1			1,242.1
Deferred revenue, non-current		199.2			216.9
Deferred income taxes, net, non-current		119.5			124.0
Other liabilities		37.9			34.8
Total liabilities	$	1,762.8		$	1,837.0
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Stockholders’ equity:
Series A convertible preferred stock, $0.001 par value; 0.08 shares authorized; 0.08 shares issued and outstanding at March 31, 2017 and December 31, 2016		—			—
Common stock; $0.001 par value; 250.0 shares authorized; 77.6 shares issued and 62.0 shares outstanding at March 31, 2017 and 77.0 shares issued and 61.4 shares outstanding at December 31, 2016		0.2			0.2
Treasury stock, at cost; 15.6 shares at March 31, 2017 and December 31, 2016		(342.0	)		(342.0	)
Additional paid-in capital		1,519.3			1,518.3
Accumulated deficit		(3.7	)		(3.6	)
Total stockholders’ equity		1,173.8			1,172.9
Total liabilities and stockholders’ equity	$	2,936.6		$	3,009.9

DigitalGlobe, Inc. Consolidated Statements of Cash Flows

	For the three months ended
	March 31,
(in millions)	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(2.2	)	$	8.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		79.5			71.0
Stock-based compensation expense, net of capitalized stock-based compensation expense		6.6			4.0
Amortization of aerial image library, deferred contract costs and lease incentive		3.0			4.2
Write-off of debt issuance costs and debt discount		0.5			—
Deferred income taxes		(2.4	)		8.2
Amortization of debt issuance costs, accretion of debt discount, and other		1.1			0.8
Changes in working capital:
Accounts receivable, net		(6.9	)		(10.9	)
Deferred contract costs		(5.0	)		(4.4	)
Other current and non-current assets		(1.8	)		(3.5	)
Accounts payable		0.1			2.5
Accrued liabilities		(14.6	)		(9.8	)
Deferred revenue		(19.2	)		(11.2	)
Net cash flows provided by operating activities		38.7			59.5
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(20.9	)		(38.6	)
Investment in joint venture		—			(7.5	)
Net cash flows used in investing activities		(20.9	)		(46.1	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of debt and capital lease obligations		(38.3	)		(1.9	)
Repurchase of common stock		—			(60.9	)
Value of shares surrendered to satisfy employee tax obligations		(6.8	)		(1.8	)
Proceeds from exercise of stock options and other		0.2			(0.9	)
Net cash flows used in financing activities		(44.9	)		(65.5	)
Net decrease in cash, cash equivalents and restricted cash		(27.1	)		(52.1	)
Cash, cash equivalents and restricted cash, beginning of period		116.5			134.0
Cash, cash equivalents and restricted cash, end of period	$	89.4		$	81.9

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest, net of capitalized amounts of $5.1 and $16.6, respectively		8.7			5.9
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Changes to accruals for capital expenditures, including interest, and additions to capital lease obligations		(2.4	)		6.8
Non-cash preferred stock dividend accrual		(1.0	)		(1.0	)

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