Total revenues from the Services segment were $70.0 million in the first quarter of 2018 compared to $25.4 million in the same period of 2017. The increase is primarily due to the inclusion of the financial results from the DigitalGlobe services business that contributed $42.9 million of revenue and $3.8 million of adjusted EBITDA in the first quarter of 2018.
Adjusted EBITDA margin percentage from the Services segment for the three months ended March 31, 2018 was 10.1% compared to 15.7% for the same period of 2017. The decrease in margin reflects the blend of margins from the DigitalGlobe services business, as well as the impact from a lower percentage of fixed-price services contracts as compared to cost-plus services contracts with the U.S. Government.
Notable bookings in the Services segment in the first quarter of 2018 included:
- A contract with a U.S. Intelligence Agency to support multiple missions across the U.S. Government. This contract provides funding for several major projects including machine learning, cloud computing, and a scheduling tool for understanding satellite tasking viability.
- A new task order on an existing prime contract vehicle to provide Multi-Intelligence analysis and software development support for a global military intelligence mission.
- A contract with a U.S. Intelligence Agency to enrich the quality of radar imagery to support advanced geospatial analysis.
Pro Forma Revenue and Adjusted EBITDA by Segment:
The following table summarizes pro forma revenue and pro forma adjusted EBITDA by segment for the last eight quarters in U.S. dollars as if MacDonald Dettwiler and DigitalGlobe had been one company beginning in 2016. The table has been updated from our fourth quarter 2017 earnings release to exclude the effects of intersegment eliminations by segment for 2016 and 2017, consistent with our current presentation.
| Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||||||||||||||||||||||
| 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | |||||||||||||||||||||||||||||||||||||||||
| ($ millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Pro forma revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Space Systems | $ | 292.4 | $ | 299.1 | $ | 339.6 | $ | 342.7 | $ | 339.9 | $ | 347.8 | $ | 356.1 | $ | 376.7 | ||||||||||||||||||||||||||||||||
| Imagery | 207.1 | 201.5 | 201.8 | 193.2 | 192.7 | 194.0 | 188.5 | 190.7 | ||||||||||||||||||||||||||||||||||||||||
| Services | 62.3 | 72.1 | 68.7 | 57.8 | 68.8 | 61.8 | 61.3 | 52.5 | ||||||||||||||||||||||||||||||||||||||||
| Intersegment eliminations | (9.7 | ) | (7.9 | ) | (6.6 | ) | (6.2 | ) | (6.6 | ) | (5.2 | ) | (5.8 | ) | (5.5 | ) | ||||||||||||||||||||||||||||||||
| Total Revenue | $ | 552.1 | $ | 564.8 | $ | 603.5 | $ | 587.5 | $ | 594.8 | $ | 598.4 | $ | 600.1 | $ | 614.4 | ||||||||||||||||||||||||||||||||
| Pro forma adjusted EBITDA: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Space Systems | $ | 49.2 | $ | 61.4 | $ | 61.6 | $ | 62.5 | $ | 61.1 | $ | 55.3 | $ | 67.2 | $ | 63.0 | ||||||||||||||||||||||||||||||||
| Imagery | 133.6 | 128.2 | 128.8 | 120.1 | 123.4 | 124.9 | 123.1 | 124.3 | ||||||||||||||||||||||||||||||||||||||||
| Services | 9.5 | 9.3 | 7.5 | 6.0 | 11.7 | 9.1 | 6.9 | 5.7 | ||||||||||||||||||||||||||||||||||||||||
| Intersegment eliminations | (1.0 | ) | (1.3 | ) | (0.6 | ) | (1.1 | ) | (0.7 | ) | (0.5 | ) | (0.9 | ) | (1.0 | ) | ||||||||||||||||||||||||||||||||
| Pro forma adjusted EBITDA: | 191.3 | 197.6 | 197.3 | 187.5 | 195.5 | 188.8 | 196.3 | 192.0 | ||||||||||||||||||||||||||||||||||||||||
| Corporate Expense | (6.4 | ) | (8.5 | ) | (10.0 | ) | (9.5 | ) | (10.1 | ) | (8.2 | ) | (8.3 | ) | (7.7 | ) | ||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 184.9 | $ | 189.1 | $ | 187.3 | $ | 178.0 | $ | 185.4 | $ | 180.6 | $ | 188.0 | $ | 184.3 | ||||||||||||||||||||||||||||||||
| MAXAR TECHNOLOGIES LTD. | ||||||||||||
|
Unaudited Condensed Consolidated Statements of Earnings |
||||||||||||
|
(In millions of United States dollars, except per share amounts) |
||||||||||||
| Three months ended | ||||||||||||
| March 31, | ||||||||||||
| 2018 | 2017 | |||||||||||
| Revenues | $ | 557.7 | $ | 373.5 | ||||||||
| Costs and expenses: | ||||||||||||
| Direct costs, selling, general and administration | 370.3 | 310.5 | ||||||||||
| Depreciation and amortization | 112.4 | 19.0 | ||||||||||
| Foreign exchange gain | (1.1 | ) | (0.2 | ) | ||||||||
| Share-based compensation (recovery) expense | (1.3 | ) | 4.8 | |||||||||
| Other expense | 7.3 | 18.7 | ||||||||||
| Earnings before interest and income taxes | 70.1 | 20.7 | ||||||||||
| Finance expense, net | 45.5 | 10.6 | ||||||||||
| Earnings before income taxes | 24.6 | 10.1 | ||||||||||
| Income tax (recovery) expense | (6.6 | ) | 5.8 | |||||||||
| Equity in loss from joint ventures, net of tax | 0.2 | — | ||||||||||
| Net earnings | $ | 31.0 | $ | 4.3 | ||||||||
| Net earnings per common share: | ||||||||||||
| Basic | $ | 0.55 | $ | 0.12 | ||||||||
| Diluted | $ | 0.55 | $ | 0.11 | ||||||||
| MAXAR TECHNOLOGIES LTD. | ||||||||||
|
Unaudited Condensed Consolidated Balance Sheets |
||||||||||
|
(In millions of United States dollars, except per share amounts) |
||||||||||
| March 31, | December 31, | |||||||||
| 2018 | 2017 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 24.7 | $ | 19.1 | ||||||
| Trade and other receivables | 321.3 | 348.2 | ||||||||
| Financial assets, other | 18.1 | 16.3 | ||||||||
| Contract assets | 180.7 | 128.3 | ||||||||
| Inventories | 100.5 | 96.5 | ||||||||
| Non-financial assets | 110.8 | 125.2 | ||||||||
| Current tax assets | 78.5 | 71.7 | ||||||||
| Total current assets | 834.6 | 805.3 | ||||||||
| Non-current assets: | ||||||||||
| Orbital receivables | 428.7 | 424.2 | ||||||||
| Financial assets, other | 85.1 | 95.2 | ||||||||
| Non-financial assets | 45.8 | 41.6 | ||||||||
| Deferred tax assets | 129.0 | 108.3 | ||||||||
| Property, plant and equipment | 1,066.4 | 1,054.9 | ||||||||
| Intangible assets | 1,698.2 | 1,753.4 | ||||||||
| Goodwill | 2,370.2 | 2,374.4 | ||||||||
| Total non-current assets | 5,823.4 | 5,852.0 | ||||||||
| Total assets | $ | 6,658.0 | $ | 6,657.3 | ||||||
| Liabilities and Shareholders’ Equity | ||||||||||
| Current liabilities: | ||||||||||
| Trade and other payables | $ | 215.6 | $ | 236.9 | ||||||
| Current tax liabilities | 23.8 | 49.2 | ||||||||
| Financial liabilities, other | 10.4 | 18.9 | ||||||||
| Provisions and other non-financial liabilities | 10.8 | 11.3 | ||||||||
| Employee benefits | 90.2 | 123.9 | ||||||||
| Contract liabilities | 426.6 | 465.5 | ||||||||
| Securitization liability | 15.6 | 15.5 | ||||||||
| Current portion of long-term debt | 18.3 | 18.1 | ||||||||
| Total current liabilities | 811.3 | 939.3 | ||||||||
| Non-current liabilities: | ||||||||||
| Financial liabilities, other | 13.6 | 13.8 | ||||||||
| Provisions | 160.2 | 159.3 | ||||||||
| Employee benefits | 211.2 | 217.6 | ||||||||
| Non-financial liabilities | 42.9 | 42.1 | ||||||||
| Contract liabilities | 146.2 | 134.3 | ||||||||
| Deferred tax liabilities | 124.1 | 103.6 | ||||||||
| Securitization liability | 86.9 | 90.8 | ||||||||
| Long-term debt | 3,030.7 | 2,942.9 | ||||||||
| Total non-current liabilities | 3,815.8 | 3,704.4 | ||||||||
| Total liabilities | 4,627.1 | 4,643.7 | ||||||||
| Shareholders’ equity: | ||||||||||
| Share capital (no par value, unlimited common shares authorized; 56.4 and 56.2 common shares issued and outstanding, respectively) | 1,558.1 | 1,550.3 | ||||||||
| Contributed surplus | 52.6 | 50.6 | ||||||||
| Retained earnings | 276.6 | 261.8 | ||||||||
| Accumulated other comprehensive income | 143.6 | 150.9 | ||||||||
| Total shareholders' equity | 2,030.9 | 2,013.6 | ||||||||
| Total liabilities and shareholders' equity | $ | 6,658.0 | $ | 6,657.3 | ||||||
| MAXAR TECHNOLOGIES LTD. | ||||||||||
|
Unaudited Condensed Consolidated Statements of Cash Flows |
||||||||||
|
(In millions of United States dollars, except per share amounts) |
||||||||||
| Three months ended | ||||||||||
| March 31, | ||||||||||
| 2018 | 2017 | |||||||||
| Cash flows provided by (used in): | ||||||||||
| Operating activities: | ||||||||||
| Net earnings | $ | 31.0 | $ | 4.3 | ||||||
| Adjustments to reconcile to net cash from operating activities: | ||||||||||
| Depreciation of property, plant and equipment | 37.4 | 8.1 | ||||||||
| Amortization of intangible assets | 75.0 | 10.9 | ||||||||
| Share-based compensation (recovery) expense | (1.3) | 4.8 | ||||||||
| Finance income | (0.2) | (0.1) | ||||||||
| Finance expense | 43.4 | 8.3 | ||||||||
| Foreign exchange loss (gain) | 0.5 | (3.1) | ||||||||
| Income tax expense | (6.6) | 5.8 | ||||||||
| Income taxes paid | (1.6) | (1.2) | ||||||||
| Income taxes recovered | 1.0 | 1.5 | ||||||||
| Loss on sale of subsidiary | 2.2 | — | ||||||||
| Changes in operating assets and liabilities: | ||||||||||
| Trade and other receivables | 23.5 | 57.0 | ||||||||
| Contract assets | (54.1) | (23.1) | ||||||||
| Financial assets, other | (14.4) | (9.8) | ||||||||
| Trade and other payables | (6.0) | 15.0 | ||||||||
| Employee benefits | (28.7) | (15.7) | ||||||||
| Contract liabilities | (26.0) | (84.7) | ||||||||
| Financial liabilities, other | (15.8) | 1.9 | ||||||||
| Cash provided by (used in) operating activities | 59.3 | (20.1) | ||||||||
| Investing activities: | ||||||||||
| Purchase of property, plant and equipment | (43.6) | (7.9) | ||||||||
| Purchase/development of intangible assets | (33.9) | (17.8) | ||||||||
| Disposal of short-term investments and subsidiary | 4.6 | — | ||||||||
| Decrease in restricted cash | 6.9 | 0.7 | ||||||||
| Interest received on short-term investments | 0.2 | 0.1 | ||||||||
| Cash used in investing activities | (65.8) | (24.9) | ||||||||
| Financing activities: | ||||||||||
| Net proceeds from revolving loan facility and other long-term debt | 84.8 | 170.7 | ||||||||
| Repayment of 2017 Term Notes | — | (100.0) | ||||||||
| Repayment of 2024 Term Notes | — | (10.2) | ||||||||
| Interest paid on long-term debt | (54.3) | (7.2) | ||||||||
| Settlement of securitization liability, including interest | (5.4) | (5.2) | ||||||||
| Payment of dividends and other | (15.6) | (9.1) | ||||||||
| Cash provided by financing activities | 9.5 | 39.0 | ||||||||
| Increase (decrease) in cash and cash equivalents | 3.0 | (6.0) | ||||||||
| Effect of foreign exchange on cash and cash equivalents | 0.1 | (0.6) | ||||||||
| Cash and cash equivalents, beginning of period (a) | 19.1 | (3.8) | ||||||||
| Cash and cash equivalents, end of period (a) | $ | 22.2 | $ | (10.4) | ||||||
Cash and cash equivalents are net of bank overdrafts of $2.5 million and
$11.9 million for the three months March 31, 2018 and 2017,
respectively. There were no bank overdrafts as at December 31, 2017.
