Space Systems Results

Total revenues from the Space Systems segment were $329.9 million in the second quarter of 2018 compared to $338.2 million in the same period of 2017. The decrease in revenue primarily related to a lower level of geostationary communications satellite construction activity in 2018 compared to 2017, partially offset by higher revenue from the construction of the Company's Legion satellite imaging constellation and contracts with the U.S. government. Revenue attributable to the Company's Legion satellite imaging constellation is eliminated in consolidation.

Although the total dollar value of geostationary communication satellite awards to the Company has remained relatively stable since 2015, there has been a step down in total number and dollar value of awards compared to historical averages prior to 2015. Revenues have decreased year-over-year as programs awarded prior to 2015 have been completed and have been replaced by this lower level of award value since 2015. Many satellite operators in the communications industry have continued to defer new satellite construction awards to evaluate geostationary and other competing satellite system architectures and other market factors. The Company has responded appropriately to manage its workforce and costs during this challenging time. The Company continues to review strategic alternatives for its geostationary communications satellite business to improve its financial performance. No final decision has been made. At the same time, the Company continues to see strong growth in its U.S. Government and low Earth orbit communications and Earth observation businesses and remains encouraged regarding the potential in these markets.

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 on a percentage of completion method over the construction period, which typically range between 20 to 36 months and up to 48 months in special situations. 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.

Adjusted EBITDA margin percentage from the Space Systems segment for the three months ended June 30, 2018 was 12.8% compared to 18.2% for the same period in the prior year. The decrease for the three months ended June 30, 2018 compared to the three months ended June 30, 2017 is primarily due to timing differences in the recognition of investment tax credits, liquidated damages recognized in 2018, and a decrease in revenue. In 2017, the majority of the investment tax credits were realized in the second quarter, whereas in 2018 the majority were realized in the first quarter.

Recent Business Developments

On July 16, 2018, the Company acquired Neptec Design Group Ltd., a leading electro-optical and electro-mechanical systems and high-performance intelligent Light Detection and Ranging company for C$42 million, comprised of approximately C$8 million in cash and the balance in common shares of Maxar. With Neptec, the Company will deliver end-to-end robotic systems and an expanded set of solutions, positioning it to capture growth in U.S., Canadian and global space exploration markets and accelerate advancement into new and expanding space segments. 

During the quarter, the Company was awarded the balance of the contract to provide communication subsystems for on-board communication signal processing capabilities for a commercial cargo system.

Imagery Segment Results