Key points from the year include:
- Consolidated revenues of $2,141 million
- Net loss under US GAAP of $1,264 million including $1,096 million in impairment losses
- Net loss under US GAAP of $21.76 per share; net loss excluding impairment losses of $2.90 per share
- Adjusted EBITDA1 of $472 million and adjusted EBITDA1 margin of 22 percent
- Quarterly dividend reduced to $0.01
- Supplemental data available on company website that reconciles changes in accounting standards from IFRS to GAAP
- EnhancedView contract extended to August 31, 2023
1 | This is a non-GAAP financial measure. Refer to section "Non-GAAP Financial Measures" in this earnings release |
"Since our CEO transition was announced 45 days ago, we have been focused on strengthening our operational and financial performance, developing a strategy to drive long-term revenue, profit, and cash flow growth, and assessing the optimal capital structure for the Company," stated Dan Jablonsky, President and Chief Executive Officer. "To that end, today we are announcing a number of actions to address these priorities, including an organizational restructuring that will create a leaner and more agile business designed to achieve customer objectives and drive improved profitability for the Company, with estimated annual cost savings of $60-$70 million. Following a thorough review of strategic options for the GEO Comsat business, we have determined to continue operating the business while right sizing the organization to better align its costs with revenue. After careful consideration, we concluded that the GEO Comsat business will generate more value as part of Maxar compared to the alternatives that were evaluated. Finally, the Board has decided to reduce our quarterly dividend to $0.01, which follows the recent sale of a facility in Palo Alto and an amended credit agreement with our lenders. Combined, these actions demonstrate the meaningful steps we are taking to strengthen Maxar's financial position and drive long-term value."
"Our fourth quarter results reflect a continuation of trends we saw throughout 2018, with our Imagery and Services segments posting positive year-over-year revenue growth and our Space Systems segment reflecting the cyclical downturn in the GEO Comsat market and the expected wind-down of work on the multi-year RCM project," stated Biggs Porter, Chief Financial Officer. "Free cash flow was within our expectation for the year. We recognized a net $883 million in impairment and other charges during the quarter, driven by the decline in our market value relative to book value, the loss of our World View-4 satellite, and the continuation of a weak GEO Comsat market. We completed a number of significant milestones during the year, including our domestication to the United States and the subsequent process of transitioning our financial reporting to US GAAP standards."
Consolidated revenue for the fourth quarter of 2018 was $496 million compared to $545 million for the same period of last year. The decrease was primarily driven by a decline in the Space Systems segment, in part offset by growth in Imagery and Services. The decline in Space Systems was a continuation of headwinds experienced throughout 2018 as the GEO Comsat market remains in a cyclical downturn and revenues from the Company's RCM project nears completion. Imagery revenue growth was driven primarily by higher revenues from the US government while Services growth was driven by ramping revenue streams on recently awarded contracts, primarily with the US government.
Total revenue increased $510 million in 2018 compared to 2017. The increase in revenue was primarily driven by the inclusion of a full year of revenue related to the DigitalGlobe businesses as compared with only approximately three months of revenue in 2017. The increase in Services revenue is primarily driven by a $725 million increase in revenue related to DigitalGlobe's imagery and services business as well as an increase in Services revenue of $50 million in the Space Systems segment. Product revenue decreased $268 million in the Space Systems segment. Further discussion of the drivers behind the decrease in revenue within the Space Systems segment is included within the "Results by segment" section below.
For the fourth quarter of 2018, adjusted EBITDA was $84 million and adjusted EBITDA as a percentage of consolidated revenues ("adjusted EBITDA margin percentage") was 17.0%. This is compared to adjusted EBITDA of $116 million and adjusted EBITDA margin percentage of 21.3% for the fourth quarter of 2017. The decline was driven largely by reduced profitability in the Space Systems segment.
For the year ended December 31, 2018, net (loss) income decreased $1.3 billion compared to the same period of 2017, primarily due to the impairment losses taken in 2018. For the year ended December 31, 2018, adjusted EBITDA was $472 million and adjusted EBITDA as a percentage of consolidated revenue was 22.0%. This is compared to adjusted EBITDA of $251 million and adjusted EBITDA margin percentage of 15.4% for the year ended December 31, 2017. These increases are primarily due to the inclusion of the financial results of DigitalGlobe's imagery business, partially offset by a decrease in the adjusted EBITDA from the Space Systems segment.
The Company had total funded order backlog of $2.4 billion as at December 31, 2018 compared to $3.3 billion as at December 31, 2017. Bookings in 2018 have been negatively impacted by the market outlook for the GEO Comsat business inside the Company's Space Systems segment. Unfunded backlog ended 2018 at $1 billion vs. $119 million in 2017 and included $900 million in the Imagery segment for the EnhancedView Follow-on contract with the National Reconnaissance Office that was signed in November 2018.
The Company has declared a quarterly dividend of $0.01 per common share on March 29, 2019 to shareholders of record at the close of business on March 15, 2019.
Financial Highlights
In addition to results reported in accordance with GAAP, the Company uses certain non-GAAP financial measures as supplemental indicators of its financial and operating performance. These non-GAAP financial measures include EBITDA and adjusted EBITDA. The Company believes these supplementary financial measures reflect the Company's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in its business.
