Maxar Technologies Reports 2019 Year End Results

Adjusted EBITDA from the Space Infrastructure segment was a loss of $17 million compared to a loss of $75 million, or a change of $58 million, for the year ended December 31, 2019 compared to the same period in 2018. The decreased loss is primarily related to reduced research and development spend of $72 million and headcount reductions from restructuring initiatives resulting in cost reductions and the impact of no new liquidated damages being incurred compared to $28 million of liquidated damages in 2018. These increases were partially offset by decreases from the effects of lower revenues and higher estimated costs to complete on certain projects along with losses incurred on developmental builds.

Corporate and other expenses

Corporate and other expenses include items such as corporate office costs, regulatory costs, executive and director compensation, foreign exchange gains and losses, retention costs, and fees for legal and consulting services.

Corporate and other expenses increased to $26 million from $6 million, or by $20 million, for the three months ended December 31, 2019 compared to the same period in 2018. The increase was primarily driven by a shift of certain functions to corporate and other increases in selling, general and administrative expense and an increase in retention costs related to the Space Infrastructure segment of $7 million.

Corporate and other expenses increased to $86 million from $49 million, or by $37 million, for the year ended December 31, 2019 compared to the same period in 2018. The increase was primarily driven by an increase in retention costs related to the Space Infrastructure segment of $24 million and an increase as a result of a shift of certain functions to corporate and other increases in selling, general and administrative expense of approximately $12 million.

Intersegment eliminations

Intersegment eliminations are related to projects between our segments, including WorldView Legion. Intersegment eliminations have increased for the three months ended December 31, 2019 compared to the same period of 2018 primarily related to an increase in intersegment activity.

MAXAR TECHNOLOGIES INC.
Consolidated Statements of Operations
(In millions, except per share amounts)

	Year Ended
	December 31,
	2019			2018			2017
Revenues:
Product	$	560		$	697		$	877
Service		1,106			1,107			380
Total revenues	$	1,666		$	1,804		$	1,257
Costs and expenses:
Product costs, excluding depreciation and amortization	$	593		$	775		$	764
Service costs, excluding depreciation and amortization		382			313			160
Selling, general and administrative		325			446			337
Depreciation and amortization		376			439			152
Impairment losses		14			586			—
Satellite insurance recovery		(183	)		—			—
Gain on sale of assets		(136	)		(33	)		—
Operating income (loss)		295			(722	)		(156	)
Interest expense, net		219			200			97
Other (income) expense, net		(1	)		1			(30	)
Income (loss) before taxes		77			(923	)		(223	)
Income tax expense (benefit)		5			(48	)		(168	)
Equity in (income) loss from joint ventures, net of tax		(11	)		(2	)		1
Income (loss) from continuing operations		83			(873	)		(56	)
Income (loss) from discontinued operations, net of tax		26			(377	)		116
Net income (loss)	$	109		$	(1,250	)	$	60

Basic income (loss) per common share:
Income (loss) from continuing operations	$	1.39		$	(15.03	)	$	(1.36	)
Income (loss) from discontinued operations, net of tax		0.44			(6.49	)		2.82
Basic income (loss) per common share	$	1.83		$	(21.52	)	$	1.46

Diluted income (loss) per common share:
Income (loss) from continuing operations	$	1.38		$	(15.03	)	$	(1.36	)
Income (loss) from discontinued operations, net of tax		0.43			(6.49	)		2.82
Diluted income (loss) per common share	$	1.81		$	(21.52	)	$	1.46

MAXAR TECHNOLOGIES INC.
Consolidated Balance Sheets
(In millions, except per share amounts)

	December 31,			December 31,
	2019			2018
Assets
Current assets:
Cash and cash equivalents	$	59		$	19
Trade and other receivables, net		357			350
Inventory		20			29
Advances to suppliers		42			42
Prepaid and other current assets		32			35
Current assets held for sale		751			203
Total current assets		1,261			678
Non-current assets:
Orbital receivables		382			407
Property, plant and equipment, net		758			725
Intangible assets, net		991			1,204
Non-current operating lease assets		176			—
Goodwill		1,455			1,455
Other non-current assets		134			107
Non-current assets held for sale		—			482
Total assets	$	5,157		$	5,058
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	153		$	149
Accrued liabilities		130			124
Accrued compensation and benefits		93			80
Contract liabilities		271			332
Current portion of long-term debt		30			16
Current operating lease liabilities		40			—
Other current liabilities		49			27
Current liabilities held for sale		230			154
Total current liabilities		996			882
Non-current liabilities:
Pension and other postretirement benefits		197			178
Contract liabilities		4			60
Operating lease liabilities		173			—
Long-term debt		2,915			3,027
Other non-current liabilities		110			186
Non-current liabilities held for sale		—			58
Total liabilities		4,395			4,391
Commitments and contingencies
Stockholders’ equity:
Common stock ($0.0001 par value, 240 million common shares authorized and 59.9 million outstanding at December 31, 2019; nil par value, unlimited authorized common shares and 59.4 million outstanding at December 31, 2018)		—			1,713
Additional paid-in capital		1,784			59
Accumulated deficit		(1,082	)		(1,188	)
Accumulated other comprehensive income		59			82
Total Maxar stockholders' equity		761			666
Noncontrolling interest		1			1
Total stockholders' equity		762			667
Total liabilities and stockholders' equity	$	5,157		$	5,058

MAXAR TECHNOLOGIES INC.
Consolidated Statements of Cash Flows
(In millions)

	Year Ended December 31,
	2019			2018			2017
Cash flows provided by (used in):
Operating activities:
Net income (loss)	$	109		$	(1,250	)	$	60
Net (income) loss from discontinued operations		(26	)		377			(116	)
Net income (loss) from continuing operations		83			(873	)		(56	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Impairment losses including inventory		17			651			—
Depreciation and amortization		376			439			152
Amortization of debt issuance costs and other noncash interest expense		11			9			3
Stock-based compensation expense		20			20			23
Loss from early extinguishment of debt		22			—			23
Gain on sale of assets		(136	)		(33	)		—
Deferred income tax expense (benefit)		—			(48	)		(169	)
Equity in (income) loss from joint ventures, net of tax		(11	)		(2	)		1
Other		7			28			(5	)
Changes in operating assets and liabilities:
Trade and other receivables		(20	)		(19	)		56
Accounts payables and accrued liabilities		7			113			(7	)
Contract liabilities		(117	)		(158	)		(15	)
Other		(1	)		(13	)		50
Cash provided by operating activities - continuing operations		258			114			56
Cash provided by operating activities - discontinued operations		59			25			49
Cash provided by operating activities		317			139			105
Investing activities:
Purchase of property, plant and equipment and development or purchase of software		(314	)		(206	)		(59	)
Sale of assets		280			68			—
Cash collected on note receivable		—			5			—
Cash paid for acquisition, net of tax		—			—			(2,273	)
Disposal of subsidiary and short-term investments		—			4			—
Return of capital from discontinued operations		28			—			—
Cash used in investing activities - continuing operations		(6	)		(129	)		(2,332	)
Cash used in investing activities - discontinued operations		(7	)		(21	)		(9	)
Cash used in investing activities		(13	)		(150	)		(2,341	)
Financing activities:
Net (payment) proceeds of revolving credit facility		(595	)		—			3,160
Net proceeds from issuance of 2023 Notes and other long-term debt		980			104			—
Repayments of long-term debt		(520	)		(24	)		(779	)
Payment of debt issuance costs		(4	)		(3	)		—
Refinancing fees paid to creditors		(20	)		—			(63	)
Repurchase of orbital receivables		(24	)		—			—
Settlement of securitization liability		(20	)		(15	)		(15	)
Proceeds from securitization of orbital receivables		—			18			—
Payment of dividends		(2	)		(65	)		(47	)
Other		(3	)		—			1
Cash (used in) provided by financing activities - continuing operations		(208	)		15			2,257
Cash used in financing activities - discontinued operations		(30	)		(2	)		(22	)
Cash (used in) provided by financing activities		(238	)		13			2,235
Increase in cash, cash equivalents, and restricted cash		66			2			(1	)
Effect of foreign exchange on cash, cash equivalents, and restricted cash		—			(1	)		4
Cash, cash equivalents, and restricted cash, beginning of year		43			42			39
Cash, cash equivalents, and restricted cash, end of year	$	109		$	43		$	42

Reconciliation of cash flow information:
Cash and cash equivalents	$	105		$	35		$	19
Restricted cash included in prepaid and other current assets		1			7			6
Restricted cash included in other non-current assets		3			1			17
Total cash, cash equivalents, and restricted cash	$	109		$	43		$	42

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