Maxar Technologies Reports First Quarter 2021 Results

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 using the cost-to-cost method of accounting to determine the percentage of completion over the construction period, which typically ranges between 20 to 36 months and up to 48 months in certain situations. Adjusted 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.

Revenues from the Space Infrastructure segment increased to $155 million from $132 million, or by $23 million, for the three months ended March 31, 2021, compared to the same period in 2020. Revenues increased primarily as a result of an increase in revenues from commercial programs of $37 million due to higher volumes related to new programs and lower EAC growth primarily due to no COVID-19 program impacts for the three months ended March 31, 2021. Revenues were negatively impacted by a $14 million decrease year over year related to our contract with Sirius XM Holdings Inc. (“Sirius XM”). The three months ended March 31, 2021, included a $25 million cumulative adjustment to revenue primarily related to the loss of final milestone and expected orbital payments due to the non-performance of the SXM-7 satellite and other adjustments. After exhausting efforts to fully recover the satellite and further discussions with Sirius XM, in April 2021, we made the determination to record the cumulative adjustment to revenue. In addition, there were $3 million of costs incurred in the first quarter related to attempts to repair and fully recover the SXM-7 satellite. The aggregate impact for the three months ended March 31, 2021, was $28 million which compares favorably to the previously disclosed potential exposure of $38 million. The $28 million decrease was partially offset by the non-reoccurrence of a $14 million adjustment to revenue due to the identification of a design anomaly on the commercial satellite program, which was recorded for the three months ended March 31, 2020.

Adjusted EBITDA from the Space Infrastructure segment changed to a loss $12 million from a loss of $39 million, or by $27 million, for the three months ended March 31, 2021, compared to the same period of 2020. The increase in the Space Infrastructure segment was primarily related to a $44 million increase in commercial program margins due to new programs and fewer negative EAC impacts during the period as compared to the three months ended March 31, 2020, which included negative EAC impacts due to COVID-19. The increase in commercial program margins has been driven by a change in program mix related to the completion of less profitable programs offset by new, more profitable programs. These increases were partially offset by the $14 million reduction in revenue related to the above-mentioned SXM-7 satellite impacts.

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 for the three months ended March 31, 2021 increased to $23 million from $10 million, or by $13 million, compared to the same period in 2020. The increase was driven by a $4 million increase in stock-based compensation expense primarily driven by a higher stock price and a $3 million increase in labor related expenses primarily driven by an increase in headcount and employee compensation related to the shift of our information technology function to corporate effective January 1, 2021, as we have centralized this function. The increase was also driven by a $2 million foreign exchange loss for the three months ended March 31, 2021, compared to a $2 million foreign exchange gain for the three months ended March 31, 2020.

Intersegment eliminations

Intersegment eliminations are related to projects between our segments, including our WorldView Legion satellite constellation. Intersegment eliminations have decreased to $5 million from $7 million, or by $2 million, for the three months ended March 31, 2021 compared to the same period in 2020, primarily related to a decrease in intersegment satellite construction activity.

MAXAR TECHNOLOGIES INC.

Consolidated Statements of Operations

(In millions, except per share amounts)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

 

2021

 

2020

Revenues:

 

 

 

 

 

 

Product

 

$

142

 

 

$

107

 

Service

 

 

250

 

 

 

274

 

Total revenues

 

 

392

 

 

 

381

 

Costs and expenses:

 

 

 

 

 

 

Product costs, excluding depreciation and amortization

 

 

148

 

 

 

145

 

Service costs, excluding depreciation and amortization

 

 

93

 

 

 

93

 

Selling, general and administrative

 

 

84

 

 

 

68

 

Depreciation and amortization

 

 

74

 

 

 

90

 

Impairment loss

 

 

 

 

 

14

 

Operating loss

 

 

(7

)

 

 

(29

)

Interest expense, net

 

 

78

 

 

 

49

 

Other income, net

 

 

(1

)

 

 

(3

)

Loss before taxes

 

 

(84

)

 

 

(75

)

Income tax expense

 

 

 

 

 

2

 

Equity in loss from joint ventures, net of tax

 

 

 

 

 

1

 

Loss from continuing operations

 

 

(84

)

 

 

(78

)

Income from discontinued operations, net of tax

 

 

 

 

 

30

 

Net loss

 

$

(84

)

 

$

(48

)

 

 

 

 

 

 

 

Basic net income (loss) per common share:

 

 

 

 

 

 

Loss from continuing operations

 

$

(1.30

)

 

$

(1.30

)

Income from discontinued operations, net of tax

 

 

 

 

 

0.50

 

Basic net loss per common share

 

$

(1.30

)

 

$

(0.80

)

 

 

 

 

 

 

 

Diluted net income (loss) per common share:

 

 

 

 

 

 

Loss from continuing operations

 

$

(1.30

)

 

$

(1.30

)

Income from discontinued operations, net of tax

 

 

 

 

 

0.50

 

Diluted net loss per common share

 

$

(1.30

)

 

$

(0.80

MAXAR TECHNOLOGIES INC.

Consolidated Balance Sheets

(In millions, except per share amounts)

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

2021

 

2020

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

22

 

 

$

27

 

Trade and other receivables, net

 

 

318

 

 

 

327

 

Inventory

 

 

38

 

 

 

31

 

Advances to suppliers

 

 

27

 

 

 

24

 

Prepaid and other current assets

 

 

58

 

 

 

59

 

Total current assets

 

 

463

 

 

 

468

 

Non-current assets:

 

 

 

 

 

 

Orbital receivables, net

 

 

339

 

 

 

361

 

Property, plant and equipment, net

 

 

889

 

 

 

883

 

Intangible assets, net

 

 

867

 

 

 

895

 

Non-current operating lease assets

 

 

156

 

 

 

163

 

Goodwill

 

 

1,627

 

 

 

1,627

 

Other non-current assets

 

 

84

 

 

 

86

 

Total assets

 

$

4,425

 

 

$

4,483

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

104

 

 

$

115

 

Accrued liabilities

 

 

77

 

 

 

65

 

Accrued compensation and benefits

 

 

76

 

 

 

105

 

Contract liabilities

 

 

284

 

 

 

278

 

Current portion of long-term debt

 

 

8

 

 

 

8

 

Current operating lease liabilities

 

 

41

 

 

 

41

 

Other current liabilities

 

 

48

 

 

 

51

 

Total current liabilities

 

 

638

 

 

 

663

 

Non-current liabilities:

 

 

 

 

 

 

Pension and other postretirement benefits

 

 

189

 

 

 

192

 

Contract liabilities

 

 

1

 

 

 

1

 

Operating lease liabilities

 

 

151

 

 

 

158

 

Long-term debt

 

 

2,098

 

 

 

2,414

 

Other non-current liabilities

 

 

101

 

 

 

119

 

Total liabilities

 

 

3,178

 

 

 

3,547

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock ($0.0001 par value, 240 million common shares authorized; 71.7 million and 61.2 million outstanding at March 31, 2021 and December 31, 2020, respectively)

 

 

 

 

 

 

Additional paid-in capital

 

 

2,207

 

 

 

1,818

 

Accumulated deficit

 

 

(847

)

 

 

(763

)

Accumulated other comprehensive loss

 

 

(114

)

 

 

(120

)

Total Maxar stockholders' equity

 

 

1,246

 

 

 

935

 

Noncontrolling interest

 

 

1

 

 

 

1

 

Total stockholders' equity

 

 

1,247

 

 

 

936

 

Total liabilities and stockholders' equity

 

$

4,425

 

 

$

4,483

 

MAXAR TECHNOLOGIES INC.

Consolidated Statements of Cash Flows

(In millions)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

 

2021

 

2020

Cash flows (used in) provided by:

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(84

)

 

$

(48

)

Income from operations of discontinued operations, net of tax

 

 

 

 

 

30

 

Loss from continuing operations

 

 

(84

)

 

 

(78

)

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

 

 

 

 

 

 

Impairment loss

 

 

 

 

 

14

 

Depreciation and amortization

 

 

74

 

 

 

90

 

Amortization of debt issuance costs and other non-cash interest expense

 

 

4

 

 

 

4

 

Stock-based compensation expense

 

 

11

 

 

 

3

 

Loss from early extinguishment of debt

 

 

41

 

 

 

 

Cumulative adjustment to SXM-7 revenue

 

 

25

 

 

 

 

Other

 

 

4

 

 

 

(1

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Trade and other receivables

 

 

3

 

 

 

47

 

Accounts payable and liabilities

 

 

(49

)

 

 

(39

)

Contract liabilities

 

 

6

 

 

 

(52

)

Other

 

 

(8

)

 

 

(1

)

Cash provided by (used in) operating activities - continuing operations

 

 

27

 

 

 

(13

)

Cash used in operating activities - discontinued operations

 

 

 

 

 

(2

)

Cash provided by (used in) operating activities

 

 

27

 

 

 

(15

)

Investing activities:

 

 

 

 

 

 

Purchase of property, plant and equipment and development or purchase of software

 

 

(50

)

 

 

(60

)

Return of capital from discontinued operations

 

 

 

 

 

11

 

Cash used in investing activities - continuing operations

 

 

(50

)

 

 

(49

)

Cash used in investing activities - discontinued operations

 

 

 

 

 

(3

)

Cash used in investing activities

 

 

(50

)

 

 

(52

)

Financing activities:

 

 

 

 

 

 

Net proceeds of revolving credit facility

 

 

25

 

 

 

15

 

Repurchase of 2023 Notes, including premium

 

 

(384

)

 

 

 

Net proceeds from issuance of common stock

 

 

380

 

 

 

 

Repayments of long-term debt

 

 

(2

)

 

 

(7

)

Settlement of securitization liability

 

 

(3

)

 

 

(4

)

Other

 

 

1

 

 

 

 

Cash provided by financing activities - continuing operations

 

 

17

 

 

 

4

 

Cash used in financing activities - discontinued operations

 

 

 

 

 

(15

)

Cash provided by (used in) financing activities

 

 

17

 

 

 

(11

)

Decrease in cash, cash equivalents, and restricted cash

 

 

(6

)

 

 

(78

)

Cash, cash equivalents, and restricted cash, beginning of year

 

 

32

 

 

 

109

 

Cash, cash equivalents, and restricted cash, end of period

 

$

26

 

 

$

31

 

 

 

 

 

 

 

 

Reconciliation of cash flow information:

 

 

 

 

 

 

Cash and cash equivalents

 

$

22

 

 

$

27

 

Restricted cash included in prepaid and other current assets

 

 

4

 

 

 

1

 

Restricted cash included in other non-current assets

 

 

 

 

 

3

 

Total cash, cash equivalents, and restricted cash

 

$

26

 

 

$

31

 


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