DigitalGlobe Reports Second Quarter 2017 Results

Net income margin is calculated by dividing net income by U.S. GAAP revenue. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by U.S. GAAP revenue.

       

DigitalGlobe, Inc.
Consolidated Statements of Operations

 
For the three months ended For the six months ended
June 30, June 30,
(in millions, except per share data) 2017 2016 2017 2016
Revenue $ 225.7 $ 175.5 $ 435.4 $ 350.9
Costs and expenses:
Cost of revenue, excluding depreciation and amortization 69.7 38.1 131.0 72.6
Selling, general and administrative 54.0 42.8 117.1 89.2
Depreciation and amortization 86.3 66.9 165.8 137.9
Restructuring charges   0.3     1.6     0.6     4.5  
Income from operations 15.4 26.1 20.9 46.7
Interest expense, net (13.3 ) (4.7 ) (22.8 ) (9.8 )
Loss from early extinguishment of debt           (0.5 )    
Income (loss) before income taxes 2.1 21.4 (2.4 ) 36.9
Income tax (expense) benefit (0.2 ) (7.9 ) 2.1 (13.9 )
Equity in earnings from joint ventures, net of tax   0.8     (1.3 )   0.8     (2.2 )
Net income 2.7 12.2 0.5 20.8
Preferred stock dividends   (1.0 )   (1.0 )   (2.0 )   (2.0 )
Net income less preferred stock dividends 1.7 11.2 (1.5 ) 18.8
Income allocated to participating securities   (0.1 )   (0.5 )       (0.9 )
Net income (loss) available to common stockholders $ 1.6   $ 10.7   $ (1.5 ) $ 17.9  
 
Earnings (loss) per share:
Basic earnings (loss) per share $ 0.03   $ 0.17   $ (0.02 ) $ 0.28  
Diluted earnings (loss) per share $ 0.03   $ 0.17   $ (0.02 ) $ 0.28  
Weighted average common shares outstanding:
Basic   62.1     62.9     61.9     63.9  
Diluted   63.3     63.4     61.9     64.2  
 

DigitalGlobe, Inc.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA

       
For the three months ended For the six months ended
June 30, June 30,
(in millions) 2017 2016 2017 2016
Net income $ 2.7 $ 12.2 $ 0.5 $ 20.8
Depreciation and amortization 86.3 66.9 165.8 137.9
Interest expense, net 13.3 4.7 22.8 9.8
Income tax expense (benefit)   0.2     7.9   (2.1 )   13.9
EBITDA 102.5 91.7 187.0 182.4
Merger and integration costs 2.1 12.3
Restructuring charges 0.3 1.6 0.6 4.5
Other re-engineering charges 0.7 1.6
Equity in earnings from joint ventures, net of tax (0.8 ) 1.3 (0.8 ) 2.2
Loss from early extinguishment of debt         0.5    
Adjusted EBITDA $ 104.1   $ 95.3 $ 199.6   $ 190.7
 

DigitalGlobe, Inc.
Reconciliation of Net Cash Flows Provided by Operating Activities to Free Cash Flow

     

For the six months ended

June 30,
(in millions) 2017     2016
Net cash flows provided by operating activities $ 85.4 $ 150.7
Capital expenditures (1)   (35.8 )   (85.8 )
Free cash flow (2) $ 49.6   $ 64.9  
(1)   Note that capital expenditures includes capitalized interest and capital expenditures.
(2) We modified our definition of free cash flow in the fourth quarter of fiscal year 2016. Prior period amounts have been revised to conform to the current definition.
 

DigitalGlobe, Inc.
Consolidated Balance Sheets

   
June 30, December 31,
(in millions, except par value) 2017 2016
ASSETS
Current assets:
Cash and cash equivalents $ 107.3 $ 109.3
Restricted cash 3.4 2.4
Accounts receivable, net of allowance for doubtful accounts of $1.7 and $1.6, respectively 147.5 114.6
Deferred contract costs 12.5 10.3
Prepaid and other current assets   19.9     23.8  
Total current assets 290.6 260.4
Property and equipment, net of accumulated depreciation of $1,544.7 and $1,387.8, respectively 1,885.6 2,002.5
Goodwill 578.1 578.1
Intangible assets, net of accumulated amortization of $47.6 and $39.0, respectively 78.4 87.0
Long-term restricted cash 8.6 4.8
Long-term deferred contract costs 48.8 49.3
Other assets   32.1     27.8  
Total assets $ 2,922.2   $ 3,009.9  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 11.2 $ 15.0
Current portion of long-term debt 12.8 47.2
Deferred revenue 85.9 86.3
Other accrued liabilities   50.8     70.7  
Total current liabilities 160.7 219.2
Long-term debt, net of discount and debt issuance costs 1,237.7 1,242.1
Deferred revenue, non-current 181.9 216.9
Deferred income taxes, net, non-current 119.8 124.0
Other liabilities   37.0     34.8  
Total liabilities $ 1,737.1   $ 1,837.0  
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Stockholders’ equity:

Series A convertible preferred stock, $0.001 par value; 0.08 shares authorized; 0.08 shares issued and outstanding at June 30, 2017 and December 31, 2016

Common stock; $0.001 par value; 250.0 shares authorized; 77.9 shares issued and 62.3 shares outstanding at June 30, 2017 and 77.0 shares issued and 61.4 shares outstanding at December 31, 2016 0.2 0.2
Treasury stock, at cost; 15.6 shares at June 30, 2017 and December 31, 2016 (342.0 ) (342.0 )
Additional paid-in capital 1,527.9 1,518.3
Accumulated deficit   (1.0 )   (3.6 )
Total stockholders’ equity   1,185.1     1,172.9  
Total liabilities and stockholders’ equity $ 2,922.2   $ 3,009.9  
 

DigitalGlobe, Inc.
Consolidated Statements of Cash Flows

   
For the six months ended
June 30,
(in millions) 2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 0.5 $ 20.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 165.8 137.9
Stock-based compensation expense, net of capitalized stock-based compensation expense 12.3 8.3
Amortization of aerial image library, deferred contract costs and lease incentive 6.1 8.4
Deferred income taxes (2.1 ) 14.0
Amortization of debt issuance costs, accretion of debt discount, and other 1.6 6.0
Changes in working capital:
Accounts receivable, net (32.9 ) (8.5 )
Deferred contract costs (9.1 ) (8.0 )
Other current and non-current assets (0.1 ) (2.4 )
Accounts payable (3.8 ) 5.7
Accrued liabilities (17.5 ) (4.1 )
Deferred revenue   (35.4 )   (27.4 )
Net cash flows provided by operating activities   85.4     150.7  
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (35.8 ) (85.8 )
Investment in joint venture       (7.5 )
Net cash flows used in investing activities   (35.8 )   (93.3 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of debt and capital lease obligations (42.7 ) (3.9 )
Repurchase of common stock (76.8 )
Value of shares surrendered to satisfy employee tax obligations (7.4 ) (2.0 )
Proceeds from exercise of stock options and other   3.3     (0.8 )
Net cash flows used in financing activities   (46.8 )   (83.5 )
Net increase (decrease) in cash, cash equivalents and restricted cash 2.8 (26.1 )
Cash, cash equivalents and restricted cash, beginning of period   116.5     134.0  
Cash, cash equivalents and restricted cash, end of period $ 119.3   $ 107.9  
 
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest, net of capitalized amounts of $5.1 and $21.8, respectively 21.0 7.4
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Changes to accruals for capital expenditures, including interest, and additions to capital lease obligations (4.0 ) 0.4
Non-cash preferred stock dividend accrual (1.0 ) (1.0 )
 

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