Total revenues from the Space Systems segment were $293.4 million in the first quarter of 2018 compared to $341.5 million in the same period of 2017. The decrease primarily related to lower revenue from the geostationary communications satellite line of business in the first quarter of 2018 compared to the first quarter of 2017, partially offset by higher revenue from contracts with the U.S. Government.
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 Revenues have decreased year-over-year as programs awarded prior to 2015 have been completed and have been replaced by this lower level of award value since 2015.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 believes that geostationary communications markets are at or near the bottom of this current decline. The Company is confident in its ability to adapt to changes in customer demand and maintain its leading market share position in the face of evolving technology trends.
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 March 31, 2018 was 18.6% compared to 18.2% for the same period in the prior year. The increase was primarily due to higher investment tax credits recognized during the three months ended March 31, 2018. The increase relates primarily to timing differences in the recognition of previously earned, but unrecognized investment tax credits on the basis that there is now reasonable assurance the benefit of the credits will be sustained.
Notable bookings in the Space Systems segment announced in the first quarter of 2018 included:
- A contract with NASA’s Jet Propulsion Laboratory to design and build critical equipment for a spacecraft that will explore Europa, one of Jupiter’s moons.
- A contract to provide a broadcast satellite for Broadcasting Satellite System Corporation (B-SAT). As the leading broadcasting satellite operator in Japan, B-SAT will use the Direct-to-Home (DTH) television satellite to ensure exceptional ultra-high definition video distribution for the 2020 Tokyo Olympics.
- Spacecom, operator of the AMOS satellite fleet, announced it has chosen Space Systems/Loral, LLC, a wholly owned subsidiary of Maxar, to build its AMOS-8 advanced communications satellite. The satellite will deliver state-of-the-art broadcast, broadband and data services from Spacecom's 4°degrees West 'hot spot' to Europe, Africa and the Middle East.
- A contract with an unnamed international customer where MDA will provide turnkey, unmanned aircraft system surveillance services. The contract includes options for additional years.
Imagery Segment Results
| Reported | ||||||||||||
| Three months ended | ||||||||||||
| March 31, | ||||||||||||
| 2018 | 2017 | |||||||||||
| ($ millions) | ||||||||||||
| Revenue | $ | 211.4 | $ | 7.7 | ||||||||
| Adjusted EBITDA 1 | $ | 138.1 | $ | 3.0 | ||||||||
| Adjusted EBITDA Margin 1 | 65.3 |
% |
|
39.0 | % | |||||||
