Maxar Technologies Reports Second Quarter 2019 Results

Services segment revenues increased to $74 million from $66 million, or by $8 million, for the three months ended June 30, 2019, compared to the same period of 2018. The increase was primarily driven by growth from new contract awards and expansion of programs with the U.S. government.

Adjusted EBITDA was $6 million for both the three months ended June 30, 2019 and 2018. The impact of the increase in revenues on Adjusted EBITDA which was partially offset by a change in an expense related to a lease.

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 June 30, 2019, were $18 million compared to $12 million for the same period of 2018. The increase of $6 million or 50% is primarily attributable to a $6 million increase in retention costs, a $2 million increase in selling, general and administrative expenses which were partially offset by $6 million in higher foreign exchange gains.

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Statements of Operations

(In millions of United States dollars, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2019

 

2018

 

2019

 

2018

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

190

 

 

$

257

 

 

$

384

 

 

$

485

 

Service

 

 

300

 

 

 

322

 

 

 

610

 

 

 

651

 

Total revenues

 

$

490

 

 

$

579

 

 

$

994

 

 

$

1,136

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Product costs, excluding depreciation and amortization

 

$

165

 

 

$

254

 

 

$

362

 

 

$

441

 

Service costs, excluding depreciation and amortization

 

 

121

 

 

 

77

 

 

 

231

 

 

 

196

 

Selling, general and administrative

 

 

80

 

 

 

133

 

 

 

183

 

 

 

236

 

Depreciation and amortization

 

 

99

 

 

 

113

 

 

 

197

 

 

 

224

 

Impairment losses

 

 

12

 

 

 

 

 

12

 

 

 

Satellite insurance recovery

 

 

(183

)

 

 

 

 

(183

)

 

 

Operating income

 

 

196

 

 

 

2

 

 

 

192

 

 

 

39

 

Interest expense, net

 

 

49

 

 

 

50

 

 

 

98

 

 

 

103

 

Other (income) expense, net

 

 

(3

)

 

 

4

 

 

 

3

 

 

 

5

 

Income (loss) before taxes

 

 

150

 

 

 

(52

)

 

 

91

 

 

 

(69

)

Income tax expense (benefit)

 

 

2

 

 

 

(9

)

 

 

1

 

 

 

(41

)

Equity in loss (income) from joint ventures, net of tax

 

 

2

 

 

 

(3

)

 

 

3

 

 

 

(3

)

Net income (loss)

 

$

146

 

 

$

(40

)

 

$

87

 

 

$

(25

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.45

 

 

$

(0.70

)

 

$

1.46

 

 

$

(0.44

)

Diluted

 

$

2.45

 

 

$

(0.70

)

 

$

1.46

 

 

$

(0.44

)

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Balance Sheets

(In millions of United States dollars, except per share amounts)

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2019

 

2018

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

63

 

 

$

35

 

Trade and other receivables, net

 

 

490

 

 

 

464

 

Inventory

 

 

24

 

 

 

31

 

Advances to suppliers

 

 

10

 

 

 

42

 

Income taxes receivable

 

 

24

 

 

 

14

 

Prepaid and other current assets

 

 

54

 

 

 

51

 

Total current assets

 

 

665

 

 

 

637

 

Non-current assets:

 

 

 

 

 

 

Orbital receivables

 

 

405

 

 

 

407

 

Deferred tax assets

 

 

112

 

 

 

103

 

Property, plant and equipment, net

 

 

785

 

 

 

747

 

Intangible assets, net

 

 

1,120

 

 

 

1,232

 

Non-current operating lease assets

 

 

124

 

 

 

Goodwill

 

 

1,763

 

 

 

1,751

 

Other assets

 

 

109

 

 

 

124

 

Total assets

 

$

5,083

 

 

$

5,001

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

172

 

 

$

209

 

Accrued liabilities

 

 

58

 

 

 

116

 

Accrued compensation and benefits

 

 

82

 

 

 

100

 

Contract liabilities

 

 

267

 

 

 

361

 

Current portion of long-term debt

 

 

17

 

 

 

17

 

Current operating lease liabilities

 

 

33

 

 

 

Other current liabilities

 

 

56

 

 

 

46

 

Total current liabilities

 

 

685

 

 

 

849

 

Non-current liabilities:

 

 

 

 

 

 

Pension and other postretirement benefits

 

 

192

 

 

 

196

 

Contract liabilities

 

 

29

 

 

 

60

 

Operating lease liabilities

 

 

133

 

 

 

Long-term debt

 

 

3,127

 

 

 

3,030

 

Other non-current liabilities

 

 

186

 

 

 

222

 

Total liabilities

 

 

4,352

 

 

 

4,357

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock ($0.0001 par value, 240 million common shares authorized and 59.6 million outstanding at
June 30, 2019; nil par value, unlimited authorized common shares and 59.4 million outstanding at
December 31, 2018)

 

 

 

 

1,713

 

Additional paid-in capital

 

 

1,776

 

 

 

59

 

Accumulated deficit

 

 

(1,125

)

 

 

(1,211

)

Accumulated other comprehensive income

 

 

79

 

 

 

82

 

Total Maxar stockholders' equity

 

 

730

 

 

 

643

 

Noncontrolling interest

 

 

1

 

 

 

1

 

Total stockholders' equity

 

 

731

 

 

 

644

 

Total liabilities and stockholders' equity

 

$

5,083

 

 

$

5,001

 

MAXAR TECHNOLOGIES INC.

         

Unaudited Condensed Consolidated Statements of Cash Flows

         

(In millions of United States dollars)

         

 

         

 

 

 

 

 

 

 

         

 

Six Months Ended

 

         

 

June 30,

 

         

 

2019

 

2018

Cash flows provided by (used in):

         

 

 

 

 

 

 

Operating activities:

         

 

 

 

 

 

 

Net income (loss)

         

 

$

87

 

 

$

(25

)

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

         

 

 

 

 

 

 

Depreciation of property, plant and equipment

         

 

 

60

 

 

 

78

 

Amortization of intangible assets

         

 

 

137

 

 

 

146

 

Stock-based compensation expense

         

 

 

4

 

 

 

9

 

Amortization of debt issuance costs and other noncash interest expense

         

 

 

4

 

 

 

5

 

Impairment losses

         

 

 

15

 

 

 

Foreign exchange losses

         

 

 

3

 

 

 

8

 

Deferred income tax expense (benefit)

         

 

 

6

 

 

 

(26

)

Other

         

 

 

(3

)

 

 

6

 

Changes in operating assets and liabilities:

         

 

 

 

 

 

 

Trade and other receivables

         

 

 

(12

)

 

 

(64

)

Accrued compensation and benefits

         

 

 

(22

)

 

 

(15

)

Trade and other payables

         

 

 

(35

)

 

 

(31

)

Accrued liabilities

         

 

 

(60

)

 

 

24

 

Contract liabilities

         

 

 

(126

)

 

 

(113

)

Advances to suppliers

         

 

 

32

 

 

 

20

 

Deferred tax assets

         

 

 

(9

)

 

 

(14

)

Deferred tax liabilities

         

 

 

(5

)

 

 

27

 

Other liabilities

         

 

 

(7

)

 

 

(17

)

Other

         

 

 

(10

)

 

 

(19

)

Cash provided by (used in) operating activities

         

 

 

59

 

 

 

(1

)

 

         

 

 

 

 

 

 

Investing activities:

         

 

 

 

 

 

 

Purchase of property, plant and equipment

         

 

 

(99

)

 

 

(83

)

Purchase or development of software

         

 

 

(28

)

 

 

(37

)

Cash collected on note receivable

         

 

 

 

 

5

 

Disposal of subsidiary and short-term investments

         

 

 

3

 

 

 

5

 

Cash used in investing activities

         

 

 

(124

)

 

 

(110

)

 

         

 

 

 

 

 

 

Financing activities:

         

 

 

 

 

 

 

Net proceeds from revolving credit facility

         

 

 

112

 

 

 

141

 

Repayments of long-term debt

         

 

 

(13

)

 

 

(13

)

Settlement of securitization liability

         

 

 

(8

)

 

 

(6

)

Payment of dividends

         

 

 

(1

)

 

 

(32

)

Change in overdraft balance

         

 

 

 

 

1

 

Cash provided by financing activities

         

 

 

90

 

 

 

91

 

Increase (decrease) in cash, cash equivalents, and restricted cash

         

 

 

25

 

 

 

(20

)

Effect of foreign exchange on cash, cash equivalents, and restricted cash

         

 

 

1

 

 

 

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

         

 

 

43

 

 

 

42

 

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

         

 

$

69

 

 

$

22

 

 

         

 

 

 

 

 

 

Reconciliation of cash flow information:

         

 

 

 

 

 

 

Cash and cash equivalents

         

 

$

63

 

 

$

12

 

Restricted cash included in prepaid and other current assets

         

 

 

5

 

 

 

9

 

Restricted cash included in other assets

         

 

 

1

 

 

 

1

 

Total cash, cash equivalents, and restricted cash

         

 

$

69

 

 

$

22

 


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