Revenues from the Space Infrastructure segment increased to $184 million from $181 million, or by $3 million, for the three months ended June 30, 2020, compared to the same period of 2019. Revenues increased primarily as a result of the impact of an increase in volume related to U.S. government contracts of $42 million during the three months ended June 30, 2020 compared to the same period in 2019 which was partially offset by reduced volumes on commercial programs of $40 million. There was COVID-19 related EAC growth of $6 million which negatively impacted revenue for the three months ended June 30, 2020. The increases in the EACs are due to increases in estimated program costs associated with the COVID-19 operating posture and the estimated impact of certain items such as supplier delays and increased labor hours.
Adjusted EBITDA increased to $11 million from $7 million, or by $4 million, for the three months ended June 30, 2020, compared to the same period of 2019. The increase in the Space Infrastructure segment is primarily related to increased revenues and higher margins on certain programs. The increase was partially offset by $10 million due to a change in the compensation structure from retention payments to bonuses which were not included in segment Adjusted EBITDA in 2019, a recovery of a previously reserved amount of $7 million in 2019 which did not reoccur in 2020, $17 million of losses incurred on developmental builds and a $6 million negative impact related to our COVID-19 operating posture, a portion of which is included in the 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 for the three months ended June 30, 2020 decreased to $12 million from $19 million, or by $7 million, compared to the same period in 2019. The decrease was primarily driven by a $6 million decrease in retention costs related to a 2019 program within the Space Infrastructure segment. The decrease was partially offset by a decrease in the foreign exchange gain recognized and an increase in selling, general and administrative expenses for the three months ended June 30, 2020, compared to the same period in 2019.
Intersegment eliminations
Intersegment eliminations are related to projects between our segments, including WorldView Legion. Intersegment eliminations have increased to $7 million from $4 million, or by $3 million, for the three months ended June 30, 2020 compared to the same period in 2019 primarily related to an increase in intersegment satellite construction activity.
MAXAR TECHNOLOGIES INC. Unaudited Condensed Consolidated Statements of Operations (In millions, except per share amounts) |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
June 30, |
|
June 30, |
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
||||||||
Product |
|
$ |
157 |
|
|
$ |
144 |
|
|
$ |
264 |
|
|
$ |
310 |
|
Service |
|
|
282 |
|
|
|
268 |
|
|
|
556 |
|
|
|
533 |
|
| Total revenues |
|
|
439 |
|
|
|
412 |
|
|
|
820 |
|
|
|
843 |
|
| Costs and expenses: |
|
|
|
|
|
|
|
|
||||||||
| Product costs, excluding depreciation and amortization |
|
|
144 |
|
|
|
141 |
|
|
|
289 |
|
|
|
312 |
|
| Service costs, excluding depreciation and amortization |
|
|
87 |
|
|
|
103 |
|
|
|
180 |
|
|
|
195 |
|
| Selling, general and administrative |
|
|
79 |
|
|
|
66 |
|
|
|
147 |
|
|
|
151 |
|
| Depreciation and amortization |
|
|
89 |
|
|
|
96 |
|
|
|
179 |
|
|
|
191 |
|
| Impairment loss |
|
|
— |
|
|
|
— |
|
|
|
14 |
|
|
|
— |
|
| Satellite insurance recovery |
|
|
— |
|
|
|
(183 |
) |
|
|
— |
|
|
|
(183 |
) |
| Operating income |
|
|
40 |
|
|
|
189 |
|
|
|
11 |
|
|
|
177 |
|
| Interest expense, net |
|
|
48 |
|
|
|
49 |
|
|
|
97 |
|
|
|
98 |
|
| Other (income) expense, net |
|
|
(4 |
) |
|
|
(2 |
) |
|
|
(7 |
) |
|
|
3 |
|
| (Loss) income before taxes |
|
|
(4 |
) |
|
|
142 |
|
|
|
(79 |
) |
|
|
76 |
|
| Income tax (benefit) expense |
|
|
(2 |
) |
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
| Equity in (income) loss from joint ventures, net of tax |
|
|
(2 |
) |
|
|
2 |
|
|
|
(1 |
) |
|
|
3 |
|
| Income (loss) from continuing operations |
|
|
— |
|
|
|
139 |
|
|
|
(78 |
) |
|
|
71 |
|
| Discontinued operations |
|
|
|
|
|
|
|
|
||||||||
| Income from operations of discontinued operations, net of tax |
|
|
2 |
|
|
|
9 |
|
|
|
32 |
|
|
|
20 |
|
| Gain on disposal of discontinued operations, net of tax |
|
|
304 |
|
|
|
— |
|
|
|
304 |
|
|
|
— |
|
| Income from discontinued operations, net of tax |
|
|
306 |
|
|
|
9 |
|
|
|
336 |
|
|
|
20 |
|
| Net income |
|
$ |
306 |
|
|
$ |
148 |
|
|
$ |
258 |
|
|
$ |
91 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
| Basic income per common share: |
|
|
|
|
|
|
|
|
||||||||
| Income (loss) from continuing operations |
|
$ |
— |
|
|
$ |
2.33 |
|
|
$ |
(1.29 |
) |
|
$ |
1.19 |
|
| Income from discontinued operations, net of tax |
|
|
5.05 |
|
|
|
0.15 |
|
|
|
5.56 |
|
|
|
0.34 |
|
| Basic income per common share |
|
$ |
5.05 |
|
|
$ |
2.48 |
|
|
$ |
4.27 |
|
|
$ |
1.53 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
| Diluted income per common share: |
|
|
|
|
|
|
|
|
||||||||
| Income (loss) from continuing operations |
|
$ |
— |
|
|
$ |
2.32 |
|
|
$ |
(1.29 |
) |
|
$ |
1.19 |
|
| Income from discontinued operations, net of tax |
|
|
4.94 |
|
|
|
0.15 |
|
|
|
5.56 |
|
|
|
0.33 |
|
| Diluted income per common share |
|
$ |
4.94 |
|
|
$ |
2.47 |
|
|
$ |
4.27 |
|
|
$ |
1.52 |
|
| MAXAR TECHNOLOGIES INC. Unaudited Condensed Consolidated Balance Sheets (In millions, except per share amounts) |
||||||||
|
|
|
|
|
|
||||
|
|
|
June 30, |
|
December 31, |
||||
|
|
|
2020 |
|
2019 |
||||
| Assets |
|
|
|
|
||||
| Current assets: |
|
|
|
|
||||
| Cash and cash equivalents |
|
$ |
177 |
|
|
$ |
59 |
|
| Trade and other receivables, net |
|
|
312 |
|
|
|
357 |
|
| Inventory |
|
|
21 |
|
|
|
20 |
|
| Advances to suppliers |
|
|
51 |
|
|
|
42 |
|
| Prepaid and other current assets |
|
|
41 |
|
|
|
32 |
|
| Current assets held for sale |
|
|
— |
|
|
|
751 |
|
| Total current assets |
|
|
602 |
|
|
|
1,261 |
|
| Non-current assets: |
|
|
|
|
||||
| Orbital receivables, net |
|
|
354 |
|
|
|
382 |
|
| Property, plant and equipment, net |
|
|
823 |
|
|
|
758 |
|
| Intangible assets, net |
|
|
901 |
|
|
|
991 |
|
| Non-current operating lease assets |
|
|
170 |
|
|
|
176 |
|
| Goodwill |
|
|
1,455 |
|
|
|
1,455 |
|
| Other non-current assets |
|
|
124 |
|
|
|
134 |
|
| Total assets |
|
$ |
4,429 |
|
|
$ |
5,157 |
|
| Liabilities and stockholders’ equity |
|
|
|
|
||||
| Current liabilities: |
|
|
|
|
||||
| Accounts payable |
|
$ |
155 |
|
|
$ |
153 |
|
| Accrued liabilities |
|
|
57 |
|
|
|
130 |
|
| Accrued compensation and benefits |
|
|
60 |
|
|
|
93 |
|
| Contract liabilities |
|
|
234 |
|
|
|
271 |
|
| Current portion of long-term debt |
|
|
9 |
|
|
|
30 |
|
| Current operating lease liabilities |
|
|
41 |
|
|
|
40 |
|
| Other current liabilities |
|
|
85 |
|
|
|
49 |
|
| Current liabilities held for sale |
|
|
— |
|
|
|
230 |
|
| Total current liabilities |
|
|
641 |
|
|
|
996 |
|
| Non-current liabilities: |
|
|
|
|
||||
| Pension and other postretirement benefits |
|
|
193 |
|
|
|
197 |
|
| Contract liabilities |
|
|
3 |
|
|
|
4 |
|
| Operating lease liabilities |
|
|
165 |
|
|
|
173 |
|
| Long-term debt |
|
|
2,407 |
|
|
|
2,915 |
|
| Other non-current liabilities |
|
|
118 |
|
|
|
110 |
|
| Total liabilities |
|
|
3,527 |
|
|
|
4,395 |
|
| Commitments and contingencies |
|
|
|
|
||||
| Stockholders’ equity: |
|
|
|
|
||||
| Common stock ($0.0001 par value, 240 million common shares authorized; 60.7 million and 59.9 million outstanding at June 30, 2020 and December 31, 2019, respectively) |
|
|
— |
|
|
|
— |
|
| Additional paid-in capital |
|
|
1,794 |
|
|
|
1,784 |
|
| Accumulated deficit |
|
|
(825 |
) |
|
|
(1,082 |
) |
| Accumulated other comprehensive (loss) income |
|
|
(68 |
) |
|
|
59 |
|
| Total Maxar stockholders' equity |
|
|
901 |
|
|
|
761 |
|
| Noncontrolling interest |
|
|
1 |
|
|
|
1 |
|
| Total stockholders' equity |
|
|
902 |
|
|
|
762 |
|
| Total liabilities and stockholders' equity |
|
$ |
4,429 |
|
|
$ |
5,157 |
|
| MAXAR TECHNOLOGIES INC. Unaudited Condensed Consolidated Statements of Cash Flows (In millions) |
||||||||
|
|
|
|
|
|
||||
|
|
|
Six Months Ended |
||||||
|
|
|
June 30, |
||||||
|
|
|
2020 |
|
2019 |
||||
| Cash flows (used in) provided by: |
|
|
|
|
||||
| Operating activities: |
|
|
|
|
||||
| Net income |
|
$ |
258 |
|
|
$ |
91 |
|
| Income from operations of discontinued operations, net of tax |
|
|
32 |
|
|
|
20 |
|
| Gain on disposal of discontinued operations, net of tax |
|
|
304 |
|
|
|
— |
|
| (Loss) income from continuing operations |
|
|
(78 |
) |
|
|
71 |
|
| Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |
|
|
|
|
||||
| Impairment losses including inventory |
|
|
14 |
|
|
|
3 |
|
| Depreciation and amortization |
|
|
179 |
|
|
|
191 |
|
| Loss from extinguishment of debt |
|
|
7 |
|
|
|
— |
|
| Amortization of debt issuance costs and other non-cash interest expense |
|
|
8 |
|
|
|
4 |
|
| Stock-based compensation expense |
|
|
13 |
|
|
|
4 |
|
| Other |
|
|
2 |
|
|
|
— |
|
| Changes in operating assets and liabilities: |
|
|
|
|
||||
| Trade and other receivables |
|
|
40 |
|
|
|
(20 |
) |
| Advances to suppliers |
|
|
(9 |
) |
|
|
32 |
|
| Accounts payables and accrued liabilities |
|
|
(76 |
) |
|
|
(92 |
) |
| Contract liabilities |
|
|
(38 |
) |
|
|
(124 |
) |
| Other |
|
|
4 |
|
|
|
7 |
|
| Cash provided by operating activities - continuing operations |
|
|
66 |
|
|
|
76 |
|
| Cash used in operating activities - discontinued operations |
|
|
(30 |
) |
|
|
(15 |
) |
| Cash provided by operating activities |
|
|
36 |
|
|
|
61 |
|
| Investing activities: |
|
|
|
|
||||
| Purchase of property, plant and equipment and development or purchase of software |
|
|
(128 |
) |
|
|
(124 |
) |
| Return of capital from discontinued operations |
|
|
20 |
|
|
|
— |
|
| Cash used in investing activities - continuing operations |
|
|
(108 |
) |
|
|
(124 |
) |
| Cash provided by (used in) investing activities - discontinued operations |
|
|
723 |
|
|
|
(3 |
) |
| Cash provided by (used in) investing activities |
|
|
615 |
|
|
|
(127 |
) |
| Financing activities: |
|
|
|
|
||||
| Net proceeds of revolving credit facility |
|
|
— |
|
|
|
97 |
|
| Net proceeds from issuance of 2027 Notes |
|
|
147 |
|
|
|
— |
|
| Repurchase of 2023 Notes, including premium |
|
|
(169 |
) |
|
|
— |
|
| Repayments of long-term debt |
|
|
(516 |
) |
|
|
(11 |
) |
| Settlement of securitization liability |
|
|
(7 |
) |
|
|
(8 |
) |
| Payment of dividends |
|
|
(1 |
) |
|
|
(1 |
) |
| Other |
|
|
(3 |
) |
|
|
— |
|
| Cash (used in) provided by financing activities - continuing operations |
|
|
(549 |
) |
|
|
77 |
|
| Cash (used in) provided by financing activities - discontinued operations |
|
|
(24 |
) |
|
|
14 |
|
| Cash (used in) provided by financing activities |
|
|
(573 |
) |
|
|
91 |
|
| Increase in cash, cash equivalents, and restricted cash |
|
|
78 |
|
|
|
25 |
|
| Effect of foreign exchange on cash, cash equivalents, and restricted cash |
|
|
(5 |
) |
|
|
1 |
|
| Cash, cash equivalents, and restricted cash, beginning of year |
|
|
110 |
|
|
|
43 |
|
| Cash, cash equivalents, and restricted cash, end of period |
|
$ |
183 |
|
|
$ |
69 |
|
|
|
|
|
|
|
||||
| Reconciliation of cash flow information: |
|
|
|
|
||||
| Cash and cash equivalents |
|
$ |
179 |
|
|
$ |
63 |
|
| Restricted cash included in prepaid and other current assets |
|
|
1 |
|
|
|
5 |
|
| Restricted cash included in other non-current assets |
|
|
3 |
|
|
|
1 |
|
| Total cash, cash equivalents, and restricted cash |
|
$ |
183 |
|
|
$ |
69 |
|
