Maxar Technologies
Reports Fourth Quarter and Full-Year 2020
Results
February 24, 2021
Maxar Technologies
announced financial results for the quarter and
year ended December 31, 2020. All dollar amounts
in this press release are expressed in U.S.
dollars, unless otherwise noted.
“We made solid progress
during 2020 toward achieving our longer-term
targets, including efforts to drive sustainable
growth in both our Earth Intelligence and Space
Infrastructure segments and to reduce our debt
and leverage, as evidenced by solid 17%
year-over-year backlog growth and the closure of
the MDA divestiture and subsequent repayment of
debt” stated Dan Jablonsky, President and Chief
Executive Officer.
Jablonsky continued, “In
Earth Intelligence we had key wins and deepened
our relationships with the most discriminating
and innovative customers in the world, including
the National Reconnaissance Office, National
Geospatial-Intelligence Agency, U.S. Army, U.S.
Air Force, U.S. Space Force, Department of
Homeland Security, and a multitude of commercial
customers, including a recent award that
expanded our relationship with a long-time
technology customer by adding a multi-year
contract including Maxar’s 3D Elevation data. In
Space Infrastructure, we booked six new GEO
Comsat awards and several civil programs,
including development work for NASA’s Human
Landing System.”
“Full year revenue,
Adjusted EBITDA and free cash flow results were
consistent with our guidance ranges despite
absorbing higher than expected stock-based
compensation in the fourth quarter given our
share performance through the end of the year
and the timing of an award that slipped into
early 2021,” stated Biggs Porter, Chief
Financial Officer. “For 2021, we expect to see
revenue and Adjusted EBITDA growth and an
improvement in free cash flow,” he continued.
“Importantly, we have also increased our 2023
targets to better reflect the earnings and cash
generation power we see ahead.”
On April 8, 2020, we
completed the previously announced sale of the
MDA Business to Neptune Acquisition Inc., a
corporation existing under the laws of the
Province of British Columbia and an affiliate of
Northern Private Capital Ltd., for an aggregate
purchase price of $729 million (C$1.0 billion)
subject to customary purchase price adjustments,
including for working capital, cash and debt. We
recognized an after-tax gain on disposal of
discontinued operations of $317 million, net of
$12 million in taxes, on the MDA Transaction for
the year ended December 31, 2020. This
divestiture represented a strategic shift in our
business and, in accordance with U.S. GAAP,
qualifies as a discontinued operation. As a
result, the operating results and cash flows
related to the MDA Business have been reflected
as discontinued operations in the Consolidated
Statements of Operations and the Consolidated
Statements of Cash Flows.
On July 1, 2020, we closed
the acquisition of Vricon Inc. (“Vricon”) and
purchased the remaining 50% ownership interest
in Vricon (“Vricon Acquisition”) for $143
million, or $120 million, net of cash at
closing. To fund the transaction, we issued $150
million in aggregate principal amount of new
senior secured notes due 2027.
Total revenues from
continuing operations increased to $467 million
from $410 million, or by $57 million, for the
three months ended December 31, 2020, compared
to the same period in 2019. The increase was
primarily driven by an increase in the Space
Infrastructure segment which was partially
offset by a decrease in the Earth Intelligence
segment. The decrease in Earth Intelligence is
primarily driven by a $30 million decrease in
the recognition of revenue related to the
EnhancedView Contract. We recognized $30 million
of deferred revenue from the EnhancedView
Contract for the three months ended December 31,
2019, compared to none for the three months
ended December 31, 2020.
Total revenues from
continuing operations increased to $1,723
million from $1,666 million, or by $57 million,
for the year ended December 31, 2020 compared to
the same period in 2019. The increase was
primarily driven by an increase in the Space
Infrastructure segment partially offset by a
decrease in the Earth Intelligence segment. The
decrease was primarily driven by a $40 million
decrease in the recognition of deferred revenue
related to the EnhancedView Contract. We
recognized $120 million of deferred revenue from
the EnhancedView Contract for the year ended
December 31, 2019, compared to $80 million for
the year ended December 31, 2020, as it was
fully recognized as of August 31, 2020.
For the three months ended
December 31, 2020, net loss (income) from
continuing operations decreased to a net loss of
$52 million from net income of $53 million, or
by $105 million, compared to the same period in
2019. The decrease was primarily driven by a
gain on sale of assets of $136 million in 2019
that did not reoccur in 2020 partially offset by
increases in revenues in the Space
Infrastructure segment.
For the year ended December
31, 2020, net loss (income) from continuing
operations decreased to a net loss of $46
million from net income of $83 million, or by
$129 million, compared to the same period in
2019. The decrease was primarily driven by the
receipt of satellite insurance proceeds of $183
million and a gain on sale of assets of $136
million in 2019 that did not reoccur in 2020.
The decrease was partially offset by an $85
million gain on remeasurement of the previously
held equity interest in Vricon and increases in
revenues in the Space Infrastructure segment.
For the three months ended
December 31, 2020, Adjusted EBITDA was $95
million and Adjusted EBITDA as a percentage of
consolidated revenues (“Adjusted EBITDA margin
percentage”) was 20.3%. This is compared to
Adjusted EBITDA of $100 million and Adjusted
EBITDA margin percentage of 24.4% for the fourth
quarter of 2019. The decrease was driven by
lower Adjusted EBITDA from the Earth
Intelligence segment primarily as a result of a
$30 million decrease in deferred revenue
recognized related to the EnhancedView Contract
discussed above, partially offset by higher
Adjusted EBITDA from the Space Infrastructure
segment.
For the year ended December
31, 2020, Adjusted EBITDA was $422 million and
Adjusted EBITDA as a percentage of consolidated
revenues was 24.5%. This is compared to Adjusted
EBITDA of $416 million and Adjusted EBITDA
margin percentage of 25.0% for the year ended
2019. The increase was driven by higher Adjusted
EBITDA from the Space Infrastructure segment and
lower corporate and other expenses partially
offset by lower Adjusted EBITDA from the Earth
Intelligence segment primarily as a result of a
$40 million decrease in deferred revenue
recognized related to the EnhancedView Contract
discussed above.
Our results of operations for the year ended December 31, 2020 include the current estimated impact of COVID-19. We had COVID-19 related EAC growth of $27 million within the Space Infrastructure segment, which negatively impacted earnings for the year ended December 31, 2020. The changes 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 along with actuals realized during the year ended December 31, 2020
We had total order backlog
of $1.9 billion as of December 31, 2020 compared
to $1.6 billion as of December 31, 2019. The
increase in backlog was primarily driven by an
increase in the Space Infrastructure segment due
to new contracts with the U.S. government. There
was also a decrease in the Earth Intelligence
segment driven by revenue recognized during the
period, partially offset by the annual exercise
of the $300 million EnhancedView Contract
option. Our unfunded contract options totaled
$0.9 billion and $1.4 billion as of December 31,
2020 and December 31, 2019, respectively.