Maxar Technologies Reports First Quarter 2021 Results

Maxar Technologies announced financial results for the quarter ended March 31, 2021. All dollar amounts in this press release are expressed in U.S. dollars, unless otherwise noted.

¹ This is a non-GAAP financial measure. Refer to section “Non-GAAP Financial Measures” in this earnings releas

“We continued this quarter to make progress 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,” stated Dan Jablonsky, President and Chief Executive Officer. “In Earth Intelligence we signed several renewals with commercial and international government customers and booked awards with the US Army and National Geospatial Intelligence Agency to support training, tactical, and intelligence missions. In Space Infrastructure, key wins included a contract modification with NASA and several study contracts supporting national security missions.”

“Revenue and earnings were negatively impacted by a $28 million charge related to the Sirius-XM7 satellite program. Without this charge, we performed in-line with our expectations for the quarter. Importantly, we issued ten million shares this quarter and used the proceeds to reduce indebtedness. This transaction strengthens our financial position and further positions us for continued growth,” stated Biggs Porter, Chief Financial Officer.

On March 22, 2021, we completed the public offering of 10 million shares of common stock, par value $0.0001 per share, of the Company, at a public offering price of $40 per share (“Offering”). We received proceeds of $380 million, net of $20 million of transaction fees as of March 31, 2021. We completed the Offering pursuant to the Underwriting Agreement. On March 26, 2021, we redeemed $350 million aggregate principal of our 2023 Notes using a portion of the net proceeds from the Offering. Additionally, we paid premiums of approximately $34 million related to the early redemption.

Total revenues increased to $392 million from $381 million, or by $11 million, for the three months ended March 31, 2021, compared to the same period in 2020. The increase was primarily driven by an increase in revenue in our Space Infrastructure segment partially offset by a decrease in revenue in our Earth Intelligence segment. The decrease in Earth Intelligence was 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 March 31, 2020, compared to none for the three months ended March 31, 2021.

For the three months ended March 31, 2021, our net loss was $84 million compared to net loss of $78 million for the three months ended March 31, 2020. The change in net loss was primarily driven by an increase in interest expense due to a $41 million loss on debt extinguishment from the partial redemption of our 2023 Notes, partially offset by a $10 million decrease in interest on long-term debt primarily driven by a lower principal balance on Term Loan B due to repayments made on these borrowings in the second quarter of 2020. The increase in net loss was also due to a $14 million decrease in revenues period over period related to our contract with Sirius XM and the non-performance of the SXM-7 satellite. Our increase in net loss was partially offset by increases in revenue within the Space Infrastructure segment outside of the Sirius XM contract previously mentioned and a $14 million recognition of impairment on orbital receivables for the three months ended March 31, 2020 that did not reoccur for the same period in 2021.

For the three months ended March 31, 2021, Adjusted EBITDA was $67 million and Adjusted EBITDA as a percentage of consolidated revenues (“Adjusted EBITDA margin percentage”) was 17.1%. This is compared to Adjusted EBITDA of $77 million and Adjusted EBITDA margin percentage of 20.2% for the same period of 2020. The decrease was primarily 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. The decrease was also driven by higher corporate and other expenses for the three months ended March 31, 2021, compared to the same period of 2020. These decreases were partially offset by higher Adjusted EBITDA from the Space Infrastructure segment.

We had total order backlog of $1.8 billion as of March 31, 2021 compared to $1.9 billion as of December 31, 2020. The decrease in backlog was primarily driven by decreases in the Space Infrastructure segment. Our unfunded contract options totaled $0.9 billion as of March 31, 2021 and December 31, 2020, respectively.

Financial Highlights

In addition to results reported in accordance with U.S. GAAP, we use certain non-GAAP financial measures as supplemental indicators of its financial and operating performance. These non-GAAP financial measures include EBITDA and Adjusted EBITDA. We believe these supplementary financial measures reflect our ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in its business.

¹ This is a non-GAAP financial measure. Refer to section “Non-GAAP Financial Measures” in this earnings release.

Revenues by segment were as follows:

We analyze financial performance by segment, which combine related activities within the Company.

¹ This is a non-GAAP financial measure. Refer to section “Non-GAAP Financial Measures” in this earnings release.

Earth Intelligence

Revenues from the Earth Intelligence segment decreased to $250 million from $271 million, or by $21 million, compared to the same period in 2020. The decrease was primarily driven by a $30 million decrease in the recognition of deferred revenue related to the EnhancedView Contract. We recognized $30 million of deferred revenue from the EnhancedView Contract for the three months ended March 31, 2020, compared to none for the three months ended March 31, 2021, as it was fully recognized as of August 31, 2020. The decrease was partially offset by a $4 million increase in new commercial programs and a $4 million increase in revenue from international defense and intelligence customers.

Adjusted EBITDA from the Earth Intelligence segment decreased to $107 million from $133 million, or by $26 million, for the three months ended March 31, 2021, compared to the same period of 2020. The decrease was primarily driven by a decrease in the recognition of revenue related to the EnhancedView Contract as mentioned above. The decrease was partially offset by higher margins due to a favorable program mix.

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 using the cost-to-cost method of accounting to determine the percentage of completion over the construction period, which typically ranges between 20 to 36 months and up to 48 months in certain situations. Adjusted 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.

Revenues from the Space Infrastructure segment increased to $155 million from $132 million, or by $23 million, for the three months ended March 31, 2021, compared to the same period in 2020. Revenues increased primarily as a result of an increase in revenues from commercial programs of $37 million due to higher volumes related to new programs and lower EAC growth primarily due to no COVID-19 program impacts for the three months ended March 31, 2021. Revenues were negatively impacted by a $14 million decrease year over year related to our contract with Sirius XM Holdings Inc. (“Sirius XM”). The three months ended March 31, 2021, included a $25 million cumulative adjustment to revenue primarily related to the loss of final milestone and expected orbital payments due to the non-performance of the SXM-7 satellite and other adjustments. After exhausting efforts to fully recover the satellite and further discussions with Sirius XM, in April 2021, we made the determination to record the cumulative adjustment to revenue. In addition, there were $3 million of costs incurred in the first quarter related to attempts to repair and fully recover the SXM-7 satellite. The aggregate impact for the three months ended March 31, 2021, was $28 million which compares favorably to the previously disclosed potential exposure of $38 million. The $28 million decrease was partially offset by the non-reoccurrence of a $14 million adjustment to revenue due to the identification of a design anomaly on the commercial satellite program, which was recorded for the three months ended March 31, 2020.

Adjusted EBITDA from the Space Infrastructure segment changed to a loss $12 million from a loss of $39 million, or by $27 million, for the three months ended March 31, 2021, compared to the same period of 2020. The increase in the Space Infrastructure segment was primarily related to a $44 million increase in commercial program margins due to new programs and fewer negative EAC impacts during the period as compared to the three months ended March 31, 2020, which included negative EAC impacts due to COVID-19. The increase in commercial program margins has been driven by a change in program mix related to the completion of less profitable programs offset by new, more profitable programs. These increases were partially offset by the $14 million reduction in revenue related to the above-mentioned SXM-7 satellite impacts.