Maxar quarterly revenues dip as firm restructures satellite business

Space

SAN FRANCISCO — Maxar Technologies reported a decrease in quarterly revenues May 9 due to lackluster geostationary communication satellite sales, completion of a radar satellite constellation and the loss of the Worldview-4 high-resolution imaging satellite. The firm reported revenues of $504 million for the quarter ended March 31, compared with $557.7 million for the first quarter of 2018.

A severe slump in geostationary satellite sales continues to depress Maxar revenues. MDA, a Maxar company, also completed construction of its three-satellite Radarsat Constellation Mission (RCM) for the Canadian Space Agency in 2018. Those satellites are scheduled for launch in June on a SpaceX Falcon 9 rocket from California’s Vandenberg Air Force Base.

Westminster, Colorado-based Maxar has received $153.3 million of $183 million in insurance payments for the Worldview-4 satellite, whose failure was announced in January. The company expects to receive the remainder by the end of the quarter, Maxar CEO Dan Jablonsky, said during a May 9 earnings call.

Maxar sells satellites, robotics, ground systems, geospatial data, intelligence platforms and government services. “Going forward, we are going to place increasing emphasis on the higher value aspects of this continuum as customers increasingly want to extract insight from the vast amounts of geospatial data available to them,” Jablonsky said. “This means we will be looking to build repeatable, scalable products that reveal Earth intelligence at scale using the decades of intellectual property built at Radiant, DigitalGlobe and MDA.”

As examples, Jablonsky cited EarthWatch and SecureWatch, cloud-based subscription services that offer customers access to Maxar imagery and analysis. Maxar also will expand geospatial machine learning capabilities, particularly through its U.S. government services business. In addition, Maxar will invest in promising business lines, including its 1300 series of large geostationary satellites, 500-kilogram Legion-class satellites, space robotics and defense integration work, he added.

“Even with the loss of Worldview-4 we are forecasting flat revenue and [earnings before interest, tax, depreciation and amortization] this year,” Jablonsky said. “A large part of that is predicated on an uptake in our subscription products: EarthWatch, SecureWatch and some derivatives.”

Maxar is comprised of three business units: space systems, imagery and services. The firm’s space systems business reported first quarter revenues of $274 million down from $293 million a year earlier, according to 10-Q filed May 9 with the Securities and Exchange Commission. Meanwhile, imagery sales fell to $200 million from $211 million compared with the first three months of 2018 while service revenues dipped to $68 million from $70 million. Of Maxar’s first quarter sales, $38 million were financial transactions involving more than one business unit, which do not appear in the company’s total quarterly revenues.

To improve the financial health of the company, Maxar leaders are “laser-focused” on reducing the firm’s debt of approximately $3.18 billion, Jablonsky said.

Maxar’s investment in its WorldView Legion remote sensing constellation will continue for two years and peak in 2019. As those expenditures decline, the company will have more cash available to reduce its debt, Biggs Porter, Maxar’s chief financial officer, said during the earnings call.

Maxar Space Solutions, previously known as SSL, reported $210 million in first-quarter revenues. Maxar is restructuring the business unit, in part, by laying off employees. At the same time, Maxar plans to spend about $20 million in 2019 as part of an ongoing effort retain remaining employees, Porter said.

Maxar Space Solutions has not booked any new orders in 2019. “In terms of future business, we have a very strong pipeline of commercial and government business, both classified and unclassified,” Jablonsky said. “Not only are we forecasting that we’re going to have wins in this business [this year] but we’ve also been discussing that we can do that on a smaller footprint. So we’ll be more nimble.”

For the quarter, Maxar reported a net loss of 99 cents per share. The firm’s stock, which began the year at $12.50 per share, closed May 9 at $6.71 before Maxar released its quarterly results.

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