Maxar Technologies Reports Fourth Quarter and Full-Year 2021 Results

Maxar Technologies (NYSE:MAXR) (TSX:MAXR) ("Maxar" or the "Company"), a provider of comprehensive space solutions and secure, precise, geospatial intelligence, today announced financial results for the quarter and year ended December 31, 2021. All dollar amounts in this press release are expressed in U.S. dollars, unless otherwise noted.

Key points from the fourth quarter and full-year include:

• Fourth quarter consolidated revenues of $468 million, net income from continuing operations of $71 million, diluted net income per share of $0.94 and Adjusted EBITDA ¹ of $112 million
 
• Full-year consolidated revenues of $1,770 million
 
• Full-year net income from continuing operations of $46 million
 
• Full-year diluted net income per share of $0.63
 
• Full-year Adjusted EBITDA ¹ of $424 million
 
• Full-year operating cash flows from continuing operations of $294 million, CapEx ² of $234 million and free cash flows ¹ of $60 million
 

  ¹ This is a non-GAAP financial measure. Refer to section "Non-GAAP Financial Measures" in this earnings release.
² CapEx is defined as the purchase of property, plant and equipment and development or purchase of software.

"Our performance this year demonstrates that we are executing on our strategic growth plans. We generated revenue and Adjusted EBITDA growth, and we won notable awards across a diverse set of customers, including the National Reconnaissance Office, the National Geospatial Intelligence Agency, the US Army, several key US allies, and a number of leading technology companies," stated Dan Jablonsky, President and Chief Executive Officer. "Importantly, we generated over $100 million in growth from our Earth Intelligence products versus last year. As we look to 2022 and beyond, we remain focused on execution and on making investments across both Earth Intelligence and Space Infrastructure that we believe will position us well to continue to meet our customer's critical mission needs into the future."

"We generated cash flow growth in 2021 versus a year ago on better operating cash flow performance and lower capital expenditures. I am pleased with the full-year financial performance across the organization, particularly the Adjusted EBITDA margin expansion we saw in both Earth Intelligence and Space Infrastructure driven by mix and solid execution," stated Biggs Porter, Chief Financial Officer. "Looking ahead, we continue to see strong growth in revenue, Adjusted EBITDA and cash flow over the next several years, and we remain focused on reducing debt and leverage."

Total revenues increased to $468 million from $467 million, or by $1 million, for the three months ended December 31, 2021, compared to the same period in 2020. The increase was primarily driven by an increase in the Earth Intelligence segment which was partially offset by a decrease in the Space Infrastructure segment.

Total revenues increased to $1,770 million from $1,723 million, or by $47 million, for the year ended December 31, 2021 compared to 2020. The increase was primarily driven by an increase in revenues in our Space Infrastructure and Earth Intelligence segments. Revenue in our Earth Intelligence segment was inclusive of an $80 million decrease in the recognition of deferred revenue related to the EnhancedView Contract.

For the three months ended December 31, 2021, our net income (loss) from continuing operations increased to net income of $71 million from a net loss of $52 million, or by $123 million, compared to the same period in 2020. The increase was driven by a $49 million reversal of our orbital receivables allowance for the three months ended December 31, 2021. The increase was also driven by a decrease in total product and services costs of $34 million primarily within the Space Infrastructure segment for the three months ended December 31, 2021 compared to the same period in 2020 and the write-off of a $33 million prepaid asset with a commercial provider of ground station services under a contract which was above current market value for the three months ended December 31, 2020, which did not reoccur for the same period in 2021.

For the year ended December 31, 2021, our net income (loss) from continuing operations increased to net income of $46 million from a net loss of $46 million, or by $92 million, compared to 2020. The increase was driven by a decrease in depreciation and amortization expense of $58 million, a $49 million reversal of our orbital receivables allowance and an increase in revenue of $47 million for the year ended December 31, 2021, compared to 2020. The increase was also driven by a decrease in interest expense, net of $24 million, compared to 2020. Interest expense, net included a $41 million loss on debt extinguishment for the year ended December 31, 2021. These increases were partially offset by an $85 million gain on remeasurement of the previously held equity interest in Vricon for the year ended December 31, 2020, which did not reoccur in 2021, an increase in selling, general and administrative costs of $37 million for the year ended December 31, 2021 compared to 2020 and the write-off of a $33 million prepaid asset with a commercial provider of ground station services for the year ended December 31, 2020, which did not reoccur in 2021.

For the three months ended December 31, 2021, Adjusted EBITDA was $112 million and Adjusted EBITDA margin was 23.9%. This is compared to Adjusted EBITDA of $95 million and Adjusted EBITDA margin of 20.3% for the three months ended 2020. The increase was primarily driven by higher Adjusted EBITDA from the Earth Intelligence segment partially offset by higher Corporate and other expenses.

For the year ended December 31, 2021, Adjusted EBITDA was $424 million and Adjusted EBITDA margin was 24.0%. This is compared to Adjusted EBITDA of $422 million and Adjusted EBITDA margin of 24.5% for the year ended 2020. The increase in Adjusted EBITDA was driven by higher Adjusted EBITDA from the Space Infrastructure segment partially offset by lower Adjusted EBITDA from the Earth Intelligence segment primarily as a result of a $80 million decrease in deferred revenue recognized related to the EnhancedView Contract discussed above. The total increase was also partially offset by higher Corporate and other expenses.

Order backlog decreased to $1,893 million from $1,904 million, or by $11 million, for the year ended December 31, 2021 compared to December 31, 2020. Our unfunded contract options totaled $650 million and $856 million as of December 31, 2021 and 2020, respectively. Unfunded contract options represent estimated amounts of revenue to be earned in the future from negotiated contracts with unexercised contract options and indefinite delivery/indefinite quantity contracts. Unfunded contract options as of December 31, 2021 were primarily comprised of the option year in the EnhancedView Contract (September 1, 2022 through July 12, 2023) and other U.S. government and commercial customer contracts. In November 2021, the National Reconnaissance Office ("NRO") announced the release of the Electro-Optical Commercial Layer ("EOCL") contract Request for Proposal ("RFP") which is expected to replace the existing EnhancedView Contract. In December 2021, we submitted our response to the EOCL RFP and anticipate the NRO to award EOCL contracts prior to the expiration of the EnhancedView Contract, including remaining option years.

  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.

Revenues by segment were as follows:

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

  Earth Intelligence  

Revenues from the Earth Intelligence segment increased to $289 million from $258 million, or by $31 million, for the three months ended December 31, 2021, compared to the same period in 2020. The increase was primarily driven by a $16 million increase in revenue from international defense and intelligence customers and a $13 million increase in commercial programs, both largely as a result of an expansion of contracts with existing customers.

Revenues from the Earth Intelligence segment increased to $1,093 million from $1,081 million, or by $12 million, for the year ended December 31, 2021, compared to 2020. The increase was primarily driven by a $48 million increase in revenue from international defense and intelligence customers, a $36 million increase in new and expanded commercial programs and a $7 million increase in revenue from new contracts with the U.S. government partially offset by an $80 million decrease in the recognition of deferred revenue related to the EnhancedView Contract. We recognized $80 million of deferred revenue from the EnhancedView Contract for the year ended December 31, 2020, compared to none for the year ended December 31, 2021, as it was fully recognized as of August 31, 2020.

Adjusted EBITDA from the Earth Intelligence segment increased to $130 million from $106 million, or by $24 million, for the three months ended December 31, 2021, compared to the same period in 2020. The increase was primarily driven by the expansion of contracts with existing commercial and international defense and intelligence customers contributing to positive program margin growth. These increases were partially offset by an increase in selling, general and administrative costs primarily due to an increase in labor related expenses driven by an increase in headcount, employee compensation and fringe benefits.

Adjusted EBITDA decreased to $492 million from $513 million, or by $21 million, for the year ended December 31, 2021, compared to 2020. The decrease was primarily driven by a decrease in the recognition of deferred revenue related to the EnhancedView Contract as mentioned above. The decrease was also driven by an increase in selling, general and administrative costs due to an increase in labor related expenses driven by an increase in headcount, employee compensation and fringe benefits for the year ended December 31, 2021, compared to 2020. These decreases were partially offset by the expansion of contracts with existing commercial and international defense and intelligence customers contributing to positive program margin growth.

  Space Infrastructure  

Revenues from the Space Infrastructure segment decreased to $199 million from $224 million, or by $25 million, for the three months ended December 31, 2021, compared to the same period in 2020. Revenues decreased primarily as a result of a $24 million decrease in revenues from U.S. government contracts driven by a decrease in volumes.

Revenues from the Space Infrastructure segment increased to $740 million from $721 million, or by $19 million, for the year ended December 31, 2021, compared to 2020. Revenues increased primarily as a result of an increase in revenues from commercial programs of $87 million due to higher volumes and lower EAC growth primarily due to no COVID-19 program impacts for the year ended December 31, 2021. Revenues were negatively impacted by a $19 million decrease year over year related to our contract with Sirius XM Holdings Inc. ("Sirius XM"). The year ended December 31, 2021, included a $30 million cumulative adjustment to revenue primarily related to the loss of final milestone and expected orbital payments from Sirius XM due to the non-performance of the SXM-7 satellite and other adjustments that were recorded in 2021. After exhausting efforts to fully recover the SXM-7 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 of 2021 related to attempts to repair and fully recover the SXM-7 satellite. The aggregate impact for the year ended December 30, 2021, was $33 million. The $33 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 year ended December 31, 2020. In addition, the total increase in revenues from the Space Infrastructure segment was partially offset by a $49 million decrease in revenues from U.S. government contracts.

Adjusted EBITDA for the Space Infrastructure segment increased to $17 million from $13 million, or by $4 million, for the three months ended December 31, 2021, compared to the same period in 2020. The increase in the Space Infrastructure segment was primarily driven by a $13 million increase related to margins on commercial programs for the three months ended December 31, 2021, compared to the same period in 2020. The increase in commercial program margins was primarily driven by a change in program mix related to the completion of less profitable programs offset by more profitable programs. These increases were partially offset by a $6 million increase in indirect costs and selling, general and administrative costs.

Adjusted EBITDA increased to $46 million from a loss of $3 million, or by $49 million, for the year ended December 31, 2021, compared to 2020. The increase in the Space Infrastructure segment was primarily related to a $92 million increase driven by increased volumes on commercial programs which resulted in increased margins and fewer negative EAC impacts during the year as compared to the year ended December 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 $19 million reduction in revenue related to the above-mentioned SXM-7 satellite impacts and a $19 million increase in indirect costs and selling, general and administrative costs which was primarily driven by an $11 million increase in research and development expenses.

  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 December 31, 2021 increased to $27 million from $18 million, or by $9 million, for the three months ended December 31, 2021, compared to the same period in 2020. The increase was primarily driven by a $6 million increase in labor related expenses driven by an increase in employee compensation and fringe benefits.

Corporate and other expenses for the year ended December 31, 2021 increased to $89 million from $61 million, or by $28 million, compared to 2020. The increase was primarily driven by a $14 million increase in selling, general and administrative costs primarily due to an increase in labor related expenses driven by an increase in employee compensation and fringe benefits. There was also an increase in stock-based compensation expense of $5 million primarily due to a higher fair market value of equity awards granted. The increase was also driven by a $3 million foreign exchange loss for the year ended December 31, 2021, compared to a $5 million foreign exchange gain for the year ended December 31, 2020.

  Intersegment eliminations  

Intersegment eliminations are related to projects between our segments, including WorldView Legion. Intersegment eliminations increased to $8 million from $6 million, or by $2 million, for the three months ended December 31, 2021 compared to the same period in 2020, primarily related to an increase in intersegment satellite construction activity.

Intersegment eliminations decreased to $25 million from $27 million, or by $2 million, for the year ended December 31, 2021 compared to 2020, primarily related to a decrease in intersegment satellite construction activity.

  NON-GAAP FINANCIAL MEASURES  

In addition to results reported in accordance with U.S. GAAP, we use certain non-GAAP financial measures as supplemental indicators of our financial and operating performance. These non-GAAP financial measures include EBITDA, Adjusted   EBITDA , Adjusted EBITDA margin and Free Cash Flow.  

We define EBITDA as earnings before interest, taxes, depreciation and amortization, Adjusted EBITDA as EBITDA adjusted for certain items affecting the comparability of our ongoing operating results as specified in the calculation and Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. Certain items affecting the comparability of our ongoing operating results between periods include restructuring, impairments, insurance recoveries, (gain) loss on sale of assets, CEO severance, (gain) loss on orbital receivables allowance and transaction and integration related expense. Transaction and integration related expense includes costs associated with de-leveraging activities, acquisitions and dispositions and the integration of acquisitions. Management believes that exclusion of these items assists in providing a more complete understanding of our underlying results and trends, and management uses these measures along with the corresponding U.S. GAAP financial measures to manage our business, evaluate our performance compared to prior periods and the marketplace, and to establish operational goals. Adjusted EBITDA is a measure being used as a key element of our incentive compensation plan. The Syndicated Credit Facility also uses Adjusted EBITDA in the determination of our debt leverage covenant ratio. The definition of Adjusted EBITDA in the Syndicated Credit Facility includes a more comprehensive set of adjustments that may result in a different calculation therein. We define Free Cash Flow as cash provided by operating activities continuing operations adjusted for the purchase of property, plant and equipment and development or purchase of software.

We believe that these non-GAAP measures, when read in conjunction with our U.S. GAAP results, provide useful information to investors by facilitating the comparability of our ongoing operating results over the periods presented, the ability to identify trends in our underlying business, and the comparison of our operating results against analyst financial models and operating results of other public companies.

EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow are not recognized terms under U.S. GAAP and may not be defined similarly by other companies. EBITDA, Adjusted EBITDA and Free Cash Flow should not be considered alternatives to net (loss) income as indications of financial performance or as alternate to cash flows from operations as measures of liquidity. EBITDA and Adjusted EBITDA have limitations as an analytical tool and should not be considered in isolation or as a substitute for our results reported under U.S. GAAP. The table below reconciles our net income to EBITDA and Total Adjusted EBITDA and presents Total Adjusted EBITDA margin for the three months ended December 31, 2021 and 2020 and the years ended December 31, 2021, 2020 and 2019.

  Cautionary Note Regarding Forward-Looking Statements  

Certain statements and other information included in this release constitute "forward-looking information" or "forward-looking statements" (collectively, "forward-looking statements") under applicable securities laws. Statements including words such as "may", "will", "could", "should", "would", "plan", "potential", "intend", "anticipate", "believe", "estimate" or "expect" and other words, terms and phrases of similar meaning are often intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties, as well as other statements referring to or including forward-looking information included in this presentation.

Forward-looking statements are subject to various risks and uncertainties which could cause actual results to differ materially from the anticipated results or expectations expressed in this presentation. As a result, although management of the Company believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. The risks that could cause actual results to differ materially from current expectations include, but are not limited to, the risk factors and other disclosures about the Company and its business included in   the Company's continuous disclosure materials filed from time to time with U.S. securities and Canadian regulatory authorities, which are available online under the Company's EDGAR profile at www.sec.gov , under the Company's SEDAR profile at www.sedar.com or on the Company's website at www.maxar.com .

The forward-looking statements contained in this release are expressly qualified in their entirety by the foregoing cautionary statements. All such forward-looking statements are based upon data available as of the date of this presentation or other specified date and speak only as of such date. The Company disclaims any intention or obligation to update or revise any forward-looking statements in this presentation as a result of new information or future events, except as may be required under applicable securities legislation.

Unless stated otherwise or the context otherwise requires, references to the terms "Company," "Maxar," "we," "us," and "our" to refer collectively to Maxar Technologies Inc. and its consolidated subsidiaries.

  Investor/Analyst Conference Call  

Maxar President and Chief Executive Officer, Dan Jablonsky, and Executive Vice President and Chief Financial Officer, Biggs Porter, will host an earnings conference call Tuesday, February 22, 2022, reviewing the fourth quarter and year end results, followed by a question and answer session. The call is scheduled to begin promptly at 3:00 p.m. MT (5:00 p.m. ET).

Investors and participants must register for the call in advance by visiting: https://conferencingportals.com/event/poKRyurD

After registering, participants will receive dial-in information, a passcode, and registrant ID. At the time of the call, participants must dial in using the numbers in the confirmation email and enter their passcode and ID.

The Conference Call will be Webcast live and then archived at: https://investor.maxar.com/events-and-presentations/default.aspx  

Telephone replay of the conference call will also be available from Tuesday, February 22, 2022 at 6:00 p.m. MT (8:00 p.m. ET) to Tuesday, March 8, 2022 at 9:59 p.m. MT (11:59 p.m. ET) at the following numbers:

Toll Free North America: 1-800-770-2030
International Dial-In: 1-647-362-9199
Passcode: 81317#

  About Maxar  

Maxar Technologies (NYSE:MAXR) (TSX:MAXR) is a provider of comprehensive space solutions and secure, precise, geospatial intelligence. We help government and commercial customers monitor, understand and navigate our changing planet; deliver global broadband communications; and explore and advance the use of space. Our approach combines decades of deep mission understanding and a proven commercial and defense foundation to deploy solutions and deliver insights with speed, scale and cost-effectiveness. Maxar's 4,400 team members in over 20 global locations are inspired to harness the potential of space to help our customers create a better world. Maxar's stock trades on the New York Stock Exchange and Toronto Stock Exchange under the symbol "MAXR". For more information, visit www.maxar.com .

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Jason Gursky | VP Investor Relations and Corporate Treasurer | 1-303-684-2207 | jason.gursky@maxar.com  
Turner Brinton | Media Relations | 1-303-684-4545 | turner.brinton@maxar.com