Attached files
| file | filename |
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| 8-K - 8-K - DIGITALGLOBE, INC. | a15-10344_18k.htm |
Exhibit 99.1
DigitalGlobe Reports First Quarter 2015 Results
Revenue Up 8%
$31 Million of Common Share Repurchases in the Quarter Bring Total to $106 Million
Longmont, Colorado, April 30, 2015 — DigitalGlobe, Inc. (NYSE: DGI), a leading global provider of commercial high-resolution earth observation and advanced geospatial solutions, today reported financial results for the quarter ended March 31, 2015.
First Quarter Financial Summary:
· Grew revenue 8.2% to $169.4 million.
· Net loss less preferred stock dividends was $(0.08) per diluted share.
· Grew U.S. Government revenue 17.6% to $114.8 million.
· Diversified Commercial revenue decreased (7.3)% to $54.6 million, with approximately 2 percentage points of impact attributable to continued challenges in Russia.
· Adjusted EBITDA was $73.1 million, yielding a margin of 43.2%.
· Cash flow from operations was $56.9 million, up 42.6% .
· Free cash flow was $25.6 million, yielding a free cash flow margin of 15.1%.
Recent Operational Highlights:
· Gary W. Ferrera began his role as the company’s Executive Vice President and Chief Financial Officer on March 2, 2015.
· The company repurchased 1,009,700 shares of its common stock for $31.1 million at an average price of $30.79.
“First quarter revenue was in line with our expectations, with strong growth in our U.S. Government business offset by an expected decline in our Diversified Commercial business,” said Jeffrey R. Tarr, CEO of DigitalGlobe. “We expect our Diversified Commercial growth to improve in the second half as we monetize WorldView-3 and generate results from a number of new products and initiatives. We were also pleased with the strength of our free cash flow, which was up nearly $48 million year-over-year, enabling us to repurchase $31 million of stock in the quarter.”
Performance against key metrics:
|
|
|
For the three months ended |
| ||||
|
|
|
March 31, |
| ||||
|
($ in millions) |
|
2015 |
|
2014 |
| ||
|
Revenue |
|
$ |
169.4 |
|
$ |
156.5 |
|
|
Net (loss) income |
|
$ |
(4.9 |
) |
$ |
0.4 |
|
|
Adjusted EBITDA |
|
$ |
73.1 |
|
$ |
67.9 |
|
|
Adjusted EBITDA margin |
|
43.2 |
% |
43.4 |
% | ||
|
Net cash flows provided by operating activities |
|
$ |
56.9 |
|
$ |
39.9 |
|
|
Free cash flow |
|
$ |
25.6 |
|
$ |
(22.1 |
) |
|
Free cash flow margin |
|
15.1 |
% |
(14.1 |
)% | ||
Reiterated 2015 Outlook:
· Revenue in a range of $725 million to $750 million.
· Adjusted EBITDA in a range of $355 million to $375 million.
· Capital expenditures of approximately $110 million.
Conference Call Information:
DigitalGlobe’s management will host a conference call today, April 30, 2015 at 5 p.m. ET to discuss its 2015 first quarter financial and operating results.
The conference call dial-in numbers are as follows:
U.S./Canada dial-in: (855) 212-2368
International dial-in: (315) 625-6886
Passcode: 30256553
A replay of the call will be available through May 30, 2015 at the following numbers:
U.S./Canada dial-in: (855) 859-2056
International dial-in: (404) 537-3406
Passcode: 30256553
DigitalGlobe will also sponsor a live and archived webcast of the conference call on the Investor Relations portion of its website. Click here to directly access the live webcast.
Supplemental earnings materials, including conference call slides and management scripts, are available on the Investor Relations section of the company’s website at www.digitalglobe.com.
About DigitalGlobe
DigitalGlobe is a leading provider of commercial high-resolution earth observation and advanced geospatial solutions that help decision makers better understand our changing planet in order to save lives, resources and time. Sourced from the world’s leading constellation, our imagery solutions deliver unmatched coverage and capacity to meet our customers’ most demanding mission requirements. Each day customers in defense and intelligence, public safety, civil agencies, map making and analysis, environmental monitoring, oil and gas exploration, infrastructure management, navigation technology, and providers of location-based services depend on DigitalGlobe data, information, technology and expertise to gain actionable insight.
DigitalGlobe is a registered trademark of DigitalGlobe.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained herein and in other of our reports, filings, and public announcements may contain or incorporate forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements relate to future events or future financial performance. We generally identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or “looks forward to” or the negative of these terms or other similar words, although not all forward-looking statements contain these words.
Any forward-looking statements are based upon our historical performance and on our current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a
representation by us that the future plans, estimates or expectations will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions. A number of important factors could cause our actual results or performance to differ materially from those indicated by such forward looking statements, including: the loss, reduction or change in terms of any of our primary contracts or decisions by customers not to exercise renewal options; the availability of government funding for our products and services both domestically and internationally; changes in government and customer priorities and requirements (including cost-cutting initiatives, the potential deferral of awards, terminations or reduction of expenditures to respond to the priorities of Congress and the administration, or budgetary cuts resulting from Congressional committee recommendations or automatic sequestration under the Budget Control Act of 2011); the risk that U.S. government sanctions against specified companies and individuals in Russia may limit our ability to conduct business with potential or existing customers; the outcome of pending or threatened litigation; the loss or impairment of any of our satellites; delays in the construction and launch of any of our satellites or our ability to achieve and maintain full operational capacity of all our satellites; delays in implementation of planned ground system and infrastructure enhancements; loss or damage to the content contained in our imagery archives; interruption or failure of our ground system and other infrastructure; decrease in demand for our imagery products and services; increased competition, including possibly from companies with substantial financial and other resources and services, that may reduce our market share or cause us to lower our prices; our inability to fully integrate acquisitions or to achieve planned synergies; changes in satellite imaging technology; our failure to obtain or maintain required regulatory approvals and licenses; changes in U.S. or foreign law or regulation that may limit our ability to distribute our imagery products and services; the costs associated with being a public company; and other important factors, all as described more fully in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2014.
We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on any of these forward-looking statements.
Non-U.S. GAAP Financial Measures
EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA are not recognized terms under U.S. GAAP and may not be defined similarly by other companies. EBITDA and Adjusted EBITDA should not be considered alternatives to net income as indications of financial performance or as alternatives to cash flow from operations as measures of liquidity. There are limitations to using non-U.S. GAAP financial measures, including the difficulty associated with comparing companies in different industries that use similar performance measures whose calculations may differ from ours.
EBITDA and Adjusted EBITDA are key measures used in our internal operating reports by management and our Board of Directors to evaluate the performance of our operations and are also used by analysts, investment banks and lenders for the same purpose. EBITDA, excluding certain acquisition costs, is a measure being used as a key element of the company-wide bonus incentive plan.
We believe that the presentation of EBITDA and Adjusted EBITDA enables a more consistent measurement of period to period performance of our operations and facilitates comparison of our operating performance to companies in our industry. We believe that EBITDA and Adjusted EBITDA measures are particularly important in a capital intensive industry such as ours, in which our current period depreciation is not a good indication of our current or future period capital expenditures. The cost to construct and launch a satellite and to build the related ground infrastructure may vary greatly from one
satellite to another, depending on the satellite’s size, type and capabilities. Current depreciation expense is not indicative of the revenue generating potential of the satellites.
EBITDA excludes interest income, interest expense and income taxes because these items are associated with our capitalization and tax structures. EBITDA also excludes depreciation and amortization expense because these non-cash expenses reflect the impact of prior capital expenditure decisions which are not indicative of future capital expenditure requirements.
Adjusted EBITDA further adjusts EBITDA to exclude the loss on abandonment of asset because this is not related to our primary operations. Additionally, it excludes restructuring costs and integration costs as these are non-core items. Restructuring and integration costs incurred in 2014 consist of charges related to the acquisition of GeoEye. Restructuring charges incurred in 2015 relate to our restructuring plan announced in February 2015. Integration costs consist primarily of professional fees incurred to assist us with system and process improvements associated with integrating operations.
We use EBITDA and Adjusted EBITDA in conjunction with traditional U.S. GAAP operating performance measures as part of our overall assessment of our performance and we do not place undue reliance on these non-U.S. GAAP measures as our only measures of operating performance. EBITDA and Adjusted EBITDA should not be considered as substitutes for other measures of financial performance reported in accordance with U.S. GAAP.
Free Cash Flow. Free cash flow is defined as net cash provided by operating activities less net cash flows used in investing activities excluding acquisition of businesses, net of cash acquired. Free cash flow is not a recognized term under U.S. GAAP and may not be defined similarly by other companies. Free cash flow should not be considered an alternative to “operating income (loss),” “net income (loss),” “net cash flows provided by (used in) operating activities” or any other measure determined in accordance with U.S. GAAP. Since free cash flow includes investments in operating assets, we believe this non-GAAP liquidity measure is useful in addition to the most comparable U.S. GAAP measure — “net cash flows provided by (used in) operating activities” because it provides information about the amount of cash generated after acquisitions of businesses that is then available to repay debt obligations, make investments, fund acquisitions, and for certain other activities. There are limitations to using non-U.S. GAAP financial measures, including the difficulty associated with comparing companies in different industries that use similar performance measures whose calculations may differ from ours.
FINANCIAL TABLES TO FOLLOW
DigitalGlobe, Inc.
Consolidated Statements of Operations
|
|
|
For the three months ended |
| ||||
|
|
|
March 31, |
| ||||
|
(in millions, except per share data) |
|
2015 |
|
2014 |
| ||
|
Revenue |
|
$ |
169.4 |
|
$ |
156.5 |
|
|
Costs and expenses: |
|
|
|
|
| ||
|
Cost of revenue, excluding depreciation and amortization |
|
39.3 |
|
39.5 |
| ||
|
Selling, general and administrative |
|
57.0 |
|
53.0 |
| ||
|
Depreciation and amortization |
|
67.3 |
|
57.6 |
| ||
|
Restructuring charges |
|
2.2 |
|
1.1 |
| ||
|
Loss on abandonment of asset |
|
— |
|
1.2 |
| ||
|
Income from operations |
|
3.6 |
|
4.1 |
| ||
|
Other income, net |
|
— |
|
0.1 |
| ||
|
Interest expense, net |
|
(12.7 |
) |
— |
| ||
|
(Loss) income before income taxes |
|
(9.1 |
) |
4.2 |
| ||
|
Income tax benefit (expense) |
|
4.2 |
|
(3.8 |
) | ||
|
Net (loss) income |
|
(4.9 |
) |
0.4 |
| ||
|
Preferred stock dividends |
|
(1.0 |
) |
(1.0 |
) | ||
|
Net loss less preferred stock dividends |
|
(5.9 |
) |
(0.6 |
) | ||
|
|
|
|
|
|
| ||
|
Loss per share: |
|
|
|
|
| ||
|
Basic loss per share |
|
$ |
(0.08 |
) |
$ |
(0.01 |
) |
|
Diluted loss per share |
|
$ |
(0.08 |
) |
$ |
(0.01 |
) |
|
Weighted average common shares outstanding: |
|
|
|
|
| ||
|
Basic |
|
72.4 |
|
75.0 |
| ||
|
Diluted |
|
72.4 |
|
75.0 |
| ||
DigitalGlobe, Inc.
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
|
|
|
For the three months ended |
| ||||
|
|
|
March 31, |
| ||||
|
(in millions) |
|
2015 |
|
2014 |
| ||
|
Net (loss) income |
|
$ |
(4.9 |
) |
$ |
0.4 |
|
|
Depreciation and amortization |
|
67.3 |
|
57.6 |
| ||
|
Interest expense, net |
|
12.7 |
|
— |
| ||
|
Income tax (benefit) expense |
|
(4.2 |
) |
3.8 |
| ||
|
EBITDA |
|
70.9 |
|
61.8 |
| ||
|
Restructuring charges (1) |
|
2.2 |
|
1.1 |
| ||
|
Integration costs (1) |
|
— |
|
3.8 |
| ||
|
Loss on abandonment of asset |
|
— |
|
1.2 |
| ||
|
Adjusted EBITDA |
|
$ |
73.1 |
|
$ |
67.9 |
|
(1) Restructuring and integration costs incurred in 2014 consist of charges related to the acquisition of GeoEye. Restructuring charges incurred in 2015 relate to our restructuring plan announced in February 2015.
EBITDA margin is calculated by dividing EBITDA by U.S. GAAP revenue. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by U.S. GAAP revenue. We have not provided a reconciliation of our Adjusted EBITDA outlook to the comparable forward-looking U.S. GAAP financial measure because we are unable to provide a forward-looking estimate of the reconciling items between such non-U.S. GAAP forward-looking measure and the comparable forward-looking U.S. GAAP measure. Certain factors that are materially significant to our ability to estimate these items are out of our control and/or cannot be reasonably predicted. Accordingly, a reconciliation to the comparable forward-looking U.S. GAAP measure is not available without unreasonable effort.
DigitalGlobe, Inc.
Reconciliation of Net Cash Flows Provided by Operating Activities to Free Cash Flow
|
|
|
For the three months ended |
| ||||
|
|
|
March 31, |
| ||||
|
(in millions) |
|
2015 |
|
2014 |
| ||
|
Net cash flows provided by operating activities |
|
$ |
56.9 |
|
$ |
39.9 |
|
|
Net cash flows used in investing activities |
|
(31.3 |
) |
(97.7 |
) | ||
|
Acquisition of businesses, net of cash acquired |
|
— |
|
35.7 |
| ||
|
Free cash flow |
|
$ |
25.6 |
|
$ |
(22.1 |
) |
Free Cash Flow margin is calculated by dividing Free Cash Flow by U.S. GAAP revenue.
DigitalGlobe, Inc.
Consolidated Balance Sheets
|
|
|
March 31, |
|
December 31, |
| ||
|
(in millions, except par value) |
|
2015 |
|
2014 |
| ||
|
ASSETS |
|
|
|
|
| ||
|
CURRENT ASSETS: |
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
114.9 |
|
$ |
117.8 |
|
|
Restricted cash |
|
2.3 |
|
2.3 |
| ||
|
Accounts receivable, net of allowance for doubtful accounts of $1.5 and $0.5, respectively |
|
130.0 |
|
133.6 |
| ||
|
Short-term deferred contract costs |
|
8.5 |
|
9.1 |
| ||
|
Prepaid and current assets |
|
18.3 |
|
22.6 |
| ||
|
Deferred taxes |
|
24.1 |
|
24.1 |
| ||
|
Total current assets |
|
298.1 |
|
309.5 |
| ||
|
Property and equipment, net of accumulated depreciation of $985.8 and $1,095.5, respectively |
|
2,138.3 |
|
2,174.7 |
| ||
|
Goodwill |
|
484.5 |
|
484.5 |
| ||
|
Intangible assets, net of accumulated amortization of $22.1 and $19.5, respectively |
|
40.4 |
|
43.0 |
| ||
|
Long-term restricted cash |
|
4.0 |
|
4.0 |
| ||
|
Long-term deferred contract costs |
|
45.1 |
|
41.8 |
| ||
|
Other assets |
|
35.1 |
|
37.7 |
| ||
|
Total assets |
|
$ |
3,045.5 |
|
$ |
3,095.2 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||
|
CURRENT LIABILITIES: |
|
|
|
|
| ||
|
Accounts payable |
|
$ |
12.7 |
|
$ |
4.4 |
|
|
Current portion of long-term debt |
|
5.5 |
|
5.5 |
| ||
|
Other accrued liabilities |
|
51.2 |
|
62.2 |
| ||
|
Current portion of deferred revenue |
|
85.0 |
|
91.0 |
| ||
|
Total current liabilities |
|
154.4 |
|
163.1 |
| ||
|
Deferred revenue |
|
321.3 |
|
335.1 |
| ||
|
Long-term debt, net of discount |
|
1,130.9 |
|
1,132.1 |
| ||
|
Long-term deferred tax liability, net |
|
96.0 |
|
101.9 |
| ||
|
Other liabilities |
|
19.6 |
|
9.5 |
| ||
|
Total liabilities |
|
$ |
1,722.2 |
|
$ |
1,741.7 |
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
| ||
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||
|
DigitalGlobe, Inc. stockholders’ equity: |
|
|
|
|
| ||
|
Series A convertible preferred stock, $0.001 par value; 0.08 shares authorized; 0.08 shares issued and outstanding at March 31, 2015 and December 31, 2014 |
|
— |
|
— |
| ||
|
Common stock; $0.001 par value; 250.0 shares authorized; 76.5 shares issued and 72.5 shares outstanding at March 31, 2015 and 76.1 shares issued and 73.2 shares outstanding at December 31, 2014 |
|
0.2 |
|
0.2 |
| ||
|
Treasury stock, at cost; 4.0 shares at March 31, 2015 and 2.9 shares at December 31, 2014 |
|
(111.7 |
) |
(80.1 |
) | ||
|
Additional paid-in capital |
|
1,490.3 |
|
1,484.0 |
| ||
|
Accumulated deficit |
|
(57.3 |
) |
(52.4 |
) | ||
|
Total DigitalGlobe, Inc. stockholders’ equity |
|
1,321.5 |
|
1,351.7 |
| ||
|
Noncontrolling interest |
|
1.8 |
|
1.8 |
| ||
|
Total stockholders’ equity |
|
1,323.3 |
|
1,353.5 |
| ||
|
Total liabilities and stockholders’ equity |
|
$ |
3,045.5 |
|
$ |
3,095.2 |
|
DigitalGlobe, Inc.
Consolidated Statements of Cash Flows
|
|
|
For the three months ended |
| ||||
|
|
|
March 31, |
| ||||
|
(in millions) |
|
2015 |
|
2014 |
| ||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
| ||
|
Net (loss) income |
|
$ |
(4.9 |
) |
$ |
0.4 |
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
| ||
|
Depreciation and amortization expense |
|
67.3 |
|
57.6 |
| ||
|
Amortization of aerial image library, deferred contract costs and lease incentive |
|
4.5 |
|
5.0 |
| ||
|
Non-cash stock-based compensation expense, net of capitalized stock-based compensation expense |
|
4.6 |
|
3.9 |
| ||
|
Amortization of debt issuance costs and accretion of debt discount, net of capitalized interest |
|
1.7 |
|
— |
| ||
|
Deferred income taxes |
|
(5.9 |
) |
3.8 |
| ||
|
Excess tax benefit from share-based compensation |
|
(0.9 |
) |
— |
| ||
|
Other |
|
0.4 |
|
1.2 |
| ||
|
Changes in working capital, net of assets acquired and liabilities assumed in business combinations: |
|
|
|
|
| ||
|
Accounts receivable, net |
|
3.6 |
|
0.1 |
| ||
|
Deferred contract costs |
|
(4.8 |
) |
(0.4 |
) | ||
|
Other current and non-current assets |
|
4.8 |
|
6.7 |
| ||
|
Accounts payable |
|
5.8 |
|
(12.1 |
) | ||
|
Accrued liabilities |
|
0.5 |
|
(12.7 |
) | ||
|
Deferred revenue |
|
(19.8 |
) |
(13.6 |
) | ||
|
Net cash flows provided by operating activities |
|
56.9 |
|
39.9 |
| ||
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
| ||
|
Construction in progress additions |
|
(30.1 |
) |
(61.8 |
) | ||
|
Property and equipment additions |
|
(1.2 |
) |
(2.2 |
) | ||
|
Acquisition of businesses, net of cash acquired |
|
— |
|
(35.7 |
) | ||
|
Decrease in restricted cash |
|
— |
|
2.0 |
| ||
|
Net cash flows used in investing activities |
|
(31.3 |
) |
(97.7 |
) | ||
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
| ||
|
Repayment of debt |
|
(1.4 |
) |
(1.4 |
) | ||
|
Principal payments on capital lease obligations |
|
(0.2 |
) |
(0.2 |
) | ||
|
Repurchase of common stock |
|
(31.1 |
) |
— |
| ||
|
Proceeds from exercise of stock options |
|
4.3 |
|
1.8 |
| ||
|
Preferred stock dividend payment |
|
(1.0 |
) |
(1.0 |
) | ||
|
Excess tax benefit from share-based compensation |
|
0.9 |
|
— |
| ||
|
Net cash flows used in financing activities |
|
(28.5 |
) |
(0.8 |
) | ||
|
Net decrease in cash and cash equivalents |
|
(2.9 |
) |
(58.6 |
) | ||
|
Cash and cash equivalents, beginning of period |
|
117.8 |
|
229.1 |
| ||
|
Cash and cash equivalents, end of period |
|
$ |
114.9 |
|
$ |
170.5 |
|
|
|
|
|
|
|
| ||
|
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
| ||
|
Cash paid for interest, net of capitalized amounts of $11.5 million and $21.1 million, respectively |
|
9.6 |
|
— |
| ||
|
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
| ||
|
Changes to non-cash property, equipment and construction in progress accruals, including interest |
|
3.2 |
|
12.0 |
| ||
|
Non-cash preferred stock dividend accrual |
|
(1.0 |
) |
(1.0 |
) | ||
# # #
Contacts
|
Investor Contact: |
Media Contact: |
|
|
|
|
David Banks |
Nancy Coleman |
|
(303) 684-4210 |
(303) 684-1674 |
|
ir@digitalglobe.com |
nancy.coleman@digitalglobe.com |