Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - DIGITALGLOBE, INC. | d250627d8k.htm |
Exhibit 99.1
DigitalGlobe Reports Third Quarter Results
Company Re-affirms Full-Year 2011 Outlook
Longmont, Colorado, November 1, 2011 – DigitalGlobe, Inc. (NYSE: DGI), a leading global provider of commercial high-resolution earth imagery products and services, today reported financial results for the third quarter ended Sept. 30, 2011.
Third quarter 2011 revenue was $81.3 million, up 1% compared with the same period last year. Included in third quarter revenue is $6.4 million of amortized revenue related to NextView, the predecessor to the EnhancedView contract with the National Geospatial-Intelligence Agency (NGA). Not included in third quarter revenue is $23.2 million of deferrals related to the service level agreement (SLA) portion of EnhancedView.
The company reported a third quarter 2011 net income of $1.1 million, or $0.02 per diluted share, compared with net income of $800 thousand, or $0.02 earnings per diluted share, for the same period last year.
Third quarter 2011 Adjusted EBITDA, a non-GAAP financial measure, was $52.0 million, an increase of 16.0% compared with third quarter 2010 Adjusted EBITDA of $44.9 million. Adjusted EBITDA includes current-quarter deferrals related to EnhancedView and, for both periods, excludes approximately $6.4 million of amortized revenue related to NextView.
Cash Flow from Operations was $156.7 million for the nine months ended September 30, 2011, up 40.2% compared with Cash Flow from Operations of $111.8 million for the nine months ended September 30, 2010.
On Oct. 12, the company completed a refinancing of its debt, entering into a senior secured credit agreement that provides for a $500 million term loan facility and a $100 million revolving credit facility. The company used these funds to repay the principal and premium related to its 10.5% Senior Secured Notes, 100% of which were redeemed and which have been retired. The company will use the remaining cash proceeds for general corporate purposes, which may include acquisitions and share repurchases. The impact of this refinancing will be included in fourth quarter 2011 financial results, and will include one-time charges related to the premium paid for early extinguishment of the debt as well as deferred financing fees.
“Our team did an outstanding job in the quarter positioning the company for future profitable growth,” said Jeffrey R. Tarr, President and Chief Executive Officer. “We won important new contracts, including a new value-added services agreement with the NGA and a large multi-year contract with a location-based services provider. We grew our 12-month backlog at a double-digit rate both year over year and sequentially, and increased our total backlog to $3.14 billion. We are well positioned for a strong 2012.”
Third Quarter Business Highlights
The company was awarded a one-year contract by the NGA under the Enhanced GEOINT Delivery (EGD) program. Through the program, DigitalGlobe will provide NGA with continuous delivery of daily images via the web within 24 hours of collect for specific, high-priority geographic locations.
The company completed the first phase of its remote ground terminal expansion, adding four new RGTs in the quarter, increasing capacity and refresh by 51% and accelerating delivery by up to 34%.
DigitalGlobe and Ball Aerospace & Technologies Corp. successfully completed the Critical Design Review (CDR) for DigitalGlobe’s next generation remote-sensing satellite, WorldView-3.
The company launched a new online geospatial intelligence service with NTT GEOSPACE in Japan, whose GEOSPACE-CDS service features on-demand access to imagery sourced from DigitalGlobe. The company also sold a subscription to its FirstLookTM global event monitoring service to the United Nations Institute for Training and Research (UNITAR).
2011 Outlook
The company’s full year 2011 outlook remains unchanged, with the exception that expected diluted earnings per share now exclude the impact of one-time expenses related to the company’s recent debt refinancing.
Revenue in a range of $330 million to $355 million. This excludes any deferrals related to EnhancedView and includes amortized revenue related to NextView.
Diluted earnings per share of $0.10 to $0.20, assuming an average diluted share count of approximately 47 million, and excluding the impact of one-time expenses related to the company’s recent debt refinancing.
| Page 1 of 8 |
|
Adjusted EBITDA of $223 million to $243 million.
Capital expenditures for 2011 of approximately $275 million.
Important factors, including those discussed in the company’s filings with the Securities and Exchange Commission, could cause actual results to differ from the company’s expectations and those differences may be material.
Conference Call Information
DigitalGlobe’s management will host a conference call today at 5 p.m. EDT to discuss third quarter 2011 results.
The conference call dial-in numbers are as follows:
U.S./Canada dial-in: (866) 921-3936
International dial-in: (706) 679-9623
Passcode: 14792883
A replay of the call will be available through December 1st, 2011 at the following numbers:
U.S./Canada dial-in: (855) 859-2056
International dial-in: (404) 537-3406
Passcode: 14792883
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 are available on the company’s website at www.digitalglobe.com.
About DigitalGlobe
DigitalGlobe is a leading global provider of commercial high-resolution earth imagery products and services. Sourced from our own advanced satellite constellation, our imagery solutions support a wide variety of uses within defense and intelligence, civil agencies, mapping and analysis, environmental monitoring, oil and gas exploration, infrastructure management, Internet portals and navigation technology. With our collection sources and comprehensive ImageLibrary (containing more than one billion square kilometers of earth imagery and imagery products) we offer a range of on- and off-line products and services designed to enable customers to easily access and integrate our imagery into their business operations and applications. For more information, visit www.digitalglobe.com.
DigitalGlobe is a registered trademark of DigitalGlobe.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained herein and 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 our 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” or “continue” 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; the loss or impairment of our satellites; delays in the construction and launch of WorldView-3; delays in implementation of planned ground system and infrastructure enhancements; loss or damage to the content contained in our ImageLibrary; interruption or failure of our ground system and other infrastructure, decrease in demand for our imagery products and services; increased competition that may reduce our market share or cause us to lower our prices; our failure to obtain or maintain required regulatory approvals and licenses; changes in U.S. 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.
| Page 2 of 8 |
|
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-GAAP Financial Measures
Adjusted EBITDA is defined as net income or loss adjusted for depreciation and amortization, net interest income or expense, income tax expense (benefit), loss on disposal of assets, restructuring, loss on early extinguishment of debt, loss on derivative instruments, non-cash stock compensation expense, EnhancedView deferred revenue and EnhancedView outstanding invoices not yet paid by NGA, and amortization of pre-FOC payments related to NextView. EnhancedView outstanding invoices not yet paid by NGA represent an irrevocable right to be paid in cash by NGA.
Adjusted EBITDA is not a recognized term under generally accepted accounting principles (GAAP), in the United States and may not be defined similarly by other companies. Adjusted EBITDA should not be considered an alternative to net income, as an indication of financial performance, or as an alternative to cash flow from operations as a measure of liquidity. There are limitations to using non-GAAP financial measures, including the difficulty associated with comparing companies in different industries that use similar performance measures whose calculations may differ from ours.
Adjusted EBITDA is a key measure used in internal operating reports by management and the board of directors to evaluate the performance of our operations and is also used by analysts, investment banks and lenders for the same purpose. Adjusted EBITDA is also a key driver of the company bonus incentive plan. Adjusted EBITDA is a measure of our current period operating performance, excluding charges for capital, depreciation related to prior period capital expenditures and items which are generally non-core in nature, and including EnhancedView deferred revenue and EnhancedView outstanding invoices not yet paid by NGA, and excluding the amortization of pre-FOC payments related to our NextView contract.
We believe that the elimination of material non-cash, non-operating items enables a more consistent measurement of period to period performance of our operations. In addition, we believe that elimination of these items in combination with the addition of the non-refundable EnhancedView deferred revenue and EnhancedView outstanding invoices not yet paid by NGA, as well as amortization of pre-FOC payments related to NextView facilitate comparison of our operating performance to companies in our industry. We believe this Adjusted EBITDA measure is 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 build the related ground infrastructure may vary greatly from one satellite to another, depending on the satellite’s size, type and capabilities. For example, our QuickBird satellite cost significantly less than our WorldView-1 and WorldView-2 satellites. Current depreciation expense is not indicative of the revenue generating potential of the satellite.
Adjusted EBITDA excludes interest income, interest expense, income taxes and loss on early extinguishment of debt because these items are associated with our capitalization and tax structures. Adjusted 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 excludes non-cash stock compensation expense, because these items are non-cash expenses and loss on derivative instrument and disposal of assets because these are not related to our primary operations.
We use Adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of our overall assessment of our performance and we do not place undue reliance on this measure as our only measure of operating performance. Adjusted EBITDA should not be considered a substitute for other measures of financial performance reported in accordance with GAAP.
FINANCIAL TABLES TO FOLLOW
| Page 3 of 8 |
|
DigitalGlobe, Inc.
Unaudited Condensed Consolidated Statements of Operations
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| (in millions, except per share data) | 2010 | 2011 | 2010 | 2011 | ||||||||||||
| Revenue |
$ | 80.5 | $ | 81.3 | $ | 238.6 | $ | 240.1 | ||||||||
| Costs and expenses: |
||||||||||||||||
| Cost of revenue, excluding depreciation and amortization |
11.0 | 17.6 | 31.2 | 43.8 | ||||||||||||
| Selling, general and administrative |
28.2 | 30.7 | 81.2 | 94.5 | ||||||||||||
| Depreciation and amortization |
29.2 | 29.1 | 89.3 | 87.5 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from operations |
12.1 | 3.9 | 36.9 | 14.3 | ||||||||||||
| Other income (expense), net |
– | – | – | 0.1 | ||||||||||||
| Interest income (expense), net |
(10.0 | ) | (4.6 | ) | (30.6 | ) | (17.8 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) before income taxes |
2.1 | (0.7 | ) | 6.3 | (3.4 | ) | ||||||||||
| Income tax (expense) benefit |
(1.3 | ) | 1.8 | (3.5 | ) | 3.4 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
$ | 0.8 | $ | 1.1 | $ | 2.8 | $ | – | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Earnings (loss) per share: |
||||||||||||||||
| Basic earnings (loss) per share |
$ | 0.02 | $ | 0.02 | $ | 0.06 | $ | 0.00 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted earnings (loss) per share |
$ | 0.02 | $ | 0.02 | $ | 0.06 | $ | 0.00 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
43.6 | 46.3 | 44.2 | 46.2 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted |
46.3 | 46.7 | 46.3 | 46.8 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Page 4 of 8 |
|
DigitalGlobe, Inc.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(unaudited)
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| (in millions) |
2010 | 2011 | 2010 | 2011 | ||||||||||||
| Net income (loss) |
$ | 0.8 | $ | 1.1 | $ | 2.8 | $ | – | ||||||||
| Depreciation and amortization |
29.2 | 29.1 | 89.3 | 87.5 | ||||||||||||
| Interest (income) expense, net |
10.0 | 4.6 | 30.6 | 17.8 | ||||||||||||
| Income tax expense (benefit) |
1.3 | (1.8 | ) | 3.5 | (3.4 | ) | ||||||||||
| Non-cash stock compensation expense |
1.7 | 2.2 | 4.6 | 11.2 | ||||||||||||
| EnhancedView deferred revenue |
8.3 | 16.5 | 8.3 | 66.2 | ||||||||||||
| EnhancedView outstanding invoices not yet paid by NGA |
– | 6.7 | – | 6.7 | ||||||||||||
| Amortization of pre-FOC payment related to NextView |
(6.4 | ) | (6.4 | ) | (19.1 | ) | (19.1 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA |
$ | 44.9 | $ | 52.0 | $ | 120.0 | $ | 166.9 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA is not a recognized term under generally accepted accounting principles (GAAP), in the United States and may not be defined similarly by other companies. Adjusted EBITDA should not be considered an alternative to net income, as an indication of financial performance, or as an alternative to cash flow from operations as a measure of liquidity. There are limitations to using non-GAAP financial measures, including the difficulty associated with comparing companies that use similar performance measures whose calculations may differ from ours.
Third quarter EnhancedView deferred revenue includes $8.3 million invoiced in the second quarter of 2011 for which cash was received in the third quarter of 2011.
| Page 5 of 8 |
|
DigitalGlobe, Inc.
Unaudited Condensed Consolidated Balance Sheets
| (in millions, except share and per share data) | December 31, 2010 |
September 30, 2011 |
||||||
| ASSETS |
||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 179.3 | $ | 148.7 | ||||
| Restricted cash |
6.7 | 5.6 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $1.0 and $1.8, respectively |
45.3 | 43.1 | ||||||
| Prepaid and current assets |
19.4 | 19.8 | ||||||
| Deferred taxes |
62.7 | 50.6 | ||||||
|
|
|
|
|
|||||
| Total current assets |
313.4 | 267.8 | ||||||
| Property and equipment, net of accumulated depreciation of $478.2 and $565.6, respectively |
879.1 | 993.1 | ||||||
| Goodwill |
8.7 | 8.7 | ||||||
| Intangibles, net of accumulated amortization of $7.7 and $7.4, respectively |
0.3 | 0.1 | ||||||
| Aerial image library, net of accumulated amortization of $21.1 and $23.7, respectively |
1.9 | 8.9 | ||||||
| Long-term restricted cash |
13.6 | 10.5 | ||||||
| Long-term deferred contract costs |
42.1 | 45.8 | ||||||
| Other assets, net |
7.2 | 5.8 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 1,266.3 | $ | 1,340.7 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| CURRENT LIABILITIES: |
||||||||
| Accounts payable |
$ | 15.0 | $ | 8.5 | ||||
| Accrued interest |
6.2 | 15.5 | ||||||
| Other accrued liabilities |
26.3 | 44.4 | ||||||
| Current portion of deferred revenue |
38.9 | 34.6 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
86.4 | 103.0 | ||||||
| Long-term accrued liability |
6.0 | 1.4 | ||||||
| Non-current portion of deferred revenue |
246.2 | 309.6 | ||||||
| Non-current portion of deferred lease incentive |
4.6 | 3.6 | ||||||
| Long-term debt, net of discount |
346.1 | 348.0 | ||||||
| Long-term deferred tax liability |
76.7 | 61.3 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
$ | 766.0 | $ | 826.9 | ||||
|
|
|
|
|
|||||
| COMMITMENTS AND CONTINGENCIES |
||||||||
| STOCKHOLDERS’ EQUITY |
||||||||
| Preferred stock, $0.001 par value; 24,000,000 shares authorized; no shares issued and outstanding at December 31, 2010 and September 30, 2011 |
— | — | ||||||
| Common stock; $0.001 par value; 250,000,000 shares authorized; 46,073,691 shares issued and outstanding at December 31, 2010 and 46,314,205 shares issued and outstanding at September 30, 2011 |
0.2 | 0.2 | ||||||
| Treasury stock, at cost; 44,039 shares at December 31, 2010 and 65,820 shares at September 30, 2011 |
(0.7 | ) | (1.2 | ) | ||||
| Additional paid-in capital |
512.7 | 526.7 | ||||||
| Accumulated deficit |
(11.9 | ) | (11.9 | ) | ||||
|
|
|
|
|
|||||
| Total stockholders’ equity |
500.3 | 513.8 | ||||||
|
|
|
|
|
|||||
| Total liabilities and stockholders’ equity |
$ | 1,266.3 | $ | 1,340.7 | ||||
|
|
|
|
|
|||||
| Page 6 of 8 |
|
DigitalGlobe, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
| (in millions) |
For the Nine Months Ended September 30, |
|||||||
| 2010 | 2011 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net income (loss) |
$ | 2.8 | $ | — | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation and amortization expense |
89.3 | 87.5 | ||||||
| EnhancedView deferred revenue |
— | 74.5 | ||||||
| Recognition of NextView pre-FOC payments |
(19.1 | ) | (19.1 | ) | ||||
| Amortization of aerial image library, deferred contract costs and lease incentive |
5.5 | 8.7 | ||||||
| Non-cash stock compensation expense |
4.6 | 11.2 | ||||||
| Amortization of debt issuance costs and debt discount |
3.4 | 2.9 | ||||||
| Deferred income taxes |
2.3 | (3.4 | ) | |||||
| Changes in working capital, net of investing activities: |
||||||||
| Accounts receivable, net |
2.9 | 2.2 | ||||||
| Prepaids and other assets |
(1.0 | ) | (8.2 | ) | ||||
| Accounts payable |
0.3 | 4.1 | ||||||
| Accrued liabilities |
20.7 | 0.6 | ||||||
| Deferred contract costs |
(14.2 | ) | (8.0 | ) | ||||
| Deferred revenue |
14.3 | 3.7 | ||||||
|
|
|
|
|
|||||
| Net cash flows provided by operating activities |
111.8 | 156.7 | ||||||
|
|
|
|
|
|||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Construction in progress additions |
(25.6 | ) | (188.1 | ) | ||||
| Other property, equipment and intangible additions |
(7.5 | ) | (4.7 | ) | ||||
| Change in restricted cash |
2.8 | 4.2 | ||||||
|
|
|
|
|
|||||
| Net cash flows used in investing activities |
(30.3 | ) | (188.6 | ) | ||||
|
|
|
|
|
|||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Costs associated with initial public offering |
(0.3 | ) | — | |||||
| Proceeds from exercise of stock options |
9.6 | 1.8 | ||||||
| Cash paid for treasury stock |
— | (0.5 | ) | |||||
|
|
|
|
|
|||||
| Net cash flows provided by financing activities |
9.3 | 1.3 | ||||||
|
|
|
|
|
|||||
| Net increase (decrease) in cash and cash equivalents |
90.8 | (30.6 | ) | |||||
| Cash and cash equivalents, beginning of period |
97.0 | 179.3 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents, end of period |
$ | 187.8 | 148.7 | |||||
|
|
|
|
|
|||||
| SUPPLEMENTAL CASH FLOW INFORMATION: |
||||||||
| Cash received (paid) for income taxes |
$ | 1.2 | $ | (1.2 | ) | |||
| Cash paid for interest, net of capitalized amounts $6.8 and $6.0, respectively |
(11.8 | ) | (12.6 | ) | ||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: |
||||||||
| Changes to non-cash construction in progress and property, equipment and intangibles accruals, including interest |
(20.6 | ) | (13.1 | ) | ||||
###
| Page 7 of 8 |
|
| Contacts
Investor Contact:
David Banks (303) 684-4210 ir@digitalglobe.com |
Media Contact:
Robert Keosheyan (303) 684-4742 rkeoshey@digitalglobe.com |
##
| Page 8 of 8 |
|