DigitalGlobe Reports Third Quarter 2013 Results
Revenue up 54%
GeoEye Integration Ahead of Plan With 83% of Synergies
Achieved
LONGMONT, CO--(Marketwired - Oct 31, 2013) - DigitalGlobe, Inc.
(NYSE: DGI), a leading global provider of high-resolution earth
imagery solutions, today reported financial results for the quarter
ended September 30, 2013.
Third quarter 2013 revenue was $164.8 million, a 54% increase
compared with the same period last year. The company reported a net
loss for the third quarter of 2013 of $(1.8) million, and a net
loss available to common shareholders of $(2.8) million, including
$1.0 million of preferred stock dividends, or $(0.04) per diluted
share, compared with net income available to common stockholders of
$8.5 million or $0.18 per diluted share in the third quarter of
2012. Included in this quarter's result is $11.1 million of
restructuring and integration expenses related to the combination
with GeoEye.
Third quarter 2013 EBITDA was $54.5 million. Not including $11.1
million of restructuring and integration related to the combination
with GeoEye yields Adjusted EBITDA of $65.6 million, with an
associated margin of approximately 40%.
"We built significant momentum in the business during the third
quarter -- accelerating growth, expanding margins and generating
positive free cash flow," said Jeffrey R. Tarr, Chief Executive
Officer. "I'm proud of our team's outstanding execution, achieving
more than $100 million of synergy savings related to our
combination with GeoEye. We remain confident in our ability to
drive double-digit growth and to return to 50 percent EBITDA margin
after we complete our 18 month integration process in the second
half of 2014."
Third Quarter Business Highlights
- U. S. Government revenue grew 53% to $100.8 million compared
with third quarter 2012, including a 353% increase in value-added
services to $37.6 million.
- Diversified Commercial revenue grew 55% to $64 million in the
quarter compared with third quarter 2012.
- Next 12-month backlog was $515.8 million, up 41% year over
year, as the company continues to build improved revenue visibility
across its customer relationships.
- Among U. S. Government customers, the Company renewed and
expanded the Global Enhanced GEOINT Delivery (G-EGD) program with
the National Geospatial-Intelligence Agency (NGA).
- The company received multiple awards serving government
customers in Russia and Latin America to deliver environmental
monitoring and base mapping services.
- The company signed an agreement with a Non-Government
Organization (NGO) to monitor oil theft activity in an African
country and renewed a contract with the Satellite Sentinel Project
to monitor human rights atrocities in the Sudan.
2013 Outlook The company expects adjusted EBITDA of at least
$228 million and an adjusted EBITDA margin of at least 36%. The
company is targeting revenue at the bottom of its original range of
$635 million to $660 million. Capital expenditures for the year are
expected to be approximately $240 million.
"We are targeting $635 million in revenue, and have high
confidence in our ability to deliver upon our original EBITDA
margin guidance of 36% across a range of revenue scenarios," said
Yancey Spruill, Chief Financial Officer.
Conference Call Information DigitalGlobe's management will host
a conference call today, October 31, 2013 at 12 p.m. ET to discuss
its third quarter 2013 financial and operating results.
The conference call dial-in numbers are as follows: U.S./Canada
dial-in: (866) 863-0053 International dial-in: (706) 758-7563
Passcode: 84201237
A replay of the call will be available through November 29, 2013
at the following numbers: U.S./Canada dial-in: (855) 859-2056
International dial-in: (404) 537-3406 Passcode: 84201237
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 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
This document 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 and generally can
be identified by the use of 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; 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 the
anticipated benefits and synergies from the strategic combination
of the Company and GeoEye, Inc. cannot be fully realized or may
take longer to realize than expected; adjustments to the fair value
of certain of the Company's assets and liabilities, including
estimates made in connection with the strategic combination of the
Company and GeoEye, Inc.; the outcome of pending or threatened
litigation; the loss or impairment of our satellites; delays in the
construction and launch of any of 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 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 U.S. Securities and
Exchange Commission, including our Annual Report on Form 10-K for
the year ended December 31, 2012.
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 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. In
2013, 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. For example, our QuickBird
satellite, which we are currently depreciating, cost significantly
less than our WorldView-1 and WorldView-2 satellites. Current
depreciation expense is not indicative of the net revenue
generating potential of the satellite.
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 restructuring
costs, acquisition costs and integration costs as these are
non-core items. Restructuring costs are costs incurred to realize
efficiencies from the GeoEye acquisition, such as reducing excess
workforce, consolidating facilities and systems, and relocating
ground terminals. Acquisition costs are costs incurred to effect
the acquisition, such as advisory, legal, accounting, consulting
and other professional fees. Integration costs consist primarily of
professional fees incurred to assist us with system and process
improvements associated with integrating operations. Adjusted
EBITDA margin is calculated by divided Adjusted EBITDA by U.S. GAAP
net revenue.
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 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.
|
|
|
|
DigitalGlobe, Inc. |
|
Unaudited Condensed Consolidated Statements of
Operations |
|
|
|
|
|
|
|
For the three months ended September 30, |
|
(in millions, except per share data) |
|
2013 |
|
|
2012 |
|
Revenue |
|
$ |
164.8 |
|
|
$ |
107.2 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
Cost
of revenue, excluding depreciation and amortization |
|
|
46.7 |
|
|
|
21.5 |
|
|
Selling, general and administrative |
|
|
60.6 |
|
|
|
40.1 |
|
|
Depreciation and amortization |
|
|
59.4 |
|
|
|
28.9 |
|
|
Restructuring charges |
|
|
3.1 |
|
|
|
- |
|
(Loss) income from operations |
|
|
(5.0 |
) |
|
|
16.7 |
|
|
Loss
from early extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
Other
income (expense), net |
|
|
0.1 |
|
|
|
(0.7 |
) |
|
Interest expense, net |
|
|
(0.7 |
) |
|
|
(1.9 |
) |
(Loss) income before income taxes |
|
|
(5.6 |
) |
|
|
14.1 |
|
|
Income tax benefit (expense) |
|
|
3.8 |
|
|
|
(5.6 |
) |
Net (loss) income |
|
|
(1.8 |
) |
|
|
8.5 |
|
Preferred stock dividends |
|
|
(1.0 |
) |
|
|
-- |
|
Net (loss) income less preferred stock dividends |
|
|
(2.8 |
) |
|
|
8.5 |
|
Income allocated to participating securities |
|
|
-- |
|
|
|
-- |
|
Net (loss) income available to common stockholders |
|
$ |
(2.8 |
) |
|
$ |
8.5 |
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per share: |
|
|
|
|
|
|
|
|
|
Basic
(loss) earnings per share |
|
$ |
(0.04 |
) |
|
$ |
0.18 |
|
|
Diluted (loss) earnings per share |
|
$ |
(0.04 |
) |
|
$ |
0.18 |
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
74.5 |
|
|
|
46.2 |
|
|
Diluted |
|
|
74.5 |
|
|
|
46.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DigitalGlobe, Inc. |
Reconciliation Net Income (Loss) EBITDA and Adjusted
EBITDA |
|
|
|
|
|
For the three months ended September 30, |
(in millions) |
|
2013 |
|
|
2012 |
Net
(loss) income |
|
$ |
(1.8 |
) |
|
$ |
8.5 |
Depreciation and amortization |
|
|
59.4 |
|
|
|
28.9 |
Interest expense, net |
|
|
0.7 |
|
|
|
1.9 |
Income tax expense (benefit) |
|
|
(3.8 |
) |
|
|
5.6 |
EBITDA |
|
|
54.5 |
|
|
|
44.9 |
Loss
from early extinguishment of debt |
|
|
-- |
|
|
|
-- |
Restructuring charges (1) |
|
|
3.1 |
|
|
|
-- |
Acquisition costs (1) |
|
|
-- |
|
|
|
7.5 |
Integration costs (1) |
|
|
8.0 |
|
|
|
-- |
Adjusted EBITDA |
|
$ |
65.6 |
|
|
$ |
52.4 |
|
|
|
|
|
|
|
|
(1) |
|
Restructuring, acquisition and integration costs consist of charges
related to the combination with GeoEye. |
|
|
|
|
|
|
|
|
|
|
DigitalGlobe, Inc. |
|
Unaudited Condensed Consolidated Balance Sheets |
|
|
|
(in millions, except par value) |
|
September 30, 2013 |
|
|
December 31, 2012 |
|
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
256.0 |
|
|
$ |
246.2 |
|
Restricted cash |
|
|
16.6 |
|
|
|
3.8 |
|
Accounts receivable, net of allowance for doubtful
accounts of $3.2 and $2.9, respectively |
|
|
90.3 |
|
|
|
67.0 |
|
Prepaid and current assets |
|
|
27.6 |
|
|
|
18.6 |
|
Deferred taxes |
|
|
70.7 |
|
|
|
43.9 |
|
|
Total
current assets |
|
|
461.2 |
|
|
|
379.5 |
|
Property and equipment, net of accumulated depreciation
of $831.2 and $676.2, respectively |
|
|
2,162.2 |
|
|
|
1,115.2 |
|
Goodwill |
|
|
453.1 |
|
|
|
8.7 |
|
Intangible assets, net of accumulated amortization of
$6.1 and $0, respectively |
|
|
38.5 |
|
|
|
- |
|
Aerial image library, net of accumulated amortization
of $39.3 and $33.4, respectively |
|
|
11.0 |
|
|
|
16.4 |
|
Long-term restricted cash |
|
|
6.7 |
|
|
|
8.3 |
|
Long-term deferred contract costs |
|
|
46.8 |
|
|
|
37.3 |
|
Other assets |
|
|
41.0 |
|
|
|
12.1 |
|
|
Total
assets |
|
$ |
3,220.5 |
|
|
$ |
1,577.5 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
16.3 |
|
|
$ |
10.2 |
|
Current portion of long-term debt |
|
|
5.5 |
|
|
|
5.0 |
|
Other accrued liabilities |
|
|
74.3 |
|
|
|
56.3 |
|
Current portion of deferred revenue |
|
|
101.2 |
|
|
|
42.9 |
|
|
Total
current liabilities |
|
|
197.3 |
|
|
|
114.4 |
|
Deferred revenue |
|
|
375.9 |
|
|
|
386.8 |
|
Long-term debt, net of discount |
|
|
1,138.4 |
|
|
|
478.6 |
|
Long-term deferred tax liability, net |
|
|
142.4 |
|
|
|
55.6 |
|
Other liabilities |
|
|
2.3 |
|
|
|
2.7 |
|
|
Total
liabilities |
|
$ |
1,856.3 |
|
|
$ |
1,038.1 |
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY: |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value; 24.0 shares
authorized; no shares issued and outstanding at September 30, 2013
and December 31, 2012 |
|
|
- |
|
|
|
- |
|
Series A convertible preferred stock, $0.001 par value,
0.08 shares authorized; 0.08 issued and outstanding at September
30, 2013; and no shares authorized, issued and outstanding at
December 31, 2012 |
|
|
- |
|
|
|
- |
|
Common stock; $0.001 par value; 250.0 shares
authorized; 75.4 shares issued and 75.2 shares outstanding at
September 30, 2013; and 47.2 shares issued and 47.1 outstanding at
December 31, 2012 |
|
|
0.2 |
|
|
|
0.2 |
|
Treasury stock, at cost; 0.2 shares at September 30,
2013 and 0.1 shares at December 31, 2012 |
|
|
(3.2 |
) |
|
|
(2.0 |
) |
Additional paid-in capital |
|
|
1,453.2 |
|
|
|
543.8 |
|
Accumulated deficit |
|
|
(86.0 |
) |
|
|
(2.6 |
) |
|
Total
stockholders' equity |
|
|
1,364.2 |
|
|
|
539.4 |
|
|
Total
liabilities and stockholders' equity |
|
$ |
3,220.5 |
|
|
$ |
1,577.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DigitalGlobe, Inc. |
|
Unaudited Condensed Consolidated Statements of Cash
Flows |
|
|
|
|
|
For the nine months ended September 30, |
|
(in millions) |
|
2013 |
|
|
2012 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(83.4 |
) |
|
$ |
21.9 |
|
Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
|
165.7 |
|
|
|
86.5 |
|
|
Amortization of aerial image library, deferred contract costs and
lease incentive |
|
|
12.6 |
|
|
|
15.1 |
|
|
Non-cash stock compensation expense |
|
|
19.9 |
|
|
|
7.2 |
|
|
Amortization of debt issuance costs and accretion of debt
discount |
|
|
3.6 |
|
|
|
2.8 |
|
|
Deferred income taxes |
|
|
(38.1 |
) |
|
|
15.0 |
|
|
Write-off of debt issuance costs and debt discounts |
|
|
12.8 |
|
|
|
- |
|
|
Other |
|
|
(0.3 |
) |
|
|
1.1 |
|
Changes in working capital, net of assets acquired and
liabilities assumed in business combinations: |
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
15.8 |
|
|
|
(9.1 |
) |
|
Other
current and non-current assets |
|
|
3.1 |
|
|
|
(9.5 |
) |
|
Accounts payable |
|
|
(3.4 |
) |
|
|
(3.1 |
) |
|
Accrued liabilities |
|
|
(37.4 |
) |
|
|
(0.5 |
) |
|
Deferred revenue |
|
|
35.3 |
|
|
|
63.2 |
|
|
Deferred contract costs |
|
|
(16.5 |
) |
|
|
(0.5 |
) |
|
Payment of 2011 Senior Secured debt discount |
|
|
(13.8 |
) |
|
|
- |
|
Net cash flows provided by operating activities |
|
|
75.9 |
|
|
|
190.1 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Construction in progress additions |
|
|
(198.9 |
) |
|
|
(152.8 |
) |
|
Acquisition of businesses, net of cash acquired |
|
|
(524.0 |
) |
|
|
- |
|
|
Other
property and equipment additions |
|
|
(12.7 |
) |
|
|
(7.8 |
) |
|
Investment in joint venture |
|
|
- |
|
|
|
(0.3 |
) |
|
Decrease in restricted cash |
|
|
4.7 |
|
|
|
6.9 |
|
Net cash flows used in investing activities |
|
|
(730.9 |
) |
|
|
(154.0 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Proceeds from issuance of debt |
|
|
1,150.0 |
|
|
|
- |
|
|
Repayment of debt |
|
|
(483.9 |
) |
|
|
(3.8 |
) |
|
Preferred stock dividend payment |
|
|
(2.0 |
) |
|
|
- |
|
|
Proceeds from exercise of stock options |
|
|
36.9 |
|
|
|
2.5 |
|
|
Tax
benefit from the exercise of stock options |
|
|
- |
|
|
|
0.5 |
|
|
Payment of debt issuance costs |
|
|
(36.2 |
) |
|
|
- |
|
Net cash flows provided by (used in) financing
activities |
|
|
664.8 |
|
|
|
(0.8 |
) |
Net increase in cash and cash equivalents |
|
|
9.8 |
|
|
|
35.3 |
|
Cash and cash equivalents, beginning of period |
|
|
246.2 |
|
|
|
198.5 |
|
Cash and cash equivalents, end of period |
|
$ |
256.0 |
|
|
$ |
233.8 |
|
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid for interest, net of capitalized amounts of
$32.6 and $17.3, respectively |
|
$ |
- |
|
|
$ |
4.8 |
|
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Changes to non-cash property, equipment and
construction in progress accruals, including interest |
|
|
(5.0 |
) |
|
|
10.1 |
|
Issuance of shares of common and convertible preferred
stock for acquisition of business |
|
|
837.8 |
|
|
|
- |
|
Stock-based compensation awards issued in acquisition
of business, net of income taxes |
|
|
13.4 |
|
|
|
- |
|
Non-cash preferred stock dividend accrual |
|
|
(1.0 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contacts Investor Contact: David Banks (303) 684-4210
ir@digitalglobe.com Media Contact: Nancy Coleman (303) 684-1674
nancy.coleman@digitalglobe.com
Digitalglobe, (delisted) (NYSE:DGI)
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