Friday, March 01, 2019

Maxar Technologies Misses Q4 Revenue Estimates; Will Retain SSL Subsidiary & Drop Dividend to $.01 US per Share

          By Chuck Black

Shareholders of Westminster CO based Maxar Technologies will be waiting patiently over the next few days to see how the market reacts to Maxar's latest quarterly earning report.

The complete slide deck used for the February 28th, 2019 Maxar Q4 2018 Earnings call is available online here. A transcript of the call was published in the March 1st, 2019 Seeking Alpha post, "Maxar Technologies Inc (MAXR) CEO Dan Jablonsky on Q4 2018 Results - Earnings Call Transcript." Graphic c/o Maxar.

Initial signs are not good. As outlined in the February 28th, 2019 Maxar press release, "Maxar Technologies Reports 2018 Year End Results," the company has reported:
  • Consolidated revenues of $2,141Mln US ($2.813Mln CDN), which was a rough miss on Q4 revenue expectations. Revenues fell 9% due to shortfalls at Maxar's Palo Alta CA based SSL GEO satellite manufacturing facility, which was mitigated somewhat by gains in imagery revenue from the US government.
  • A net loss under US generally accepted accounting principles (GAAP) of $1,264Mln US ($1.661Mln CDN) including $1,096Mln US ($1.440Mln CDN) in impairment losses.
  • A net loss under US GAAP of $21.76 US ($28.59 CDN) per share excluding impairment losses of $2.90 per share.
  • An adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to sales ratio (EBITDA1) of $472Mln US ($620Mln CDN) with an adjusted EBITDA1 margin of 22%.
  • A quarterly dividend reduced from $0.02764 US to $0.01 US per share and an organizational restructuring.
Maxar, which seems to have been unable to sell SSL for any reasonable amount, has decided to continue its operations while "rightsizing the organization to better align its costs with revenue."

As outlined in the February 13th, 2019 Seeking Alpha post, "Maxar Technologies: Betting On Space," most analysts had felt that Maxar needed to cut the quarterly stock dividend plus sell SSL for a reasonable amount of money, perhaps around $500Mln US ($660Mln CDN), in order to turn around the company.

Since new Maxar President and CEO Daniel Jablonsky and recently appointed Executive VP and CFO Biggs Porter were able to only address one of those two issues, the company is still treading on dangerous ground.

Does the new "Maxar" arm use Canadarm technology? As noted previously in this blog, NASA administrator Jim Bridenstine is a big advocate of Maxar/MDA.  Photo's c/o @JimBridenstine.

On the upside, the organizational restructuring did take note of potential future revenue expected to come from Canada as a result of Prime Minister Justin Trudeau's Thursday announcement that Canada has made a formal commitment to the US led Lunar Gateway

As outlined in the February 28th, 2019 post, "Canada Becomes the First Nation to Formally Commit to the NASA Lunar Gateway Plan," much of the $2Bln CDN allocated to the program over the next 24 years will eventually filter down to Maxar's Brampton ON based MDA Space Systems subsidiary.

But not today.

Canadian's won't likely know the funding details of the new Federal program until after the 2019 Federal Budget is tabled on March 19th, 2019 and won't be able to take advantage of the potential new opportunity until then, or maybe later.
Chuck Black.

Chuck Black is the editor of the Commercial Space blog. 


  1. Chuck, it’s amazing to me that on the day after the government commits more than $2B to the Canadian space program, possibly the largest single commitment for space in our history, you lead your blog with a posting about Maxar’s quarterly call.

    It would seem to call into question your judgement on what is valuable news for your readers. Furthermore, the vendetta you have against MDA and our parent company is illogical.

    Yesterday’s announcement will broadly benefit many Canadian space companies as well as the aerospace and AI clusters across Canada, not simply MDA, and it will spur new entrants.

    And the LEAP program announced yesterday will be enormously beneficial to SMEs and academics with bright ideas, grit and advanced capabilities to develop and test technologies and applications on and around the Moon.

    This was a generational investment in Canada’s space program by the government, yet you choose to use the announcement to be critical of MDA and your competitor. The mind boggles.

    Leslie Swartman

    1. Thanks for your comments, Leslie.

      It's a shame we disagree. I believe that Maxar's fiscal performance is absolutely of interest to Canadians since its MDA subsidiary is the prime contractor for Canada's Canadarm program.

      Should Maxar ever go out of business (a reasonable possibility given its current debt load, dropping stock price, shrinking cash-flow and billion dollar financial loss in the last quarter) Canada's ability to follow-through with Prime Minister Justin Trudeau's Thursday commitment to build a "Canadarm3" for the US Lunar Gateway would surely be in jeopardy.

      Canada's first prime contractor for the Canadarm, Downsview ON based Spar Aerospace was broken up and sold back in the 1990's after running into fiscal trouble so it's not as if this scenario hasn't happened before.

      While I appreciate your current role as the Director of Public Affairs at Brampton ON based MDA, I also stand by the current coverage of both Thursday's announcement and of the Maxar Q4 conference call held later that same day.

      And both stories were included in the e-mail this blog sent out to subscribers on Friday morning because both were important and related to each other.

      With that said and done, everyone contributing to this blog is more than happy to correct factual errors in our coverage and provide opportunities for you to get your voice out.

      I look forward to your future contributions.

      Chuck Black - Editor


Support our Patreon Page