Revenue up 3.5% to $175.4 MillionNet
income available to common stockholders of $7.3
MillionAdjusted EBITDA up 30.5% to $95.4 Million$61
Million of Share Repurchases Bring Total to $281 Million
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, 2016.
First Quarter Financial Summary:
- Grew Revenue 3.5% to $175.4
million.
- Net income available to common
stockholders was $7.3 million, or $0.11 per diluted share.
- Increased Adjusted EBITDA 30.5% to
$95.4 million.
- Expanded Adjusted EBITDA margin 1,124
bps to 54.4%.
- Increased Net cash flows from
operations 1.2% to $57.6 million.
- Free cash flow was $17.8 million.
Recent Highlights:
- Announced the signing of a new DAP
customer to a letter of intent for multi-year access to WorldView-4
and the current constellation.
- Announced an agreement to convert an
existing letter of intent into a definitive agreement with an
existing DAP customer.
- Repurchased 4,116,271 shares of its
common stock for $60.9 million at an average price of $14.80 per
share.
“We got off to a good start to the year with revenue growth and
margin expansion that exceeded our expectations, driven by strength
in our DAP business and continued realization of operating
efficiencies,” said Jeffrey R. Tarr, DigitalGlobe CEO. “We remain
confident in our full year outlook despite more challenging
comparisons in the quarters ahead. Longer term, we are encouraged
by the demand we are seeing for WorldView-3 and WorldView-4 from
our international defense and intelligence customers.”
Reiterated 2016 Revenue and Adjusted EBITDA Outlook:
- Revenue in a range of $670 million to
$700 million.
- Adjusted EBITDA in a range of $330
million to $355 million.
- Capital expenditures of approximately
$125 million.(1)
_________________________________(1) Excludes capitalized
interest
Conference Call Information:
DigitalGlobe’s management will host a conference call today,
April 27, 2016 at 5 p.m. ET to discuss its 2016 first quarter
financial and operating results.
The conference call dial-in numbers are as follows:U.S./Canada
dial-in: (855) 212-2368International dial-in: (315)
625-6886Passcode: 90683475
A replay of the call will be available through May 27, 2016 at
the following numbers:U.S./Canada dial-in: (855)
859-2056International dial-in: (404) 537-3406Passcode: 90683475
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 global provider of high-resolution
Earth-imagery products and services sourced from our own advanced
satellite constellation and third-party providers. Our imagery
solutions support a wide variety of users in defense and
intelligence, civil agencies, mapping and analysis, environmental
monitoring, oil and gas exploration, infrastructure management,
Internet portals, and navigation technology. Each day users depend
on us to better understand our changing planet in order to save
lives, resources and time.
DigitalGlobe is a registered trademark of DigitalGlobe.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained herein, including statements about
our 2016 outlook and in the management quotation, contain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. 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.
Forward-looking statements are based upon our current
expectations and assumptions of future events and are subject to
risks and uncertainties that could cause our actual results or
performance to differ materially from those indicated by such
forward looking statements. Some of the risks and uncertainties
that could cause actual results to differ include, but are not
limited to: the loss or reduction in scope 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; our ability to
meet our obligations under the EnhancedView contract; our reliance
on a limited number of vendors to provide certain key products or
services to us; breach of our system security measures or loss of
our secure facility clearance and accreditation; the loss or damage
to 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; loss or damage to the
content contained in our ImageLibrary; interruption or failure of
our ground systems 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; changes in
political or economic conditions, including fluctuations in the
value of foreign currencies, interest rates, energy and commodity
prices, trade laws and the effects of governmental initiatives to
manage economic conditions; our ability to recruit, hire or retain
key employees or a highly skilled and diverse workforce; failure to
obtain or maintain required regulatory approvals and licenses; and,
changes in U.S. or foreign law or regulation that may limit our
ability to distribute our imagery products and services. Additional
information concerning these and other risk factors can be found in
our filings with the Securities and Exchange Commission, including
Item 1A of our Annual Report on Form 10-K for the year ended
December 31, 2015.
We undertake no obligation to revise or update any
forward-looking statements, except as required by law. 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.
Adjusted EBITDA 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 EBITDA 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 restructuring
and other re-engineering costs, as these are non-core items.
Restructuring charges incurred in 2015 and 2016 relate to our
re-engineering and restructuring plans announced in 2015, pursuant
to which the Company has and expects to continue to reduce global
headcount and rationalize our real estate footprint. Other
re-engineering charges are associated with the restructuring plans
announced in 2015 and represent costs incurred to realize
efficiencies from reducing headcount, such as re-engineering
processes and enhancing system workflows, as well as costs related
to the decision to proactively decommission IKONOS. Additionally,
it excludes joint venture losses because this is a non-core item
that is not related to our primary 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-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 flows
provided by operating activities less net cash flows used in
investing activities (excluding acquisition of businesses, net of
cash acquired and excluding other strategic investments). 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 before 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.
Performance against key metrics:
For the three months ended March 31, ($ in
millions) 2016 2015 Revenue
$ 175.4 $ 169.4 Net income (loss) available to common
stockholders $ 7.3 $ (5.9 ) Adjusted EBITDA $ 95.4 $ 73.1 Adjusted
EBITDA margin 54.4 % 43.2 % Net cash flows provided by operating
activities $ 57.6 $ 56.9 Free cash flow $ 17.8 $ 25.6 Free cash
flow margin 10.1 % 15.1 %
DigitalGlobe, Inc.
Consolidated Statements of Operations
For the three months ended March 31, (in
millions, except per share data) 2016 2015
Revenue $ 175.4 $ 169.4 Costs and expenses: Cost of revenue,
excluding depreciation and amortization 32.2 39.3 Selling, general
and administrative 48.7 57.0 Depreciation and amortization 71.0
67.3 Restructuring charges 2.9 2.2
Income from operations 20.6 3.6 Interest expense, net (5.1 )
(12.7 ) Income (loss) before income taxes 15.5 (9.1 ) Income
tax (expense) benefit (6.0 ) 4.2 Equity in earnings from joint
venture, net of tax (0.9 ) — Net income (loss)
8.6 (4.9 ) Preferred stock dividends (1.0 ) (1.0 )
Net income (loss) less preferred stock dividends 7.6 (5.9 ) Income
allocated to participating securities (0.3 ) —
Net income (loss) available to common stockholders $ 7.3 $
(5.9 ) Earnings per share: Basic earnings (loss) per share $
0.11 $ (0.08 ) Diluted earnings (loss) per share $ 0.11
$ (0.08 ) Weighted average common shares outstanding: Basic
64.9 72.4 Diluted 65.1
72.4
DigitalGlobe, Inc.
Reconciliation of Net Income to EBITDA and
Adjusted EBITDA
For the three months ended March 31, (in
millions) 2016 2015 Net income $ 8.6 $ (4.9 )
Depreciation and amortization 71.0 67.3 Interest expense, net 5.1
12.7 Income tax expense (benefit) 6.0 (4.2 )
EBITDA 90.7 70.9 Restructuring charges 2.9 2.2 Other
re-engineering charges 0.9 — Joint venture losses, net 0.9
—
Adjusted EBITDA $ 95.4 $ 73.1
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) 2016 2015 Net cash flows provided by
operating activities $ 57.6 $ 56.9 Net cash flows used in investing
activities (47.3 ) (31.3 ) Investment in joint venture 7.5
— Free cash flow $ 17.8 $ 25.6
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) 2016 2015 ASSETS Current
Assets: Cash and cash equivalents $ 72.8 $ 126.1 Restricted cash
4.0 3.6
Accounts receivable, net of allowance for
doubtful accounts of $2.9 and $2.8,respectively
101.7 90.8 Deferred contract costs 12.2 13.5 Prepaid and other
current assets 18.8 17.4 Total current
assets 209.5 251.4
Property and equipment, net of accumulated
depreciation of $1,242.6 and $1,179.4,respectively
2,043.6 2,080.2 Goodwill 484.1 484.1 Intangible assets, net of
accumulated amortization of $31.9 and $29.6, respectively 30.6 32.9
Long-term restricted cash 5.1 4.3 Long-term deferred contract costs
48.3 47.1 Other assets 21.0 13.2
Total assets $ 2,842.2 $ 2,913.2
LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities:
Accounts payable $ 6.9 $ 3.9 Current portion of long-term debt 5.5
5.5 Deferred revenue 83.5 80.3 Other accrued liabilities
45.7 64.4 Total current liabilities 141.6
154.1 Long-term debt, net of discount and debt issuance costs
1,104.4 1,104.4 Deferred revenue, non-current 269.6 284.0 Deferred
income taxes, net, non-current 94.6 86.4 Other liabilities
36.7 36.2
Total liabilities $ 1,646.9
$ 1,665.1
COMMITMENTS AND CONTINGENCIES (Note
15) 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, 2016 and December 31, 2015
— —
Common stock; $0.001 par value; 250.0
shares authorized; 76.8 shares issuedand 63.5 shares outstanding at
March 31, 2016 and 76.6 shares issued and 67.4shares outstanding at
December 31, 2015
0.2 0.2
Treasury stock, at cost; 13.3 shares at
March 31, 2016 and 9.2 shares atDecember 31, 2015
(286.9 ) (225.8 ) Additional paid-in capital 1,502.5 1,502.8
Accumulated deficit (20.5 ) (29.1 )
Total
stockholders’ equity 1,195.3 1,248.1
Total liabilities and stockholders’ equity $ 2,842.2
$ 2,913.2
DigitalGlobe, Inc.
Consolidated Statements of Cash Flows
For the three months ended March 31, (in
millions) 2016 2015 CASH FLOWS FROM OPERATING
ACTIVITIES: Net income (loss) $ 8.6 $ (4.9 )
Adjustments to reconcile net income (loss)
to net cash provided by operatingactivities:
Depreciation and amortization expense 71.0 67.3
Stock-based compensation expense, net of
capitalized stock-based compensationexpense
4.0 4.6 Amortization of aerial image library, deferred contract
costs and lease incentive 4.2 4.5 Deferred income taxes 8.2 (5.9 )
Excess tax benefit from share-based compensation (0.1 ) (0.9 )
Amortization of debt issuance costs and accretion of debt discount,
and other 0.8 2.1 Changes in working capital: Accounts receivable,
net (10.9 ) 3.6 Deferred contract costs (4.4 ) (4.8 ) Other current
and non-current assets (3.5 ) 4.8 Accounts payable 0.7 5.8 Accrued
liabilities (9.8 ) 0.5 Deferred revenue (11.2 ) (19.8
) Net cash flows provided by operating activities 57.6
56.9
CASH FLOWS FROM INVESTING
ACTIVITIES: Construction in progress additions (38.6 ) (30.1 )
Property and equipment additions — (1.2 ) Increase in restricted
cash (1.2 ) — Investment in joint venture (7.5 ) —
Net cash flows used in investing activities (47.3 )
(31.3 )
CASH FLOWS FROM FINANCING ACTIVITIES: Payment
of debt and capital lease obligations (1.9 ) (1.6 ) Repurchase of
common stock (60.9 ) (31.1 ) Proceeds from exercise of stock
options 0.1 4.3 Preferred stock dividend payment (1.0 ) (1.0 )
Excess tax benefit from share-based compensation 0.1
0.9 Net cash flows used in financing activities
(63.6 ) (28.5 ) Net decrease in cash and cash
equivalents (53.3 ) (2.9 ) Cash and cash equivalents, beginning of
period 126.1 117.8 Cash and cash
equivalents, end of period $ 72.8 $ 114.9
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest, net of capitalized
amounts of $16.6 million and $11.5million, respectively
5.9 9.6
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Changes to non-cash property, equipment
and construction in progress accruals,including interest
6.8 3.2 Non-cash preferred stock dividend accrual (1.0 ) (1.0 )
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160427006426/en/
DigitalGlobeInvestor Relations Contact:Fred Graffam,
303-684-1692Senior Vice President,
Financeir@digitalglobe.comorMedia Contact:Edelman for
DigitalGlobeDigitalGlobe@edelman.com
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