August 06,
2019
Maxar
Technologies announced financial results
for the quarter ended June 30, 2019. All
dollar amounts in this press release are
expressed in U.S. dollars.
Key points
from the quarter include:
Consolidated
revenues of $490 million
Net income of
$2.45 per share
Adjusted
EBITDA1 of $129 million and Adjusted
EBITDA1 margin of 26 percent
1 |
This
is a non-GAAP financial measure.
Refer to section “Non-GAAP
Financial Measures” in this
earnings release |
“We made
solid progress this quarter on our
near-term priorities to position Maxar
for sustained top and bottom-line
growth. We continued to track options to
reduce debt and leverage levels,
re-engineer the Space Solutions
business, position our Imagery,
Services, and MDA businesses for
long-term growth, and create a leaner,
more agile organization with a reduced
cost structure,” stated Dan Jablonsky,
President and Chief Executive Officer.
Jablonsky
continued, “This quarter, we garnered
some important wins, including NASA’s
Power Propulsion Element for the Artemis
program, we signed a study contract with
National Reconnaissance Office to assess
Maxar’s current and future capabilities
and added an additional country to the
installed base for the Company’s Rapid
Access Program. Our Services business
generated a greater than one
book-to-bill again this quarter, and MDA
started work on the Canadian Surface
Combatant program and signed an award
with the Canadian government for
flight-ready repeaters that will be
launched on the US Air Force’s GPS III
satellites. Finally, we continued to
advance our organizational
re-engineering to strengthen our
financial position and drive long-term
value for our shareholders and
customers.”
“Second
quarter results were largely consistent
with expectations,” stated Biggs Porter,
Chief Financial Officer. “Cash flows and
earnings benefited from the recovery of
insurance proceeds related to the loss
of the World-View 4 while Adjusted
EBITDA experienced quarter over quarter
growth given recent restructuring
efforts and improved profitability.”
Total
revenues decreased to $490 million from
$579 million, or by $89 million, for the
three months ended June 30, 2019,
compared to the same period of 2018. The
decrease in revenues was primarily
driven by a $73 million decrease in the
Space Systems segment and an $11 million
decrease in the Imagery segment. These
decreases were partially offset by an $8
million increase in revenues in the
Services segment.
For the three
months ended June 30, 2019, net income
of $146 million compared to net loss of
$40 million in the comparative period of
2018. The increase is primarily driven
by the receipt of satellite insurance
proceeds in the second quarter of 2019.
For the
second quarter of 2019, Adjusted EBITDA
was $129 million and Adjusted EBITDA as
a percentage of consolidated revenues
(“Adjusted EBITDA margin percentage”)
was 26.3%. This is compared to Adjusted
EBITDA of $133 million and Adjusted
EBITDA margin percentage of 22.9% for
the second quarter of 2018. The decline
was driven largely by lower Adjusted
EBITDA from the Imagery segment and
higher corporate and other unallocated
expenses, partially offset by an
increase in the Space Systems segment.
The Company
had total order backlog of $2.2 billion
as of June 30, 2019 compared to $2.4
billion as at December 31, 2018. Backlog
decreased primarily due to declines in
backlog in our Imagery segment partially
offset by an increase in our Space
Systems segment and Services segment
backlog as a result of new awards during
the quarter. Imagery backlog declined
primarily due to the recognition of
EnhancedView revenue during the quarter
and the loss of our WorldView-4
satellite. As of June 30, 2019 and
December 31, 2018 unfunded contract
options totaled $1.2 billion,
respectively.
Financial
Highlights
In addition
to results reported in accordance with
U.S. GAAP, the Company uses certain
non-GAAP financial measures as
supplemental indicators of its financial
and operating performance. These
non-GAAP financial measures include
EBITDA and Adjusted EBITDA. The Company
believes these supplementary financial
measures reflect the Company’s ongoing
business in a manner that allows for
meaningful period-to-period comparisons
and analysis of trends in its business.
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Six
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June
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June
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2019 |
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2018 |
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2019 |
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2018 |
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($
millions, except per share
amounts) |
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Revenues |
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$ |
490 |
$ |
579 |
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$ |
994 |
$ |
1,136 |
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Net
income (loss) |
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146 |
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(40 |
) |
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87 |
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(25 |
) |
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Adjusted EBITDA1 |
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129 |
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133 |
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246 |
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284 |
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Net
income (loss) per share, diluted |
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$ |
2.45 |
$ |
(0.70 |
) |
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$ |
1.46 |
$ |
(0.44 |
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Weighted average number of
common shares outstanding
(millions): |
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Basic |
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59.6 |
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57.2 |
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59.6 |
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56.8 |
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Diluted |
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59.6 |
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57.2 |
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59.6 |
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56.8 |
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1 |
This
is a non-GAAP financial measure.
Refer to section “Non-GAAP
Financial Measures” in this
earnings release. |
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Revenues by
segment are as follows:
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30, |
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June
30, |
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2019 |
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2018 |
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2019 |
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2018 |
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($
millions) |
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Revenues |
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Space
Systems |
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$ |
257 |
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$ |
330 |
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$ |
531 |
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$ |
623 |
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Imagery |
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201 |
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212 |
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401 |
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423 |
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Services |
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74 |
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66 |
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142 |
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136 |
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Intersegment eliminations |
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(42 |
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(29 |
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(80 |
) |
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(46 |
) |
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Total
Revenues |
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$ |
490 |
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$ |
579 |
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$ |
994 |
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$ |
1,136 |
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The Company
analyzes financial performance by
segment, which combine related
activities within the Company.
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months ended |
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months ended |
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30, |
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June
30, |
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2019 |
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2018 |
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2019 |
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2018 |
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Adjusted EBITDA: |
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Space
Systems |
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$ |
28 |
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$ |
13 |
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$ |
38 |
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$ |
41 |
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Imagery |
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123 |
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133 |
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244 |
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267 |
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Services |
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6 |
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6 |
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13 |
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10 |
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Intersegment eliminations |
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(10 |
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(7 |
) |
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(13 |
) |
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(9 |
) |
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Corporate and other expenses |
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(18 |
) |
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(12 |
) |
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(36 |
) |
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(25 |
) |
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Adjusted EBITDA1 |
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$ |
129 |
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$ |
133 |
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$ |
246 |
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$ |
284 |
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1 |
This
is a non-GAAP financial measure.
Refer to section “Non-GAAP
Financial Measures” in this
earnings release. |
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Space Systems
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Three
months ended |
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Six
months ended |
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June
30, |
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June
30, |
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2019 |
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2018 |
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2019 |
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2018 |
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($
millions) |
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Revenues |
$ |
257 |
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$ |
330 |
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$ |
531 |
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$ |
623 |
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Adjusted EBITDA |
$ |
28 |
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$ |
13 |
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$ |
38 |
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$ |
41 |
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Adjusted EBITDA margin
percentage |
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10.9 |
% |
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3.9 |
% |
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7.2 |
% |
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6.6 |
% |
Revenues from
the Space Systems segment decreased to
$257 million from $330 million, or by
$73 million, for the three months ended
June 30, 2019, compared to the same
period of 2018. Revenues from Space
Solutions decreased primarily as a
result of the impact of reduced volume
in our geostationary satellite
manufacturing business (“GeoComm”)
business and an increase in estimated
costs to complete. An increase in
estimated costs to complete directly
impacts revenues, as revenues are
recognized over time under the
cost-to-cost method. Revenues from MDA
also decreased which was primarily
related to lower revenues on the RCM
program in Canada which launched in June
2019.
Adjusted
EBITDA increased to $28 million from $13
million, or by $15 million, for the
three months ended June 30, 2019,
compared to the same period of 2018. The
increase in the Space Systems segment is
primarily related to reduced research
and development spend of $18 million,
headcount reductions from restructuring
initiatives resulting in $5 million of
cost reductions, a recovery of a
previously reserved amount of $7
million, and no liquidating damages
incurred to date during 2019 compared to
$5 million of liquidated damages at
Space Solutions that occurred in 2018.
These increases were partially offset by
decreases from the effects of lower
revenues within the Space Systems
segment.
Imagery
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Three
months ended |
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Six
months ended |
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June
30, |
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June
30, |
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2019 |
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2018 |
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2019 |
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2018 |
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($
millions) |
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Revenues |
$ |
201 |
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$ |
212 |
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$ |
401 |
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$ |
423 |
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Adjusted EBITDA |
$ |
123 |
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$ |
133 |
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$ |
244 |
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$ |
267 |
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Adjusted EBITDA Margin |
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61.2 |
% |
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62.7 |
% |
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60.8 |
% |
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63.1 |
% |
Imagery
segment revenues decreased to $201
million from $212 million, or by $11
million, for the three months ended June
30, 2019, compared to the same period of
2018. The decrease was primarily driven
by a $14 million decrease due to the
loss of WorldView-4 revenue and a $4
million decrease due to a delay in the
signing of a contract with an existing
international customer. These decreases
were partially offset by $8 million in
revenue growth from the U.S. government.
Adjusted
EBITDA decreased to $123 million from
$133 million, or by $10 million, for the
three months ended June 30, 2019,
compared to the same period of 2018. The
decrease was primarily driven by the
impact of the loss of revenue generated
from the WorldView-4 satellite and the
impact due to the delayed contract
signing of an existing international
customer, both of which had higher
margins.
Services
|
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Three
months ended |
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Six
months ended |
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June
30, |
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June
30, |
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|
2019 |
|
|
2018 |
|
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2019 |
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|
2018 |
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||||||
($
millions) |
|
|
|
|
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|
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Revenues |
$ |
74 |
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$ |
66 |
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$ |
142 |
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$ |
136 |
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Adjusted EBITDA |
$ |
6 |
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$ |
6 |
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$ |
13 |
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$ |
10 |
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Adjusted EBITDA Margin |
|
8.1 |
% |
|
9.1 |
% |
|
9.2 |
% |
|
7.4 |
% |
Services
segment revenues increased to $74
million from $66 million, or by $8
million, for the three months ended June
30, 2019, compared to the same period of
2018. The increase was primarily driven
by growth from new contract awards and
expansion of programs with the U.S.
government.
Adjusted
EBITDA was $6 million for both the three
months ended June 30, 2019 and 2018. The
impact of the increase in revenues on
Adjusted EBITDA which was partially
offset by a change in an expense related
to a lease.
Corporate and
other expenses
Corporate and
other expenses include items such as
corporate office costs, regulatory
costs, executive and director
compensation, foreign exchange gains and
losses, retention costs, and fees for
legal and consulting services.
Corporate and
other expenses for the three months
ended June 30, 2019, were $18 million
compared to $12 million for the same
period of 2018. The increase of $6
million or 50% is primarily attributable
to a $6 million increase in retention
costs, a $2 million increase in selling,
general and administrative expenses
which were partially offset by $6
million in higher foreign exchange
gains.