Highlights from the quarter include:
- Consolidated revenues of $508.2 million
- Net loss under IFRS of $432.5 million including $383.6 million in impairment losses and inventory obsolescence
- Net loss under IFRS of $7.31 per share; net loss excluding impairment losses of $0.83 per share
- Adjusted EBITDA of $146.3 million and adjusted EBITDA margin of 28.8 percent
- Adjusted earnings of $44.6 million and adjusted earnings per share of $0.75
- IFRS Operating Cash Flow of $119.2 million
- Adjusted Operating Cash Flow of $91.9 million; Adjusted Free Cash Flow of $29.2 million
"We made progress this quarter in executing on our four strategic priorities that focus on driving sustained growth in our Imagery and Services segments, returning our Space Systems segment to growth, achieving merger synergies, and improving cash generation with a priority to pay down debt balances and reduce leverage," stated Howard L. Lance, President & Chief Executive Officer. "In Imagery, we successfully transitioned the EnhancedView contract to the National Reconnaissance Office, in Services we won our first two task orders on the recently awarded Janus Geography IDIQ contract vehicle, and in Space Systems we won several awards related to work with NASA and the US Department of Defense," he added. "We are continuing to evaluate strategic alternatives for the GEO Comsat business and expect to make a final decision by the end of 2018," he continued. "Excluding the impact of the large GEO market decline, the rest of Maxar is delivering solid revenue growth. Combined, the new awards and developments in the quarter better position us to execute against our long-term strategy."
"The Company generated improved adjusted operating cash flow this quarter, which now stands at $160.7 million year-to-date vs. $31.7 million generated at the same point in 2017," stated Biggs Porter, Chief Financial Officer. "This allowed the Company to generate $29.2 million in adjusted free cash flow this quarter and to hold debt balances essentially flat from the second quarter of 2018," he added. "We recognized impairment losses of $345.9 million and an inventory obsolescence charge of $37.7 million related to the GEO Comsat business this quarter. This non-cash charge reflects the decline in the business and our decision to evaluate strategic alternatives for GEO Comsat."
Consolidated revenues for the third quarter of 2018 were $508.2 million compared to $337.4 million for the same period of last year. The increase was primarily due to the inclusion of DigitalGlobe's imagery and services businesses as a result of the acquisition of DigitalGlobe. Excluding intercompany eliminations, the DigitalGlobe businesses contributed $230.7 million of revenue during the three months ended September 30, 2018. Excluding the effects of intersegment eliminations, the Space Systems segment contributed revenues of $262.5 million (three months ended September 30, 2017 - $297.8 million), the Imagery segment contributed revenues of $209.2 million (three months ended September 30, 2017 - $11.8 million), and the Services segment contributed revenues of $61.8 million (three months ended September 30, 2017 - $29.0 million), partially offset by intersegment eliminations of $25.3 million (three months ended September 30, 2017 - $1.2 million). Intersegment revenue, which was primarily attributable to the Company's WorldView Legion satellite imaging constellation within our Space Systems segment, is eliminated in consolidation.
For the third quarter of 2018, adjusted EBITDA was $146.3 million and adjusted EBITDA as a percentage of consolidated revenues ("adjusted EBITDA margin percentage") was 28.8%. This is compared to adjusted EBITDA of $68.7 million and adjusted EBITDA margin percentage of 20.4% for the third quarter of 2017. These increases are primarily due to the inclusion of the financial results of DigitalGlobe's imagery business, partially offset by a decrease in the adjusted EBITDA from the Space Systems segment.
Adjusted earnings, or net earnings excluding the impact of specified items affecting comparability, were $44.6 million ($0.75 per share) for the third quarter of 2018 compared to $36.5 million ($1.00 per share) for the same period of 2017. The increase of adjusted earnings for the three month period is primarily due to the inclusion of DigitalGlobe's imagery business, partially offset by higher depreciation, amortization, and interest expense due to the acquisition of DigitalGlobe, and lower adjusted EBIDTA from Space Systems. The decrease in adjusted earnings per share of $(0.25) for the same period is due to the increase in shares outstanding, primarily from shares issued as part of the purchase consideration of DigitalGlobe.
The Company had total funded order backlog of $2.6 billion as at September 30, 2018 compared to $3.3 billion as at December 31, 2017. Book-to-Bill year-to-date is 0.75x after removing the $105.0 million quarterly drawdown of the 10-year Enhanced View contract with the US government in the Imagery segment. Bookings in 2018 have been negatively impacted by the market outlook for the GEO Comsat business inside the Company's Space Systems segment.
The Company has declared a quarterly dividend of C$0.37 per common share payable on December 31, 2018 to shareholders of record at the close of business on December 14, 2018.
In addition to results reported in accordance with IFRS, the Company uses certain non-IFRS financial measures as supplemental indicators of its financial and operating performance. These non-IFRS financial measures include adjusted earnings, adjusted earnings per share 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.