It was a good news, bad news quarterly conference call for Maxar Technologies which includes Canadian subsidiary MDA.
The good news is that revenue was better than expected led primarily by the inclusion of DigitalGlobe’s Imagery and Services businesses as a result of the DigitalGlobe acquisition that closed last October.
However, while DigitalGlobe provided a boost to the bottom line, Maxar’s SSL unit which builds satellites, had lower revenues that offset the gains. SSL did score two important geostationary (GEO) communications satellites contract wins during the quarter. SSL will build AMOS-8 for Israel’s Spacecom and B-SAT-4b for Japan’s Broadcasting Satellite System Corporation.
According to Maxar the “impact of lower GEO satellite market orders in 2015-2017 has run its course through the satellite build cycle with revenue now at or near the bottom.” This would suggest there might be more wins in the future for SSL in the GEO Satcom area though Maxar President and CEO Howard L. Lance said he expects “a sustained lower level of GEO market orders.”
Reported consolidated revenues for the first quarter of 2018 were $557.7 million compared to $373.5 million for the same period of last year.
Maxar declared a quarterly dividend of CAD$0.37 per common share and the total funded order backlog is $3.3 billion as at March 31, 2018, which is flat compared to the last quarter.
DND says no to commercial use of RCM data
While the government of Canada has not formally issued a statement on the data policy regarding the RADARSAT Constellation Mission (RCM), we now know that there won’t be any commercial sale of the data by Maxar.
During the conference call Lance said “we do not have data rights to the RCM Constellation, the Canada Department of National Defence will be using all of that capacity.”
This was the first time Maxar has publicly stated that they would be shut-out of selling RCM data commercially. Lance did point out though that Maxar never had data rights in the first place. Maxar had made several proposals, and it was hoped that they would get some data rights, but now they are focused on the possible RCM follow-on which might see additional satellites built. The original constellation was to have had six satellites, but will only have three at this time.
Lance said Maxar would be focused on growing their RADARSAT-2 imagery business and was optimistic about sales as they’ll now use the DigitalGlobe sales channels.
He further stated “we also continue to review what our follow on commercial satellite, radar satellite strategy may be in future years as we go forward.”
Lance did not rule out future use of RCM data saying that “we continue in discussions with (the) government of Canada on what they call the RCM Radar Continuity Program, which would be additional satellites to provide additional capacity, some of which could be available for commercial use by Maxar.”
That statement is rather optimistic at this point as there are no plans as yet to move forward with adding satellites to RCM. Even if this was the case, it could years before any decision on a data policy for the additional satellites.
The current RCM data policy doesn’t come as a surprise. In fact, if you listened to the recent SpaceQ podcast with MDA President Mike Greenley, you got the sense that the company wasn’t counting on being able to access RCM data for commercial purposes.
Despite this news, Maxar’s stock was higher on the day with today’s results and conference call.Maxar Technologies Q1 2018 earnings presentation