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 June 30, 2014.
Second quarter 2014 revenue was $157.8 million, a 5% increase compared with the same period last year. Net income for the second quarter was $5.0 million, with net income available to common shareholders of $3.9 million, or $0.05 per diluted share. In the second quarter 2013, the company reported a net loss of $(21.0) million, with a net loss available to common shareholders of $(22.0) million, or a loss of $(0.30) per diluted share.
Second quarter 2014 Adjusted EBITDA was $63.9 million with an Adjusted EBITDA margin of 40.5%. This compares with Adjusted EBITDA of $45.9 million in second quarter 2013, with an associated margin of 30.5%, a 1,000 basis point increase year over year. Adjusted EBITDA excludes the impact of restructuring, integration and other costs.
With the imminent conclusion of the integration of GeoEye and spending for WorldView-3, DigitalGlobe’s Board of Directors has authorized a $75 million share repurchase, which is expected to be executed in the next 18 months. The company may repurchase shares in the open market or in privately negotiated transactions, including under a Rule 10b5-1 plan, at the discretion of management.
“We are pleased to report top-line growth, strong margin expansion and free cash flow in line with expectations,” said Jeffrey R. Tarr, CEO of DigitalGlobe. “We are looking forward to the launch of WorldView-3 in mid-August — further extending our commanding lead in all aspects of quality that matter to customers. We are also pleased to introduce a $75 million share repurchase that reflects our confidence in our future and our commitment to balancing organic growth, M&A and return of capital in a fashion intended to create shareowner value over time.”
Recent Business Highlights
– On July 23, the National Geospatial-Intelligence Agency exercised its option to extend the Service Level Agreement (SLA) portion of DigitalGlobe’s EnhancedView contract for the period of September 1, 2014 through August 31, 2015, including the increase of $50 million per year for the SLA in connection with the launch of WorldView-3.
– Second quarter 2014 revenue from the U. S. Government grew 15.5% to $95.5 million compared with second quarter 2013, including a 66% increase in value-added services to $32.3 million, driven by continued growth in analytics and the Global Enhanced GEOINT Delivery (G-EGD) program.
– Diversified Commercial revenue declined 8% to $62.3 million in the quarter compared with second quarter 2013. The year-over-year decline was driven by two significant customer deliveries in the prior year, which did not recur in the current quarter, as well as ongoing weakness in Russia related to the geopolitical situation in that country.
– DigitalGlobe was awarded a multi-year, sole-source contract through the Department of Homeland Security to help build a geospatial analytic solution that predicts transportation risk.
– In July, DigitalGlobe agreed to provide imagery to a large location-based services customer under a multi-year, multi-million dollar contract.
– A major oil & gas company has renewed its multi-year agreement with DigitalGlobe, upsizing its relationship by approximately 30%.
– DigitalGlobe signed an agreement with the World Resources Institute (WRI) to support its new Global Forest Watch-Fires platform. The company will provide high-resolution imagery of recent and active fires and leverage its Tomnod crowdsourcing platform to enable volunteers to identify and tag burned areas.
– The company agreed to provide archived imagery of the entire country to the United Arab Emirates under a multi-year, multi-million dollar contract.
– The company renewed multiple Direct Access Program (DAP) agreements and the Australian Geospatial-Intelligence Organization (AGO) signed a separate multi-year, multi-million dollar imagery agreement.
2014 Outlook
For 2014, the company continues to expect to report revenue in a range of $630 million to $660 million. The company expects to achieve a full-year Adjusted EBITDA margin of approximately 43% with a fourth quarter 2014 Adjusted EBITDA margin of 50%. The company also expects 2014 capital expenditures of approximately $170 million.
