Maxar CEO predicts return to growth
WASHINGTON — After a difficult year that saw its stock price plummet and the future of its geostationary satellite business questioned, the head of Maxar Technologies says he’s optimistic about the future of both that satellite business and the overall company.
Speaking at the G.research Aerospace & Defense Conference Sept. 5 in New York, Dan Jablonsky, president and chief executive of Maxar, said he was “excited about the trend lines” he was seeing in the overall growth of the business, thanks in part to growing government work.
“If you look at our stock chart, it’s not the prettiest sight in the world. We’ve had a rough year,” he acknowledged to an audience of investors. “We’re on a recovery path.”
Maxar’s stock, which was trading at more than $37 a share less than a year ago, closed Sept. 6 at $7.06 a share. That price, though, is above its 52-week low of less than $4 a share earlier this year. Earnings warnings, along with the failure in early January of the WorldView-4 imaging satellite, triggered the declines.
“This is a reset and stabilization year as we get ready to return to growth on a better, more nimble cost basis and organization model,” he said.
Much of that growth is coming from increased business with the government agencies both in the U.S. and in other countries. This includes imagery and data products “on a realtime and near-realtime basis” using its satellites for defense and intelligence. “We see great growth potential ahead,” he said, citing its business with agencies like the National Reconnaissance and National Geospatial-Intelligence Agency as well as with other countries. “In some senses we are the NRO and NGA for key U.S. allies.”
That growth has been hindered by the WorldView-4 failure, but Jablonsky looked ahead to the WorldView Legion series of satellites that will provide high-resolution images with more frequent revisit times. The first of those satellites will launch in the first quarter of 2021. He said WorldView Legion will provide three times the capacity ofWorldView-4 at a lower price than that single satellite.
Maxar has also looking for more “white space” business, as Jablonsky called it, among civil government agencies. He cited as examples the award the company won from NASA in May to build the Power and Propulsion Element for the lunar Gateway and a study contract awarded to Maxar’s Canadian operation, MDA, from the Canadian Space Agency in August for Canadarm3, the robotic arm that Canada intends to develop as its contribution to the Gateway.
Jablonsky said there’s even signs of growth in its commercial satellite manufacturing business, the former Space Systems Loral, which Maxar said earlier this year it was restructuring after considering selling or shutting down the unit. “We’ve made it clear to everyone that we’re there and we’re staying and we’re winning business,” he said of that unit.
He added there has been signs of a turnaround in commercial GEO satellite sales after the market “got chilled” by plans for low Earth orbit constellations that caused operators of GEO satellites to reconsider their plans. “There are more awards already this year than anyone predicted for the entire year, which I think is a good sign,” he said.
That’s included a shift to smaller GEO platforms, like a contract Maxar won in July to provide a satellite for Swedish operator Ovzon based on the Legion satellite bus. “That’s a good sign of health for the industry, because it’s becoming a little more nimble,” he said.
Jablonsky said Maxar was also working to cut costs, key to its long-term efforts to reduce its extensive debt. He said that restructuring earlier this year reduced expenses by $60 million, while the company is spending $40 million in integration activities this year, bringing together formerly separate companies like SSL and DigitalGlobe, that won’t be needed in future years.
“Last year the Palo Alto business burned closed to $100 million in cash,” he said of the former SSL. “We’re coming out of that cycle. We’re getting to a trend line where it will be net neutral.” He added the company spent $20 million this year on retention payments that he doesn’t expect to be needed in the future.
He predicted Maxar would have a “capex holiday” once the Legion program is completed, freeing up cash that can be used for deleveraging the company. “Historically we’ve been able to either buy back a lot of shares or delever over time pretty quickly” because of the cash flow and high margins of its satellite imagery business.