Seeking Alpha • Feb 22

Maxar Technologies GAAP EPS of -$2.03, revenue of $1.61B

Maxar Technologies press release (NYSE:MAXR): FY GAAP EPS of -$2.03. Revenue of $1.61B (-9.0% Y/Y).

Seeking Alpha • Feb 15

Maxar receives no competing offers in go-shop period

Space and satellite imagery company Maxar Technologies (NYSE:MAXR) announced on Wednesday the expiration of the 60-day "go-shop" period pursuant to its previously announced definitive merger agreement with Advent International. In December 2022, Advent agreed to acquire Maxar (MAXR) in an all-cash transaction that values the latter at an enterprise value of ~$6.4B. Advent will acquire all outstanding shares of Maxar common stock for $53.00 per share in cash. The "go-shop" period expired on February 14, 2023. Maxar (MAXR) did not receive any competing acquisition proposals during the "go-shop" period. The deal received U.S. antitrust clearance pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 at the end of January and remains on track to close in mid-2023. Upon completion, Maxar will become a privately held company and its common stock will no longer be publicly listed.

Seeking Alpha • Feb 08

Maxar wins $192M IDIQ contract from National Geospatial-Intelligence Agency

Maxar Technologies (NYSE:MAXR) has won a contract from the National Geospatial-Intelligence Agency to provide commercial imagery services. The Foreign Commercial Imagery Program contract, worth up to $192M over five years, will see Maxar providing multiple U.S. allies and partners with commercial imagery services consisting of high-resolution electro-optical, synthetic aperture radar and 3D data products.

Seeking Alpha • Jan 26

Maxar: Low Merger Spread Implies Little Upside Left, Sell And Redeploy

Summary Maxar Technologies Inc. is a leader in satellite imagery and space infrastructure. The company announced a transaction to sell itself to Advent International, a PE investor, for $6.4 billion or $53 / share. Merger arb spread imply little upside left in Maxar Technologies Inc. shares. Investors may want to consider selling ahead of the deal completion and redeploy capital elsewhere. A few months ago, I wrote a bullish article on Maxar Technologies Inc. (MAXR), noting the significant upside in Maxar's shares if and when its next generation "Worldview Legion" satellites get launched. Apparently, I was not the only one who saw the significant value in Maxar's satellite imagery business, as well as its satellite design and launch capabilities. On December 16th, 2022, Maxar announced it had struck an agreement to be acquired by Advent International for $6.4 billion. Maxar Selling To Private Equity Under the terms of the agreement, Maxar would be acquired by Advent International ("Advent") in an all-cash transaction valuing Maxar at an enterprise value of $6.4 billion or $53.00 per share in cash, a 135% premium to Maxar's stock price on December 15, 2022. Advent is a leading global private equity investor headquartered in the U.S. with $89 billion in assets under management. Importantly, after the transaction, Maxar will remain a U.S.-controlled company. Furthermore, Advent is well known to North American regulators, having deployed $28 billion across the defense, security and cybersecurity sectors in the last three years. Therefore, for investors of Maxar, the Advent transaction looks like a pretty safe bet to go through. Under the terms of the transaction agreement, Maxar has a 60-day "go shop" period that will expire on February 14, 2023. If management can solicit a superior merger proposal prior to February 14th, Maxar has the right the terminate the sales agreement to Advent for a termination fee of $51.9 million. After the "go shop" period, the termination fee rises to $124.5 million. On the other hand, if Advent cannot complete the transaction for whatever reason, Maxar is entitled to a termination fee of $249 million. Stock Price Implying No Superior Bid According to the transaction press release, Maxar and Advent expect the transaction to be completed in mid-2023, pending regulatory approvals. Based on a current price of $51.30, Maxar is trading at a 3.2% discount to the $53 cash bid. I estimate the market is implying a 98% likelihood of the transaction completing with Advent (Figure 1). Figure 1 - Market implying a high likelihood of the transaction completing (Author created) Furthermore, with Maxar's stock price never trading above the $53 deal price, I believe there is very little expectation of a superior deal emerging before the expiration of the "go shop" period (Figure 2). Figure 2 - MAXR shares did not trade through the deal price (stockcharts.com) Investors Should Look To Tender For investors who followed my recommendation and bought shares of Maxar, I believe the best course of action is to sell their shares now and look to redeploy elsewhere, as the merger arbitrage spread is not attractive. Holding the shares now until deal is completed mid-2023 will only yield 3.2% for ~6 months, or 6.5% annualized, versus over 4.85% annualized yield that can be obtained on 6 month treasury bills. Where To Redeploy? For investors looking to stay within the Aerospace industry, I think an interesting place to redeploy capital is in Rolls-Royce Holdings plc (RYCEF). I wrote a recent article on Rolls-Royce detailing my bullish view.

Seeking Alpha • Jan 04

Maxar Technologies wins $35.8M NGA contracts

Maxar Technologies (NYSE:MAXR) has secured new contracts worth up to $35.8M from the U.S. National Geospatial-Intelligence Agency (NGA). The first award is a one-year contract worth up to $22.5M with $11.3M initially funded under NGA's Janus Geography program. The contract builds upon Maxar's (MAXR) more than 20 years of experience delivering foundational geospatial intelligence data to the agency by characterizing land cover at high resolution over numerous previously unmapped areas. The second award is worth up to $13.3M and will see Maxar supporting NGA's Foundation Program with an enhanced API capable of querying, discovering and downloading Maxar products derived from the company’s 125-petabyte (PB) high-resolution commercial imagery archive. This contract has a performance period of up to 4.5 years consisting of a base of six months and four full option years.

Seeking Alpha • Dec 16

Maxar Technologies shares soar on report of takeover by Advent International for $6.4B in cash

Space and satellite imagery company Maxar Technologies (NYSE:MAXR) shares is surging ~123% premarket on reports to be acquired by United States-based Advent International in an all-cash transaction that values Maxar at an enterprise value of ~$6.4B. Pursuant to the deal, Maxar will remain a U.S.-controlled and operated company. Advent brings 35+ year investment track record with significant experience in global security and defense. The deal will support Maxar to accelerate investment in and development of the company’s next-generation satellite technologies and data insights for its customers. With the move, Maxar will benefit from the significant resources, operational expertise and capacity for investment provided by Advent. As a private company, Maxar will be able to accelerate investments in next-generation satellite technologies and data insights that are vital to the company’s government and commercial customers, as well as pursue select, strategic M&A to further enhance the company’s portfolio of solutions. Maxar stockholders to receive $53.00/share in cash, a 129% premium to prior closing price. The transaction is expected to close mid-2023. Upon closure, Maxar’s common stock will no longer be publicly listed and is expected that Maxar will continue to operate under the same brand and maintain its current headquarters in Westminster, Colorado.

Seeking Alpha • Nov 03

Maxar completes purchase of AI company Wovenware

Maxar Technologies (NYSE:MAXR) on Thursday completed the acquisition of AI and software development company Wovenware. Wovenware will become one of Maxar’s software development and AI/machine learning centers of excellence, along with its ~150 employees. Terms of the deal were not disclosed.

Seeking Alpha • Oct 26

Maxar: I'm Still Not Convinced

Summary Rising interest rates hurt the company a lot; interest costs are enormous. It seems like the revenue potential of the Legion fleet is overrated. Earnings estimates are great, but so far there is a big gap between non-GAAP and GAAP results. I think investors should wait and see if the company will keep its promises and how future revenues and interest payments will develop. Investment thesis In March, I wrote an article about Maxar (MAXR) with a "Hold" rating. I was skeptical mainly because of not increasing profitability, much share dilution, and high debt. Since then, the stock price has fallen 40%, and I now want to examine whether the points on which I was skeptical have improved. And, of course, also look at the current valuation and outlook. Overall, I'm still not convinced, as the debt is now leading to high capital costs, while at the same time the new Legion fleet keeps getting postponed. Industry Overview In my first article, I wrote about the growing use cases of satellites and the estimated future market size. Although satellites have been playing a role for decades, it is above all, the much cheaper launches into orbit and better image resolution have opened up entirely new application possibilities in recent years. You can find more information about this on the Maxar website under use cases. ourworldindata.org Reasons for the share price drop As I said, the stock has been down 40% since March, which seems surprising given the Ukraine war. The earth intelligence business accounts for about two-thirds of the company's revenue. I've been paying a lot of attention to the war, and I've seen the Maxar logo on almost every satellite image. But it didn't boost sales; more on that later. Debt What has hurt the stock is the interest rate policy. The company has taken on a lot of debt and invested in CapEx to launch the LEGION satellite program. This will then provide significantly higher cash flow, resulting in the leverage ratio falling and debt being repaid. So much for the theory. In practice, however, this has yet to happen. So far, the debt is there, but higher cash flows are not. And since the stock market is generally very volatile right now and investors are more cautious, it is understandable that this increased risk does not please market participants. Debt/EBITDA is currently around five but could be significantly lower next year when EBITDA is supposed to go up. Another problem with the debt is the rising interest burden. This was $76M in the second quarter instead of $24M in Q2 2021. The revenue in Q2 is only $438M, so this interest expense is enormous. So you can see that EBITDA is a metric you must be very careful with. It's easy to borrow money and generate more EBITDA, but you shouldn't exclude interest payments when debt is very high. Q2 EBITDA was $119M, and interest payments were already $76M. The FY 2022 guidance is $165 million in interest payments and $450M to $500M EBITDA. Data by YCharts In addition, debt was restructured in the second quarter, and debt that would have been maturing in 2023 was rescheduled for 2027. One of our key priorities this year has been to address our upcoming debt maturities to provide the financial flexibility needed to execute on our long-term strategy. When combined with the recent award of the EOCL program by the NRO, we have significantly improved the visibility of the business for all Maxar's stakeholders. Biggs Porter, Chief Financial Officer. More delays of the Legion fleet The long-awaited WorldView Legion constellation has now been postponed several times. The launch was initially scheduled for September 2021. First, it was delayed to the beginning of 2022, then to September 2022, and finally to the fourth quarter of 2022. The last excuse for this was "software validation." And so far, there is no exact launch date, although it is already the end of October. Therefore, I believe there is a strong indication that this will not happen in the fourth quarter. Maxar How much revenue will it add? The Legion satellite constellation is seen as a game-changer in most articles and comments. But is that the case? First of all, these are only six satellites, which together could cover the area of India every day and, according to Maxar, 60% of the earth's surface per month. In a presentation from March 2021, Maxar itself estimated that these satellites would contribute $165M annually to EBITDA. This was stated under the "Financial outlook 2023." Even if we add another 10% to that because we assume they may be able to charge higher prices now, it's still only about $180M. That's only slightly more than the interest costs this year for debt that was taken on, among other things, to finance this project in the first place. However, the same presentation also assumes that after successful implementation, CapEx costs will drop by $180M per year, directly contributing to increasing free cash flow. Whether this whole calculation works out is not entirely clear from the data I can see. Indeed, more satellites in space will bring more revenue, but how much remains on the bottom line? Will this be enough to pay the enormous interest and reduce the debt burden? At the same time, the company started to pay a small dividend of $0.01 per share per quarter. Probably the company also has increased costs for employees, like many other companies. When the company originally planned, they probably didn't anticipate inflation and rising interest rates, which now changes the calculus a lot. This is not an attack on the management but an attempt to assess where we are now. Valuation Nevertheless, the market expects earnings per share to increase strongly in the next few years due to increased revenue and improved margins. The Earth Intelligence business, which will include the new LEGION fleet, achieved a strong adjusted EBITDA margin of 45.4%. Non-GAAP EPS in Q2 was positive at $0.38, but GAAP earnings were negative at $0.41. The bottom line is that the company lost money in the second quarter, even if they want to sell this as a profit and find explanations such as "net loss stood at $30M compared to net income of $45M led by an increase in interest expense of $52M driven by a $53M loss on debt extinguishment" (source). However, non-recurring costs are also part of regular business. There are always new one-time costs. Especially if you have taken on debt in the past and now have to pay for it in one form or another. For my taste, too many companies are pretty creative with their numbers and call them "adjusted." I was very surprised that the YoY revenue even decreased, although Maxar seems to have been used a lot by the US government. "Earth Intelligence" remained flat in terms of revenue, but the Adjusted EBITDA margin dropped from 46.3% to 45.4%. If these EPS estimates were to materialize, the stock would be easy to buy. These estimates show the hoped-for margin improvement, CapEx reduction, etc.: Although sales are not expected to increase as much, earnings per share are forecast to explode.

Analysis Article • Oct 19

Is Now An Opportune Moment To Examine Maxar Technologies Inc. (NYSE:MAXR)?

Maxar Technologies Inc. ( NYSE:MAXR ), might not be a large cap stock, but it saw a double-digit share price rise of...

Seeking Alpha • Oct 07

Be Contrarian And Buy Maxar, In Addition To Holding Raytheon

Summary The market's tendency to associate defense companies only with those producing weapon systems is wrong. Events in Ukraine have clearly demonstrated that satellite imagery now plays a key role, both for military defensive and offensive purposes. This makes the case for adopting a contrarian view of Maxar, especially given the fact that it is undervalued relative to Raytheon and the industrial sector. The company also operates in the wider space industry, which is expanding rapidly and also has a considerable backlog. Raytheon remains a firm hold though, in view of the increasing pace of militarization of the world, and investors can consider adding some shares of Maxar to their portfolio of defense stocks. I can't see a better way to start a contrarian thesis than by mentioning the Ukrainian conflict. To be frank, most of us were expecting the massively superior invading force to rapidly overwhelm the defenders, but this did not happen. Another likely scenario was the conflict turning into guerrilla warfare with Ukraine’s ragtag troops launching sporadic assaults from underground hideouts, but, few predicted that they would launch a full-fledged offensive just like a regular army would do. Now, the general perception is that the gains have largely been made possible by U.S.-supplied sophisticated weapons such as the Javelin-guided missiles jointly built jointly by Raytheon Technologies (RTX) and Lockheed Martin (LMT). As a result, the market has rewarded the companies with higher price-to-sales ratios as shown in the table below. Comparing Key Metrics (www.seekingalpha.com) Instead, the much lower P/S of Maxar Technologies (MAXR) shows that investors are underestimating this satellite play whose high-precision images proved crucial to Ukrainians in averting a fatal blow at the very beginning of the conflict and is now proving vital in guiding the country's troop in their present advance towards the East. Contrarily to what some may think, the aim of this thesis is not to make a bearish case for Raytheon in favor of Maxar, but, instead, to apply the notion that for success on the battlefield, be it for defensive or offensive actions, intelligence data is crucial, to the same degree as the most sophisticated weapon. I start by highlighting the importance of satellite imagery beyond the military context as well as Maxar's role in the wider space economy. Maxar, A Space Technology Company Satellite imagery has provided valuable data for making key decisions that have saved people's lives, helped defenders anticipate attacks, assessed damage after the destruction of infrastructure, and monitor refugee movements. They have even provided footage of Russian ships being loaded with Ukrainian grain as well as how the country's harvest has been shrunk by half. This shows that potential applications are not only restricted to conflict zones but also span civilian uses like planning land use for agriculture, and coordinating complex logistics operations including ships, cargo planes, and land-based transportation. Other uses include tracking leakage of oil and environment monitoring. For this purpose, Maxar has a high-resolution fleet of WorldView Legion satellites and related revenues are accounted into the Earth Intelligence segment as shown in the left-hand side picture below. The segment saw growth in product revenues during the second quarter of 2022. Still, as shown in the right-hand side chart, revenues for Q2 were less on a year-on-year basis, due to weakness in the Space Infrastructure segment. Company presentation (static.seekingalpha.com) Combined together, these two segments show that Maxar is more of a space technology company, as, in addition to earth observation, it also specializes in manufacturing and on-orbit servicing for satellites and related communication products. Looking into the rear mirror, Maxar was historically (up till the mid-2010s) a strong player in manufacturing GEO or geostationary earth-orbiting satellites, but, subsequently went into a period of decline. This period more or less coincided with the creation of SpaceX (SPACE) by Elon Musk in 2002, whose popular Starlink (STRLK) constellation of satellites use LEO or Low Earth Orbit. These are situated nearer the earth than their GEO counterparts and have proved successful in providing wireless communications to remote areas. However, the satellite company did fight back, helped by long-standing partnerships with the U.S. government for both civil and military purposes. Interestingly, its commercial satellite bus is used by NASA programs, namely for the planned Psyche mission for prospecting a metal-rich asteroid orbiting the Sun. Consequently, with an evolving product suite and diversified customer base, Maxar has managed to recover from its 2010 lows as shown in the blue chart below. It has grown by an astounding 146.8% since 2005 which is nearly five times Raytheon's. Raytheon And Its Hypersonic Cruise Missile The latter nonetheless generates a much higher level of revenues of $64.4 billion for 2021 compared to only $1.77 billion for Maxar. Data by YCharts The advanced weapons company also saw its revenues plummet in 2018 as seen by the orange chart above but has since then recovered, and this growth trajectory should be sustained after being awarded more contracts since the intensifying of the East European conflict. Thus, in August, a $311.2 million contract was awarded to the Raytheon/Lockheed Martin joint venture for full-rate production of Javelins till November 2026. This covers 1,800 missiles which should replenish the U.S. Army's inventory of Javelin to offset those to be sent to Ukraine and other allies. This is in addition to an earlier $352 million contract again for the missiles. The company also recently benefited from a $225.6 million contract for the AIM-9X system deployed in the Naval air system. As a result, Raytheon expects FY2022 revenues of $67.75 billion to $68.75 billion whose midpoint of $68.25 billion constitutes an increase of 6% over 2021. However, it trimmed its full-year free cash flow to about $4 billion from the $6 billion initially expected, due to higher costs and supply chain issues. To be realistic, Raytheon already has an Intelligence and Space segment, but, contrarily to Maxar which is growing sales, the defense company is struggling as evidenced by a revenue regression of 6% during its last reported quarter and its backlog remains below the satellite play when compared on relative terms. Company Presentation (seekingalpha.com) Looking across the defense industry, Raytheon has beaten its competitors Boeing (BA) and Lockheed Martin to supply a $985 million hypersonic cruise missile to the U.S. Air Force. One of the factors which weighed on the decision appeared to have been the fairly short development time whereby the device will have to be operational by 2027, in an attempt to make up for the delay compared to the Chinese and Russians. The ultimate objective is to target enemies and destroy them at a greater distance compared to what is possible through more conventional weaponry. Valuations, Cautionary Note, And Conclusion Now, these new missiles incorporate advanced guidance systems for the precise locking of targets, but, as events in Ukraine have shown, there is still a need for high-precision satellite imagery and data analytics in any conflict zone, signifying more revenues for both Maxar and Raytheon. Examples that come to mind are increased militarisation not only in Europe but also in East Asia after heightened geopolitical tensions concerning Taiwan, whereby countries like Japan and South Korea increasingly need to know what is happening within the territories of their belligerent neighbors, in order not to caught off guard as in East Europe. In order to get a sense of the value of satellite imagery, just think for one moment about the alternative, namely during the cold war, when spies had to infiltrate enemy lines in order to observe troop movement. For a territory the size of Ukraine, this would require an army of spies whose activities would have to be coordinated by the commanding officer before being relayed to the central command taking days. In contrast, data is now downloaded from Maxar's satellites and transmitted to them within hours. As for valuations, considering that Maxar's role also encompasses the whole satellite ecosystem, it operates as part of the global space economy. According to Euroconsult, this economy reached $370 billion in 2021 with one of the factors enabling this is the opening up of the field to private companies, in turn leading to lower launch costs. Going forward, the space economy is expected to grow by 6.3% CAGR to reach $642 billion by 2030. This is equivalent to 74% ((642-370)/370) growth from 2022 to 2030. Multiplying Maxar's 2021 revenues by 74% gives $3.1 billion for 2030. In support of this target, the company's total book-to-bill increased by four times, adding $1.5 billion to the existing backlog resulting in a total of $3.2 billion. Thus, Maxar is a buy, and based on its lower trailing P/S relative to the industrials sector by 27.44% as shown in the table below, I obtain a target of around $27 (23.41 x 1.27) based on the current share price of $23.41. Moreover, the company's positive EBITDA valuations show that it is profitable based on non-GAAP metrics, which may not be the case for other high-growth satellite plays.

Seeking Alpha • Sep 21

Maxar: An Underperforming Aerospace Stock With An Uncertain Earnings Outlook

Summary Aerospace & defense stocks have been a source of relative calm in a wild year, but not all of its components trade the same way. Maxar Technologies, invested in the space exploration niche, has suffered since early 2021. Shares do not look cheap and the technical chart shows a potential bearish breakdown. Looking for some winning stocks in a year of high volatility? The aerospace & defense industry is about flat for 2022, as measured by the iShares U.S. Aerospace & Defense ETF (ITA). Several large caps in the fund have weathered the equity storm well given an ongoing conflict in Ukraine and now renewed tensions caused by Putin. Unfortunately, one small-cap stock in the industry has not performed so well compared to the big players. Defense Stocks Tread Water in 2022, Beating Industrials & the S&P 500 Stockcharts.com According to Bank of America Global Research, Maxar Technologies (MAXR) is a space technology and intelligence company that participates in two distinct areas of the satellite market. Earth Intelligence is associated with imagery - both capturing and analyzing. Space Infrastructure is associated with designing, building, integrating, and testing space-based communication satellites (both LEO and GEO). The firm has been working on diversifying its business model and deleveraging its balance sheet. It has faced hurdles and increasing costs with the Legion constellation, however. Downside risks include negative impacts should the U.S. federal government not renew key contracts. Demand for satellite imagery is also an important wild card. The Colorado-based $1.6 billion market cap aerospace & defense industry company within the industrial sector trades at a high 32.3 trailing 12-month GAAP price-to-earnings ratio and pays a scant 0.2% dividend yield, according to The Wall Street Journal. On valuation, BofA analysts see negative EPS this year, both on an operating and GAAP basis, but free cash flow and profits should turn positive looking out to next year and 2024. The Bloomberg consensus EPS estimates are more sanguine, though. Maxar's dividend will likely remain minuscule. The stock trades near its historical EV/EBITDA multiple. So the shares look about fairly valued here. Maxar Earnings, Valuation, Dividend, and Free Cash Flow Forecasts BofA Global Research Looking ahead, Wall Street Horizon shows an unconfirmed Q3 earnings date of Wednesday, Nov. 2 with a dividend pay date Friday next week (9/30). After Maxar spoke at a pair of recent conferences, the corporate event calendar is light until the next profit report. Corporate Event Calendar Wall Street Horizon The Technical Take With an uneventful calendar until Q3 earnings and a mixed valuation picture, what can the chart tell us about where MAXR is headed? Shares sit at a critical level right now. I see support in the $21 to $23 range, and the stock is under $22 currently. A long position right here with a stop under $20 makes sense, but I have a hunch Maxar wants to move lower to next support around $14 to $15. On the upside, noting a descending trendline that could be problematic on rallies. Moreover, there's a high amount of shares traded in the $27 to $30 range as evidenced by the 'volume by price' indicator on the left portion of the chart.

Seeking Alpha • Sep 15

Maxar Technologies' CFO to retire in 2023

Maxar Technologies (NYSE:MAXR) announced Thursday its President and CFO Biggs Porter plans to retire in 2023. The aerospace company said Porter will remain in a consulting role following his retirement through March of 2024 while the search for his successor is already underway. “Biggs has been instrumental in driving Maxar’s growth and financial transformation over the last several years,” noted Maxar Chief Executive Officer Dan Jablonsky. Earlier: Maxar Technologies Q2 revenue sees a drop amid falling Space Infrastructure product revenue

Seeking Alpha • Aug 10

Maxar Technologies Q2 revenue sees a drop amid falling Space Infrastructure product revenue

Maxar Technologies (NYSE:MAXR) reported a drop in its Q2 total revenues to $438M from $473M from prior year quarter led by decrease in product revenues within its Space Infrastructure segment. Space Infrastructure revenues narrowed down to $186M during the quarter from $206M in year ago quarter. Earth Intelligence continues to drive growth in high margin imagery revenue and Space Infrastructure continues to generate healthy margins. Net loss stood at $30M compared to net income of $45M led by increase in interest expense of $52M driven by a $53M loss on debt extinguishment; drop was partially offset by a decrease in product costs of $28M within Space Infrastructure segment. The company had total order backlog of $2,945M as of June 30, 2022 compared to $1,893M as of Dec. 31, 2021 led by increase in the Earth Intelligence segment partially offset by a decrease in the Space Infrastructure segment. Unfunded contract options totaled $2,204M and $650M as of June 30, 2022 and Dec. 31, 2021, respectively. "We are maintaining the 2022 guidance ranges for Revenue and Adjusted EBITDA. Although the interest cost is higher than expected coming into the year, we are pleased to have successfully executed a refinancing of our debt structure and significantly extend maturities," CFO Biggs Porter commented. Financial Outlook (2022):

Analysis Article • Jul 26

Maxar Technologies (NYSE:MAXR) Has A Somewhat Strained Balance Sheet

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility...

Seeking Alpha • Jul 08

Maxar Technologies: Not For The Faint Of Heart

Maxar is a leader in satellite imagery and space infrastructure. Business on the mend following near insolvency in 2019. Upcoming catalyst could reignite revenue growth. I recently came across a news article from CNN showing Russian ships allegedly stealing Ukrainian grain, and I was amazed by the detailed satellite images from the article. Apparently, the images were taken by Maxar Technologies Inc. (MAXR)'s satellites, and my curiosity was piqued. Maxar is reasonably valued for its existing operations, trading at 16.4x P/E on LTM earnings. Shares look attractive if we assume Maxar is successful in launching its fleet of new imaging satellites, with potentially 50% upside. I would recommend investors slowly accumulate shares ahead of the scheduled launch of the satellites in September. Bear in mind the stock has large 1-day moves, so risk-averse investors may want to consider a smaller position size. Overview Of Maxar Maxar has more than 60 years of experience in designing and manufacturing satellites and spacecraft components for communications, Earth observation, exploration and on-orbit servicing and assembly. It has two operating segments: Earth Intelligence and Space Infrastructure. The Earth Intelligence business segment provides customers with high-resolution satellite images and analytics. Maxar currently operates 4 in-orbit satellites, which have combined collected over 137 petabytes of images over 20 years (Figure 1). Maxar is also designing and building a fleet of 6 new satellites called "Worldview Legion" that is expected to launch in The Fall. Customers for the Earth Intelligence segment include the U.S. government, other international government agencies, and enterprise customers. Figure 1 - Maxar's in-orbit satellites (Maxar 2021 annual report) The Space Infrastructure segment provide solutions for communications, Earth observation, remote sensing, on-orbit servicing, robotic assembly and space exploration. Maxar primarily designs and manufactures satellites and space components for commercial satellite operators and government agencies worldwide. Over the years, more than 287 custom Maxar-built spacecraft, including 81 low Earth orbit ("LEO") satellites, have launched with a combined 2,850 years of service. Maxar Has Had Many Issues Recently Investing in Maxar stock is definitely not for the faint of heart. In just the past 5 years, the company has experienced a short-seller attack in mid 2018, a satellite failure, a new CEO, a major write-down and dividend cut, a near escape from insolvency, a sale of an important business to pay off debt, and a bunch of delays to the launch of its next generation image satellites, just to name a few. Figure 2 shows the stock price performance of Maxar. Notice the chart is full of large 1-day gaps, some as much as 35%. While the day-to-day price action in Maxar can be choppy, the long term chart does show a potential for a large cup+handle formation, with notable relative strength in recent weeks compared to the market. Figure 2 - Maxar shares are volatile (Author created with price chart from stockcharts.com) Financial Performance Has Been Volatile One of the reasons why Maxar's stock price has been so volatile is because its business model is dependent on contract wins and is very lumpy. It is very difficult for analysts to accurately predict Maxar's earnings. Earnings per share surprise can range from -460% to +550% (Figure 3). Even when revenues surprised by +24% in Q4/2019, EPS ended up surprising by -300%! Figure 3 - Maxar earnings are volatile. (Seeking Alpha) Lumpiness aside, the underlying business has been steadily improving since the near-death experience in 2019 (Figure 4). Even though revenues were still lower in 2021 than 2018, gross margin expanded by 470bps, which led to a dramatic turnaround in operating income from a loss of $145 million in fiscal 2018 to an operating profit of $130 million in 2021. Figure 4 - Summary financials (Author created with data from tikr.com) Worldview Legion A Key Upcoming Catalyst A key upcoming catalyst for Maxar is the scheduled launch of its next generation satellites, "WorldView Legion." Worldview Legion will be a fleet of six high performance satellites that will allow re-snapping of images of rapidly changing areas up to 15 times per day, an increase from four times per day currently, which will more than triple Maxar's capacity to collect 30 cm resolution images and increase Maxar's overall capacity in high demand areas. Figure 5 highlights Worldview Legion's capabilities in more detail. Worldview Legion will have native 30 cm resolution and can derive 15cm HD images using data analytics. Worldview Legion will also be able to capture much larger single swath images, 672 sq km per swath at sub 50cm resolution compared to competitors that can only capture single image size of 26 sq km at 78 cm resolution. Figure 5 - Worldview Legion capabilities (Maxar investor presentation ) Worldview Legion's enhanced capabilities will allow Maxar to offer novel use cases such as remote monitoring for high demand areas, accurate multilayer mapping, timely pattern-of-life and human geography analysis, and accurate 3D models of the world (Figure 6). Figure 6 - Key use cases (Maxar investor presentation ) In fact, some analysts were so enamored with the new fleet of satellites that they estimated Worldview Legion can reignite topline growth for Maxar and drive the company to deliver $360 million of free cash flow by 2023. Obviously, the above analysis by Kerrisdale capital should be viewed with the 1-year delay in the satellites' launch in mind. Valuation Reasonable With Upside With LTM EPS of $1.63, shares are currently valued at 16.4x P/E, about inline with the market. Where it gets interesting is as Worldview Legion comes online in the next few quarters, Wall Street analysts estimate a significant ramp up in Maxar's revenues from $1.8 billion in 2022 to $2.1 billion in 2024 (Figure 7). Figure 7 - Consensus revenues (Seeking Alpha) As we had mentioned above, Wall Street analysts are notoriously bad at estimating EPS for Maxar due to the lumpy nature of its business. Assuming the extra $300 million in additional revenue is from additional satellite images and that it comes at a 40% EBITDA margin (Figure 8), similar to the existing Earth Intelligence business, we could be looking at an additional $120 million in EBITDA. Figure 8 - Satellite imagery EBITDA margins (Maxar Q1/2022 presentation ) If we value this $120 million in additional EBITDA at 8.5x (Maxar has traded between 7x to 13x EV/EBITDA, most recently at 8.4x), this could add $1 billion to Maxar's market cap or almost 50% upside (Figure 9). Figure 9 - Maxar EV / EBITDA valuation (Tikr.com) Risks To Maxar Story Worldview Legion Launch Date Biggest Near Term Risk

Analysis Article • Jul 04

What Is Maxar Technologies Inc.'s (NYSE:MAXR) Share Price Doing?

Maxar Technologies Inc. ( NYSE:MAXR ), is not the largest company out there, but it saw significant share price...

Seeking Alpha • Apr 21

Maxar: The Power Of Satellite Imagery In The Russia-Ukraine Conflict

Maxar Technologies is a provider of high-resolution satellite images to the U.S. government, its allies as well as news media outlets. The Ukrainian conflict has engendered higher consumption of these images. Thus, the company should be valued higher, along the same lines as other key defense plays producing sophisticated weapons. These higher valuations are also supported by an improvement in the balance sheet and positive stock momentum following the potential successful launch of the Legion satellites in space. Conversely, any adverse news pertaining to any further launch delays is likely to induce sharp volatility.

Analysis Article • Apr 07

Is Maxar Technologies (NYSE:MAXR) A Risky Investment?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously...

Analysis Article • Mar 17

Is Now The Time To Look At Buying Maxar Technologies Inc. (NYSE:MAXR)?

Maxar Technologies Inc. ( NYSE:MAXR ), is not the largest company out there, but it received a lot of attention from a...

Seeking Alpha • Mar 10

Maxar Demonstrates Its Value In The Ukraine Conflict, But I Am Not Buying Anyway

Maxar has received much attention in the Ukraine war for its value to the U.S. government. Satellites are becoming increasingly important for governments, as well as for businesses. In addition, global use is protected by the Outer Space Treaty. Despite the numerous application areas, profit and sales have been stagnating for years. In addition, the debt is high and there has been a large share dilution for years.

Analysis Article • Feb 24

Maxar Technologies Inc. Just Reported A Surprise Profit And Analysts Updated Their Estimates

It's been a sad week for Maxar Technologies Inc. ( NYSE:MAXR ), who've watched their investment drop 12% to US$24.50 in...

Analysis Article • Dec 27

Maxar Technologies (NYSE:MAXR) Has A Somewhat Strained Balance Sheet

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously...

Seeking Alpha • Nov 29

Why Maxar Technologies Will Blast Off In 2022

Maxar Technologies fell as panic gripped the stock market. Satellite launch schedule re-affirmed. 2022 revenue and margin upside discussed.

Analysis Article • Sep 13

Maxar Technologies (NYSE:MAXR) Has A Somewhat Strained Balance Sheet

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of...

Seeking Alpha • Aug 24

A Fresh Look At The Prospects For Maxar Technologies Stock

We've covered Maxar Technologies for a number of years and it is fair to say there is rarely a dull moment with this stock. The stock is very volatile, though overall trending up, and has a tendency to get blown around by even relatively minor matters. Fundamental valuation remains way low in our opinion, suppressed most likely by uncertainty regarding the success of the next generation satellite fleet. Technical analysis looks to us a better way to assess the stock's prospects. We take a fresh look below. We reiterate our Buy rating.

Seeking Alpha • Aug 05

We Remain At Buy On Maxar Technologies

Launch of the new Legion fleet has been pushed back, again, which has likely spurred the drop in the stock price. But the financial performance of the company is stronger than you might think. Revenue growth and accounting profitability are improving nicely. Cashflow was poor as a result of working capital outflows, but the company's customers are highly creditworthy so this should catch up some going forward. We remain at Buy on a long-term basis.

Seeking Alpha • Jul 28

Why Maxar Technologies Dipped Again

Markets are still shaken from Maxar's Q1 results. Long-term prospects still strong. Suitable for patient investors with at least a two-year timeframe.

Analysis Article • Jun 04

Here's Why Maxar Technologies (NYSE:MAXR) Is Weighed Down By Its Debt Load

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says...

Analysis Article • May 04

Are Investors Undervaluing Maxar Technologies Inc. (NYSE:MAXR) By 37%?

Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Maxar Technologies...

Analysis Article • Mar 19

Maxar Technologies (NYSE:MAXR) Shareholders Have Enjoyed A Whopping 356% Share Price Gain

It might be of some concern to shareholders to see the Maxar Technologies Inc. ( NYSE:MAXR ) share price down 22% in...

Analysis Article • Mar 01

How Many Maxar Technologies Inc. (NYSE:MAXR) Shares Did Insiders Buy, In The Last Year?

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On...

Analysis Article • Feb 02

Is Maxar Technologies (NYSE:MAXR) Weighed On By Its Debt Load?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it seems the smart money knows that...

Snowflake Score
Valuation	0/6
Future Growth	4/6
Past Performance	0/6
Financial Health	2/6
Dividends	0/6

Historical stock prices
Current Share Price	US$52.99
52 Week High	US$52.99
52 Week Low	US$17.51
Beta	0.87
1 Month Change	3.11%
3 Month Change	2.67%
1 Year Change	58.80%
3 Year Change	410.99%
5 Year Change	8.30%
Change since IPO	23.78%

	MAXR	US Aerospace & Defense	US Market
7D	0.6%	4.6%	1.6%
1Y	58.8%	31.1%	28.2%

MAXR volatility
MAXR Average Weekly Movement	1.1%
Aerospace & Defense Industry Average Movement	8.9%
Market Average Movement	7.2%
10% most volatile stocks in US Market	16.8%
10% least volatile stocks in US Market	3.0%

MAXR fundamental statistics
Market cap	US$4.02b
Earnings (TTM)	-US$157.00m
Revenue (TTM)	US$1.62b

MAXR income statement (TTM)
Revenue	US$1.62b
Cost of Revenue	US$960.00m
Gross Profit	US$659.00m
Other Expenses	US$816.00m
Earnings	-US$157.00m

Earnings per share (EPS)	-2.07
Gross Margin	40.70%
Net Profit Margin	-9.70%
Debt/Equity Ratio	162.4%

Data	Last Updated (UTC time)
Company Analysis	2023/05/04 19:47
End of Day Share Price	2023/05/02 00:00
Earnings	2023/03/31
Annual Earnings	2022/12/31

Package	Data	Timeframe	Example US Source ^*
Company Financials	10 years	Income statement Cash flow statement Balance sheet	SEC Form 10-K SEC Form 10-Q
Analyst Consensus Estimates	+3 years	Forecast financials Analyst price targets	Analyst Research Reports Blue Matrix
Market Prices	30 years	Stock prices Dividends, Splits and Actions	ICE Market Data SEC Form S-1
Ownership	10 years	Top shareholders Insider trading	SEC Form 4 SEC Form 13D
Management	10 years	Leadership team Board of directors	SEC Form 10-K SEC Form DEF 14A
Key Developments	10 years	Company announcements	SEC Form 8-K

Analyst	Institution
Robert Peters	ATB Cormark Historical (Cormark Securities)
Peter Arment	Baird
Ronald Epstein	BofA Global Research

This company listing is no longer active

Maxar Technologies (MAXR) Stock Overview

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Price History & Performance

Recent News & Updates

Maxar Technologies GAAP EPS of -$2.03, revenue of $1.61B

Maxar Technologies Announces Completion of 'Go-Shop' Period

Maxar receives no competing offers in go-shop period

Maxar wins $192M IDIQ contract from National Geospatial-Intelligence Agency

Maxar: Low Merger Spread Implies Little Upside Left, Sell And Redeploy

Maxar Technologies wins $35.8M NGA contracts

Recent updates

Maxar Technologies GAAP EPS of -$2.03, revenue of $1.61B

Maxar Technologies Announces Completion of 'Go-Shop' Period

Maxar receives no competing offers in go-shop period

Maxar wins $192M IDIQ contract from National Geospatial-Intelligence Agency

Maxar: Low Merger Spread Implies Little Upside Left, Sell And Redeploy

Maxar Technologies wins $35.8M NGA contracts

Price target increased to US$37.75

Maxar Technologies shares soar on report of takeover by Advent International for $6.4B in cash

Upcoming dividend of US$0.01 per share

Consensus EPS estimates have been downgraded.

Investor sentiment improved over the past week

Consensus EPS estimates fall by 61%

Third quarter 2022 earnings: Revenues miss analyst expectations

Maxar completes purchase of AI company Wovenware

Maxar: I'm Still Not Convinced

Is Now An Opportune Moment To Examine Maxar Technologies Inc. (NYSE:MAXR)?

Be Contrarian And Buy Maxar, In Addition To Holding Raytheon

Investor sentiment improved over the past week

Maxar: An Underperforming Aerospace Stock With An Uncertain Earnings Outlook

Maxar Technologies' CFO to retire in 2023

Upcoming dividend of US$0.01 per share

Consensus forecasts updated

Second quarter 2022 earnings: EPS and revenues miss analyst expectations

Maxar Technologies Q2 revenue sees a drop amid falling Space Infrastructure product revenue

Maxar Technologies (NYSE:MAXR) Has A Somewhat Strained Balance Sheet

Maxar Technologies: Not For The Faint Of Heart

What Is Maxar Technologies Inc.'s (NYSE:MAXR) Share Price Doing?

Insider notifies of intention to sell stock

Upcoming dividend of US$0.01 per share

Investor sentiment improved over the past week

Consensus EPS estimates fall by 23%

First quarter 2022 earnings: EPS and revenues miss analyst expectations

Maxar: The Power Of Satellite Imagery In The Russia-Ukraine Conflict

Is Maxar Technologies (NYSE:MAXR) A Risky Investment?

Investor sentiment improved over the past week

Is Now The Time To Look At Buying Maxar Technologies Inc. (NYSE:MAXR)?

Maxar Demonstrates Its Value In The Ukraine Conflict, But I Am Not Buying Anyway

Upcoming dividend of US$0.01 per share

Investor sentiment improved over the past week

Maxar Technologies Inc. Just Reported A Surprise Profit And Analysts Updated Their Estimates

Full year 2021 earnings: Revenues exceed analysts expectations while EPS lags behind

Maxar Technologies (NYSE:MAXR) Has A Somewhat Strained Balance Sheet

Upcoming dividend of US$0.01 per share

Executive VP & CTO recently bought US$55k worth of stock

Why Maxar Technologies Will Blast Off In 2022

Insider notifies of intention to sell stock

Third quarter 2021 earnings released: EPS US$0.19 (vs US$1.38 in 3Q 2020)

Maxar Technologies (NYSE:MAXR) Has A Somewhat Strained Balance Sheet

Upcoming dividend of US$0.01 per share

A Fresh Look At The Prospects For Maxar Technologies Stock

Executive VP & CTO recently bought US$52k worth of stock

We Remain At Buy On Maxar Technologies

Why Maxar Technologies Dipped Again

Price target decreased to US$48.04

Upcoming dividend of US$0.01 per share

Here's Why Maxar Technologies (NYSE:MAXR) Is Weighed Down By Its Debt Load

Senior VP & Chief Product Officer has left the company

Interim Executive Vice President of Space Programs Delivery Paul Estey has left the company

CFO & Executive VP recently bought US$95k worth of stock

First quarter 2021 earnings released

Price target decreased to US$48.05

Are Investors Undervaluing Maxar Technologies Inc. (NYSE:MAXR) By 37%?