Maxar Takes Hit from SiriusXM Satellite Loss, Pushes Legion Launch to Q4
Maxar Technologies saw a slight boost in first quarter revenue in 2021 compared to 2020, but posted a net loss of $84 million, including a $28 million charge related to the failure of the SXM-7 satellite. In addition, delays on the WorldView Legion program have pushed the first satellite launch to the fourth quarter.
The net loss of $84 million in Q1 2021 compares to a net loss of $48 million in Q1 2020. Overall, Maxar reported $392 million in revenue in Q1, up 3% from the year prior.
Maxar’s Earth Intelligence segment brought in $250 million in the quarter. Revenues from the Earth Intelligence segment decreased by $21 million compared to the same period in 2020, primarily because of a decrease in the recognition of deferred revenue related to the EnhancedView contract.
The Space Infrastructure segment brought in $155 million, up $23 million from the same time in 2020. This boost drove the company’s modest revenue increase for the quarter. Space Infrastructure gains were driven by an increase in revenue from commercial programs.
The quarter’s results were brought down by a $28 million impact due to the failure of the SXM-7 satellite for Sirius XM Holdings, which was launched in December 2020. Maxar said in its quarter results that it exhausted efforts to fully recover the satellite in April 2021. The $28 million charge includes $3 million in costs trying to repair and recover the satellite and a $25 million cumulative adjustment for the satellite as well.
“Revenue and earnings were negatively impacted by a $28 million charge related to the Sirius-XM7 satellite program. Without this charge, we performed in-line with our expectations for the quarter,” stated Biggs Porter, Maxar CFO.
CEO Dan Jablonsky highlighted contract renewals in Earth Intelligence during the quarter, including awards with the U.S. Army and National Geospatial Intelligence Agency to support training, tactical, and intelligence missions. He also highlighted Space Infrastructure wins including a contract modification with NASA and study contracts supporting national security missions.
Total order backlog of $1.8 billion decreased $100 million from the previous quarter due to decreases in the Space Infrastructure segment.
Legion Pushed to Q4 2021
During the investor call on May 3, Jablonsky gave an update on the WorldView Legion satellite program, and a few issues that could push the satellite launch date back. Maxar is now targeting a Q4 2021 launch. In the previous quarter, the satellite was on target for a September 2021 launch.
One issue is completion and validation of flight software. Jablonsky also said there is an industry-wide issue with some aspects of Honeywell electronic components that are being used on the first Legion satellite. Maxar is receiving preferential treatment to resolve the issue because it has been designed a high-priority defense mission.
Finally, Raytheon found an issue during testing on a high-precision optical instrument that is due to workmanship. Jablonsky said an extensive plan for remediation is being worked through, and this will lead to integration and testing delays.
“With exquisite imaging instruments like this, we can’t accept anything less than perfection,” Jablonsky said. It’s clearly a risk that this will prove to be the critical path for schedule. … We’re still driving hard, and schedule is incredibly important, but so is quality. We haven’t earned our hard one reputation by cutting corners.”
In terms of effects on revenue, Jablonsky said that he expects the WorldView Legion program to still reach target revenue a year and a half from now, even if launch delays cause revenue delays.
“It’s hard to guess at this point exactly how much mortgage challenge that presents us, but it does mean we’ll be focused on getting as much done as we possibly can now on the ground and then how fast we commissioned satellites and start delivering revenue … so that the customers can get their expected service levels from them,” he said.