GeoEye Reports Third Quarter 2011 Earnings Results

-- Conference Call Scheduled for Tuesday, November 1, 2011, 8:30 a.m. EDT --

(PRNewswire) — GeoEye, Inc. (NASDAQ: GEOY), a leading source of geospatial information and insight, announced today results for its fiscal third quarter ended Sept. 30, 2011.

(Logo: http://photos.prnewswire.com/prnh/20080625/LAW528LOGO)

"While results for the third quarter were below our expectations, our core business continues to be strong," said Matt O'Connell, GeoEye's chief executive officer and president. "We renewed our Service Level Agreement with the National Geospatial-Intelligence Agency for another year, booked some significant new production orders and maintained strong margins. We have positioned the Company to resume growth from our government, international and commercial clients in the fourth quarter."

THIRD QUARTER RESULTS

Total revenues were $85.8 million for the third quarter of 2011, an 0.8 percent decrease from the third quarter of 2010. The net income available to common stockholders for the third quarter of 2011 was $11.7 million, or $0.51 per fully diluted share, compared to a loss of $6.5 million, or ($0.30) per fully diluted share, for the third quarter of 2010. Adjusted net income available to common shareholders (a non-GAAP measurement that excludes the impact of non-operating charges, gains and one-time charges and tax benefits) for the third quarter of 2011 was also $11.7 million, or $0.51 per diluted share, as compared to $13.6 million, or $0.61 per diluted share, in the same period in 2010.  

Operating profit was $23.8 million for the third quarter of 2011. Operating margin was 27.7 percent for the third quarter of 2011, compared to 33.7 percent in the third quarter of 2010. Adjusted EBITDA (a non-GAAP measurement defined as net income before interest, taxes, depreciation, amortization, non-cash recognition of stock compensation expense and other items) was approximately $43.7 million for the third quarter of 2011, compared to $47.4 million in the same period in 2010. The Adjusted EBITDA as a percentage of revenues was 50.9 percent for the third quarter of 2011, compared to 54.8 percent in the third quarter of 2010.

The Company ended the third quarter of 2011 with unrestricted cash, cash equivalents and short-term investments of $218.5 million; total assets of approximately $1.3 billion; stockholders' equity of $488.4 million and long-term debt of $510.3 million.

THIRD QUARTER 2011 OPERATING HIGHLIGHTS

Revenue Mix

  • Imagery revenues in the third quarter of 2011 were $63.5 million, or 74.0 percent of total revenues. Production and other services revenues were $16.2 million, or 19.0 percent of total revenues. The NextView cost share accounted for revenues of $6.0 million, or 7.0 percent of total revenues.

Geographic Information

  • Domestic revenues were $63.7 million for the third quarter of 2011, or 74.3 percent of total revenues for the period. International revenues were $22.1 million for the third quarter of 2011, or 25.7 percent of total revenues for the period.
  • Domestic revenues increased 1.9 percent for the third quarter of 2011, compared to the same period in 2010. International revenues were down 7.8 percent for the third quarter of 2011, compared to the same period in 2010.

GeoEye-2 Capital Investments

  • During the quarter, the Company invested $62.7 million for the continued development and construction of the GeoEye-2 satellite, including $12.1 million of capitalized interest. To date, the Company has invested $518.1 million in the GeoEye-2 satellite program, including $49.7 million of capitalized interest.

NINE MONTH RESULTS

Total revenues for the nine months ended Sept. 30, 2011, were $259.6 million, a 4.8 percent increase from $247.8 million in the nine months ended Sept. 30, 2010. The Company's Adjusted EBITDA for the nine-month period ended Sept. 30, 2011, was $131.4 million, a decrease of 1.3 percent from the same period in 2010. The net income available to common stockholders for the nine months ended Sept. 30, 2011, was $32.8 million, or $1.44 per fully diluted share, as compared to net income available to common stockholders of $6.4 million, or $0.29 per fully diluted share, in the same period in 2010.

FISCAL YEAR 2011 FINANCIAL OUTLOOK

For the full year, the Company is revising its previous revenue, Adjusted EBITDA and earnings per share guidance. Our new expectations for 2011 are for revenues to range from $348 million to $355 million, Adjusted EBITDA to range from $176 million to $181 million and earnings per share of $1.95 to $2.15.  In the fourth quarter, we anticipate sequential growth and expect revenues to be in the range of $88 million to $95 million.  

These estimates represent management's current expectations about the Company's future financial performance, based on information available at this time.

CONFERENCE CALL INFORMATION

GeoEye, Inc. (NASDAQ: GEOY) will host a conference call for investors and analysts to discuss financial results for the third quarter, which ended Sept. 30, 2011.

When: Tuesday, Nov. 1, 2011, at 8:30 a.m. Eastern Daylight Time

To Participate:

To participate in the call via phone, domestic callers may dial toll-free at (877) 776-4039. International callers may dial (631) 291-4808 approximately 10 minutes prior to the start time. Callers may identify themselves to the operator as GeoEye conference call participants or by using the conference ID: 10931966. Questions will be accepted from phone participants during the live call after prepared remarks and as time permits.  

The conference call will also be webcast on the "Investor Relations" section of the Company's corporate Web site, www.geoeye.com. To directly access the live webcast go to: http://geoy.client.shareholder.com/eventdetail.cfm?eventid=102870 and click on the "November 1, 2011 Investor Update Webcast" link. Please allow 15 minutes before the scheduled start time to register, download and install any necessary audio software.

Replay:

An audio replay of the third quarter conference call will be available through midnight Nov. 15, 2011, by dialing (855) 859-2056 and typing in the conference ID number 10931966.

An archived webcast of the conference call will be available at the same URL address approximately two hours after the conclusion of the call.

Selected financial results for the Company are as follows (dollars in thousands, except earnings per share):

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)










Three Months Ended September 30,





2011


2010


Change



(unaudited)



Revenues

$   85,769


$   86,452


$    (683)

Operating expenses:







Direct costs of revenue (exclusive of depreciation and amortization)

28,508


26,722


1,786


Depreciation and amortization

17,986


16,363


1,623


Selling, general and administrative

15,516


14,219


1,297


Total operating expenses

62,010


57,304


4,706

Income from operations

23,759


29,148


(5,389)

Interest expense, net

(1,122)


(5,719)


4,597

Other non-operating expense

-


(16,047)


16,047

Gain from investments

-


700


(700)

Write-off of prepaid financing costs

-


(6,412)


6,412

Income before provision for income taxes

22,637


1,670


20,967

Provision for income taxes

(8,549)


(8,046)


(503)

Net income (loss)

14,088


(6,376)


20,464

Preferred stock dividends

(1,008)


(99)


(909)



13,080


(6,475)


19,555

Income allocated to participating securities

(1,416)


-


(1,416)

Net income (loss) available to common stockholders

$   11,664


$   (6,475)


$ 18,139








Earnings (loss) per share







Basic

$       0.53


$     (0.30)


$     0.83


Diluted

$       0.51


$     (0.30)


$     0.81

Shares used to compute basic earnings per share

22,147


21,792



Shares used to compute diluted earnings per share

22,789


21,792












Nine Months Ended September 30,





2011


2010


Change



(unaudited)



Revenues

$ 259,601


$ 247,802


$ 11,799

Operating expenses:







Direct costs of revenue (exclusive of depreciation and amortization)

91,246


77,905


13,341


Depreciation and amortization

52,204


48,585


3,619


Selling, general and administrative

44,606


41,384


3,222


Total operating expenses

188,056


167,874


20,182

Income from operations

71,545


79,928


(8,383)

Interest expense, net

(8,249)


(21,714)


13,465

Other non-operating expense

-


(24,466)


24,466

Gain from investments

-


700


(700)

Loss from early extinguishment of debt

-


(37)


37

Write-off of prepaid financing costs

-


(6,412)


6,412

Income before provision for income taxes

63,296


27,999


35,297

Provision for income taxes

(23,552)


(21,452)


(2,100)

Net income

39,744


6,547


33,197

Preferred stock dividends

(2,992)


(99)


(2,893)



36,752


6,448


30,304

Income allocated to participating securities

(3,984)


(27)


(3,957)

Net income available to common stockholders

$   32,768


$     6,421


$ 26,347








Earnings per share







Basic

$       1.48


$       0.30


$     1.18


Diluted

$       1.44


$       0.29


$     1.15

Shares used to compute basic earnings per share

22,107


21,544



Shares used to compute diluted earnings per share

22,767


21,982





CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)








September 30,


December 31,




2011


2010


Change


(unaudited)





ASSETS

Current assets:






Cash and cash equivalents

$          209,328


$        283,233


$ (73,905)

Short-term investments

9,220


50,124


(40,904)

Accounts receivable - trade and unbilled receivables, net

36,014


42,868


(6,854)

Income tax receivable

20,014


34,385


(14,371)

Restricted cash

4,207


3,952


255

Prepaid expenses and other current assets

13,427


16,183


(2,756)

Total current assets

292,210


430,745


(138,535)

Property, plant and equipment, net

48,097


35,924


12,173

Satellites and related ground systems, net

867,480


697,126


170,354

Goodwill

71,250


71,568


(318)

Intangible assets, net

12,277


14,943


(2,666)

Non-current restricted cash

7,862


10,822


(2,960)

Other non-current assets

8,366


7,957


409

Total assets

$       1,307,542


$     1,269,085


$  38,457







LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:






Accounts payable and accrued expenses

$            54,464


$          70,936


$ (16,472)

Current portion of deferred revenue

55,122


50,533


4,589

Current deferred tax liabilities

6,656


6,656


-

Total current liabilities

116,242


128,125


(11,883)

Long-term debt

510,275


508,160


2,115

Long-term deferred revenue, net of current portion

139,406


161,673


(22,267)

Deferred tax liabilities

45,492


21,336


24,156

Other non-current liabilities

7,713


6,548


1,165

Total liabilities

819,128


825,842


(6,714)

Commitments and contingencies

-


-


-

Stockholders’ equity:






Series A convertible preferred stock

1


1


-

Series B junior participating preferred stock

-


-


-

Common stock

222


221


1

Additional paid-in capital

376,141


367,723


8,418

Retained earnings

112,050


75,298


36,752

Total stockholders’ equity

488,414


443,243


45,171

Total liabilities and stockholders’ equity

$       1,307,542


$     1,269,085


$  38,457



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS INFORMATION

(in thousands)








Nine Months Ended

September 30,




2011


2010


Change


(unaudited)



Net cash provided by operating activities

$ 133,702


$   94,995


$  38,707

Net cash used in investing activities

(205,765)


(149,905)


(55,860)

Net cash (used in) provided by financing activities

(1,842)


92,739


(94,581)

Net (decrease) increase in cash and cash equivalents

(73,905)


37,829


(111,734)

Cash and cash equivalents, beginning of period

283,233


208,872


74,361

Cash and cash equivalents, end of period

$ 209,328


$ 246,701


$ (37,373)



ADJUSTED EBITDA

(in thousands)










Three Months Ended September 30,


Nine Months Ended September 30,


2011


2010


2011


2010

Net income (loss)

$                    14,088


$                    (6,376)


$                    39,744


$                      6,547

Adjustments:








Interest expense, net

1,122


5,719


8,249


21,714

Loss from early extinguishment of debt

-


-


-


37

Write-off of prepaid financing costs

-


6,412


-


6,412

Provision for income taxes

8,549


8,046


23,552


21,452

Depreciation and amortization

17,986


16,363


52,204


48,585

Non-cash stock-based compensation expense

1,928


1,844


7,665


4,685

Non-cash change in fair value of financial instrument

-


16,047


-


24,466

Gain from investments

-


(700)


-


(700)

Adjusted EBITDA

$                    43,673


$                    47,355


$                  131,414


$                  133,198









Adjusted EBITDA is a non-GAAP financial measure that represents net income before depreciation and amortization expenses, net interest income or expense, provision for income taxes, non-cash stock-based compensation expense and other items.  We believe that Adjusted EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing operations.  However, Adjusted EBITDA is not a recognized term under financial performance under GAAP, and our calculation of Adjusted EBITDA may not be comparable to the calculation of similarly titled measures of other companies.




ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS AND ADJUSTED DILUTED EPS


(in thousands, except per share amounts)










Three Months Ended

September 30, 2011


Three Months Ended

September 30, 2010


Nine Months Ended

September 30, 2011


Nine Months Ended

September 30, 2010




















Net income available to common stockholders

$                           11,664


$                           (6,475)


$                           32,768


$                             6,421


Adjustments:









Non-cash change in fair value of financial instrument

-


16,047


-


24,466


Write-off of prepaid financing costs

-


6,412


-


6,412


Gain from sale of investment

-


(700)


-


(700)


Income allocated to participating securities

-


(164)


-


-


Tax impact of adjustments

-


(1,521)


-


(1,543)


Adjusted net income available to common stockholders

$                           11,664


$                           13,599


$                           32,768


$                           35,056




















Weighted average shares diluted

22,789


21,792


22,767


21,982


Dilutive effect of stock options and other instruments

-


355


-


-


Adjusted fully diluted shares

22,789


22,147


22,767


21,982


Adjusted diluted EPS

$                               0.51


$                               0.61


$                               1.44


$                               1.59











Adjusted Net Income Available to Common Stockholders is a non-GAAP financial measure that represents net income available to common stockholders before other items, net of tax.  Adjusted Diluted EPS is a non-GAAP financial measure that represents fully diluted earnings per share before other items, net of tax.  We believe that Adjusted Net Income Available to Common Stockholders and Adjusted Diluted EPS provide useful information to investors because they allow investors to evaluate our performance for different periods on a more comparable basis by excluding items that are not related to the ongoing operations of our business.  However, Adjusted Net Income Available to Common Stockholders and Adjusted Diluted EPS are not recognized terms under financial performance under GAAP, and our calculation of Adjusted Net Income Available to Common Stockholders and Adjusted Diluted EPS may not be comparable to the calculation of similarly titled measures of other companies.




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