GEOEYE INC. 
By HERNDON, Va., Nov. 6, 2012 /PRNewswire/ -- GeoEye, Inc. (NASDAQ: GEOY), a leading source of geospatial information and insight, announced today results for its fiscal third quarter ended Sept. 30, 2012.
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"Third quarter revenue and operating results were in line with our expectations. As expected, on Oct. 31, the National Geospatial-Intelligence Agency (NGA) notified us that they have decided to cancel our Service Level Agreement (SLA) part of the EnhancedView contract. Effective Dec. 1, 2012, we will no longer be providing imagery to the NGA," said Matt O'Connell, GeoEye's chief executive officer and president.
"We will continue to provide other services to the NGA under EnhancedView, including the Web delivery platform, secure operations and value-added production services," O'Connell continued. "We continue to move forward with our combination with DigitalGlobe. We expect to close the transaction late this year or in the first quarter of 2013."
THIRD QUARTER RESULTS
Total revenues were $87.1 million for the third quarter of 2012, a $1.3 million increase from the third quarter of 2011. Net income available to common stockholders for the third quarter of 2012 was $7.6 million, or $0.33 per fully diluted share, compared to $11.7 million, or $0.51 per fully diluted share, for the third quarter of 2011. When adjusted for transaction costs related to the combination with DigitalGlobe, net income available to common stockholders for the three months ended Sept. 30, 2012, was $12.0 million, or $0.53 per fully diluted share.
Operating profit was $15.2 million for the third quarter of 2012, which included $8.3 million of transaction-related costs. Operating margin was 17.4 percent for the third quarter of 2012, compared to 27.7 percent in the third quarter of 2011. 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 including transaction related costs) was $43.4 million for the third quarter of 2012, compared to $43.7 million in the same period in 2011.
The company ended the third quarter of 2012 with unrestricted cash, cash equivalents and short-term investments of $229.4 million; total assets of approximately $1.5 billion; stockholders' equity of $550.8 million and long-term debt of $513.4 million.
THIRD QUARTER 2012 OPERATING HIGHLIGHTS
Revenue Mix
-- Imagery revenues in the third quarter of 2012 were $59.7 million, or
68.6 percent of total revenues. Production and other services revenues
were $21.3 million, or 24.5 percent of total revenues. The NextView cost
share accounted for revenues of $6.0 million, or 6.9 percent of total
revenues.
-- The company recognized $37.5 million of imagery and other revenue under
the EnhancedView SLA during the third quarter. U.S. government revenues
were $58.9 million, or 68 percent of total revenues in the quarter.
Geographic Information
-- Domestic revenues were $66.1 million for the third quarter of 2012, or
75.8 percent of total revenues for the period. International revenues
were $21.0 million for the third quarter of 2012, or 24.2 percent of
total revenues for the period.
GeoEye-2 Capital Expenditures
-- During the quarter, the company invested $55.3 million for the continued
development and construction of the GeoEye-2 satellite, including $13.4
million of capitalized interest. To date, the company has invested
$773.6 million in the GeoEye-2 satellite program, including $103.1
million of capitalized interest.
NINE MONTH RESULTS
Total revenues for the nine months ended Sept. 30, 2012, were $264.8 million, a 2.0 percent increase from $259.6 million in the nine months ended Sept. 30, 2011. The company's Adjusted EBITDA for the nine-month period ended Sept. 30, 2012, was $134.3 million, an increase of 2.2 percent from the same period in 2011. Net income available to common stockholders for the nine months ended Sept. 30, 2012, was $32.5 million, or $1.43 per fully diluted share, as compared to net income available to common stockholders of $32.8 million, or $1.44 per fully diluted share, in the same period in 2011. When adjusted for transaction related and other costs of $10.9 million, net income available to common stockholders for the nine months ended Sept. 30, 2012, was $38.3 million, or $1.68 per fully diluted share.
FISCAL YEAR 2012 FINANCIAL OUTLOOK
Given the execution of a definitive merger agreement with DigitalGlobe in July 2012, and the nature of the ongoing business transaction, the company has suspended its full year 2012 guidance.
CONFERENCE CALL
Due to the pending merger of GeoEye, Inc. with DigitalGlobe, Inc., GeoEye will not host a conference call to discuss financial results for the third quarter of 2012.
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,
-------------
2012 2011 Change
---- ---- ------
(unaudited)
Revenues $87,109 $85,769 $1,340
Operating expenses:
Direct costs of revenue (exclusive
of depreciation and amortization) 31,227 28,508 2,719
Depreciation and amortization 17,860 17,986 (126)
Selling, general and
administrative 22,822 15,516 7,306
Total operating expenses 71,909 62,010 9,899
Income from operations 15,200 23,759 (8,559)
Interest income (expense),
net 22 (1,122) 1,144
Income before provision for
income taxes 15,222 22,637 - (7,415)
Provision for income taxes (5,666) (8,549) 2,883
Net income 9,556 14,088 - (4,532)
Preferred stock dividends (1,007) (1,008) 1
8,549 13,080 (4,531)
Income allocated to
participating securities (912) (1,416) 504
---- ------ ---
Net income available to
common stockholders $7,637 $11,664 $(4,027)
====== ======= =======
Earnings per share
Basic $0.34 $0.53 $(0.19)
=====
Diluted $0.33 $0.51 $(0.18)
=======
Weighted average shares
basic 22,519 22,147
====== ======
Weighted average shares
diluted 22,845 22,789
====== ======
Nine Months Ended
September 30,
-------------
2012 2011 Change
---- ---- ------
(unaudited)
Revenues $264,786 $259,601 $5,185
Operating expenses:
Direct costs of revenue (exclusive
of depreciation and amortization) 91,937 91,246 691
Depreciation and amortization 53,355 52,204 1,151
Selling, general and
administrative 56,469 44,606 11,863
Total operating expenses 201,761 188,056 13,705
Income from operations 63,025 71,545 (8,520)
Interest income (expense),
net 1,382 (8,249) 9,631
Income before provision for
income taxes 64,407 63,296 - 1,111
Provision for income taxes (25,004) (23,552) (1,452)
Net income 39,403 39,744 - (341)
Preferred stock dividends (3,002) (2,992) (10)
36,401 36,752 (351)
Income allocated to
participating securities (3,902) (3,984) 82
------ ------ ---
Net income available to
common stockholders $32,499 $32,768 $(269)
======= ======= =====
Earnings per share
Basic $1.45 $1.48 $(0.03)
=====
Diluted $1.43 $1.44 $(0.01)
=======
Weighted average shares
basic 22,392 22,107
====== ======
Weighted average shares
diluted 22,799 22,767
====== ======
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2012 2011 Change
---- ---- ------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $220,860 $188,738 $32,122
Short-term investments 8,500 9,220 (720)
Accounts receivable -trade
and unbilled receivables,
net 44,973 39,917 5,056
Income tax receivable 2,748 19,645 (16,897)
Restricted cash 3,952 4,207 (255)
Current deferred tax assets 2,148 2,148 -
Prepaid expenses and other
current assets 11,360 14,805 (3,445)
Total current assets 294,541 278,680 15,861
Property, plant and
equipment, net 56,857 48,065 8,792
Satellites and related ground
systems, net 1,070,795 913,454 157,341
Goodwill 67,945 68,130 (185)
Intangible assets, net 8,130 10,526 (2,396)
Non-current restricted cash 3,915 6,875 (2,960)
Other non-current assets 11,051 8,855 2,196
Total assets $1,513,234 $1,334,585 $178,649
========== ========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses $63,240 $58,510 $4,730
Current portion of deferred
revenue 67,322 53,433 13,889
Total current liabilities 130,562 111,943 18,619
Long-term debt 513,379 511,019 2,360
Long-term deferred revenue,
net of current portion 220,869 131,968 88,901
Deferred tax liabilities 89,748 64,694 25,054
Other non-current liabilities 7,879 7,674 205
Total liabilities 962,437 827,298 135,139
------- ------- -------
Commitments and contingencies - - -
Stockholders' equity:
Series A convertible
preferred stock 1 1 -
Series B junior participating
preferred stock - - -
Common stock 226 222 4
Additional paid-in capital 386,259 379,154 7,105
Retained earnings 164,311 127,910 36,401
Total stockholders' equity 550,797 507,287 43,510
------- ------- ------
Total liabilities and
stockholders' equity $1,513,234 $1,334,585 $178,649
========== ========== ========
CONSOLIDATED STATEMENTS OF CASH FLOWS INFORMATION
(in thousands)
Nine Months Ended
September 30,
------------------
2012 2011 Change
---- ---- ------
(unaudited)
Net cash
provided by
operating
activities $238,110 $133,702 $104,408
Net cash used
in investing
activities (204,352) (205,765) 1,413
Net cash used
in financing
activities (1,636) (1,842) 206
Net increase
(decrease) in
cash and cash
equivalents 32,122 (73,905) 106,027
Cash and cash
equivalents,
beginning of
period 188,738 283,233 (94,495)
Cash and cash
equivalents,
end of period $220,860 $209,328 $11,532
======== ======== =======
ADJUSTED EBITDA
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
2012 2011 2012 2011
---- ---- ---- ----
Net income $9,556 $14,088 $39,403 $39,744
Adjustments:
Interest (income)
expense, net (22) 1,122 (1,382) 8,249
Provision for income
taxes 5,666 8,549 25,004 23,552
Depreciation and
amortization 17,860 17,986 53,355 52,204
Transaction costs 8,339 - 10,715 -
Non-cash stock-based
compensation expense 2,043 1,928 7,219 7,665
Adjusted EBITDA $43,442 $43,673 $134,314 $131,414
======= ======= ======== ========
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 including transaction related
costs. 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 9/30/12 Three Months Ended
9/30/11 Nine Months Ended 9/30/12 Nine Months Ended 9/30/11
-------------------------- ------------------- ------------------------- -------------------------
Net income available
to common
stockholders $7,637 $11,664 $32,499 $32,768
Adjustments:
Transaction costs 8,339 10,715
Adjustment to
normalize provision
for income taxes (3,416) (4,254)
Impact of adjustments
on income allocated
to participating
securities (525) (693)
Adjusted net income
available to common
stockholders $12,035 $11,664 $38,267 $32,768
======= ======= ======= =======
Weighted average
shares -fully
diluted 22,845 22,789 22,799 22,767
Adjusted diluted EPS $0.53 $0.51 $1.68 $1.44
===== ===== ===== =====
Adjusted Net Income Available to Common Stockholders is a non-GAAP financial measure that represents net income available to common stockholders before
other items including transaction related costs, 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.
About GeoEye
GeoEye is a leading source of geospatial information and insight for decision makers and analysts, who need a clear understanding of our changing world to protect lives, manage risk and optimize resources. Each day, organizations in defense and intelligence, public safety, critical infrastructure, energy and online media rely on GeoEye's imagery, tools and expertise to support important missions around the globe. Widely recognized as a pioneer in high-resolution satellite imagery, GeoEye has evolved into a complete provider of geospatial intelligence solutions. GeoEye's ability to collect, process and analyze massive amounts of geospatial data allows our customers to quickly see precise changes on the ground and anticipate where events may occur in the future. GeoEye is a public company listed on NASDAQ as GEOY and is headquartered in Herndon, Virginia with more than 700 employees worldwide. Learn more at www.geoeye.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Without limitation, the words "anticipates," "believes," "estimates," "expects," "intends," "plans," "will" and similar expressions are intended to identify forward-looking statements. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future, including statements relating to growth, expected levels of expenditures and statements expressing general optimism about future operating results, are forward-looking statements. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All such forward-looking statements and those presented elsewhere by our management from time to time are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements. These risks and uncertainties include, but are not limited to, those described in "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2011, which we filed with the Securities and Exchange Commission ("SEC") on March 13, 2012, as updated in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2012, and June 30, 2012, which we filed with the SEC on May 4, 2012, and August 7, 2012, respectively. Copies of all SEC filings may be obtained from the SEC's EDGAR Web site, http://www.sec.gov/ or by contacting: William L. Warren, Executive Vice President, General Counsel and Secretary, at 703-480-5672.
SOURCE GeoEye, Inc.
