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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38228

Maxar Technologies Inc.

Delaware

83-2809420

(State or jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

1300 W. 120th Avenue, Westminster, Colorado

80234

(Address of principal executive offices)

(Zip Code)

303-684-7660

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock par value of $0.0001 per share

MAXR

New York Stock Exchange

Toronto Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and emerging growth company in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer 

Non-accelerated Filer 

Smaller Reporting Company  Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No 

As of October 27, 2022, there were 74,561,562 shares of the registrant’s common stock, at $0.0001 par value, outstanding.

Maxar Technologies Inc.

Quarterly Report on Form 10-Q

For the period ended September 30, 2022

HIDDEN ROW

Item Number

Table of Contents

PART I

1.

Financial Statements

3

Unaudited Condensed Consolidated Statements of Operations

3

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

4

Unaudited Condensed Consolidated Balance Sheets

5

Unaudited Condensed Consolidated Statements of Cash Flows

6

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

7

Notes to the Unaudited Condensed Consolidated Financial Statements

9

2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

27

3.

Quantitative and Qualitative Disclosures about Market Risk

45

4.

Controls and Procedures

45

PART II

1.

Legal Proceedings

46

1A.

Risk Factors

46

2.

Unregistered Sales of Equity Securities and Use of Proceeds

71

3.

Defaults Upon Senior Securities

71

4.

Mine Safety Disclosures

71

5.

Other Information

71

6.

Exhibits

71

Signatures

74

2

PART I. FINANCIAL INFORMATION

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

Three Months Ended 

Nine Months Ended 

September 30, 

September 30, 

    

2022

    

2021

    

2022

    

2021

Revenues:

Product

$

161

$

166

$

469

$

498

Service

275

271

810

804

Total revenues

436

437

1,279

1,302

Costs and expenses:

Product costs, excluding depreciation and amortization

125

144

380

448

Service costs, excluding depreciation and amortization

95

93

280

286

Selling, general and administrative

110

89

320

261

Depreciation and amortization

 

64

 

74

 

199

 

221

Gain on sale of assets

(1)

(1)

Operating income

 

43

 

37

 

101

 

86

Interest expense, net

 

30

 

25

 

129

 

127

Other expense (income), net

12

(2)

7

(6)

Income (loss) before taxes

 

1

 

14

 

(35)

 

(35)

Income tax expense (benefit)

 

5

 

 

6

 

(10)

Net (loss) income

$

(4)

$

14

$

(41)

$

(25)

Net (loss) income per common share:

Basic

$

(0.05)

$

0.19

$

(0.56)

$

(0.36)

Diluted

$

(0.05)

$

0.19

$

(0.56)

$

(0.36)

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

3

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

(In millions)

Three Months Ended 

Nine Months Ended 

September 30, 

September 30, 

    

2022

    

2021

    

2022

    

2021

Net (loss) income

$

(4)

$

14

$

(41)

$

(25)

Other comprehensive income (loss), net of tax:

Unrealized gain on interest rate swaps

 

11

3

 

23

13

Foreign currency translation adjustments

 

(1)

 

(2)

(1)

Gain on pension and other postretirement benefit plans

1

3

Other comprehensive income, net of tax

 

10

4

 

21

15

Comprehensive income (loss), net of tax

$

6

$

18

$

(20)

$

(10)

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

4

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Balance Sheets

(In millions)

September 30, 

December 31, 

    

2022

    

2021

Assets

Current assets:

Cash and cash equivalents

 

$

28

$

47

Trade and other receivables, net

 

 

399

 

355

Inventory, net

 

 

39

 

39

Advances to suppliers

27

31

Prepaid assets

32

35

Other current assets

64

22

Total current assets

 

 

589

 

529

Non-current assets:

 

 

 

  

Orbital receivables, net

 

 

348

368

Property, plant and equipment, net

 

 

1,036

940

Intangible assets, net

 

 

712

787

Non-current operating lease assets

136

145

Goodwill

 

 

1,627

1,627

Other non-current assets

109

102

Total assets

 

$

4,557

$

4,498

Liabilities and stockholders’ equity

 

 

Current liabilities:

 

 

Accounts payable

 

$

91

$

75

Accrued liabilities

73

43

Accrued compensation and benefits

 

 

65

 

111

Contract liabilities

 

 

245

 

289

Current portion of long-term debt

 

 

22

 

24

Current operating lease liabilities

33

42

Other current liabilities

70

38

Total current liabilities

 

599

 

622

Non-current liabilities:

 

 

Pension and other postretirement benefits

 

 

125

134

Operating lease liabilities

136

138

Long-term debt

 

 

2,172

2,062

Other non-current liabilities

64

79

Total liabilities

 

 

3,096

 

3,035

Commitments and contingencies

Stockholders’ equity:

 

 

Common stock ($0.0001 par value, 240 million common shares authorized; 74.3 million and 72.7 million issued and outstanding at September 30, 2022 and December 31, 2021, respectively)

 

 

Additional paid-in capital

 

 

2,256

2,235

Accumulated deficit

 

 

(763)

(720)

Accumulated other comprehensive loss

 

 

(32)

(53)

Total Maxar stockholders' equity

1,461

1,462

Noncontrolling interest

1

Total stockholders' equity

 

 

1,461

 

1,463

Total liabilities and stockholders' equity

 

$

4,557

$

4,498

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

5

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Statements of Cash Flows

(In millions)

Nine Months Ended 

September 30, 

    

2022

    

2021

Cash flows provided by (used in):

Operating activities:

 

Net loss

$

(41)

$

(25)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

 

199

 

221

Stock-based compensation expense

 

35

 

31

Amortization of debt issuance costs and other non-cash interest expense

12

11

Loss from early extinguishment of debt

53

41

Cumulative adjustment to SXM-7 revenue

30

Deferred income tax expense

1

2

Other

11

(3)

Changes in operating assets and liabilities:

Trade and other receivables, net

(31)

(33)

Accounts payable and liabilities

5

(57)

Contract liabilities

(44)

(20)

Other

(9)

(12)

Cash provided by operating activities - continuing operations

 

191

186

Cash used in operating activities - discontinued operations

(1)

Cash provided by operating activities

191

185

Investing activities:

Purchase of property, plant and equipment and development or purchase of software

 

(226)

 

(156)

Acquisition of investment

(2)

Cash used in investing activities - continuing operations

 

(228)

 

(156)

Financing activities:

Cash paid to extinguish existing Term Loan B

(1,341)

Proceeds from amendment of Term Loan B, net of discount

1,329

Repurchase of 9.75% 2023 Notes, including premium

(537)

(384)

Proceeds from issuance of 7.75% 2027 Notes

500

Net proceeds from Revolving Credit Facility

125

Debt issuance costs paid

(27)

Settlement of securitization liability

(10)

(9)

Repayments of long-term debt

(12)

(7)

Net proceeds from issuance of common stock

380

Other

(10)

(4)

Cash provided by (used in) financing activities - continuing operations

17

(24)

(Decrease) increase in cash, cash equivalents, and restricted cash

(20)

5

Effect of foreign exchange on cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash, beginning of year

48

31

Cash, cash equivalents, and restricted cash, end of period

$

28

$

36

Reconciliation of cash flow information:

Cash and cash equivalents

$

28

$

36

Restricted cash included in prepaid and other current assets

Total cash, cash equivalents, and restricted cash

$

28

$

36

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

6

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In millions, except per share amounts)

Three and nine months ended September 30, 2022:

Accumulated

other

Total

Common Stock

Additional

Accumulated

comprehensive

Noncontrolling

stockholders’

    

Shares

    

Amount

    

paid-in capital

    

deficit

    

income (loss)

    

interest

    

equity

Balance as of December 31, 2021

72.7

$

$

2,235

$

(720)

$

(53)

$

1

$

1,463

Common stock issued under employee stock purchase plan

0.1

2

2

Equity classified stock-based compensation expense

0.6

6

6

Dividends ($0.01 per common share)

Comprehensive (loss) income

(7)

11

4

Balance as of March 31, 2022

73.4

$

$

2,243

$

(727)

$

(42)

$

1

$

1,475

Common stock issued under employee stock purchase plan

0.1

2

2

Equity classified stock-based compensation expense

0.7

1

1

Dividends ($0.01 per common share)

(1)

(1)

Comprehensive loss

(30)

(30)

Other

(1)

(1)

Balance as of June 30, 2022

74.2

$

$

2,246

$

(758)

$

(42)

$

$

1,446

Equity classified stock-based compensation expense

0.1

10

10

Dividends ($0.01 per common share)

(1)

(1)

Comprehensive (loss) income

(4)

10

6

Balance as of September 30, 2022

74.3

$

$

2,256

$

(763)

$

(32)

$

$

1,461

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements

7

MAXAR TECHNOLOGIES INC.

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In millions, except per share amounts)

Three and nine months ended September 30, 2021:

Accumulated

other

Total

Common Stock

Additional

Accumulated

comprehensive

Noncontrolling

stockholders’

    

Shares

    

Amount

    

paid-in capital

    

deficit

    

income (loss)

    

interest

    

equity

Balance as of December 31, 2020

61.2

$

$

1,818

$

(763)

$

(120)

$

1

$

936

Common stock issuance, net of transaction fees

10.0

380

380

Common stock issued under employee stock purchase plan

0.1

2

2

Equity classified stock-based compensation expense

0.4

7

7

Dividends ($0.01 per common share)

Comprehensive (loss) income

(84)

6

(78)

Balance as of March 31, 2021

71.7

$

$

2,207

$

(847)

$

(114)

$

1

$

1,247

Common stock issued under employee stock purchase plan

0.1

2

2

Equity classified stock-based compensation expense

0.6

2

2

Dividends ($0.01 per common share)

(1)

(1)

Comprehensive income

45

5

50

Balance as of June 30, 2021

72.4

$

$

2,211

$

(803)

$

(109)

$

1

$

1,300

Common stock issued under employee stock purchase plan

0.1

2

2

Equity classified stock-based compensation expense

0.1

11

11

Dividends ($0.01 per common share)

(1)

(1)

Comprehensive income

14

4

18

Balance as of September 30, 2021

72.6

$

$

2,224

$

(790)

$

(105)

$

1

$

1,330

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

8

Table of Contents

MAXAR TECHNOLOGIES INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

(Tabular amounts in millions of dollars, unless otherwise noted)

1.

GENERAL BUSINESS DESCRIPTION

Maxar Technologies Inc. (the “Company” or “Maxar”) is a provider of comprehensive space solutions and secure, precise, geospatial intelligence. Maxar helps government and commercial customers monitor, understand and navigate our changing planet; deliver global broadband communications; and explore and advance the use of space. The Company’s approach combines decades of deep mission understanding and a proven commercial and defense foundation to deploy solutions and deliver insights with speed, scale and cost effectiveness. Maxar’s stock trades on the New York Stock Exchange and Toronto Stock Exchange under the symbol “MAXR.”

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The Unaudited Condensed Consolidated Financial Statements include the accounts of Maxar Technologies Inc., and all consolidated subsidiary entities. The Company’s Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). All intercompany balances and transactions are eliminated on consolidation.

The Company’s Unaudited Condensed Consolidated Financial Statements are presented in U.S. dollars and have been prepared on a historical cost basis, except for certain financial assets and liabilities including derivative financial instruments which are stated at fair value.

The Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s annual audited consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K filed with the SEC. Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. In management’s opinion, all adjustments of a normal recurring nature that are necessary for a fair statement of the accompanying Unaudited Condensed Consolidated Financial Statements have been included. 

Use of estimates, assumptions and judgments

The preparation of the Unaudited Condensed Consolidated Financial Statements in accordance with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the reporting date, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared using the most current and best available information; however, actual results could differ materially from those estimates.

Recent Accounting Guidance Adopted

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which together with subsequent amendments, is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. This guidance was effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. On June 30, 2022, the Company amended its existing interest rate swaps that mature in June 2023 to modify the designated hedged interest rate risk from LIBOR to the Secured

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Table of Contents

MAXAR TECHNOLOGIES INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

(Tabular amounts in millions, unless otherwise noted)

Overnight Financing Rate (“SOFR”) in connection with the Company's amendment and restatement of its Syndicated Credit Facility (as defined below) and elected to apply the contract modification optional expedient to the amendments and consider the amendments as a continuation of the existing contracts without performing an assessment that would otherwise be required under U.S. GAAP. See Note 8 for additional details regarding the amendments to the existing interest swaps.

3.

TRADE AND OTHER RECEIVABLES, NET

    

September 30, 

December 31, 

2022

    

2021

Billed

$

195

$

162

Unbilled

 

157

 

143

Total trade receivables

352

305

Orbital receivables, current portion

44

49

Other

4

2

Allowance for doubtful accounts

(1)

(1)

Trade and other receivables, net

$

399

$

355

The Company had orbital receivables from 13 customers for which the largest customer’s value represented 30% of the stated current and non-current balance sheet values as of both September 30, 2022 and December 31, 2021.

During the first quarter of 2021, the Company reduced its outstanding receivables related to the SXM-7 satellite for the final milestone and expected orbital payments by $15 million and $14 million, respectively. See Note 10 for additional details regarding the adjustment to revenue.

There have been no changes in the allowance for expected credit losses related to non-current orbital receivables for the nine months ended September 30, 2022.

Securitization liabilities are as follows:

    

September 30, 

December 31, 

2022

    

2021

Current portion

$

17

$

16

Non-current portion

 

21

 

32

Total securitization liabilities

$

38

$

48

4.

INVENTORY, NET

    

September 30, 

    

December 31, 

2022

2021

Raw materials

$

36

$

34

Work in process

5

6

Total

$

41

$

40

Inventory reserve

(2)

(1)

Inventory, net

$

39

$

39

5.PROPERTY, PLANT AND EQUIPMENT, NET

10

Table of Contents

MAXAR TECHNOLOGIES INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

(Tabular amounts in millions, unless otherwise noted)

    

September 30, 

    

December 31, 

2022

2021

Satellites

$

397

$

397

Equipment

209

221

Computer hardware

115

95

Leasehold improvements

85

83

Furniture and fixtures

16

16

Construction in process1

796

668

Property, plant and equipment, at cost

1,618

1,480

Accumulated depreciation

 

(582)

(540)

Property, plant and equipment, net

$

1,036

$

940

1Construction in process is primarily related to the construction of the Company’s WorldView Legion satellites.

Depreciation expense for property, plant and equipment was $20 million and $23 million for the three months ended September 30, 2022 and 2021, respectively, and $58 million and $67 million for the nine months ended September 30, 2022 and 2021, respectively.

6.

INTANGIBLE ASSETS

September 30, 2022

December 31, 2021

    

Gross carrying
value

    

Accumulated
amortization

    

Net carrying
value

    

Gross carrying
value

    

Accumulated
amortization

    

Net carrying
value

Customer relationships

$

615

$

(223)

$

392

$

615

$

(190)

$

425

Software

446

(179)

267

379

(152)

227

Technologies

367

(329)

38

367

(278)

89

Backlog

 

86

 

(86)

 

 

107

 

(89)

 

18

Image library

80

(80)

80

(71)

9

Trade names and other

37

(22)

15

37

(18)

19

Intangible assets

$

1,631

$

(919)

$

712

$

1,585

$

(798)

$

787

The gross carrying value and accumulated amortization balances for fully amortized backlog were removed from the Unaudited Condensed Consolidated Balance Sheets and excluded from the table above as of September 30, 2022. Amortization expense related to intangible assets was $44 million and $51 million, for the three months ended September 30, 2022 and 2021, respectively, and $141 million and $154 million for the nine months ended September 30, 2022 and 2021, respectively.

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MAXAR TECHNOLOGIES INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

(Tabular amounts in millions, unless otherwise noted)