MAXR Maxar

Jason Gursky VP, IR
Dan Jablonsky CEO
Biggs Porter CFO
Kenneth Herbert Canaccord
Tim James TD Securities
Thanos Moschopoulos BMO Capital Markets
Seth Seifman JPMorgan
Michael Ciarmoli Truist Securities
Elizabeth Wenzel Bank of America
Christopher Quilty Quilty Analytics
Call transcript

Greetings. Thank you for standing by, and welcome to the Maxar Technologies First Quarter 2021 Investor Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jason Gursky, Vice President of Investor Relations. Please go ahead.

Jason Gursky

Yes. Good afternoon. Thanks, operator. Welcome to Maxar First Quarter 2021 Earnings Conference Call. I'm joined today by the Company's Chief Executive Officer, Dan Jablonsky; and its Chief Financial Officer, Biggs Porter. Both will make some opening remarks. After which, we're going to open up the line for your questions. We're shooting to wrap up the call in about an hour.

Before we get started, I'd like to refer listeners to the accompanying slides for today's presentation, which can be found on the Company's website at in the Investor Events and Presentations section of the site. Once there, please turn to Slide 2 where I'd like to remind you that part of today's discussion, including responses to various questions, may contain forward-looking statements, which represent the Company's estimates, future plans, objectives and expected performance at today's date. These statements are based on current assumptions that the Company believes are reasonable but are subject to a wide range of uncertainties and risks that could lead actual results to differ materially from the forward-looking information.

You are referred to the advisory regarding forward-looking statements contained in our quarterly earnings releases, earnings call slide decks and the Company's most recent MD&A section found in our Form 10-Q, which is available online under the Company's SEDAR profile at, under the Company's EDGAR profile at or on the Company's website at

As we get started, I'll ask you to turn to Slide 3. And then with that, I'll turn the call over to Dan. Dan, go ahead.

Dan Jablonsky

Thanks, Jason, and good afternoon, everyone. We had another busy quarter at Maxar. Good progress with the business and continued traction on our customer relationships and winning new programs. We're really encouraged at the pace that the vaccines are rolling out, and we've started returning people back to work sites to join the approximately quarter to 1/3 of our people that all along have continued powering through on-site to serve critical customer missions over the past year. Today, I'd like to run through key highlights from the quarter, update you on the progress we're making on our 2021 priorities, provide a view on the demand environment, pipeline and then do a double-click on some of the technologies we're working on with our space technologies that we believe will help us drive growth in the future.

So with that, please turn to Slide 3 of the accompanying presentation. We generated 12% revenue and 40% plus adjusted EBITDA growth year-over-year without the effects of the EnhancedView deferred revenue despite charges related to the Sirius XM satellite program. Biggs will go into the details later, but without these charges, growth for both metrics would have been even higher.

Importantly, work on Sirius-XM8 has completed and the satellites in route to the launch facility. We're looking forward to launch in a few weeks. I'm definitely not pleased with these rearview-looking charges. Putting it in context, I'm really encouraged with the underlying growth we generated across both the Intelligence and Space segments this quarter. They're both a strong proof point that all the work our teams have been doing to drive sustained growth in Maxar now and into the future are on the right path to continue creating shareholder value.

One of our most important metrics, free cash flow trends have continued to improve as well.

Our trailing 12-month consumption near breakeven this quarter.

We continue to expect capital expenditures to trend significantly lower beyond 2021, driving strong cash generation. That will give us even more flexibility on both debt reduction and those investments that will drive growth in the business. Booking trends also remain positive with trailing 12-month book-to-bill at roughly 1.1 times. Biggs will go into more details later. But on guidance, excluding the XM7 charge, we've increased the outlook for cash flow, maintain it for adjusted EBITDA and modestly decreased it for revenue. Overall, a pretty good quarter and start to the year but full charges on the Sirius XM satellite program. Please turn to Slide 4 for a review of the progress we're making, our 2021 priorities. We remain focused on winning in Earth Intelligence, which means driving bookings growth, including for capacity on WorldView Legion, growing our 3D capabilities and extending the EnhancedView program. Key wins in the quarter included several renewals with international allies and large technology companies.

Some of the large customers have started adding 3D data and point cloud capabilities to their renewals, including a key U.S. ally last week for over $10 million, highlighting and validating the decision we made to acquire Vricon last year.

Additionally, we signed contracts with the U.S. Army and the National Geospatial Intelligence Agency this quarter to support training, mapping, intelligence and operational missions.

We also signed our first deal with the drone delivery service. On WorldView Legion, I'm pleased to announce that we've signed contracts with four international allies to upgrade their direct access facilities to our 3.0 architecture so that they're ready for legion when the constellation comes online. This is an important step in the deployment of these assets and the eventual ramp in revenue will expect in Earth Intelligence over the next several years.

On the EnhancedView follow-on program, our customer continues its work on extending the program beyond 2023. It's always tough to predict exact dates, but it now appears possible that this award is likely to occur later in 2021. If that's the case, we'll expect the renewal of our existing contract in Q3 like we've seen every year for the past decade.

So from an execution perspective, it was a good quarter with the team generating solid adjusted EBITDA margin is tracking in line with our full year guidance range.

On the WorldView Legion program, we continue to progress, and I'm really excited about the capabilities of these satellites. This entire constellation will soon be providing to our customers. All that said, it's a complex program as anything this exquisite is expected to be, and work continues.

Software and engineering teams are getting back into workspaces this week to again be in proximity to the teams that have been conducting the build work, and that's really good to see. And it's really impressive to see the morale and energy on these teams. At this point, we're tracking a few critical items that could impact time lines to launch.

The first of these is completion and validation of flight software, which is complex and continued simulation and testing of this spacecraft and its components and subsystems.

Next, there's an industry-wide issue with some aspects of Honeywell electronic components that have been identified and need to be corrected. We're using these Honeywell electronic components on the first of our Legion satellites.

As I noted, the entire satellite industry is being impacted. Notably, Maxar's Legion program, though, has been designated as a high priority defense mission and has formally received a DX rating under the Defense Production Act. We're basically front of the line alongside other DX-rated programs that are close to it and preferential treatment and resolving this issue. And at this point, we're optimistic that this is not a pacing item.

Finally, we put our satellites and systems through a rigorous set of environmental testing to validate the engineering, the design, the quality and construction and work that goes into the build. We and our suppliers do that as additional validation measures.

During April, one of our suppliers, Raytheon, had been conducting those same sorts of tests on the high-precision optical instruments. They unexpectedly encountered an issue during testing not related to design but due to some workmanship in an assembly of a supporting component. An extensive plan for remediation is being completed. That's compressing some of the margin we had in our schedule and is leading to other integration and testing delays. This instrument has had some previous schedule delays, but we're pretty sure we've got our arms around at this point. With exquisite imaging instruments like this, we can't accept anything less than perfection. It's clearly a risk that this will prove to be the critical path for schedule.

We have more testing ahead of this and this can always change. That's our best view today of what's driving completion.

So, 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. We're going to keep going through our extensive mission assurance procedures. At this point, we expect a fourth quarter watch.

Turning now to Space Infrastructure, where we're committed to delivering the best possible systems for our customers, and from a business standpoint, have been focused on establishing a foundation for future growth. Key wins in the quarter included a contract modification with NASA for work on the power propulsion element, which allows Maxar to proceed with NASA's updated requirements for the now combined PPE halo spacecraft.

We also signed several study contracts for national security work as we continue to look to shape new programs and further diversify the business. From an investment standpoint, our recently upgraded mission architecture team is hard at work on new satellite and constellation designs, including modular approaches, as we look to serve commercial, civil and classified programs with highly engineered and affordable solutions.

We also remain focused on our payload strategy and are proactively working with partners on comprehensive packages that will solve our customers' most demanding mission needs. On execution, excluding the charge related to Sirius XM, adjusted EBITDA margins continued their improvement, reflecting better performance and healthier program mix. I'm also delighted to note that we recently hired Chris Johnson to lead our space programs organization. Chris comes to us from Boeing, where he's been for over two decades and most recently served as the President of Boeing Satellite Systems and led successful business transformation that reduced balance sheet risk, improved profitability, refined product strategy and modernized manufacturing approaches. I look forward to working with Chris in the new role to drive sustained revenue, profit and cash flow growth in our Space segment, and I'm glad to be welcoming Chris to the Maxar team. And finally, on financial flexibility, we issued 10 million shares this quarter and use the proceeds to claw back $350 million of expensive debt that was due in 2023. This transaction strengthens our financial position and sets us up for continued growth. We believe at the time and continue to now that the trade on dilution was advantageous to our shareholders and will drive higher equity performance going forward. Please turn to Slide 5.

Speaking of growth and the demand environment, we continue to see over $25 billion in pipeline opportunities over the next five years, which compares quite favorably to the $1.9 billion of bookings in 2020. Space Infrastructure, demand for space systems and architectures is growing, along with our other technologies there across both commercial and government markets for missions in LEO, GEO, deep space.

On the Earth Intelligence side, we see growing demand for data and analytics, particularly with our government customers. And the Legion Constellation will be a key enabler in meeting our customers' needs. We're closely watching, and at this point, are encouraged by the Biden administration's assessment of the geopolitical environment and with its priorities in making with regard to spending, both on the national security front and with several programs at agencies like NASA. We remain confident about the growth trajectory of the Company in the years ahead and look forward to updating you over time on the progress we make in growing our backlog. Please turn to Slide 6.

As you recall, last quarter, I did a deeper dive on some of the technology we've been developing and deploying in Earth Intelligence to support the U.S. government and reducing sensor to shooter time lines on the battlefield and the subsequent growth potential we see for Maxar as a result. What I thought I'd do today is provide some more detail on what we've been up to recently in our Space Technologies, the strength of our portfolio and the potential we have to drive growth.

As you know, Maxar has a long heritage in space that dates back to the Apollo missions, and we've been designing and manufacturing communications and earth observation satellites, space exploration spacecraft and space robotics for decades. Slide 7 demonstrates some of the use cases of our technology, including satellites for direct broadcasting, two-way broadband, digital audio, radio, digital media and weather. We've been a market leader in the industry for these types of applications that have relied on price, performance and quality to win market share over time.

Going forward, we see our unique capabilities in power and propulsion as key discriminators as we look to serve both commercial and government customers and in building a well-balanced portfolio of programs. Please turn to Slide 8. Today, Maxar has built over 35 satellites with solar electric propulsion, using an active hall-effect thruster, including a commercial geo-conformation that exclusively uses the technology. This approach reduces fuel mass by 80% relative to traditional chemical fuel propulsion systems, allowing more allocation for revenue-generating payload mass. And this is a good thing, especially for our commercial customers who are constantly looking for ways to increase the capital efficiency of their operations. On Slide 9, we showcase the Psyche mission as an example of how this technology can be used in deep space.

As a reminder, Psyche is a NASA emission to explore a metallic asteroid. The mission will require the spacecraft to be on orbit for years and to travel 1 billion miles. To get this done, we're using a more powerful hall-effect thruster than those used in the typical mission orbiting Earth.

In fact, this will be the first time that a hall thruster has been used beyond lunar orbit, and as such, is a groundbreaking mission that could lead to a different approach in how spacecraft are powered and deep space going forward. Please turn to Slide 10. Things start to get even more interesting in this propulsion technique is combined with rollout solar arrays.

As you know, satellites use solar panels to help power their operations.

However, traditional arrays have been limited by the mass and carrying capacity of the launch vehicles to get them into space. Rollout solar arrays allow for compact storage, are highly scalable, and both weigh and cost less than traditional arrays. All this allows for a more flexible, powerful and cost-effective spacecraft. The best demonstration we have today that the power of these two technologies working together is the power propulsion element, or PPE, that we're developing for mass' Lunar Gateway. Please turn to Slide 11. The PPE, the power propulsion element, will utilize unprecedentedly large rollout solar arrays providing 60 kilowatts of electrical power, more than any other space craft apart from the International Space Station. It will also deploy the highest power solar electric propulsion system to ever fly on a spacecraft by using several large and larger hall effect thrusters. At the time of their launch, both thruster types will be higher powered than any other hall thruster launched to date. This spacecraft will set the standard for solar electric propulsion, and we believe that we'll be able to use the technology and integration techniques developed for the program on future missions for both our commercial and government customers. This is a nice foundation for growth, and we remain excited about the demand backdrop across both our commercial and government customers. We'll continue providing updates like this and look forward to future discussions on our space robotics capabilities, artificial intelligence and machine learning advances in augmented and virtual reality applications going forward. And with that, I'd like to hand the call over to Biggs for a discussion of this quarter's financials and an outlook for the year. Over to you, Biggs.

Biggs Porter

Thanks, Dan. Please turn to Slide 12, where we present year-over-year comparisons for the first quarter.

Our net loss from tuning operations for Q1 was $84 million driven primarily by $41 million in debt extinguishment costs as we retired $350 million into 2023 notes in connection with our recent equity raise as well as a $28 million charge related to the Sirius-XM7 satellite. Revenue increased 3% for the quarter on a year-over-year basis. Without the effects of the EnhancedView contract deferred revenue burn-off, total company revenues increased 12% year-over-year driven by recent wins in Space Infrastructure and the expansion of programs at Earth Intelligence. Without the $28 million in net charges related to Sirius XM, total company revenues and adjusted EBITDA would have been $420 million and $95 million, respectively, this quarter. Please turn to Slide 13. Earth Intelligence revenue, without the effects of EV deferred revenue, increased 4% year-over-year in the first quarter, while adjusted EBITDA margins improved modestly with a slightly more favorable program mix. The year-over-year growth was driven by increases in our commercial programs as well as growth from international defense and intelligence customers. Please turn to Slide 14.

As noted in our earnings release, Space Infrastructure revenue and adjusted EBITDA were negatively impacted by the performance issues with the Sirius-XM7 satellite. This included a $25 million cumulative adjustment to revenue related to the loss of the final milestone and orbital payments net of other adjustments. This compares favorably to the $38 million we expressed as risks from the receivables and LTEs.

Additionally, we incurred $3 million of costs during the quarter as we attempted to repair and fully recover the satellite. On a reported basis, revenue increased 17% year-over-year, while margins expanded 2,180 basis points, driven by the profitability of recent awards as well as a reduction in negative EAC impacts, including those related to COVID-19 taken last year as we first adjusted our operating posture due to the pandemic. Without the $28 million impact to the Sirius XM adjustments to revenue and adjusted EBITDA, margins would have been 8.7%, which we feel is more in line with our expectations as we continue to drive margin growth. Space Infrastructure segment has a trailing 12-month book-to-bill greater than 1x. And without the Sirius XM charge, our trailing 12-month margins would have been roughly 7%. These are important milestones as we continue to diversify our bookings in this business and drive growth with more profitable margins. Please turn to Slide 15. The Company generated $27 million in operating cash flow for continuing operations in the first quarter and invested 50 million in CapEx and developed intangibles.

Importantly, trailing 12 months cash consumption was 15 million and compares favorably to the 65 million consumed in 2020. We remain confident in the outlook for cash generation as the Legion construction program winds down. Please turn to Slide 16. We had roughly $472 million liquidity at the end of the quarter, and our bank defined leverage ratio ended the year at approximately 3.8 times. The leverage metric benefited from the recent $350 million pay down of our 2023 notes. Please turn to Slide 17 for a summary of our guidance changes. The following guidance does not include any impact related to the Sirius XM charges taken during the first quarter, which impacted both revenue and adjusted EBITDA by $28 million. It will impact full year cash flow by approximately $20 million. Total company revenue guidance was down modestly given the announcement of the human landing system down select.

Our adjusted EBITDA guidance is remains unchanged, and we have raised the bottom end of our operating cash flow guidance by $20 million.

Now please turn to Slide 18 for a more detailed view of those guidance figures. Revenue guidance for Earth Intelligence remains unchanged from what we issued at year-end, the targeted range of $1.05 billion to $1.095 billion. We've modified our revenue guidance to Space Infrastructure downward by $35 million to account for our team's loss of the human landing system program and now expect to be in a range of $765 million to $800 million. Intersegment eliminations have increased modestly, and we now expect to be in the range of $50 million to $55 million for the year.

Turning to adjusted EBITDA. No change to the outlook range for Earth Intelligence. Recall that we expect some incremental costs in future quarters related to Legion Constellation as we continue investments in our ground and secure operations architecture.

As such, at the midpoint of guidance, we don't expect margins to expand from Q1 levels despite the forecast for sequential revenue growth. The reduction related to the human landing system down select does not materially impact our adjusted EBITDA expectations at Space Infrastructure, and we've left the same guidance range as presented last quarter. At a consolidated level, our guidance for adjusted EBITDA also is unchanged. We previously stated that revenue and earnings will progress sequentially each quarter as we proceed through the year. This is still the case. This progression is driven by general growth, but more specifically, the continued transition of revenues transition of revenues at Space Infrastructure as work transitions to more recent contracts and as product revenues, notably 3D, continue to ramp up at Earth Intelligence. We've increased the bottom end of our operating cash flow guidance by $20 million for a total range of $260 million to $290 million. This is driven in large part by the interest savings we will realize this year as a result of the debt pay down. And we've left the top end of our operating cash flow range unchanged as it's still early in the year, especially given the typical uncertainty around working capital changes.

We will look to tighten this range throughout the year. The ranges for CapEx remain the same.

Moving on to other noteworthy items. We've updated our interest expense and share count guidance for the recent equity issuance and subsequent pay down of debt. Interest expense expectations have increased by $5 million to a total of $165 million, but that is inclusive of the $41 million in nonrecurring charges taken in Q1 stemming from the early retirement of debt. On an annualized basis, interest expense will decrease by roughly $35 million, which flows into future years and will have a positive impact on our longer-term financial targets.

As I just stated, all the guidance I gave is exclusive of the effects of the Sirius XM charge. To make it easier going forward, we've also added a slide, which shows how that guidance would look if the Sirius XM effects are added in after rounding numbers off.

Before I hand the call back over to the operator for Q&A, I wanted to also briefly address a corporate housekeeping matter that will require public filings in the next several days. Back in 2019, we implemented a tax benefit preservation plan to preserve our NOLs, which included the authorization of the potential issuance of Series A preferred stock as a part of the plan.

However, because we don't utilize those shares and the plan has since expired, we will be issuing an 8-K outlining certain steps required to formally eliminate those unused preferred shares. There is no change to our NOLs or impact to current shareholders, but I want to take a minute to walk through this and explain the rationale before the 8-K is filed next week. Operator, we'd like to now begin Q&A.


[Operator Instructions] And your first question comes from the line of Kenneth Herbert with Canaccord. Please go ahead.

Kenneth Herbert

Dan, I just wanted to start off and follow up on your comments on the Legion and the delays there. Do you have any more specifics around the timing in the fourth quarter you're looking at for the launch? And then I guess, specifically, how are you viewing -- it sounds like the gating item on the components from Raytheon, you went through some of the detail there, but confidence around the steps over the next few months to further mitigate that risk. And any more color around what you can say and help with confidence on a launch at the end of this year on that?

Dan Jablonsky

Yes. Sure. Thanks.

So I mean the Legion program is a complex program. It's been one we've been working on for several years. Everything is starting to come together now. We're getting into the final testing and integration phases. And when you do that, unfortunately, sometimes you uncover things that you'd rather not have go on, but you're glad to get them uncovered on the ground here before we do the launches in this space. The Raytheon issue was a workmanship issue, and I think we've got it fully resolved and taken care of. And I spent some time in person with the Raytheon team this past week, looking at the improved test procedures are doing as well as the modifications they've made to a small component. And everything looks like it's on track, and we're back on pace. But that said, it did introduce -- it took out some margin and introduced some delays to us, particularly as we roll that into the resting of our testing phase programs, our integration and our -- the last amount of software and testing we do on the fully integrated satellites.

So at this point, I think we've accounted for everything. We're planning on a Q4 launch, and we're driving for that. I'm not prepared to say at this point whether that's early or late Q4, but we're continuing to drive as hard as we can on schedule but keeping quality top of mind.

I think we've done and dealt with the Honeywell issue pretty well, but we've got to keep on that one as well and keep working that and look forward to launching quality instruments later this year.

Kenneth Herbert

Great. And just a quick follow up on that.

So just on the flight software and on the Honeywell issue, it sounds like those are maybe not as significant of issues, but I'm guessing you feel pretty good about risk mitigation on those as well.

Dan Jablonsky

We do at this point, but we track everything. The software itself is about just under 300,000 lines of code or so.

So not incredibly complex, but it's something we want to put through the paces and test over and over in both the -- on the spacecraft when it's fully integrated as well as in the normal operating procedures that we'll go through during form of act and other testing procedures.

So we want to keep running that, finalize and get everything to the point where we want it. But those are the three big issues we're tracking right now. Obviously, there's always something that could -- unanticipated would come into it, but that's kind of where we are today as we look at the plan ahead and the schedule and the work to be required or to be done throughout the rest of the year.


And your next question comes from the line of Tim James with TD Securities.

Tim James

If you could maybe talk specifically about the LEO market in particular and kind of -- I know it's not a huge part of the SI segment for you now, but just curious kind of how you view that and the opportunities there today and maybe kind of where that opportunity ranks relative to other buckets of growth for you within Space Infrastructure.

Dan Jablonsky

Yes. And just to kind of clarify, Tim, you may be asking just about the communications side, but we think about the LEO market more expansively.

So for example, Legion Constellation, other observations, sometimes other government programs we do, and something that we're chasing and we'll continue to chase are in the lower orbit part of space. There are certainly opportunities we're chasing in the LEO side, on the comm side as well. There have been some that have been announced. There are others out there that are -- we're in active pursuit on. And there are others that are people's planning boards right now for which RFIs and RFPs haven't quite been issued, but that we're aware of. One thing that we've done is we've made some really significant investments in our capture group as well as our mission architecture teams. And people like Jim McClellan coming on board for the emission systems architecture work are doing a great job, I think, at helping us refine the types of products we can deliver for LEO constellations. And I think over time, we're going to have some good success there.

Tim James

Okay. That's helpful. And then just one follow-up, if I might.

Just on the 4% growth in interest intelligence, both commercial and IDI customers accounting for that, I'm just wondering within that, was one customer type or the other sort of more responsible for that growth? Or are they both kind of growing currently at that low single digit rate? And kind of how do you see that trajectory through the balance of the year?

Dan Jablonsky

Yes. And I'll let Biggs chime in here in a second.

I think we're seeing growth across commercial and international defense and national programs as well on the Earth Intelligence side.

So we're really encouraged by that. We're also going to see some strong ramp-up throughout the year.

So Q1 seasonally adjusted is a little lighter than the rest of the year is expected to be. And we've -- Biggs talked about pipeline, some of the backlog statistics there, can go into more detail on that. But we're seeing great uptake on the products, particularly the 3D products, across both the commercial and the government sets as well.

Biggs Porter

I agree. It's a pretty even mix between ID&I and commercial in terms of the customer mix. And clearly, the product of 3D had an influence as well.


And your next question comes from the line of Thanos Moschopoulos with BMO Capital Markets.

Thanos Moschopoulos

Dan, maybe expanding on the 3D aspect and Vricon. How much runway is there as far as going back to your existing base of the defense and intel customers? Is it still roughly early days in that front? Or what kind of color you can provide there?

Dan Jablonsky


I think it's actually fairly strong. In my remarks, I made a reference to a new $10 million award we got from an existing U.S. ally. And that's growth beyond what we would have otherwise expected in our data business and our services business for a customer like that, very strong growth potential there. In first quarter, we -- earlier, I guess, the annual conference call, a couple -- 1.5 months ago, we announced the Army One World Terrain program enhancements and what we're doing there.

So that's we expect to be used more extensively across U.S. military applications.

And so we think there's just a great set of use cases across U.S. government, international intelligence customers and then commercial applications.

We haven't talked about commercial applications a lot, but we've gotten some good early traction with the commercial customers, and including the contract I referenced in my remarks about a drone company that will be using this type of technology to autonomously navigate drones in urban areas.

So we're pretty excited about that, see a lot of potential for it internally.

Our forecasts are looking very good for the 3D product set this year, and we expect that to be a strong growth driver for the business going forward.

Thanos Moschopoulos

Can you take us on the services business? I know in the past, you were maybe a bit headcount constrained as far as being able to meet demand. But what are you seeing on that side of the business? And is there opportunity materializing internationally? Or is that still predominantly being driven by U.S. gov?

Dan Jablonsky

Right now, it's still being -- as of today, it's been predominantly driven by U.S. growth. And if we could hire faster, we'd be growing faster still, even though we're growing healthy. We won some really good programs, including the recently announced Janus award with NGA that we're staffing out of our St. Louis office and some other great things we've got going on.

On the international front, we're in deep discussions with a number of customers to be able to bring those types of technologies and services and integration things we can do for the U.S. government to their intelligence defense needs. Still early days there, and COVID's probably hampered us a little more because we can't travel and do the same kind of demos and integration work. But we see over time that that can be a strong driver of growth for us as well.

Thanos Moschopoulos


Just one last one for me. The Honeywell issue, like that affecting other programs in the factory or would that be implemented to Legion?

Dan Jablonsky

It's an industry-wide issue, and it has the potential. We're still assessing all the schedule impacts on any other programs. At this point, we don't believe there are any material financial impacts to the business for that, but it's one of these things that goes across a broad set of programs across more companies than just Maxar.


And your next question comes from the line of Seth Seifman from JPMorgan.

Seth Seifman

Great. I was wondering just on the 2023 targets, are those still all operative?

Dan Jablonsky

In general, we're not going to make it a habit to update every quarter. We don't do a new long-range plan every quarter, as you might guess. But at this point in time, we couldn't point out anything that we've learned that changes those. I have made the point to tell people, though, with respect to the refinancing that we did from the equity issuance that those interest savings were incremental to the guidance we've previously given.

So there's -- if all other things equal, upward pressure from that on the cash flow part of the guidance. But on everything else, not forecasting any change, but we're not literally going to update every quarter.

Seth Seifman

Great. That's helpful. And then maybe one follow-up on -- with regard to the guidance in Earth observation, and it seems maybe with the potential for the Legion launch to split that again, it seems like that was regard the EBIT -- I guess, first part, the EBITDA guidance for the year is kind of -- it seems like maybe independent of the timing of that launch. And then second, with regard to the contracts that you have on that capacity, is there a time by which you need to have those first satellites in the constellation launched?

Dan Jablonsky


So just on the guidance piece, you're right that Legion impacts are not at all affecting our 2021 guidance or numbers. We -- I think the one big thing to say about Legion is these are being assets designed for a 10-plus year life.

So a couple of weeks here, a couple of weeks there are not impacting our long-term view of their importance to the marketplace and to our customer base.

And so we're going to be very focused on quality and making sure we get the right assets up there on the right time horizon. And we're still well within our expectations for how our customers are going to need those and what we're going to do with the assets. All that said, getting to the 2023 numbers with the Legion capacity, maybe a little steeper ramp-up in the start date to how we want to end out 2022 going into 2023.

So we'll be -- continue to work on everything we can on this side, including any place we can do things on the ground or the second set of the constellation or how fast we bring the assets online for customers and then a free work we can do on the ground to make that -- the revenue flow hit faster, things like our 3.0 architecture as well feed into that for the direct access facilities.


Our next question comes from the line of Robert Spingarn with Crédit Suisse.

Robert Spingarn

Dan, when I go back to your Slide number 5, and you talked about this $25 billion five-year pipeline, how does that split between the two businesses? And within Space Infrastructure, how much of that is GEO satellite demand?

Dan Jablonsky

I love your questions, Rob. This is great. I'm not going to break it out specifically. Biggs, if you want to talk a little bit more about how that balances out.

I think what you're seeing generally across the business is we've been growing again on the Space Infrastructure side, which is really good. And our margins have been increasing, and we've been winning new programs.

So we got to keep winning and keep doing that, but we're on the right path.

On the Earth Intelligence side, probably, if you looked at it, be growing even faster with the types of things we see in front of us here, particularly as Vricon is moving its way forward, the Legion Constellation coming online and continued growth in our services side of the business.

Robert Spingarn

Moves on that plan?

Biggs Porter

Sure. Yes. I don't have anything more specific, Rob, at my fingertips on the split, but I think there is a healthy pipeline in both segments, and keeping in mind that the Earth Intelligence segment is very high margin, and the Space Infrastructure normally 10% or more.

So from a bottom line standpoint, that can be a little more heavily weighted to the Earth Intelligence side, but I can't remember what are laid the split only on the pipeline from a revenue standpoint.

Robert Spingarn

Okay. And then just, Dan, given with Vricon and the additional capabilities that you have and your ability to move into LEO here, how do you think about the market as it evolves here with all these new competitors in Imagery and elsewhere in your positioning given your incumbent status, if you will, and how you think about Maxar relative to the competition going forward?

Dan Jablonsky

Well, we've been very privileged and pleased to be the leader in the Earth observation as well as now the technologies that tie all that together and make sense of the data and propagate the data and pull it into usable format so that our customers can make decisions.

We continue to run as hard and fast as we possibly can to solve customer missions and that's our big focus. If we're taking care of our customers and thinking ahead on what their needs are and building our constellations and our assets and our infrastructure and our -- both secured and unsecured infrastructure, we'll be able to meet their needs going forward. That's our biggest focus and doing it in a cost effective and profitable way for shareholders. We watch very closely everything that everybody else is doing.

I think Jeff Bezos always talked about what day one felt like. We hope we act that way around Maxar here. But the biggest thing we're focused on is driving as fast and hard as we can to solve customer problems. We think that's the best way to create value for shareholders. We're aware of what everybody else is doing, but we're not resting for a second in terms of how we're taking care of people and thinking about the future.

Robert Spingarn

Okay. And just a last one, and this kind of ties to the first question on the $25 billion, but what's your latest progress on getting defense work at Space Infrastructure as you try to diversify sales there, either directly or maybe through the primes?

Dan Jablonsky


I think we're about where we expect to be. We always said it was a 3- to 5-year journey. We're probably about through the first year of that. We're winning, doing well on study phase contracts, helping, I think, shape the right things going forward, but those have to materialize then into what we would like to see for expectations in larger and more substantial programs.

We are very open to, and in certain instances, bidding and teaming with the large primes where we offer a value capability for them that's either better than something they have or something they don't have in their portfolio.

So we might win some of those as a prime. We might win some of those as sub to one of the larger companies in the industry. We're very focused on what our key technologies and capabilities are.

I think from my presentation, the hall effect thrusters are one of those types of things that we do really well. Robotics, space robotics is another, and we'll be doing some demonstrations on orbit next 1.5 years or so with what some of those capabilities look like and getting the Legion capabilities as well as some of our modular architecture up in space and having that all space qualified, I think, will go a long way towards helping us win some of these programs over the next one, two, three and four years.


Our next question comes from the line of Michael Ciarmoli with Truist Securities.

Michael Ciarmoli

Maybe just on the -- you pulled out the human lander system revenues. What's the latest there? It looks like mass, I think, issued a stop work order. I mean it sounds like you're being conservative, but any views in light of how that protest or program is progressing?

Dan Jablonsky

Not a lot. We were not awarded the initial phase contracts.

As you know, we were teamed with Dynetics as a sub to them on that for the -- some of the subsystems and thermal and communications work. Look, it's very interesting. We're watching the developments closely. If there's a way to get back in, obviously, we'll certainly take it. But we're not forecasting or planning on it at this point. But what we are focused on is trying to figure out how to is ably and adeptly as we can to replace those types of opportunities types of opportunities with other NASA or commercial or other government programs. We've got some really great teams that are not going to be working on that right now and have the ability to work on other things, and we're driving efforts in those directions.

Michael Ciarmoli

Got it. Got it. Makes sense.

Just back to the WorldView Legion, I know you said there were no real financial implications. Anything we should be aware of to CapEx or cash, these bottlenecks continue to endure here?

Biggs Porter

As far as 2021 goes, not likely to have a big impact, and we just updated the guidance basically confirming what we already had out there for CapEx.

So no real change expected this year, Delay really is at this point in time not further forecasted.

So I think that what we've got the right numbers to expect for us from this year.

As Dan mentioned, I think the harder thing to call is '22 and the exact timing of revenue buildup and how that gets affected, leading up to hitting the run rate leading '22 going into '23.

Michael Ciarmoli

Got it. Got it. And then just last one for me. Do you have the actual bookings number in the quarter?

Biggs Porter

I'd refer you to the 10-Q. I don't know the, it had at my fingertips here.



And your next question comes from the line of Elizabeth Wenzel with Bank of America. Please go ahead.

Elizabeth Wenzel

What's -- how should we be thinking about once you have the Legion launch and in constellation, the plans for the existing constellation and thoughts around extending the life of those satellites or ending their service life and what that might look like?

Dan Jablonsky

Yes. Well, first off, I mean, we've got a great constellation.

We have the world-leading constellation right now. We'll be augmenting and then advancing it with the Legion Constellation.

So not to take anything away from our current assets, but they've been doing great business for us. And as long as customers have a need for them, which we expect to exist far into the future because there's still going to be some of the very best assets available in the world in our world class. But as long as we can keep operating and using them for customer service needs, we'll continue doing so. We're excited about Legion. There was always some replacement capacity designed into that for Worldview-one and two as they get later in life. But -- and as we sit here today, they're continuing to do great mission service for U.S. international allies and commercial customers. And we continue to expect to be providing that even as we bring on the new Legion capacity for them.

Elizabeth Wenzel

So they could go beyond 2022, 2023, I mean it could go beyond?

Dan Jablonsky

Yes. That's possible. Yes. We've got actuarial tables in our public reports based on analyses that are done and assessments of the expected or potential life of those satellites. But those are just engineering simulations. And what we've learned is assets and space, the longer they're there and continuing to operate the longer they expect it to continue operating.

So we'll adjust and update those as we can. But for now, the best numbers on that would be in the tables in our 10-K for where we got.


Your next question comes from the line of Christopher Quilty with Quilty Analytics.

Christopher Quilty

I wanted to follow up and just clarify something that you had in the script around the timing of EnhancedView follow-on contract. And I understand that you expect another one-year extension contract end of August, so during third quarter. And then the successor contract vehicle, which is now being called the commercial layer, gets awarded later in the year. And at some point, you get folded in, I guess, after that 1-year extension, is that correct?

Dan Jablonsky


I think what we were trying to express, and maybe we weren't as full as we wanted to be, but the initial -- or earlier in the year and earlier last year when we said that there -- with all the study work that had been done that the new phases of this, the electro-optical commercial layer, we thought that might happen this summer, and then that would take over and replace the existing EnhancedView program. We're not so sure that's going to be the case anymore. And I think with the administration change and a few other things going on, that's just moving maybe a little bit slower than what we thought it might have six months ago.

So if that next version of what happens into the future is not done by September 1, then we would expect to be renewed under the existing program, the option pickup as we have been every year back to 2010 time frame. And then at some point, it could be September 2, it could be any time in the fall, it could be -- who knows how long it exactly takes the federal government to get that done. But then once that gets hammered out, then we would transition the EnhancedView program onto the new contract vehicles and contract terms of the [ESCL].

Christopher Quilty

Got you.


You also made mention somewhere in the transcript of a cryptic statement about working with partners to do payloads for customers. Can you unpack that for us?

Dan Jablonsky

Well, yes, we've got really good capabilities across our business in some swim lanes. And just as an example, we're really running fast with the Legion architecture on one hand and as well as some modular architecture on the others. We traditionally haven't done a lot of payload development ourselves.

So where someone else has a better payload capability, on the commercial side, we believe digital payloads will be more of a partner strategy for us going forward or other types of phenomenologies that could be available for either commercial or classified missions that we'll be working with the wider defense industrial-based ecosystem to put those on orbit and have them serve customers.

Christopher Quilty

Understand. Question on the human lander, I was a little bit surprised that you guys put that in your forecast even before the award was made. And obviously, it was a competitive award with three strong teams. Is that sort of traditionally how you would handle a large potential award like this? Or was there something special about this that gave you unfounded confidence?

Dan Jablonsky

Well, I think we always have a certain level of realistic confidence. And when we build up a forecast, there's puts and takes and probability of wins and probability of programs going forward and all those kind of things that we take that basket mix of things as we put the forecast together and then give the guidance on the numbers we do. On this one, in the earlier phases, I think we've been graded very well by NASA in terms of things we've been doing. We're a little surprised by some of the commentary and results in the final award letters. And as I think one of the other folks on the call mentioned, there's some challenges taking place on that front, but it was one that we had a reasonable degree of confidence in and so included in the forecast for those reasons.

Now that we've been knocked out, we're adjusting and modifying for it on the upside, yes. Yes. Go ahead, Biggs.

Biggs Porter

I would just add in that the original plan was for a down select to two of the three competitors.

So that, of course, increases our confidence level as well. We were confident that we'd be one of the two down selects. Obviously, that's not the way NASA has gone at this point, but that was a part of the analysis when we built the plan.

Christopher Quilty

I understand. Congrats on getting Sirius-XM8 out the door. How is Jupiter 3 moving towards the door? And are there any of those supply chain issues that you previously identified that would impact that program?

Dan Jablonsky


We continue to work very, very hard on the Jupiter 3 program and know how critical that is for our customer and their business plans moving forward. We don't believe there are any development risks associated with the program anymore. There is one particular vendor that's the bottleneck on one particular set of parts across border. And we are working with them, and they've been a little bit hampered by COVID in terms of how many people they could put into tuning stations and do other things to keep the pipeline moving forward. But the products are delivering. They're not delivering at the pace we had originally expected, but things are on track now. And we didn't get any additional delays related to the Jupiter 3 program this quarter. We're still going to make it all the way through testing and everything to deliver the customer, the satellite they expect. But we're driving forward. It's really about execution at this point, and we are highly focused on getting this customer the satellite so that they can complete their business operations.

Christopher Quilty

Got it. And final question, the first Airbus Neo satellite launched, and I should have written it down, but I think somewhere in the press release, they advertised the fact that they had pre-booked some certain amount of commercial revenues associated with that new satellite and its capability, which brings up the question, are you getting any further along in customer traction and signing contracts and pre-commitments?

Dan Jablonsky

We've made some great progress on our end, the four DAP architectures to the 3.0 architecture, specifically designed to incorporate the Legion work.

So customers are spending money to get that capability online.

I think the DX rating on the program is another good indicator for the importance of those missions, and we're having lots of good traction at this point.

So we, I think, get it up as timely as we can to start getting the revenue and serving the customer needs that are expected on the constellation.


Your next question is a follow-up from Tim James with TD Securities.

Tim James

I just wanted to follow-up quickly on the Legion. Dan, you're commenting about if there's a bit of slippage here, it implies a steeper ramp to kind of get the revenue that's included in your 2023 targets. Do you mean that it could be more challenging to get there or just that it will be a quicker ramp? And if we think about what is required to get to '23, is it more of kind of getting customers signed up? Or is it more of a kind of operational challenge on your part?

Dan Jablonsky

Good question, Tim.

I think the way I'd characterize it is we fully still expect to be in that position 1.5 years from now where we want to be. But with the delays and where we are in the program, with a couple of these issues that I highlighted in the remarks, Honeywell and Raytheon, the ramp is going to be a little bit steeper.

Now anytime you got a little bit of a steeper ramp that's a little bit more of a challenge. I don't know 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 can possibly now on the ground and then how fast we commissioned satellites and start delivering revenue and those kinds of things, so that the customers can get their expected service levels from them. There are a few customers, a handful of them that whose procurement agencies won't allow them to contract until they can see the data from the assets and so it pushes the signing of those customers out further, if you've got to blame the satellite program.

Dan Jablonsky

Okay, operator, I think we've exhausted the queue. I'd like to thank you as well as those that dialed in for the call today.

I think we're all set from everyone will bid everybody goodbye until next quarter. Certainly look forward to seeing many of you in the weeks in between on Zoom. Thanks again operator.


This concludes today's conference. Thank you for your participation.

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