GeoEye Reports Third Quarter 2012 Earnings Results

(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.

"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




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