Fourth quarter 2010 revenue was $83.6 million, an increase of 14.7% compared with the same period last year. Included in fourth quarter revenue is $6.4 million of amortized revenue related to NextView, the predecessor to the EnhancedView contract with the U.S. Government. Not included in fourth quarter revenue is $24.8 million of deferrals related to the service level agreement (SLA) portion of EnhancedView. Fourth quarter 2010 net income was $1.3 million, or $0.03 per diluted share, compared with net income of $13.8 million, or $0.30 per diluted share, for the same period last year.
Fourth quarter 2010 Adjusted EBITDA, a non-GAAP financial measure, was $62.5 million, compared with fourth quarter 2009 Adjusted EBITDA of $36.3 million. Adjusted EBITDA includes current-quarter deferrals related to EnhancedView and, for both periods, excludes approximately $6.4 million of amortized revenue related to NextView.
Full-year 2010 revenue was $322.2 million, an increase of 14.3% compared with 2009. Included in full-year revenue is $25.5 million of amortized revenue related to NextView. Not included in full-year revenue is $33.1 million of deferrals related to the service level agreement (SLA) portion of EnhancedView. Full-year 2010 net income was $4.1 million, or $0.09 per diluted share, compared with net income of $47.4 million, or $1.06 per diluted share for 2009. Full-year 2010 Adjusted EBITDA, a non-GAAP financial measure, was $182.4 million, compared with 2009 Adjusted EBITDA of $143.9 million.
"2010 was a milestone year for DigitalGlobe," said Jill Smith, Chairman and Chief Executive Officer. "We achieved great financial success, won a significant, long-term award from the U.S. Government, and substantially extended two important lines of business -- Direct Access and Commercial. We expect continued growth financially and operationally during 2011, delivering even greater value to our customers as we move toward the provision of information and insight products."
Fourth Quarter Business Highlights
- The Defense and Intelligence segment revenue was $63.2 million, up 9.9% compared with fourth quarter 2009, driven primarily by the company's Direct Access Program (DAP). This excludes $24.8 million of deferrals related to EnhancedView, and includes $6.4 million related to NextView.
- The company's DAP product line generated $9.3 million in revenue for the fourth quarter. For the year, DAP generated $34.4 million in revenue.
- Commercial segment revenue increased to $20.4 million, up 32.5% compared with fourth quarter 2009, powered by growth in every market domain. Full-year commercial segment revenue of $70.1 million is up 37.7% compared with 2009.
- The company extended its commercial customer footprint in China during the quarter by inking new contracts with three Chinese companies: China Mobile, YF International, and Hazens.
For the full year 2011, the company expects:
- Revenue in a range of $345 million to $365 million. This excludes any deferrals related to EnhancedView and includes amortized revenue related to NextView.
- Diluted earnings per share of $0.20 to $0.40, assuming an average diluted share count of approximately 47 million.
- Adjusted EBITDA of $223 million to $243 million. This includes any deferrals related to EnhancedView and excludes amortized revenue related to NextView.
- Capital expenditures for 2011 of at least $275 million, with all but approximately $35 million related to the company's construction of WorldView-3 and other EnhancedView-related infrastructure investments.
Important factors, including those discussed in the company's filings with the Securities and Exchange Commission, could cause actual results to differ from the company's expectations and those differences may be material.
Conference Call Information
DigitalGlobe's management will host a conference call today at 5 p.m. EST to discuss fourth quarter 2010 results.
The conference call dial-in numbers are as follows:
U.S./Canada dial-in: 866-921-3936
International dial-in: 706-679-9623
A replay of the call will be available through March 28, 2011 at the following numbers:
U.S./Canada dial-in: 800-642-1687
International dial-in: 706-645-9291
DigitalGlobe will also sponsor a live and archived webcast of the conference call on its website, www.digitalglobe.com. Supplemental earnings materials are also available at this website.
Longmont, Colorado-based DigitalGlobe is a leading global provider of commercial high-resolution earth imagery products and services. Sourced from our own advanced satellite constellation, our imagery solutions support a wide variety of uses within defense, intelligence, and homeland security applications, mapping and analysis, environmental monitoring, oil and gas exploration, infrastructure management, Internet portals and navigation technology. With our collection sources and comprehensive ImageLibrary (containing more than 1 billion square kilometers of earth imagery and imagery products) we offer a range of on- and off-line products and services designed to enable customers to easily access and integrate our imagery into their business operations and applications. For more information, please visit www.digitalglobe.com.
DigitalGlobe is a registered trademark of DigitalGlobe.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained herein and other of our reports, filings, and public announcements may contain or incorporate forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar words, although not all forward-looking statements contain these words.
Any forward-looking statements are based upon our historical performance and on our current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions. A number of important factors could cause our actual results or performance to differ materially from those indicated by such forward-looking statements, including: the loss, reduction or change in terms of any of our primary contracts; the loss or impairment of our satellites; delays in the construction and launch of WorldView-3; delays in implementation of planned ground system and infrastructure enhancements; loss or damage to the content contained in our ImageLibrary; interruption or failure of our ground system and other infrastructure, decrease in demand for our imagery products and services; increased competition that may reduce our market share or cause us to lower our prices; our failure to obtain or maintain required regulatory approvals and licenses; changes in U.S. foreign law or regulation that may limit our ability to distribute our imagery products and services; the costs associated with being a public company; and other important factors, all as described more fully in our filings with the Securities and Exchange Commission, including this Annual Report on Form 10-K.
We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on any of these forward looking statements.
Non-GAAP Financial Measures
Adjusted EBITDA is defined as net income or loss adjusted for depreciation and amortization, net interest income or expense, income tax expense (benefit), loss on disposal of assets, restructuring, loss on early extinguishment of debt, loss on derivative instruments, non-cash stock compensation expense, EnhancedView deferred revenue and EnhancedView outstanding invoices not yet paid by NGA, and amortization of pre-FOC payments related to NextView. EnhancedView outstanding invoices not yet paid by NGA represent an irrevocable right to be paid in cash by NGA.
Adjusted EBITDA is not a recognized term under generally accepted accounting principles, or GAAP, in the United States and may not be defined similarly by other companies. Adjusted EBITDA should not be considered an alternative to net income, as an indication of financial performance, or as an alternative to cash flow from operations as a measure of liquidity. There are limitations to using non-GAAP financial measures, including the difficulty associated with comparing companies in different industries that use similar performance measures whose calculations may differ from ours.
Adjusted EBITDA is a key measure used in internal operating reports by management and the board of directors to evaluate the performance of our operations and is also used by analysts, investment banks and lenders for the same purpose. Adjusted EBITDA is also a key driver of the company-wide bonus incentive plan. Adjusted EBITDA is a measure of our current period operating performance, excluding charges for capital, depreciation related to prior period capital expenditures and items which are generally non-core in nature, and including EnhancedView deferred revenue and EnhancedView outstanding invoices not yet paid by NGA, revenue and excluding the amortization of pre-FOC payments related to our NextView contract.