Third quarter 2012 revenue was $107.2 million, up 31% compared with the same period last year. Net income in the third quarter was $8.5 million, or $0.18 per share, compared with net income of $1.1 million, or $0.02 per share in third quarter 2011. Third quarter 2012 EBITDA was $44.9 million, delivering an EBITDA margin of 41.9%, up approximately 210 basis points year over year compared with the third quarter 2011 EBITDA margin of 39.8%. Third Quarter EBITDA margin expanded compared with the year-ago period despite incurring $7.5 million of non-recurring costs in connection with the recently announced combination with GeoEye.
"We are delighted to deliver our fourth straight quarter of double-digit revenue growth," said Jeffrey R. Tarr, President and Chief Executive Officer. "Combined with continued strong growth in our 12-month backlog, our results this quarter are evidence of our progress transforming DigitalGlobe into a high-growth, scalable, recurring revenue information business. In addition, we expect to close our combination with GeoEye late this year or in the first quarter of 2013. We look forward to delivering on the substantial benefits of this strategic transaction to our customers, shareholders and other key stakeholders."
Third Quarter Business Highlights
- Defense & Intelligence segment revenue grew 24% to $81.1 million compared with the third quarter of 2011. Performance was driven by increased revenue related to the service level agreement (SLA) portion of EnhancedView and year-over-year growth of 44% to $8.2 million from value-added services.
- Commercial segment revenue grew 57% to $26.1 million in the quarter compared with the prior-year period. Growth was broad based, driven by international civil government customers, growth from recurring-revenue contracts with location-based services customers and significant improvement within a variety of other industry-verticals.
- The company completed the final phase of its remote ground terminal expansion ahead of schedule, adding three additional Remote Ground Terminals (RGTs) in the quarter. Combined with the four RGTs added during 2011, this now enables the company to recognize substantially all of the EnhancedView SLA cash payments into revenue.
- Further diversifying the company's revenue base, it signed its sixth Direct Access (DAP) customer during the quarter to a multi-year contract that the company expects will begin generating revenue in the second half of 2013.
- The company continued to expand its business globally through a number of new, renewed or expanded agreements with international civil governments. Through its relationship with a key value-added reseller in the region, the company was awarded a contract to provide imagery in support of India's infrastructure modernization effort. The company also continued to expand its location-based services business, fostering a new, multi-year relationship with AutoNavi, a top provider of digital map content and navigation solutions, through its joint venture with China Siwei.
- Among its industry verticals customers, the company signed an agreement with SAAB to integrate its stereoscopic satellite imagery and temporal analysis data into SAAB's Vricon solution under a newly formed partnership. This agreement will enable faster creation of highly accurate, photo-realistic three-dimensional maps of specific global areas of interest, primarily for use by international governments. The company also signed an agreement to provide its Global Basemap solution to Pemex, in Mexico, under a multi-year, multi-million-dollar arrangement.
- The company's 12-month backlog increased to $366.2 million, up 20% year over year, indicative of the company's success in shifting its revenue mix to a more visible recurring model.
For the full year, the company now expects to report GAAP revenue growth of 18-21% compared with 2011, an increase from its previous expectation of approximately 16% growth. The company continues to expect to achieve a full-year EBITDA margin of approximately 46%, including the expected impact of non-recurring expenses related to its planned business combination with GeoEye. The company's 2012 capital expenditure estimate of approximately $200 million remains unchanged.
Conference Call Information
DigitalGlobe's management will host a conference call tomorrow, October 31, 2012 at 1 p.m. ET to discuss third quarter 2012 results.
The conference call dial-in numbers are as follows:
U.S./Canada dial-in: (866) 863-0053
International dial-in: (706) 758-7563
A replay of the call will be available through December 1, 2012 at the following numbers:
U.S./Canada dial-in: (855) 859-2056
International dial-in: (404) 537-3406
DigitalGlobe will also sponsor a live and archived webcast of the conference call on the Investor Relations portion of its website. Click here to directly access the live webcast.
Supplemental earnings materials are available on the company's website at www.digitalglobe.com.
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 and intelligence, civil agencies, 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 one 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, visit www.digitalglobe.com.
DigitalGlobe is a registered trademark of DigitalGlobe, Inc.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
DigitalGlobe Forward-Looking Statement
This document 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 future financial performance and generally can be identified by the use of terminology such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," "continue" or "looks forward to" or the negative of these terms or other similar words, although not all forward-looking statements contain these words.
This document contains forward-looking statements relating to the proposed strategic combination of DigitalGlobe and GeoEye pursuant to a merger. All statements, other than historical facts, including statements regarding the expected timing of the closing of the transaction; the ability of the parties to complete the transaction considering the various closing conditions; the expected benefits of the transaction such as efficiencies, cost savings, tax benefits, enhanced revenues and cash flow, growth potential, market profile and financial strength; the competitive ability and position of the combined company; and any assumptions underlying any of the foregoing, are forward-looking statements. Such statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, that (1) one or more closing conditions to the transaction may not be satisfied or waived, on a timely basis or otherwise, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction or that the required approvals by DigitalGlobe and GeoEye stockholders may not be obtained; (2) there may be a material adverse change of GeoEye or the business of GeoEye may suffer as a result of uncertainty surrounding the transaction; (3) the anticipated benefits of the transaction may not be fully realized or may take longer to realize than expected; (4) the costs or challenges related to the integration of DigitalGlobe and GeoEye operations could be greater than expected; (5) the ability of the combined company to retain and hire key personnel and maintain relationships with customers, suppliers or other business partners; (6) the impact of legislative, regulatory, competitive and technological changes; (7) the risk that the credit ratings of the combined company may be different from what the companies expect; (8) other business effects, including the effects of industry, economic or political conditions outside of the companies' control, transaction costs and actual or contingent liabilities; (9) the outcome of any legal proceedings related to the transaction; and (10) other risk factors as detailed from time to time in DigitalGlobe's and GeoEye's reports filed with the Securities and Exchange Commission ("SEC"), including their respective Annual Reports on Form 10-K for the year ended December 31, 2011 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2012 and June 30, 2012, which are available on the SEC's website ( www.sec.gov ). There can be no assurance that the strategic combination will be completed, or if it is completed, that it will close within the anticipated time period or that the expected benefits of the strategic combination will be realized.