GeoEye Reports Fourth Quarter and Fiscal Year 2010 Earnings Results

- Conference Call Scheduled for 8:30 a.m. EDT, Tuesday, March 15, 2011 -

News provided by

GeoEye, Inc.

Mar 14, 2011, 04:45 ET

DULLES, Va., March 14, 2011 /PRNewswire/ -- GeoEye, Inc. (Nasdaq: GEOY), a premier provider of superior satellite and aerial geospatial information and services, announced today results for its fiscal fourth quarter and fiscal year ended Dec. 31, 2010.

(Logo: http://photos.prnewswire.com/prnh/20080625/LAW528LOGO)

“We had a very successful year, met our corporate goals and delivered 22 percent revenue growth and strong margins,” said Matt O’Connell, GeoEye’s chief executive officer and president. “We won a ten-year, multi-billion-dollar award from the National Geospatial-Intelligence Agency (NGA); launched our Web dissemination services platform, EyeQ™; and acquired SPADAC, now renamed GeoEye Analytics, the leader in the field of predictive geospatial analytics. In 2011, we’ll build on these significant achievements by focusing on the construction of our next-generation, high-resolution satellite, GeoEye-2, and increasing our value-added information services and product offerings to our expanding customer base.”

FOURTH QUARTER RESULTS

Total revenues were $82.5 million for the fourth quarter of 2010, a 12.7% increase from $73.2 million for the fourth quarter of 2009. The net income available to common stockholders for the fourth quarter of 2010 was $15.2 million, or $0.68 per fully diluted share, compared to net income of $11.7 million, or $0.55 per fully diluted share, for the fourth quarter of 2009. Adjusted net income available to common stockholders (a non-GAAP measurement that excludes the impact of non-operating charges, gains and one-time charges and tax benefits) for the fourth quarter of 2010 was $9.5 million, or $0.42 per diluted share, as compared to $6.8 million, or $0.32 per diluted share in the fourth quarter of 2009.

Domestic revenues were $60.4 million for the fourth quarter of 2010, which were 73.2% of total revenues for the period. International revenues were $22.1 million for the fourth quarter of 2010, which were 26.8% of total revenues for the period. Domestic revenues increased 5.2% for the fourth quarter of 2010, compared to the same period in 2009. International revenues increased 40.0% for the fourth quarter of 2010, compared to the same period in 2009.

Operating profit was $23.7 million for the fourth quarter of 2010, a $4.3 million increase from $19.4 million for the fourth quarter of 2009. Operating margin was 28.7% for the fourth quarter of 2010, compared to 26.4% in the same period in 2009. 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) increased approximately $7.0 million, to approximately $43.7 million for the fourth quarter of 2010, from $36.7 million the same period in 2009.

The Company ended the fourth quarter of 2010 with unrestricted cash, cash equivalents and short-term investments of $333.4 million; total assets of approximately $1.3 billion; stockholders’ equity of $443.2 million and long-term debt of $508.2 million.

TWELVE MONTH RESULTS

Total revenues for the twelve months ended Dec. 31, 2010, were $330.3 million, a 21.9% increase from $271.1 million in the twelve months ended Dec. 31, 2009. The Company’s Adjusted EBITDA for the twelve-month period ended Dec. 31, 2010, was $176.9 million, an increase of 33.9% from the $132.2 million reported in the same period in 2009. GAAP net income available to common stockholders for the twelve months ended Dec. 31, 2010, was $22.7 million, or $1.02 per fully diluted share, as compared to GAAP net income available to common stockholders of $32.1 million, or $1.55 per fully diluted share, in the same period of 2009.

Adjusted net income available to common stockholders for the twelve months ended Dec. 31, 2010, was $44.3 million, or $1.99 per diluted share, as compared to $25.4 million, or $1.23 per diluted share for the twelve months ended Dec. 31, 2009, excluding the impact of non-operating charges, gains and one-time charges and tax benefits in both periods.

FOURTH QUARTER AND FISCAL YEAR 2010 OPERATING HIGHLIGHTS

  • Significant new contract award
    • On Aug. 6, 2010, the Company was awarded a contract for up to $3.8 billion from the NGA under the EnhancedView program. The period of performance for the EnhancedView contract is 10 years. It began on Sept. 1, 2010, and continues through Aug. 31, 2011, with nine one-year options.
  • GeoEye-2 construction
    • Under the terms of the EnhancedView award, the NGA will contribute up to $337.0 million of the overall construction costs of GeoEye's next-generation satellite, GeoEye-2.
    • During the year, the Company invested $243.1 million for the continued development and construction of the GeoEye-2 satellite. To date, the Company has invested $309.9 million in the GeoEye-2 satellite program.
  • Additional cash proceeds
    • On Sept. 22, 2010, the Company completed a convertible preferred stock sale to Cerberus Capital Management, L.P., which generated proceeds of $78.0 million.
    • On Oct. 1, 2010, the Company issued $125.0 million of 8.625% Senior Secured Notes due 2016. The proceeds of $121.0 million will be used for general working capital purposes.
  • Information services developments
    • On Sept. 30, 2010, the Company launched the commercial EyeQ service to provide Web mapping services to commercial customers.
    • On Dec. 15, 2010, the Company completed the acquisition of SPADAC, now called GeoEye Analytics, the industry leader in the field of predictive analytics. GeoEye Analytics has approximately 170 employees who work at over 40 federal defense and intelligence agencies.

FIRST QUARTER AND FISCAL YEAR 2011 FINANCIAL OUTLOOK

The Company expects revenues for the first quarter of 2011 to be in the range of $86 to $90 million with an Adjusted EBITDA of $42 to $45 million and earnings per share of $0.37 to $0.45.

For the full year, the Company expects revenues to be in the range of $360 to $380 million with Adjusted EBITDA of $170 to $185 million and earnings per share of $1.70 to $2.00.

These estimates represent management's current expectations about the Company's future financial performance, based on information available at this time.

CONFERENCE CALL INFORMATION

GeoEye, Inc. (NASDAQ: GEOY) will host a conference call for investors and analysts to discuss financial results for the fourth quarter and 2010 fiscal year, which ended Dec. 31, 2010.

When: March 15, 2011, at 8:30 a.m. Eastern Daylight Time

To Participate:

To participate in the call via phone, domestic callers may dial toll-free 1-877-776-4039 approximately 10 minutes prior to the start time. International callers may dial 1-631-291-4808. Callers may identify themselves to the operator as GeoEye conference call participants or by using the conference ID number: 40408544. Questions will be accepted from phone participants during the live call after prepared remarks and as time permits.

The conference call will also be webcast on the "Investor Relations" section of the Company's corporate Web site, www.geoeye.com. To directly access the live webcast go to: http://www.geoeye.com/CorpSite/corporate/investor-relations/Default.aspx and click on the "March 15, 2011 Investor Update Webcast" link. Please allow 15 minutes before the scheduled start time to register, download and install any necessary audio software.

Replay:

An audio replay of the fourth quarter conference call will be available through midnight March 22, 2011, by dialing (800) 642-1687 and typing in the conference ID number: 40408544.

An archived webcast of the conference call will be available at the same URL address approximately two hours after the conclusion of the call.

Selected financial results for the Company are as follows (dollars in thousands, except earnings per share):

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)










Three Months Ended





12/31/10


12/31/09


Change



(unaudited)



Revenues

$   82,543


$   73,249


$   9,294

Operating expenses:







Direct costs of revenue (exclusive of depreciation and amortization)

26,105


24,458


1,647


Depreciation and amortization

16,677


16,423


254


Selling, general and administrative

16,067


13,014


3,053


Total operating expenses

58,849


53,895


4,954

Income from operations

23,694


19,354


4,340

Interest expense, net

(6,204)


(8,181)


1,977

Gain from investments

2,500


-


2,500

Loss from early extinguishment of debt

-


(27,127)


27,127

Income (loss) before provision for income taxes

19,990


(15,954)


35,944

(Provision) benefit for income taxes

(1,900)


27,673


(29,573)

Net income

18,090


11,719


6,371

Preferred stock dividends

(1,008)


-


(1,008)



17,082


11,719


5,363

Income allocated to participating securities

(1,871)


-


(1,871)

Net income available to common stockholders

$   15,211


$   11,719


$   3,492








Earnings per share







Basic

$       0.70


$       0.60


$     0.10


Diluted

$       0.68


$       0.55


$     0.13

Weighted average shares basic

21,855


19,373



Weighted average shares diluted

22,523


21,139












Year Ended





12/31/10


12/31/09


Change



(unaudited)



Revenues

$ 330,345


$ 271,102


$ 59,243

Operating expenses:







Direct costs of revenue (exclusive of depreciation and amortization)

104,010


94,693


9,317


Depreciation and amortization

65,262


57,166


8,096


Selling, general and administrative

57,451


46,608


10,843


Total operating expenses

226,723


198,467


28,256

Income from operations

103,622


72,635


30,987

Interest expense, net

(27,918)


(31,020)


3,102

Other non-operating expense

(24,466)


-


(24,466)

Gain from investments

3,200


-


3,200

Loss from early extinguishment of debt

(37)


(27,127)


27,090

Write-off of prepaid financing costs

(6,412)


-


(6,412)

Income before provision for income taxes

47,989


14,488


33,501

(Provision) benefit for income taxes

(23,352)


17,573


(40,925)

Net income

24,637


32,061


(7,424)

Preferred stock dividends

(1,107)


-


(1,107)



23,530


32,061


(8,531)

Income allocated to participating securities

(783)


-


(783)

Net income available to common stockholders

$   22,747


$   32,061


$ (9,314)








Earnings per share







Basic

$       1.05


$       1.71


$   (0.66)


Diluted

$       1.02


$       1.55


$   (0.53)

Weighted average shares basic

21,622


18,753



Weighted average shares diluted

22,250


20,685





CONSOLIDATED BALANCE SHEETS

(in thousands)








December 31,


December 31,




2010


2009


Change


(unaudited)





ASSETS

Current assets:






Cash and cash equivalents

$        283,233


$        208,872


$   74,361

Short-term investments

50,124


-


50,124

Accounts receivable - trade and unbilled receivables (net of allowances: 2010 - $957; 2009 - $923)

42,868


32,578


10,290

Income tax receivable

34,385


40,237


(5,852)

Restricted cash

3,952


52,268


(48,316)

Prepaid expenses and other current assets

16,183


16,836


(653)

Total current assets

430,745


350,791


79,954

Property, plant and equipment, net

36,591


25,381


11,210

Satellites and related ground systems, net

696,459


505,035


191,424

Goodwill

71,568


34,264


37,304

Intangible assets, net

14,943


11,685


3,258

Non-current restricted cash

10,822


13,653


(2,831)

Other non-current assets

7,957


6,398


1,559

Total assets

$     1,269,085


$        947,207


$ 321,878







LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:






Accounts payable and accrued expenses

$          70,936


$          33,997


$   36,939

Current portion of deferred revenue

50,533


52,221


(1,688)

Current deferred tax liabilities

6,656


4,744


1,912

Current portion of long-term debt

-


497


(497)

Total current liabilities

128,125


91,459


36,666

Long-term debt

508,160


380,594


127,566

Long-term deferred revenue, net of current portion

161,673


192,313


(30,640)

Non-current income tax reserve

626


248


378

Deferred tax liabilities

21,336


2,078


19,258

Other non-current liabilities

5,922


560


5,362

Total liabilities

825,842


667,252


158,590

Commitments and contingencies

-


-


-

Stockholders’ equity:






Series A convertible preferred stock

1


-


1

Common stock

221


199


22

Additional paid-in capital

367,723


227,988


139,735

Retained earnings

75,298


51,768


23,530

Total stockholders’ equity

443,243


279,955


163,288

Total liabilities and stockholders’ equity

$     1,269,085


$        947,207


$ 321,878



CONSOLIDATED STATEMENTS OF CASH FLOWS INFORMATION

(in thousands)








Year Ended




12/31/10


12/31/09


Change


(unaudited)



Net cash provided by operating activities

$ 126,693


$ 100,207


$  26,486

Net cash used in investing activities

(265,921)


(123,034)


(142,887)

Net cash provided by financing activities

213,589


124,966


88,623

Net increase in cash and cash equivalents

74,361


102,139


(27,778)

Cash and cash equivalents, beginning of period

208,872


106,733


102,139

Cash and cash equivalents, end of period

$ 283,233


$ 208,872


$  74,361



ADJUSTED EBITDA

(in thousands)










Three Months Ended


Year Ended


12/31/10


12/31/09


12/31/10


12/31/09

Net income

$ 18,090


$ 11,719


$   24,637


$   32,061

Adjustments:








Interest expense, net

6,204


8,181


27,918


31,020

Loss from early extinguishment of debt

-


27,127


37


27,127

Write-off of prepaid financing costs

-


-


6,412


-

Income tax provision (benefit)

1,900


(27,673)


23,352


(17,573)

Depreciation and amortization

16,677


16,423


65,262


57,166

Non-cash stock-based compensation expense

2,192


876


6,877


2,371

Non-cash change in fair value of financial instrument

-


-


24,466


-

Gain from sale of investment

(2,500)


-


(3,200)


-

Acquisition costs

1,167


-


1,167


-

Adjusted EBITDA

$ 43,730


$ 36,653


$ 176,928


$ 132,172









Adjusted EBITDA is a non-GAAP financial measure that represents net income (loss) before net interest income or expense, income tax expense (benefit), depreciation and amortization expenses, non-cash stock-based compensation expense and other items.  We believe that Adjusted EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing operations.  However, Adjusted EBITDA is not a recognized term under financial performance under GAAP, and our calculation of Adjusted EBITDA may not be comparable to the calculation of similarly titled measures of other companies.



ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS AND ADJUSTED DILUTED EPS

(in thousands, except per share amounts)




Three Months
Ended 12/31/10


Three Months
Ended 12/31/09









Net income available to common stockholders

$            15,211


$            11,719

Adjustments:




Loss from early extinguishment of debt

-


27,127

Gain from investments

(2,500)


-

Acquisition costs

1,167


-

Impact of adjustments on income allocated to participating securities

703


-

Adjustment to normalize provision for income taxes

(5,085)


(32,030)

Adjusted net income available to common stockholders

$              9,496


$              6,816









Adjusted fully diluted shares

22,523


21,139

Adjusted diluted EPS

$                0.42


$                0.32






Year Ended
12/31/10


Year Ended
12/31/09









Net income available to common stockholders

$            22,747


$            32,061

Adjustments:




Non-cash change in fair value of financial instrument

24,466


-

Loss from early extinguishment of debt

37


27,127

Write-off of prepaid financing costs

6,412


-

Gain from investments

(3,200)


-

Acquisition costs

1,167


-

Impact of adjustments on income allocated to participating securities

(740)


-

Adjustment to normalize provision for income taxes

(6,628)


(33,803)

Adjusted net income available to common stockholders

$            44,261


$            25,385









Adjusted fully diluted shares

22,250


20,685

Adjusted diluted EPS

$                1.99


$                1.23













Adjusted Net Income Available to Common Stockholders is a non-GAAP financial measure that represents net income available to common stockholders before other items, net of tax.  Adjusted Diluted EPS is a non-GAAP financial measure that represents fully diluted earnings per share before other items, net of tax.  We believe that Adjusted Net Income Available to Common Stockholders and Adjusted Diluted EPS, using a normalized tax rate to 39%, provide useful information to investors because they allow investors to evaluate our performance for different periods on a more comparable basis by excluding items that are not related to the ongoing operations of our business.  However, Adjusted Net Income Available to Common Stockholders and Adjusted Diluted EPS are not recognized terms under financial performance under GAAP, and our calculation of Adjusted Net Income Available to Common Stockholders and Adjusted Diluted EPS may not be comparable to the calculation of similarly titled measures of other companies.



About GeoEye

GeoEye, Inc. is a leading international information services company serving government and commercial markets. The Company is recognized as one of the geospatial industry's imagery experts, delivering exceptional quality imagery products, services and solutions to customers around the world. In August 2010, GeoEye was named one of Fortune Magazine’s “100 Fastest-Growing Companies” in the United States. The Company has more than 700 employees dedicated to developing best-in-class geospatial information products and services. GeoEye is a public company listed on the NASDAQ stock exchange under the symbol GEOY. Additional information about GeoEye is available at www.geoeye.com

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Without limitation, the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “will” and similar expressions are intended to identify forward-looking statements. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future, including statements relating to growth, expected levels of expenditures and statements expressing general optimism about future operating results, are forward-looking statements. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All such forward-looking statements and those presented elsewhere by our management from time to time are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements. These risks and uncertainties include, but are not limited to, those described in "Risk Factors" included in our Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2009, which we filed with the Securities and Exchange Commission ("SEC") on March 12, 2010, and our Quarterly Reports on Form 10-Q for the period ended March 31, 2010, June 30, 2010 and Sept. 30, 2010, which we filed with the SEC on May 10, 2010, Aug. 9, 2010 and Nov. 9, 2010, respectively. Copies of all SEC filings may be obtained from the SEC's EDGAR Web site, http://www.sec.gov/, or by contacting: William L. Warren, Executive Vice President, General Counsel and Secretary, at 703-480-5672.

SOURCE GeoEye, Inc.