Why Maxar Technologies Stock Just Got Destroyed

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What happened

Tuesday is turning into a bad day to own Maxar Technologies (NYSE:MAXR) stock.

Maxar shares tumbled 24.5% through 11 a.m. EDT this morning after the “space infrastructure” builder and Earth imaging satellite photographs-taker reported worsening GAAP losses in Q1 2021, despite slightly improved sales.

Image source: Getty Images.

So what

Total sales inched up 3% year over year for Maxar, but the composition of those sales was not at all what might be desired. On the one hand, the company recorded 17% more business in its money-losing space infrastructure segment. On the other hand, sales declined 8% in Maxar’s high-margin Earth intelligence unit.

As a result, while losses slimmed in the space infrastructure segment (adjusted earnings before interest, taxes, depreciation, and amortization or EBITDA becoming $27 million less negative this quarter than a year ago), profits (i.e., adjusted EBITDA) in the Earth intelligence business fell by almost as much — $26 million.

When all was said and done, Maxar ended up with lower EBITDA, and lower adjusted EBITDA as well — and a net loss of $1.30 per share, worse than last year’s $0.80 quarterly loss.

Now what

It’s not all bad news for Maxar. Operating cash flow turned positive again in Q1 2021 — $27 million. And while management declined to give guidance in its earnings release, according to data from S&P Global Market Intelligence, analysts who follow the stock are forecasting a return to GAAP profitability as soon as this current quarter, Q2 2021.

Although the size of Q1’s loss makes it unlikely that Maxar will turn a GAAP profit this year, analysts predict that by 2022, Maxar should be earning steady and growing profits once again, and producing positive free cash flow besides.

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