Space Infrastructure
|
Three months ended |
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Year ended |
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December 31, |
|
December 31, |
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|
2019 |
|
2018 |
|
2019 |
|
2018 |
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($ millions) |
|
|
|
|
|
|
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Revenues |
$ |
153 |
|
$ |
175 |
|
$ |
706 |
|
$ |
823 |
|
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Adjusted EBITDA |
$ |
(19 |
) |
$ |
(44 |
) |
$ |
(17 |
) |
$ |
(75 |
) |
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Adjusted EBITDA Margin |
|
(12.4 |
)% |
|
(25.1 |
)% |
|
(2.4 |
)% |
|
(9.1 |
)% |
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Changes in revenues from year to year are influenced by the size, timing and number of satellite contracts awarded in the current and preceding years and the length of the construction period for satellite contracts awarded. Revenues on satellite contracts are recognized using the cost-to-cost method to determine the percentage of completion over the construction period, which typically range between 20 to 36 months and up to 48 months in special situations. Adjusted EBITDA margins can vary from quarter to quarter due to the mix of our revenues and changes in our estimated costs to complete as our risks are retired and as our estimated costs to complete are increased or decreased based on contract performance.
Revenues from the Space Infrastructure segment decreased to $153 million from $175 million primarily as a result of the impact of reduced volume in our geostationary satellite manufacturing business (“GeoComm”) and an increase in estimated costs to complete programs during the three months ended December 31, 2019 compared to the same period in 2018. An increase in estimated costs to complete directly impacts revenues, as revenues are recognized over time under the cost-to-cost method. These decreases were partially offset by increases in U.S. government programs year over year and liquidated damages expense in 2018 which did not reoccur in 2019.
Revenues from the Space Infrastructure segment decreased to $706 million from $823 million, or by $117 million, for the year ended December 31, 2019 compared to the same period in 2018. Revenues decreased primarily as a result of the impact of reduced volume in our GeoComm business and an increase in estimated costs to complete programs. The reduced volume was a result of new business not fully replacing existing backlog contracts that were completed during the period
Adjusted EBITDA increased to a loss of $19 million from a loss of $44 million, or by $25 million, for the three months ended December 31, 2019, compared to the same period of 2018. The increase in the Space Infrastructure segment is primarily related to reduced research and development spend of $13 million, headcount reductions from restructuring initiatives resulting in cost reductions and the liquidated damages which did not reoccur in 2019. These increases were partially offset by decreases from the effects of lower revenues and higher estimated costs to complete on certain projects within the Space Infrastructure segment, including higher costs related to the conversion of subcontract work performed by our MDA business to fixed price.
