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  "documentTitle": "Maxar Technologies (MAXR)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
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  "presentationDate": "2018-08-07 00:00:00",
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  "notes": "Includes a direct quote from the CEO and a comparison of two financial guidance tables to highlight the D&A reduction.",
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      "text": "After only one quarter, Maxar resorted to accounting changes to artificially boost its EPS guidance.",
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      "text": "Adjusted EPS: $0.15c",
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      "text": "After only one quarter, Maxar resorted to accounting changes to artificially boost its EPS guidance. For example, in Q1'18 it used the oldest trick in the book to increase its estimated useful life of satellites. This lowered depreciation expense by $14-22m and increased EPS by $0.15c. In Q2'18, Maxar cut depreciation guidance another $10m ($0.15c) yet didn't increase guidance - signaling underlying weakness. (1) What's alarming is that at the time of deal announcement, CFO Wirasekara said no depreciation changes were to be expected. (2) The reason for the reduction of depreciation hasn't been disclosed in a transparent manner (in the press release or financial reports). Investors only learn by listening to the conference calls.",
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      "text": "From the Q1'18 Conference Call\nTim James: \"Okay. Thank you. And then just my final question, just a bit of a housekeeping question. I'm wondering what caused the increase—excuse me, the decrease in expected D&A for 2018?\"\nCEO Howard Lance: \"It has to do with, I think, what's fairly typical in a major merger, which is purchase price adjustments and valuations as to fair value and life, in our case, of satellites on orbit. So that work continued on into the quarter past the point where we provided our previous guidance. And the expected life of assets on orbit was increased modestly, which reduced the annual depreciation associated with those assets.\"",
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      "text": "It has to do with, I think, what's fairly typical in a major merger, which is purchase price adjustments and valuations as to fair value and life, in our case, of satellites on orbit. So that work continued on into the quarter past the point where we provided our previous guidance. And the expected life of assets on orbit was increased modestly, which reduced the annual depreciation associated with those assets. — CEO Howard Lance",
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      "text": "1) $18m depreciation reduction at the midpoint and using MAXR's 14% tax rate and 57m share count equates to a $0.27c benefit vs. the $0.15c EPS boost. On the Q2'18 conference call the CEO cited \"complicated purchase price adjustment and valuation process that we've gone through since the merger last October\" as a reason for the continued reduction\n2) Deal announcement conference call, Feb 2017",
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      "text": "Initial 2018 Guidance",
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      "text": "Magic Drop in D&A Expense In Two Quarters",
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      "text": "Depreciation Accounting Changes Reveal Underlying Weakness",
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