From: Telesat Canada
Posted: Thursday, August 1, 2019
Telesat today announced its financial results for the three and six-month periods ended June 30, 2019. All amounts are in Canadian dollars and reported under International Financial Reporting Standards (“IFRS”) unless otherwise noted.
For the quarter ended June 30, 2019, Telesat reported consolidated revenues of $231 million, an increase of 9% ($19 million) compared to the same period in 2018. When adjusting for the impact of foreign exchange rate changes, revenue increased by 8% ($16 million) compared to the same period in 2018. The increase was due to higher revenue related to the Telstar 19 VANTAGE and Telstar 18 VANTAGE satellites, which entered into commercial service in August 2018 and October 2018, respectively, combined with an increase from short-term services provided to other satellite operators.
Operating expenses of $38 million for the quarter were 5% ($2 million) higher than the same period in 2018. When adjusting for the impact of foreign exchange rate changes, operating expenses were 3% ($1 million) higher. The increase was primarily related to higher cost of sales. Adjusted EBITDA1 for the quarter was $197 million; an increase of 10% ($19 million) compared to the same period in 2018. When adjusting for foreign exchange rate changes, Adjusted EBITDA1 increased by 9% ($16 million). The Adjusted EBITDA margin1 for the second quarter of 2019 was 85.2%, compared to 84.3% in the same period in 2018.
Telesat’s net income for the quarter was $135 million compared to a net loss of $6 million for the quarter ended June 30, 2018. The $142 million difference was the result of a higher non-cash gain on foreign exchange arising principally from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars, gains on financial instruments, and higher operating income in the second quarter of 2019.
For the six months ended June 30, 2019, revenue was $454 million, an increase of 2% ($9 million) compared to the same period in 2018. When adjusted for changes in foreign exchange rates, revenues were slightly higher ($2 million) compared to 2018. The increase was primarily due to revenue related to the Telstar 19 VANTAGE and Telstar 18 VANTAGE satellites, offset by lower short-term services provided to other satellite operators, lower equipment sales and lower revenue from certain customers in the resource sector. Operating expenses were $77 million, an increase of 4% ($3 million) from 2018. The increase was primarily due to higher, non-cash, share-based compensation expense. Adjusted EBITDA1 was $384 million, an increase of 3% ($11 million) or, when adjusted for foreign exchange rates, an increase of 1% ($5 million). The Adjusted EBITDA margin1 for the first six months of 2019 was 84.7%, compared to 84.1% in 2018.
For the six months ended June 30, 2019, net income was $307 million, compared to a loss of $21 million for 2018. The increase in net income for the year-to-date was principally the result of foreign exchange gains in 2019, arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars compared to foreign exchange losses in 2018, and greater gains on financial instruments in 2019 when compared to 2018.
“I am pleased with our financial and operating performance in the second quarter of 2019,” commented Dan Goldberg, Telesat’s President and CEO. “Our Telstar 19V and 18V satellites, as well as certain short term satellite services provided to another satellite operator, contributed to top line growth relative to Q2 last year, and our continued operating discipline resulted in an increase in both Adjusted EBITDA1 and our Adjusted EBITDA margin1. In addition to a favorable second quarter, we also continue to make strong progress on our advanced Low Earth Orbit (LEO) satellite constellation. Last week we signed a Memorandum of Understanding with the Government of Canada (GoC) to ensure access to affordable high-speed Internet connectivity across rural and remote areas of Canada via the Telesat LEO Constellation, an arrangement we expect will generate $1.2 billion in revenue over a 10 year period. Additionally, the GoC will contribute $85 million to Telesat to support the development of the Telesat LEO Constellation through the Strategic Innovation Fund (SIF). Looking ahead we remain heavily focused on continuing to increase the utilization of our in-orbit satellites and executing on our key growth initiatives, particularly our LEO program.”
- At June 30, 2019:
- On July 24, 2019, Telesat announced that it had entered into:
- In May 2019, Telesat, Vodafone Group and the University of Surrey announced that they had completed a successful demonstration using Telesat’s in-orbit Phase 1 Low Earth Orbit (LEO) satellite of how LEO satellites can provide effective backhaul transport for mobile network operators (MNOs), including advanced backhaul solutions for 5G.
- In May 2019, Telesat announced the successful completion of the System Definition and Risk Management Phase of the Telesat LEO Constellation program.
Telesat’s quarterly report on Form 6-K for the quarter ended June 30, 2019, has been filed with the United States Securities and Exchange Commission (“SEC”) and may be accessed on the SEC’s website at www.sec.gov.
Telesat has scheduled a conference call on Thursday, August 1, 2019, at 10:30 a.m. ET to discuss its financial results for the three and six month periods ended June 30, 2019. The call will be hosted by Daniel S. Goldberg, President and Chief Executive Officer, and Michel Cayouette, Chief Financial Officer, of Telesat.
The toll-free dial-in number for the teleconference is +1 (800) 478-9326. Callers outside of North America should dial +1 (416) 340-2219. The conference reference number is 4308204. Please allow at least 15 minutes prior to the scheduled start time to connect to the teleconference.
Dial-in Audio Replay:
A replay of the teleconference will be available one hour after the end of the call on August 1, 2019 until 11:59 p.m. ET on August 15, 2019. To access the replay, please call +1 (800) 408-3053. Callers outside of North America should dial +1 (905) 694-9451. The access code is 9470052 followed by the number sign (#).
Telesat is a leading global satellite operator, providing reliable and secure satellite-delivered communications solutions worldwide to broadcast, telecom, corporate and government customers. Headquartered in Ottawa, Canada, with offices and facilities around the world, the company’s state-of-the-art fleet consists of 16 GEO satellites, the Canadian payload on ViaSat-1 and one Phase 1 LEO satellite which is the start of Telesat’s planned advanced global LEO satellite constellation that will offer ultra-low latency, extremely high throughput, affordable broadband services. Telesat is also a leading technical consultant providing high value expertise and support to satellite operators, insurers and other industry participants on a global basis. Privately held, Telesat’s principal shareholders are Canada’s Public Sector Pension Investment Board and Loral Space & Communications Inc. (NASDAQ: LORL). www.telesat.com
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