From: Telesat Canada
Posted: Thursday, February 27, 2020
Telesat today announced its financial results for the three-month and one-year periods ended December 31, 2019. All amounts are in Canadian dollars and reported under International Financial Reporting Standards (“IFRS”) unless otherwise noted.
For the year ended December 31, 2019, Telesat reported consolidated revenue of $911 million, an increase of 1% ($8 million) compared to the same period in 2018. When adjusted for changes in foreign exchange rates, revenue was unchanged compared to 2018. Revenue increases related to the Telstar 19 VANTAGE and Telstar 18 VANTAGE satellites, which were launched in 2018, and revenues earned from short-term services to other satellite operators. These increases were offset by lower equipment sales, a reduction of service for a certain customer in the broadcast segment, lower revenue due to the completion of the term for prepaid services in a customer agreement which was accounted for as having a significant financing component, and lower revenue from certain customers in the resource sector. Operating expenses were $165 million, a decrease of 11% ($20 million) from 2018. When adjusting for the impact of foreign exchange rate changes, expenses decreased by 12% ($22 million). Adjusted EBITDA1 was $763 million, an increase of 1% ($11 million) or, when adjusted for foreign exchange rates, an increase of $3 million. The Adjusted EBITDA margin1 for 2019 was 83.7%, compared to 83.3% in 2018.
For the year ended December 31, 2019, net income was $187 million, compared to a net loss of $91 million for 2018. The increase in net income for the year was principally the result of non-cash 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, partially offset by higher non-cash losses on financial instruments and a loss on refinancing in 2019 when compared to 2018.
For the quarter ended December 31, 2019, consolidated revenue was $220 million, a decrease of 5% ($11 million) compared to the same period in 2018. The decrease was due to a reduction of service for a customer in the broadcast segment, lower revenue due to the completion of the term for prepaid services in a customer agreement which was accounted for as having a significant financing component and lower equipment sales, partially offset by an increase in short-term services provided to other satellite operators.
Operating expenses of $51 million for the quarter were 29% ($21 million) lower than the same period in 2018. The decrease was primarily related to lower compensation expenses related to non-cash share based compensation. Adjusted EBITDA1 for the quarter was $175 million, a decrease of 8% ($15 million) compared to the same period in 2018. The Adjusted EBITDA margin1 for the fourth quarter of 2019 was79.6%, compared to 82.2% in the same period in 2018. Foreign exchange rate changes did not have a meaningful impact on revenue and Adjusted EBITDA1 during the comparative quarter.
Telesat’s net income for the quarter was $3 million compared to a net loss of $187 million for the quarter ended December 31, 2018. The $190 million difference was the result of non-cash gains on foreign exchange arising principally from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars in the fourth quarter of 2019 and higher gains on financial instruments offset by a $152 million loss incurred on the refinancing of Telesat’s debt.
“I am pleased with our financial and operating performance in 2019,” commented Dan Goldberg, Telesat’s President and CEO. “In addition to achieving stable financial results relative to the prior year, we took significant steps in laying the foundations for our future growth. In particular we made meaningful progress in refining the design of our planned revolutionary Low Earth Orbit (LEO) satellite constellation and, importantly, announced a Memorandum of Understanding with the Canadian Government to leverage the constellation to bridge the Digital Divide in Canada, an arrangement we expect will generate $1.2 billion in revenue over a 10 year period. In addition, toward the end of last year we successfully refinanced all of our existing debt, extending our borrowing maturities and slightly reducing our borrowing costs. Looking ahead, we remain heavily focused on continuing to increase the utilization of our in-orbit satellites, executing on our key growth initiatives, including our planned LEO constellation, and leveraging our spectrum rights.”
At December 31, 2019:
Government of Canada Memorandum of Understanding and Strategic Innovation Fund
Telesat’s annual report on Form 20-F for the year ended December 31, 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, February 27, 2020, at 10:30 a.m. ET to discuss its financial results for the three month and one-year periods ended December 31, 2019. The call will be hosted by Daniel S. Goldberg, President and Chief Executive Officer, and Andrew Browne, Chief Financial Officer, of Telesat.
Prior to the commencement of the call, Telesat will post a news release containing its financial results on its website (www.telesat.com) under the tab “Investor Relations” and the heading “News”.
The toll-free dial-in number for the teleconference is +1 800 273 9672. Callers outside of North America should dial +1 416 340 2219. The conference reference number is 4318650. 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 February 27, 2020 until 11:59 p.m. ET on March 12, 2020. 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 6711106 followed by the number sign (#).
Backed by a legacy of engineering excellence, reliability and industry-leading customer service, Telesat has grown to be one of the largest and most successful global satellite operators. Telesat works collaboratively with its customers to deliver critical connectivity solutions that tackle the world’s most complex communications challenges, providing powerful advantages that improve their operations and drive growth. Telesat LEO, our Low Earth Orbit network scheduled to begin service in 2022, will revolutionize global broadband connectivity by delivering a combination of high capacity, security, resiliency and affordability with ultra-low latency and fiber-like speeds.
Privately held and headquartered in Ottawa, Canada with offices and facilities around the world, Telesat’s principal shareholders are Canada’s Public Sector Pension Investment Board and Loral Space & Communications Inc. (NASDAQ: LORL). For more information, visit www.telesat.com.
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