Intelsat Reports Fourth Quarter and Full Year 2014 Results

Intelsat S.A. (NYSE: I), the world’s leading provider of satellite services, today reported total revenue of $619.1 million and net income attributable to Intelsat S.A. of $16.2 million, or $0.14 per share on a diluted basis, for the three months ended December 31, 2014. The company reported adjusted net income per diluted common share1 of $0.79 for the three months ended December 31, 2014.

Intelsat S.A. reported EBITDA1, or earnings before net interest, losses on early extinguishment of debt, taxes and depreciation and amortization, of $462.0 million, and Adjusted EBITDA1 of $477.1 million, or 77 percent of revenue, for the three months ended December 31, 2014.

For the year ended December 31, 2014, Intelsat reported total revenue of $2,472.4 million and a net income attributable to Intelsat S.A. of $232.5 million, or $1.99 per share on a diluted basis. The company reported adjusted net income per diluted common share of $3.30 for the year ended December 31, 2014. Intelsat also reported EBITDA of $1,924.0 million, and Adjusted EBITDA of $1,958.7 million, or 79 percent of revenue, for the year ended December 31, 2014.

Intelsat Chairman and CEO, Dave McGlade said, “In 2014, we were able to deliver strong Adjusted EBITDA and cash flow in a challenging environment, meeting our guidance targets on all metrics. We also completed a debt pay down of $475 million and funded investments in our network. However, the continuation of the trends we experienced in 2014, such as pricing pressures in certain regions and applications, reduced U.S. government spending, and rising geopolitical challenges, compounded with services nearing the end of lifecycle, is creating ongoing headwinds for our business in 2015 and into 2016. We are taking action to counterbalance these trends, focusing our resources on laying the groundwork that will position us to return to growth as our new media satellites and next generation satellites enter service in mid-2016 and 2017.

The path forward for us is clear: design, build and place into service new satellite capacity; introduce services that leverage our ground network and networking capabilities; and develop advanced ground technologies and other innovations that will simplify access to our satellites. Through these initiatives, combined with supporting the growth of our core customers and optimizing the use of our orbital rights and global presence, we will enhance our ability to address larger and higher growth applications. By executing on these priorities, we will be positioned for success once our new inventory becomes available.”

Fourth Quarter and Full Year 2014 Business Highlights

Intelsat provides critical communications infrastructure to customers in the network services, media and government sectors. Our customers use our services for broadband connectivity to deliver fixed and mobile telecommunications, enterprise, video distribution and fixed and mobile government applications.

Network Services
Network Services comprised 46 percent of Intelsat’s total fourth quarter 2014 revenue, and at $284.1 million, decreased 5 percent as compared to the fourth quarter of 2013. For the year ended December 31, 2014, Network Services comprised 46 percent of Intelsat’s total revenue, and at $1,149.5 million, decreased 4 percent compared to the year ended December 31, 2013.

Media
Media comprised 37 percent of the company’s revenue for the quarter ended December 31, 2014, and at $226.0 million, increased 3 percent as compared to the fourth quarter of 2013. For the year ended December 31, 2014, Media comprised 36 percent of Intelsat’s total revenue, and at $881.0 million, declined 0.3 percent compared to the year ended December 31, 2013.

Government
Government comprised 16 percent of our revenue for the quarter ended December 31, 2014, and at $99.7 million, decreased 14 percent as compared to fourth quarter 2013 results. For the year ended December 31, 2014, Government comprised 17 percent of Intelsat’s total revenue, and at $410.2 million, decreased 16 percent compared to the year ended December 31, 2013.

Average Fill Rate
Intelsat’s average fill rate on our approximately 2,200 station-kept transponders was 75 percent at December 31, 2014, in line with the average fill rate as of September 30, 2014. The transponder count reflects the entry into service of Intelsat 30 in fourth quarter of 2014.

Satellite Launches
Intelsat 34, a replacement satellite for our 304.5°E video neighborhood, is currently expected to launch in the third quarter 2015. Intelsat 31, the second of two satellites providing services primarily for direct-to-home (“DTH”) service provider, DIRECTV® Latin America, is now scheduled to launch in the first quarter 2016. Intelsat 29e, the first Intelsat EpicNG high throughput satellite, is expected to launch in the first quarter 2016. We currently have twelve satellite programs in development. In addition, a custom payload is being built for us on a third-party satellite which will not require capital expenditure.

Contracted Backlog
At December 31, 2014, Intelsat’s contracted backlog, representing expected future revenue under existing contracts with customers, was $10.0 billion, as compared to $10.1 billion at September 30, 2014. The mix of backlog reflects lower overall net new contracts. At 4.0 times trailing 12 months revenue (from January 1, 2014 to December 31, 2014), our backlog remains sizeable and a foundation for predictable cash flow and investment in our business.

Capital Markets and Finance Activities
On November 1, 2014, Intelsat Jackson Holdings S.A. (“Intelsat Jackson”) redeemed the entire $500.0 million aggregate principal amount of its 8 ½% Senior Notes due 2019 (the “2019 Senior Notes”). Our secured revolving credit facility had a $49 million outstanding balance at December 31, 2014. This balance was repaid in early 2015.

Full financial details available here.