Telesat Reports Results for the Quarter Ended September 30, 2018
Telesat Canada (“Telesat”) today announced its financial results for the three and nine-month periods ended September 30, 2018. All amounts are in Canadian dollars and reported under International Financial Reporting Standards (“IFRS”) unless otherwise noted.
For the quarter ended September 30, 2018, Telesat reported consolidated revenues of $227 million, an increase of 6% ($13 million) compared to the same period in 2017. The increase was primarily due to short-term services provided to another satellite operator, the impact of the implementation of IFRS 15 and revenue related to the Telstar 19 VANTAGE satellite, which entered commercial service in August. Excluding the impact of foreign exchange rate changes, revenue increased by 5% ($11 million) compared to the same period in 2017.
Operating expenses of $40 million for the quarter were 4% ($2 million) lower than the same period in 2017. Adjusted EBITDA1 for the quarter was $188 million; an increase of 8% ($14 million) compared to the same period in 2017 and an improvement of 7% ($13 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin1 for the third quarter of 2018 was 82.8%, compared to 81.3% in the same period in 2017.
On January 1, 2018, Telesat adopted IFRS 9, Financial Instruments, and IFRS 15, Revenue from Contracts with Customers. For the three-month period ended September 30, 2018, the adoption of IFRS 15 had a net positive impact of approximately $5 million on revenues, an approximately $5 million reduction in operating expenses and a positive impact of approximately $10 million on Adjusted EBITDA1.The adoption of IFRS 9 had no impact on revenues, operating expenses and Adjusted EBITDA1.
Telesat’s net income for the quarter was $117 million compared to net income of$197 million for the quarter ended September 30, 2017. The $80 million difference was the result of a lower non-cash gain on foreign exchange arising principally from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars in the third quarter of 2018.
For the nine-month period ended September 30, 2018, revenue was $671 million, a decrease of 1% ($4 million) compared to the same period in 2017. When adjusted for changes in foreign exchange rates, revenues rose 1% ($7 million) compared to the same period in 2017. Operating expenses were $115 million, a decrease of 19% ($26 million) from the first nine months of 2017. The decrease in operating expenses was due to the impact of IFRS 15 implementation in 2018 and lower compensation expense associated with certain payments to stock option holders made in connection with the cash distribution to shareholders in the first quarter of 2017. Adjusted EBITDA1 was $562 million, an increase of 2% ($12 million). When adjusted for foreign exchange rate changes Adjusted EBITDA1 increased by 4% ($21 million) compared to 2017. The Adjusted EBITDA margin1 for the first nine months of 2018 was 83.7%, compared to 81.5% in the same period in 2017.
The adoption of IFRS 15 had a net positive impact of approximately $13 million on revenues, an approximate $16 million reduction in operating expenses and a positive impact of approximately $28 million on Adjusted EBITDA1 for the nine month period ended September 30, 2018.
For the nine-month period ended September 30, 2018, net income was $96 million, compared to net income of $433 million for the same period in 2017. The decrease in net income for the first nine months of the year was principally the result of foreign exchange losses in the first nine months of 2018, arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars compared to foreign exchange gains in the first nine months of 2017.
“I am pleased with our performance for the third quarter and first nine months of the year,” commented Dan Goldberg, Telesat’s President and CEO. “In addition to achieving solid financial results, we took a number of concrete steps to strengthen our business and position the company for the future. We successfully launched our state-of-the-art Telstar 19 VANTAGE and Telstar 18 VANTAGE satellites in the quarter and they are both now in commercial service. We also continued the development of our planned LEO constellation and, using our in orbit Phase 1 LEO satellite, demonstrated some of the key advantages of LEO in a recent customer trial. Looking ahead, we remain focused on increasing the utilization of our in-orbit satellites and executing on our key growth initiatives.”
