Telesat Holdings Inc. (“Telesat”) today announced its financial results for the three and six month periods ended June 30, 2015. All amounts are in Canadian dollars and are reported under International Financial Reporting Standards (“IFRS”) unless otherwise noted.
For the quarter ended June 30, 2015, Telesat reported consolidated revenue of $227 million, an increase of $1 million compared to the same period in 2014. During the quarter, the U.S. dollar was 13% stronger than it was during the second quarter of 2014, resulting in a positive impact on the conversion of U.S. dollar denominated revenue and a negative impact on the conversion of U.S. dollar denominated expenses. When adjusted for foreign exchange rate changes, revenue decreased by 4% ($9 million) compared to the same period in 2014. The decrease was mainly related to lower revenue from Telesat’s international satellite services and lower equipment sales.
Operating expenses of $44 million were 4% ($2 million) lower than the same period in 2014 or 9% ($4 million) lower when taking into account changes in foreign exchange rates. The decrease was mainly related to lower cost of equipment sales. Adjusted EBITDA1 was $185 million, an increase of 1% ($2 million) compared to the same period in 2014, or a decrease of 3% ($6 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin1 was 81.4% for the second quarter of 2015 compared to 81.0% for the same period in 2014.
For the six month period ended June 30, 2015, consolidated revenue was $456 million, a decrease of 3% ($12 million) compared to the same period in 2014. During the first half of 2015, the U.S. dollar was 13% stronger than it was during the first half of 2014. When adjusted for foreign exchange rate changes, revenue decreased by 7% ($34 million) compared to the same period in 2014. The decrease was primarily due to short-term services provided to other satellite operators in the first half of 2014 which did not recur in the first half of 2015 and lower equipment sales compared to the same period in 2014. Operating expenses were $89 million, a decrease of 4% ($4 million) compared to the first half of 2014 or 9% ($8 million) lower when adjusted for foreign exchange rate changes. The largest contributor to the operating expense reduction was from lower cost of equipment sales with the balance due to lower expenses in other areas. Adjusted EBITDA1 was $371 million, a decrease of 3% ($10 million) compared to the same period in 2014, or a decrease of 7% ($28 million) when adjusted for foreign 2 exchange rate changes. The Adjusted EBITDA margin1 for the first half of 2015 was 81.4%, compared to 81.5% in the same period in 2014.
Telesat’s net income for the quarter ended June 30, 2015 was $56 million compared to net income of $108 million for the same period in 2014. The reduction in net income arose principally from a reduced foreign exchange gain and an increased loss in the fair value of financial instruments compared to 2014. For the six month period ended June 30, 2015, the net loss was $98 million, compared to net income of $80 million for the same period in 2014. The reduction in net income for the first half of the year was principally the result of a first quarter noncash loss on foreign exchange arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars.
“Telesat had a solid second quarter notwithstanding weakness in certain markets we serve”, commented Dan Goldberg, Telesat’s President and CEO. “Although revenue and Adjusted EBITDA1 grew on a reported basis relative to the second quarter last year, they declined 4% and 3%, respectively, after taking foreign exchange rate changes into account. Nonetheless, we achieved a reduction of operating expenses, a modest expansion of our Adjusted EBITDA margin1 , and continued to generate a significant amount of cash from our operating activities. Looking ahead, the Telstar 12 VANTAGE satellite remains on schedule and we anticipate its launch toward the end of this year. Our industry-leading contractual backlog provides visibility into the stability of our future revenue and cash flow, and anticipated growing demand for satellite services positions us well to expand our activities going forward.”
Business Highlights at June 30, 2015:
-Telesat had contracted backlog for future services of approximately $4.6 billion.
– Fleet utilization was 94% for Telesat’s North American fleet2 and 80% for Telesat’s international fleet.
Telesat’s report on Form 6-K for the quarter ended June 30, 2015 has been filed with the U.S. 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, July 30, 2015 at 10:30 a.m. ET to discuss its financial results for the three and six month periods ended June 30, 2015 and other recent developments. The call will be hosted by Daniel S. Goldberg, President and Chief Executive Officer, and Michel Cayouette, Chief Financial Officer, of Telesat.
– Dial-in Instructions: The toll-free dial-in number for the teleconference is +1 (866) 225-6564. Callers outside of North America should dial +1 (416) 340-2219. The conference reference number is 4219382. 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 July 30, 2015, until 11:59 p.m. ET on August 13, 2015. 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 3874897 followed by the number sign (#).
All Adjusted EBITDA and Adjusted EBITDA margins included in this release are non-IFRS financial measures, as described in the End Notes section of this release. For information reconciling non-IFRS financial measures to the most comparable IFRS financial measures, please see the consolidated financial information below.
About Telesat (www.telesat.com)
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 14 satellites and the Canadian payload on ViaSat-1 with another satellite under construction. Telesat also manages the operations of additional satellites for third parties. Privately held, Telesat’s principal shareholders are Canada’s Public Sector Pension Investment Board and Loral Space & Communications Inc. (NASDAQ: LORL).
For further information:
Michael Bolitho, Telesat, +1 (613) 748-8700 ext. 2336 (ir@telesat.com)
