Telesat Holdings Inc. (“Telesat”) today announced its financial results for the three and nine month periods ended September 30, 2014. All amounts are in Canadian dollars and are reported under International Financial Reporting Standards (“IFRS”) unless otherwise noted.
For the quarter ended September 30, 2014, Telesat reported consolidated revenue of $228 million, a decrease of 4% ($10 million) compared to the same period in 2013. During the quarter, the U.S. dollar was 4% stronger than it was during the third quarter of 2013, 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 6% ($14 million) compared to the same period in 2013. The decrease was mainly related to revenue earned in the prior period from short-term services provided to another satellite operator and from the Nimiq 2 satellite which was returned by a customer late in the third quarter of 2013.
Operating expenses of $49 million were 6% ($3 million) lower than the same period in 2013, or 8% ($4 million) lower when taking into account changes in foreign exchange rates. The reduction was mainly due to a decrease in share-based compensation expense related to stock options granted during the third quarter of 2013. Adjusted EBITDA1 was $182 million, a decrease of 5% ($10 million) compared to the same period in 2013, or a decrease of 7% ($13 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin1 was 80% for the third quarter of 2014 compared to 81% for the same period in 2013.
For the nine month period ended September 30, 2014, consolidated revenue was $695 million, an increase of 3% ($22 million) compared to the same period in 2013. During the first nine months of 2014, the U.S. dollar was 6% stronger than it was during the first nine months of 2013. When adjusted for foreign exchange rate changes, revenue increased by 1% ($4 million) compared to the same period in 2013. The increase was primarily due to revenue earned on the Anik G1 satellite, which entered commercial service in May 2013, partially offset by a decrease in revenue earned on the Nimiq 2 satellite and by lower equipment sales. Operating expenses were $142 million, a decrease of 6% ($9 million) compared to the first nine months of 2013 or 8% ($12 million) when adjusted for foreign exchange rate changes. This decrease was related to lower cost of equipment sales and lower expenses in certain other areas. Adjusted EBITDA1 was $563 million, an increase of 5% ($29 million) compared to the same period in 2013, or an increase of 3% ($14 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin1 for the first nine months of 2014 was 81% compared to 79% in the same period in 2013.
Telesat’s net loss for the quarter ended September 30, 2014 was $41 million compared to net income of $102 million for the same period in 2013. The reduction in net income was principally due to a non-cash loss on foreign exchange resulting from the Canadian dollar weakening during the quarter relative to the U.S dollar, negatively impacting the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars. The decrease was partially offset by non-cash gains on the fair value of financial instruments. For the nine month period ended September 30, 2014, net income was $39 million compared to a net income of $20 million for the same period in 2013, primarily as a result of higher revenues.
“I am pleased with our performance in the third quarter and year to date,” commented Dan Goldberg, Telesat’s President and CEO. “The market environment has been relatively stable throughout the course of the year and, as a result of our strategic focus and disciplined execution, we grew revenues, reduced operating expenses, increased Adjusted EBITDA1 and expanded our Adjusted EBITDA margin1 compared to the first nine months of last year. Our revenues remain well diversified and our industry-leading contractual backlog provides strong visibility into the stability of our future revenue and cash flow.”
At September 30, 2014:
– Telesat had contracted backlog for future services of approximately $4.6 billion.
– Fleet utilization was 91% for Telesat’s North American fleet and 83% for its international fleet.
Telesat’s report on Form 6-K for the quarter ended September 30, 2014 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, October 30, 2014 at 10:30 a.m. ET to discuss its financial results for the quarter ended September 30, 2014 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) 226-1792. Callers outside of North America should dial +1 (416) 340-2216. The conference reference number is 4181895. 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 October 30, 2014, until 11:59 p.m. ET on November 13, 2014. 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 9330944 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.
Forward-Looking Statements Safe Harbor
This news release contains statements that are not based on historical fact and are ‘‘forward-looking statements’’ within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this news release, the words “provides”, “visibility”, “future” or other variations of these words or other similar expressions are intended to identify forward-looking statements and information. Actual results may differ materially from the expectations expressed or implied in the forward-looking statements as a result of known and unknown risks and uncertainties. Detailed information about some of the known risks and uncertainties is included in the “Risk Factors” section of Telesat Holdings Inc.’s Annual Report on Form 20-F for the fiscal year ended December 31, 2013, as well as Telesat’s other filings with the United States Securities and Exchange Commission (SEC), which can be obtained on the SEC’s website at http://www.sec.gov. Known risks and uncertainties include but are not limited to: risks associated with operating satellites and providing satellite services, including satellite construction or launch delays, launch failures, in-orbit failures or impaired satellite performance, volatility in exchange rates and risks associated with domestic and foreign government regulation. The foregoing list of important factors is not exhaustive. The information contained in this news release reflects Telesat’s beliefs, assumptions, intentions, plans and expectations as of the date of this news release. Except as required by law, Telesat disclaims any obligation or undertaking to update or revise the information herein.
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)
