Telesat Canada (“Telesat”) today announced its financial results for the three-month period ended March 31, 2018. All amounts are in Canadian dollars and reported under International Financial Reporting Standards (“IFRS”) unless otherwise noted.
For the quarter ended March 31, 2018, Telesat reported consolidated revenues of $232 million, compared to $235 million in the same period in 2017. During the quarter, the U.S. dollar was approximately 5% weaker against the Canadian dollar than it was during the first quarter of 2016 and, as a result, there was an unfavorable impact on the conversion of U.S. dollar denominated revenues. Excluding the impact of foreign exchange rate changes, revenue increased by 2% ($4 million) compared to the same period in 2017.
Operating expenses of $38 million for the quarter were 31% ($17 million) lower than the same period in 2017, or 29% ($16 million) lower excluding the impact of changes in foreign exchange rates. The decrease in operating expenses was primarily due to a decrease in compensation and employee benefits expense arising from a special payment of $12 million made during the first quarter of 2017 to stock option holders in connection with a return of capital to Telesat’s shareholders. Adjusted EBITDA1 for the quarter was $195 million, an increase of 1% ($3 million) compared to the same period in 2017 and an increase of 4% ($8 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin1 for the first quarter of 2018 was 83.9%, compared to 81.9% 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 March 31, 2018, the adoption of IFRS 15 had a net positive impact of approximately $4 million on revenues, a reduction of approximately $5 million on operating expenses and a positive impact of approximately $9 million on Adjusted EBITDA1. The adoption of IFRS 9 had no impact on revenues, operating expenses and Adjusted EBITDA1.
Telesat’s net loss for the quarter was $15 million compared to net income of $88 million for the quarter ended March 31, 2017. The $103 million difference was the result of a higher non-cash loss on foreign exchange arising principally from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars in the first quarter of 2018.
“I am pleased with our performance for the first quarter,” commented Dan Goldberg, Telesat’s President and CEO. “Our results underscore the stability of our business, underpinned by our substantial contractual backlog, as well as our strong operating discipline. Beyond the financial results, we continue to make progress on our planned Telstar 18 VANTAGE and Telstar 19 VANTAGE satellites, which we anticipate will launch mid this year. In addition, we successfully launched and deployed our first Low Earth Orbit (LEO) satellite to support the development of our planned state-of-the-art, high capacity LEO constellation that will deliver transformative, low latency, fiber-like broadband to commercial and government users worldwide. Looking ahead, we remain focused on increasing the utilization of our in-orbit satellites and executing on our key growth initiatives.”
Business Highlights
At March 31, 2018:
- Telesat had contracted backlog for future services of approximately $4.0 billion.
- Fleet utilization was 93% for Telesat’s North American fleet and 70% for Telesat’s international fleet.
- In January 2018, Telesat announced the successful launch of its first LEO satellite, an important milestone in the company’s plans to deploy a global LEO constellation. Telesat’s LEO constellation is expected to deliver high-performing, cost-effective, fiber-like broadband anywhere in the world for business, government and individual users. Telesat subsequently announced that OmniAccess and Optus Satellite would begin testing and trials on Phase 1 LEO.
- In February 2018, Telesat welcomed the Government of Canada’s commitment in Budget 2018 to support investment in new LEO satellite constellations for rural broadband communications. Budget 2018 proposes funding of $100 million over five years for the Strategic Innovation Fund, with a particular focus on supporting projects that relate to LEO satellites and next generation rural broadband.
- In April 2018, Telesat entered into amended Senior Secured Credit Facilities which reduced the applicable margin from 3.0% to 2.5% on the outstanding borrowings of US $2,344 million.
Telesat’s report on Form 6-K for the quarter ended March 31, 2018, 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.
Conference Call
Telesat has scheduled a conference call on Thursday, May 3, 2018, at 10:30 a.m. ET to discuss its financial results for the three-month period ended March 31, 2018 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 (800) 273-9672. Callers outside of North America should dial +1 (416) 340-2216. The conference reference number is 4285538. 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 May 3, 2018, until 11:59 p.m. ET on May 17, 2018. 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 2629668 followed by the number sign (#).
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 “looking ahead”, “anticipate”, “planned”, and “will”, 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 Canada’s Annual Report on Form 20-F for the fiscal year ended December 31, 2017 which can be obtained on the SEC 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, the ability to successfully deploy an advanced global LEO satellite constellation, the availability of government funding for the LEO satellite constellation, 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 governme
nt customers. Headquartered in Ottawa, Canada, the company’s state-of-the-art fleet consists of 15 GEO satellites, the Canadian payload on ViaSat-1 and one Phase 1 LEO satellite which is the start of Telesat’s planned global LEO satellite constellation that will offer low latency, high throughput broadband services. An additional two GEO satellites are under construction with launches planned for mid-2018. Telesat is also a leading technical consultant providing high value expertise and support to satellite operators, insurers and other industry participants on a global basis. 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
