Intelsat released its Q4 2014 financial results and conducted a conference call with financial analysts and investors. This is the transcript.
Executives
Dianne VanBeber – VP, IR & Corporate Communications
David McGlade – Chairman & CEO
Stephen Spengler – Deputy CEO
Michael McDonnell – EVP & CFO
Operator
Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Intelsat Fourth Quarter 2014 Earnings Conference Call.
At this time, all participants are in a listen-only mode. Later we will conduct a Q&A session and instructions will be given at that time [Operator Instructions] Please note today’s conference is being recorded.
I would now like to hand the conference over to Dianne VanBeber, Vice President, Investor Relations and Corporate Communications. Please go ahead.
Dianne VanBeber – VP, IR & Corporate Communications
Welcome everyone and thank you for joining Intelsat’s fourth quarter 2014 earnings conference call. Earlier this morning, we issued our earnings release and published a quarterly commentary, both of which are available at intelsat.com.
The quarterly commentary provides the investment community with the information and context that you need to analyze our results in advance of our earnings call. We use the quarterly commentary to make your time with us more efficient and to maximize the amount of time on this call for Q&A with management.
During today’s call, we will discuss adjusted EBITDA and other financial metrics not prepared in accordance with U.S. Generally Accepted Accounting Principles, including EBITDA-related margins, adjusted net income per diluted common share and free cash flow from operations.
We provide reconciliations of these metrics to the most directly comparable GAAP measures in the earnings release and on our website. Later today, we’ll be filing the quarterly report on Form 20-F of the Intelsat S.A. with the SEC. You can find the link to the filing on our website.
Additionally, our conversation today will include forward-looking statements reflecting our current expectations for future industry conditions as well as our business strategy, market trends and positioning and expected future financial performance. These forward-looking statements are subject to risks and uncertainties many of which are outside of our control.
Please refer to the Safe Harbor statement included in our Annual Report on Form 20-F for information regarding some of the factors that could cause our actual results to differ materially from the expectations.
Finally, be aware that our conference call today is open to the investment community and media, with the media invited to participate in listen-only mode. Members of the media are not authorized to quote either directly or in substance any participant in the call, who is not a representative of Intelsat.
I am joined this morning by Chairman and CEO, David McGlade, Deputy CEO, Stephen Spengler and Executive Vice President and CFO, Michael McDonnell, who are here to offer you additional detail on Intelsat’s business and financial performance.
Following brief opening remarks by Dave and Steve, they’ll be happy to take your questions.
David McGlade – Chairman & CEO
Thanks Dianne. Intelsat’s 2014 performance is in line with our goals and continue to demonstrate our focus on long term value creation. We reported revenue and adjusted EBITDA on par with our guidance for the year.
We also completed net debt pay down of $475 million. Intelsat 30, our newest satellite entered service in November and is already providing DTH programming in Latin America.
Fourth quarter revenues were $619 million, a decline of 4% from the year ago quarter. Adjusted EBITDA was $477 million or 77% of revenue, reflecting slight pressure due to end of year operating expenses and product mix.
Future growth is largely dependent upon the new and innovative capacity of our upcoming launches, particularly the Intelsat Epic platform. As a result, our interim financial performance will be shaped by ongoing headwinds, which are expected to persist this year and into next.
In this context, our outlook for 2015 total revenue is $2.33 billion to $2.38 billion, a roughly 5% decline from 2014. Some of these headwinds such as channel and other trunking services reaching the end of their product lifecycle are specific to our legacy business.
Others such as the pace of troop withdrawal and the strengthening dollar are macro in nature. Our operating priorities take these realities into consideration as we continue to make progress on our long-term goals.
Given our reduced expectations, our ability to de-lever materially is limited in 2015. Down the road, we will reassess our capacity to de-lever as growth returns.
Meanwhile, it is important to note that we have a fully funded business plan. Even with our current outlook there is sufficient expected cash flow to execute the capital investment plan outlined by our guidance and to service all debt obligations.
Value creations from the pursuit of higher growth applications and larger addressable markets has been the core of business strategy and was the genesis of our next generation platform Intelsat Epic.
We will continue to execute on that goal under the leadership of my successor, our deputy CEO Steve Spengler, who will step into his new role on April 1. Steve has been at Intelsat since 2003 and our President and Chief Commercial Officer since 2013, leading our strategy, sales, marketing and business development efforts.
With that, I will turn it over to Steve, Steve.
