OTTAWA, April 30, 2015 (GLOBE NEWSWIRE) -- Telesat Holdings Inc. ("Telesat") today announced its financial results for the three month period ended March 31, 2015. All amounts are in Canadian dollars and are reported under International Financial Reporting Standards ("IFRS") unless otherwise noted.
For the quarter ended March 31, 2015, Telesat reported consolidated revenues of $229 million, a decrease of approximately 5% ($13 million) compared to the same period in 2014. During the quarter, the U.S. dollar was approximately 12% stronger than it was during the first quarter of 2014, and as a result, there was a favorable impact on the conversion of U.S. dollar denominated revenues. When adjusted for foreign exchange rate changes, revenue decreased by 10% ($25 million) compared to the same period in 2014. The decrease was primarily due to revenues from short-term services provided to other satellite operators in the first quarter of 2014 which did not recur in the first quarter of 2015.
Operating expenses of $45 million for the quarter 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. This reduction was primarily due to lower cost of sales in 2015. Adjusted EBITDA1 for the quarter was $186 million, a decrease of 6% ($12 million) compared to the same period in 2014 and a decrease of 11% ($22 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin1 was 81% for the first quarter of 2015 compared to 82% for the same period in 2014.
Telesat's net loss for the quarter was $154 million compared to net loss of $28 million for the quarter ended March 31, 2014. Results were negatively impacted by a non-cash loss on foreign exchange arising from the translation of Telesat's U.S. dollar denominated debt into Canadian dollars as well as lower operating income. The losses were partially mitigated by a higher gain on changes in the fair value of financial instruments and by lower interest expense in the first quarter of 2015.
"Our first quarter revenue and EBITDA were lower than the same period last year principally as a result of the fact that certain short-term satellite services we provided to other satellite operators in 2014 did not recur in the first quarter of this year," commented Dan Goldberg, Telesat's President and CEO. "Despite this reduction, our Adjusted EBITDA margin1 was essentially stable given our continued operating discipline. Looking ahead, the Telstar 12 VANTAGE satellite remains on schedule, and we anticipate its launch toward the end of this year. Our satellite expansion plans combined with our industry-leading contractual backlog provides visibility into the stability of our future revenue and cash flow and positions us well for future growth."
Business Highlights
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At March 31, 2015:
- Telesat had contracted backlog for future services of approximately $4.6 billion.
- Fleet utilization was 93% for Telesat's North American fleet2 and 80% for Telesat's international fleet.
Telesat's report on Form 6-K for the quarter ended March 31, 2015 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.
Telesat has scheduled a conference call on Thursday, April 30, 2015, at 10:30 a.m. ET to discuss its financial results for the three month period ended March 31, 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 4214739. 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 April 30, 2015, until 11:59 p.m. ET on May 14, 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 9734731 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 "looking ahead", "anticipate", "plans", "future", "positions us well" 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, 2014 which can be obtained on the United States Securities and Exchange Commission (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, 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).
| Telesat Holdings Inc. | ||
| Condensed Consolidated Statements of Loss | ||
| For the three months ended March 31 | ||
| (in thousands of Canadian dollars) (unaudited) | 2015 | 2014 |
| Revenue | $ 228,708 | $ 241,928 |
| Operating expenses | (44,474) | (47,089) |
| 184,234 | 194,839 | |
| Depreciation | (52,438) | (54,183) |
| Amortization | (7,154) | (7,764) |
| Other operating losses, net | (18) | (65) |
| Operating income | 124,624 | 132,827 |
| Interest expense | (44,942) | (53,469) |
| Interest and other income | 990 | 808 |
| Gain on changes in fair value of financial instruments | 44,335 | 21,674 |
| Loss on foreign exchange | (260,541) | (109,813) |
| Loss before tax | (135,534) | (7,973) |
| Tax expense | (18,655) | (20,289) |
| Net loss | $ (154,189) | $ (28,262) |
| Telesat Holdings Inc. | ||||
| Condensed Consolidated Balance Sheets | ||||
| (in thousands of Canadian dollars) (unaudited) |
March 31, 2015 |
December 31, 2014 |
||
| Assets | ||||
| Cash and cash equivalents | $ 551,808 | $ 497,356 | ||
| Trade and other receivables | 45,782 | 49,534 | ||
| Other current financial assets | 170 | 765 | ||
| Prepaid expenses and other current assets | 21,970 | 17,202 | ||
| Total current assets | 619,730 | 564,857 | ||
| Satellites, property and other equipment | 1,845,167 | 1,861,015 | ||
| Deferred tax assets | 3,867 | 3,183 | ||
| Other long-term financial assets | 90,044 | 38,442 | ||
| Other long-term assets | 3,080 | 3,170 | ||
| Intangible assets | 818,121 | 820,572 | ||
| Goodwill | 2,446,603 | 2,446,603 | ||
| Total assets | $ 5,826,612 | $ 5,737,842 | ||
| Liabilities | ||||
| Trade and other payables | $ 37,330 | $ 36,714 | ||
| Other current financial liabilities | 55,229 | 35,633 | ||
| Other current liabilities | 83,696 | 124,145 | ||
| Current indebtedness | 66,814 | 58,822 | ||
| Total current liabilities | 243,069 | 255,314 | ||
| Long-term indebtedness | 3,742,184 | 3,486,857 | ||
| Deferred tax liabilities | 472,076 | 484,758 | ||
| Other long-term financial liabilities | 69,039 | 60,753 | ||
| Other long-term liabilities | 308,951 | 318,992 | ||
| Total liabilities | 4,835,319 | 4,606,674 | ||
| Shareholders' Equity | ||||
| Share capital | 656,874 | 656,874 | ||
| Accumulated earnings | 297,439 | 451,628 | ||
| Reserves | 36,980 | 22,666 | ||
| Total shareholders' equity | 991,293 | 1,131,168 | ||
| Total liabilities and shareholders' equity | $ 5,826,612 | $ 5,737,842 | ||
| Telesat Holdings Inc. | ||
| Condensed Consolidated Statements of Cash Flows | ||
| For the three months ended March 31 | ||
| (in thousands of Canadian dollars) (unaudited) | 2015 | 2014(3) |
| Cash flows from operating activities | ||
| Net loss | $ (154,189) | $ (28,262) |
| Adjustments to reconcile net loss to cash flows from operating activities | ||
| Depreciation | 52,438 | 54,183 |
| Amortization | 7,154 | 7,764 |
| Tax expense | 18,655 | 20,289 |
| Interest expense | 44,942 | 53,469 |
| Interest income | (933) | (635) |
| Unrealized foreign exchange loss | 255,689 | 99,072 |
| Gain on changes in fair value of financial instruments | (44,335) | (21,674) |
| Share-based compensation | 1,920 | 2,943 |
| Loss on disposal of assets | 18 | 65 |
| Other | (9,970) | (22,444) |
| Income taxes paid, net of income taxes received | (76,402) | (50,811) |
| Interest paid, net of capitalized interest and interest received | (23,549) | (34,631) |
| Operating assets and liabilities | 6,753 | 1,136 |
| Net cash from operating activities | $ 78,191 | $ 80,464 |
| Cash flows used in investing activities | ||
| Satellite programs, including capitalized interest | $ (23,568) | $ (10,515) |
| Purchase of other property and equipment | (2,221) | (1,973) |
| Net cash used in investing activities | $ (25,789) | $ (12,488) |
| Cash flows used in financing activities | ||
| Repayment of indebtedness | $ (18,312) | $ (17,679) |
| Settlement of derivatives | -- | (145) |
| Dividends paid on preferred shares | -- | (10) |
| Satellite performance incentive payments | (1,637) | (1,347) |
| Net cash used in financing activities | $ (19,949) | $ (19,181) |
| Effect of changes in exchange rates on cash and cash equivalents | $ 21,999 | $ 14,542 |
| Increase in cash and cash equivalents | $ 54,452 | $ 63,337 |
| Cash and cash equivalents, beginning of period | 497,356 | 298,713 |
| Cash and cash equivalents, end of period | $ 551,808 | $ 362,050 |
| Telesat's Adjusted EBITDA margin(1): | ||
|
Three months ended March 31, |
||
| (in thousands of Canadian dollars) (unaudited) | 2015 | 2014 |
| Net loss | $ (154,189) | $ (28,262) |
| Tax expense | 18,655 | 20,289 |
| Gain on changes in fair value of financial instruments | (44,335) | (21,674) |
| Loss on foreign exchange | 260,541 | 109,813 |
| Interest and other income | (990) | (808) |
| Interest expense | 44,942 | 53,469 |
| Depreciation | 52,438 | 54,183 |
| Amortization | 7,154 | 7,764 |
| Other operating losses, net | 18 | 65 |
| Special compensation, benefit expense and severance payments | 98 | 274 |
| Non-cash expense related to share based compensation | 1,920 | 2,943 |
| Adjusted EBITDA | $ 186,252 | $ 198,056 |
| Revenue | $ 228,708 | $ 241,928 |
| Adjusted EBITDA Margin | 81.4% | 81.9% |
End Notes
1 The common definition of EBITDA is "Earnings Before Interest, Taxes, Depreciation and Amortization." In evaluating financial performance, Telesat uses revenue and deducts certain operating expenses (including share-based compensation expense and unusual and non-recurring items, including restructuring related expenses) to obtain operating income before interest, taxes, depreciation and amortization ("Adjusted EBITDA") and the Adjusted EBITDA margin (defined as the ratio of Adjusted EBITDA to revenue) as measures of Telesat's operating performance.
Adjusted EBITDA allows Telesat and investors to compare Telesat's operating results with that of competitors exclusive of depreciation and amortization, interest and investment income, interest expense, taxes and certain other expenses. Financial results of competitors in the satellite services industry have significant variations that can result from timing of capital expenditures, the amount of intangible assets recorded, the differences in assets' lives, the timing and amount of investments, the effects of other income (expense), and unusual and non-recurring items. The use of Adjusted EBITDA assists Telesat and investors to compare operating results exclusive of these items. Competitors in the satellite services industry have significantly different capital structures. Telesat believes the use of Adjusted EBITDA improves comparability of performance by excluding interest expense.
Telesat believes the use of Adjusted EBITDA and the Adjusted EBITDA margin along with IFRS financial measures enhances the understanding of Telesat's operating results and is useful to Telesat and investors in comparing performance with competitors, estimating enterprise value and making investment decisions. Adjusted EBITDA as used here may not be the same as similarly titled measures reported by competitors. Adjusted EBITDA should be used in conjunction with IFRS financial measures and is not presented as a substitute for cash flows from operations as a measure of Telesat's liquidity or as a substitute for net income as an indicator of Telesat's operating performance.
2 A change in calculation methodology has resulted in a change to the reported capacity utilization on Telesat's North American fleet. On the basis of the previous calculation methodology, the equivalent utilization would have been reported as 91%. The change in calculation methodology does not affect the reported revenue.
3 A change in accounting policies for the year ended December 31, 2014 has resulted in changes to the 2014 comparative figures. For more information on the impact, please refer to Note 3 of Telesat's unaudited condensed consolidated financial statements, filed with the SEC on a Form 6-K dated today.