OTTAWA, Nov. 05, 2021 (GLOBE NEWSWIRE) -- Telesat today announced its financial results for the three and nine-month periods ended September 30, 2021. All amounts are in Canadian dollars and reported under International Financial Reporting Standards (“IFRS”) unless otherwise noted.
For the quarter ended September 30, 2021, Telesat reported consolidated revenue of $192 million, a decrease of 5% ($10 million) compared to the same period in 2020. When adjusted for changes in foreign exchange rates, revenue declined 2% ($4 million) compared to 2020. The revenue decrease was primarily due to a slight reduction of service for one of Telesat’s North American DTH customers, the reduction or non-renewal of certain services in the enterprise segment, including as a result of the COVID-19 pandemic, and lower consulting revenue, partially offset by an increase in revenue associated with short-term services provided to another satellite operator.
Operating expenses for the quarter were $50 million, an increase of $8 million from 2020. When adjusted for changes in foreign exchange rates, operating expenses increased by $9 million. The increase in operating expenses was primarily due to higher non-cash share-based compensation, partially offset by higher capitalized engineering costs.
Adjusted EBITDA1 was $157 million, a decrease of 4% ($6 million) or, when adjusted for foreign exchange rates, a decrease of 1% ($1 million). The Adjusted EBITDA margin1 for the third quarter was 81.5%, compared to 80.4% in 2020.
For the quarter ended September 30, 2021, the net loss was $42 million, compared to net income of $107 million for 2020. The change was principally the result of a non-cash foreign exchange loss in 2021 compared to a gain in 2020, arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars, combined with an increase in non-cash share-based compensation in 2021.
For the nine-month period ended September 30, 2021, Telesat reported consolidated revenue of $571 million, a decrease of 8% ($48 million) compared to the same period in 2020. When adjusted for changes in foreign exchange rates, revenue declined 4% ($23 million) compared to 2020. Revenue decreases for the nine-month period were driven by the same factors discussed above for the quarter.
Operating expenses for the nine-month period were $147 million, an increase of $13 million from 2020. When adjusted for changes in foreign exchange rates, operating expenses increased by $17 million from 2020. The increase was principally due to higher non-cash share-based compensation combined with higher wages due to the hiring of additional employees primarily to support our Telesat Lightspeed program. This was partially offset by higher capitalized engineering costs.
Adjusted EBITDA1 for the nine-month period was $458 million, a decrease of 7% ($35 million) or, when adjusted for foreign exchange rates, a decrease of 3% ($14 million). The Adjusted EBITDA margin1 was 80.2%, compared to 79.7% in 2020.
For the nine months ended September 30, 2021, net income was $61 million, compared to a net loss of $9 million for 2020. The positive change was principally the result of higher non-cash foreign exchange gains, arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars, offset by an increase in non-cash share-based compensation.
“I am pleased with our results for the third quarter and first nine months of the year, particularly given the fact that the COVID-19 pandemic continued to restrain certain business activities,” commented Dan Goldberg, Telesat’s President and CEO. “Although revenues and Adjusted EBITDA, adjusted for foreign exchange rate changes, were modestly lower, we continued to generate strong cash flows and maintain an industry-leading Adjusted EBITDA margin1, high capacity utilization and a substantial contractual backlog.”
Goldberg added: “As we announced previously, we made significant progress last quarter on the financing of our Telesat Lightspeed constellation, welcoming the Government of Canada’s $1.44 billion investment in the program. Lastly, I am pleased that we are now poised to conclude the process of transforming Telesat into a publicly listed company, which we expect to occur before the end of this year.”
Business Highlights
- At September 30, 2021:
- Telesat had contracted backlog2 for future services of approximately $2.3 billion.
- Fleet utilization was 80%.
- Telesat had contracted backlog2 for future services of approximately $2.3 billion.
Telesat’s quarterly report on Form 6-K for the quarter ended September 30, 2021, 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 Friday, November 5, 2021, at 10:30 a.m. ET to discuss its financial results for the three and nine-month periods ended September 30, 2021. The call will be hosted by Daniel S. Goldberg, President and Chief Executive Officer, and Andrew Browne, Chief Financial Officer, of Telesat.
Dial-in Instructions:
The toll-free dial-in number for the teleconference is +1 866 696 5910. Callers outside of North America should dial +1 416 641 6104. The participant passcode is 8848228 followed by the number sign (#). Please allow at least 15 minutes prior to the scheduled start time to connect to the teleconference. In the event of technical issues, please dial *0 and advise the conference call operator of the company name (“Telesat”) and the name of the moderator (Michael Bolitho).
Dial-in Audio Replay:
A replay of the teleconference will be available one hour after the end of the call on November 5, 2021 until 11:55 p.m. ET on November 19, 2021. To access the replay, please call +1 800 408 3053. Callers from outside North America should dial +1 905 694 9451. The access code is 6137696 followed by the number sign (#).
About Telesat
Backed by a legacy of engineering excellence, reliability and industry-leading customer service, Telesat is one of the largest and most successful global satellite operators. Telesat works collaboratively with its customers to deliver critical connectivity solutions that tackle the world’s most complex communications challenges, providing powerful advantages that improve their operations and drive profitable growth.
Continuously innovating to meet the connectivity demands of the future, Telesat Lightspeed, the company’s Low Earth Orbit satellite network, will be the first and only LEO network optimized to meet the rigorous requirements of telecom, government, maritime and aeronautical customers. Operating under its international priority Ka-band spectrum rights, Telesat Lightspeed will redefine global satellite connectivity with ubiquitous, affordable, high-capacity links with fiber-like speeds.
Privately held and headquartered in Ottawa, Canada with offices and facilities around the world, Telesat’s principal shareholders are Canada’s Public Sector Pension Investment Board and Loral Space & Communications Inc. (NASDAQ: LORL). For more information, visit www.telesat.com.
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 “will” and “transforming”, 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, 2020 and in Telesat Canada’s Quarterly Report on Form 6-K for the three and six-month periods ended June 30, 2021, both of which can be obtained from the SEC website.
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 and the execution of definitive agreements with TAS, MDA and the Governments of Canada and Québec, the availability of government and/or other funding for the LEO satellite constellation, the receipt of proceeds in relation to the re-allocation of C-band spectrum, volatility in exchange rates, risks and expense associated with becoming a publicly listed company the ability to expand existing satellite utilization 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.
Contact
Michael Bolitho
Telesat
+1.613.748.8828
ir@telesat.com
| Telesat Canada | ||||||||||||||||
| Unaudited Interim Condensed Consolidated Statements of (Loss) Income | ||||||||||||||||
| For the periods ended September 30 | ||||||||||||||||
| Three months | Nine Months | |||||||||||||||
| (in thousands of Canadian dollars) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Revenue | $ | 192,335 | $ | 202,053 | $ | 570,715 | $ | 618,560 | ||||||||
| Operating expenses | (49,691 | ) | (42,185 | ) | (146,921 | ) | (133,712 | ) | ||||||||
| Depreciation | (50,663 | ) | (55,597 | ) | (153,402 | ) | (166,819 | ) | ||||||||
| Amortization | (3,988 | ) | (4,289 | ) | (12,051 | ) | (12,906 | ) | ||||||||
| Other operating losses, net | (30 | ) | (34 | ) | (777 | ) | (246 | ) | ||||||||
| Operating income | 87,963 | 99,948 | 257,564 | 304,877 | ||||||||||||
| Interest expense | (50,691 | ) | (50,116 | ) | (139,153 | ) | (155,917 | ) | ||||||||
| Interest and other income | 1,013 | 875 | 2,786 | 6,667 | ||||||||||||
| Gain (loss) on changes in fair value of financial instruments | 971 | 5,715 | (20,357 | ) | (38,884 | ) | ||||||||||
| (Loss) gain on foreign exchange | (68,411 | ) | 66,334 | 7,343 | (99,088 | ) | ||||||||||
| (Loss) income before tax | (29,155 | ) | 122,756 | 108,183 | 17,655 | |||||||||||
| Tax expense | (12,764 | ) | (15,736 | ) | (47,591 | ) | (27,100 | ) | ||||||||
| Net (loss) income | $ | (41,919 | ) | $ | 107,020 | $ | 60,592 | $ | (9,445 | ) | ||||||
| Telesat Canada | ||||||||||||
| Unaudited Interim Condensed Consolidated Balance Sheets | ||||||||||||
| (in thousands of Canadian dollars) | September 30, 2021 | December 31, 2020 | ||||||||||
| Assets | ||||||||||||
| Cash and cash equivalents | $ | 1,558,638 | $ | 818,378 | ||||||||
| Trade and other receivables | 55,985 | 51,928 | ||||||||||
| Other current financial assets | 474 | 448 | ||||||||||
| Prepaid expenses and other current assets | 38,103 | 22,861 | ||||||||||
| Total current assets | 1,653,200 | 893,615 | ||||||||||
| Satellites, property and other equipment | 1,286,390 | 1,318,526 | ||||||||||
| Deferred tax assets | 62,523 | 79,912 | ||||||||||
| Other long-term financial assets | 16,918 | 53,425 | ||||||||||
| Other long-term assets | 13,410 | 9,922 | ||||||||||
| Intangible assets | 766,031 | 779,190 | ||||||||||
| Goodwill | 2,446,603 | 2,446,603 | ||||||||||
| Total assets | $ | 6,245,075 | $ | 5,581,193 | ||||||||
| Liabilities | ||||||||||||
| Trade and other payables | $ | 33,508 | $ | 30,091 | ||||||||
| Other current financial liabilities | 63,433 | 35,880 | ||||||||||
| Other current liabilities | 91,294 | 96,155 | ||||||||||
| Total current liabilities | 188,235 | 162,126 | ||||||||||
| Long-term indebtedness | 3,805,313 | 3,187,152 | ||||||||||
| Deferred tax liabilities | 290,282 | 325,893 | ||||||||||
| Other long-term financial liabilities | 25,172 | 35,499 | ||||||||||
| Other long-term liabilities | 383,587 | 410,587 | ||||||||||
| Total liabilities | 4,692,589 | 4,121,257 | ||||||||||
| Shareholders' Equity | ||||||||||||
| Share capital | 155,714 | 155,698 | ||||||||||
| Accumulated earnings | 1,327,106 | 1,266,514 | ||||||||||
| Reserves | 69,666 | 37,724 | ||||||||||
| Total shareholders' equity | 1,552,486 | 1,459,936 | ||||||||||
| Total liabilities and shareholders' equity | $ | 6,245,075 | $ | 5,581,193 | ||||||||
| Telesat Canada | ||||||||||||||||||
| Unaudited Interim Condensed Consolidated Statements of Cash Flows | ||||||||||||||||||
| For the nine months ended September 30 | ||||||||||||||||||
| | ||||||||||||||||||
| (in thousands of Canadian dollars) | 2021 | 2020 | ||||||||||||||||
| Cash flows generated from operating activities | ||||||||||||||||||
| Net income (loss) | $ | 60,592 | $ | (9,445 | ) | |||||||||||||
| Adjustments to reconcile net income (loss) to cash flows generated from operating activities | ||||||||||||||||||
| Depreciation | 153,402 | 166,819 | ||||||||||||||||
| Amortization | 12,051 | 12,906 | ||||||||||||||||
| Tax expense | 47,591 | 27,100 | ||||||||||||||||
| Interest expense | 139,153 | 155,917 | ||||||||||||||||
| Interest income | (3,197 | ) | (6,761 | ) | ||||||||||||||
| (Gain) loss on foreign exchange | (7,343 | ) | 99,088 | |||||||||||||||
| Loss on changes in fair value of financial instruments | 20,357 | 38,884 | ||||||||||||||||
| Share-based compensation | 33,758 | 7,160 | ||||||||||||||||
| Loss on disposal of assets | 777 | 246 | ||||||||||||||||
| Other | (45,397 | ) | (45,474 | ) | ||||||||||||||
| Income taxes paid, net of income taxes received | (71,644 | ) | (35,221 | ) | ||||||||||||||
| Interest paid, net of interest received | (87,213 | ) | (120,576 | ) | ||||||||||||||
| Operating assets and liabilities | (2,753 | ) | 9,046 | |||||||||||||||
| Net cash generated from operating activities | 250,134 | 299,689 | ||||||||||||||||
| | ||||||||||||||||||
| Cash flows used in investing activities | | |||||||||||||||||
| Purchases for satellite programs | (97,131 | ) | (64,810 | ) | ||||||||||||||
| Purchase of property and other equipment | (27,202 | ) | (13,235 | ) | ||||||||||||||
| Purchase of intangible assets | — | (30 | ) | |||||||||||||||
| Net cash used in investing activities | (124,333 | ) | (78,075 | ) | ||||||||||||||
| Cash flows generated from (used in) financing activities | ||||||||||||||||||
| Proceeds from indebtedness | 619,900 | — | ||||||||||||||||
| Repayment of indebtedness | — | (19,197 | ) | |||||||||||||||
| Payment of debt issue costs | (6,834 | ) | — | |||||||||||||||
| Payments of principal on lease liabilities | (1,780 | ) | (1,215 | ) | ||||||||||||||
| Satellite performance incentive payments | (5,092 | ) | (6,877 | ) | ||||||||||||||
| Proceeds from exercise of stock options | 16 | — | ||||||||||||||||
| Government grant received | — | 6,120 | ||||||||||||||||
| Net cash generated from (used in) financing activities | 606,210 | (21,169 | ) | |||||||||||||||
| Effect of changes in exchange rates on cash and cash equivalents | 8,249 | 14,648 | ||||||||||||||||
| Increase in cash and cash equivalents | 740,260 | 215,093 | ||||||||||||||||
| Cash and cash equivalents, beginning of period | 818,378 | 1,027,222 | ||||||||||||||||
| Cash and cash equivalents, end of period | $ | 1,558,638 | $ | 1,242,315 | ||||||||||||||
Telesat’s Adjusted EBITDA margin(1):
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| (in thousands of Canadian dollars) (unaudited) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Net (loss) income | $ | (41,919 | ) | $ | 107,020 | $ | 60,592 | $ | (9,445 | ) | ||||||
| Tax expense | 12,764 | 15,736 | 47,591 | 27,100 | ||||||||||||
| (Gain) loss on changes in fair value of financial instruments | (971 | ) | (5,715 | ) | 20,357 | 38,884 | ||||||||||
| Loss (gain) on foreign exchange | 68,411 | (66,334 | ) | (7,343 | ) | 99,088 | ||||||||||
| Interest and other income | (1,013 | ) | (875 | ) | (2,786 | ) | (6,667 | ) | ||||||||
| Interest expense | 50,691 | 50,116 | 139,153 | 155,917 | ||||||||||||
| Depreciation | 50,663 | 55,597 | 153,402 | 166,819 | ||||||||||||
| Amortization | 3,988 | 4,289 | 12,051 | 12,906 | ||||||||||||
| Other operating losses, net | 30 | 34 | 777 | 246 | ||||||||||||
| Non-recurring compensation expenses(3) | 39 | 252 | 374 | 876 | ||||||||||||
| Non-cash expense related to share-based compensation | 14,055 | 2,275 | 33,757 | 7,160 | ||||||||||||
| Adjusted EBITDA | $ | 156,738 | $ | 162,395 | $ | 457,925 | $ | 492,884 | ||||||||
| Revenue | $ | 192,335 | $ | 202,053 | $ | 570,715 | $ | 618,560 | ||||||||
| Adjusted EBITDA Margin | 81.5 | % | 80.4 | % | 80.2 | % | 79.7 | % | ||||||||
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 expense, 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 Remaining performance obligations, which we refer to as contracted revenue backlog, represents Telesat’s expected future revenue from existing service contracts (without discounting for present value) including any deferred revenue that Telesat will recognize in the future in respect of cash already received. The majority of Telesat’s contracted revenue backlog is generated from contractual agreements for satellite capacity.
3 Includes severance payments and special compensation and benefits for executives and employees.
