Loral Reports Second Quarter 2011 Financial Results
Aug. 9, 2011
Loral Space & Communications Inc. announced its financial results for the three months and six months ended
June 30, 2011. Revenues and Adjusted EBITDA for the first half of the year at both Telesat and Space Systems/Loral (SS/L) showed continued improvement when compared to the first half of 2010. Second quarter results continue to reflect improved operating margins; however, reported results were lower at SS/L compared to the second quarter of 2010, primarily due to the benefit from the recognition of overhead rate improvements in the prior period, and the effects in the current quarter of the timing and average size and profitability of satellites under construction at SS/L, and costs associated with a solar array anomaly on Telstar 14R/Estrela do Sul 2 upon its launch.
Loral reported net income in the current quarter of $29 million compared to a net loss of $20 million in the second quarter of 2010; the improvement was largely driven by changes in foreign exchange rates at Telesat. For the first six months of 2011, net income was $97 million
compared to net income for the first six months of 2010 which was $10 million. Diluted earnings per share for the quarter was
$0.91 compared to a loss per share for the second quarter of 2010 of $0.66. For the first six months of 2011 diluted earnings per share was $3.01 compared to diluted earnings per share of
$0.32 for the first six months of 2010. Loral's available cash increased to $181 million compared to $166
million at the end of 2010, and liquidity is further enhanced by the availability of the SS/L $150 million revolver which remains undrawn.
Revenues and Adjusted EBITDA for all segments before eliminations for the second quarter of 2011 were $460 million and $185 million, respectively, compared to $481 million and
$187 million, respectively, for the second quarter of 2010. Combined segment revenues and Adjusted EBITDA for the first six months of the year were $946 million and $379 million, respectively, compared to $903 million and $339 million, respectively, for the first six months of 2010. All of Telesat's revenue and Adjusted EBITDA are included in these segment results. Loral's income statement, however, reflects its 64 percent economic interest in Telesat under the equity method of accounting.
Loral's revenues and Adjusted EBITDA for the quarter after eliminations were
$252 million and $25 million, respectively, compared to $280 million and $34 million, respectively, in the second quarter of 2010. Revenues and Adjusted EBITDA for the first six months of 2011 after eliminations were $532 million
and $60 million, respectively, compared to $509 million and $43 million, respectively, for the first six months of 2010. The eliminations include all of Telesat's results.
"SS/L's results in the second quarter as compared to last year were negatively impacted by the occurrence of two of the kind of factors that I have discussed previously as potentially skewing results in any particular quarter," said Michael B. Targoff, Chief Executive Officer of Loral Space & Communications. "First, as the number of satellite contract awards in any given year is relatively small, the timing and average size of awards, which generally correlates to profitability, can cause revenue and Adjusted EBITDA to change significantly on a quarter-to-quarter basis, or even on a year-to-year basis. Second, events can occur in any one quarter that are not predictable and which positively or negatively impact operating margins, causing material deviations from run rate averages. The second quarter of 2010 benefitted from these timing conditions while the second quarter of 2011 was negatively impacted by both factors: timing and average size and profitability of satellites under construction and a $13 million charge for the anomaly on Telstar 14R. Notwithstanding these factors, SS/L's performance continues to demonstrate the continued operating efficiencies we have been achieving over the past two years."
