Telesat Reports Results for the Quarter Ended June 30, 2014

 

July 31, 2014

Telesat Holdings Inc. announced its financial results for the three and six month periods ended June 30, 2014. All amounts are in Canadian dollars and are reported under International Financial Reporting Standards (“IFRS”) unless otherwise noted.

For the quarter ended June 30, 2014, Telesat reported consolidated revenue of $226 million, an increase of 5% ($10 million) compared to the same period in 2013. During the quarter, the U.S. dollar was 7% stronger than it was during the second quarter of 2013, resulting in a positive impact on the conversion of U.S. dollar denominated revenue and a negative impact on the conversion of U.S. dollar denominated expenses. When adjusted for foreign exchange rate changes, revenue increased by 1% ($3 million) compared to the same period in 2013. The increase was mainly related to revenue earned on the Anik G1 satellite which entered into commercial service in May 2013 partially offset by a decrease in revenue earned on the Nimiq 2 satellite.

Operating expenses of $46 million were 6% ($3 million) lower than the same period in 2013 or 8% ($4 million) lower when taking into account changes in foreign exchange rates. Over half of the reduction was due to a decrease in share-based compensation expense related to stock options granted during the second quarter of 2013 with the balance of the reduction due to a decrease in expenses in a number of other areas. Adjusted EBITDA1 was $183 million, an increase of 6% ($11 million) compared to the same period in 2013, or an increase of 3% ($5 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin1 was 81% for the second quarter of 2014 compared to 80% for the same period in 2013.

For the six month period ended June 30, 2014, consolidated revenue was $468 million, an increase of 8% ($33 million) compared to the same period in 2013. During the first half of 2014, the U.S. dollar was 8% stronger than it was during the first half of 2013. When adjusted for foreign exchange rate changes, revenue increased by 4% ($18 million) compared to the same period in 2013. The increase was primarily due to short-term services provided to another satellite operator and revenue earned on the Anik G1 satellite, partially offset by a decrease in revenue earned on the Nimiq 2 satellite and by lower equipment sales. Operating expenses were $93 million, a decrease of 6% ($6 million) compared to the first half of 2013 or 9% ($9 million) when adjusted for foreign exchange rate changes. The majority of this decrease was related to lower cost of equipment sales with the balance due to lower expenses in certain other areas. Adjusted EBITDA1 was $381 million, an increase of 11% ($39 million) compared to the same period in 2013, or an increase of 8% ($27 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin1 for the first half of 2014 was 82%, compared to 79% in the same period in 2013.

Telesat’s net income for the quarter ended June 30, 2014 was $108 million compared to net income of $15 million for the same period in 2013. The favorable variation was principally due to a non-cash gain on foreign exchange, which was primarily a result of the U.S. dollar weakening during the quarter relative to the Canadian dollar, positively impacting the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars. Results were also favorably impacted by higher revenue and lower operating expenses. The favorable variations were partially offset by a loss on changes in the fair value of financial instruments in the second quarter of 2014, as compared to a gain on changes in fair value of financial instruments in the second quarter of 2013. For the six month period ended June 30, 2014, net income was $80 million, compared to a net loss of $83 million for the same period in 2013.

“I am pleased with our performance in the second quarter of 2014,” commented Dan Goldberg, Telesat’s President and CEO. “Through careful and focused execution, we achieved modest revenue growth, reduced our overall operating expenses, increased Adjusted EBITDA1 and expanded our Adjusted EBITDA margin1 relative to the same period last year. Our industry-leading contractual backlog provides visibility into the stability of our future revenue and cash flow, and anticipated growing demand for satellite services positions us well to expand our activities going forward.”