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Telesat Reports Results for the Quarter Ended September 30, 2014

 

October 30, 2014

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

For the quarter ended September 30, 2014, Telesat reported consolidated revenue of $228 million, a decrease of 4% ($10 million) compared to the same period in 2013. During the quarter, the U.S. dollar was 4% stronger than it was during the third 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 decreased by 6% ($14 million) compared to the same period in 2013. The decrease was mainly related to revenue earned in the prior period from short-term services provided to another satellite operator and from the Nimiq 2 satellite which was returned by a customer late in the third quarter of 2013.

 

Operating expenses of $49 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. The reduction was mainly due to a decrease in share-based compensation expense related to stock options granted during the third quarter of 2013. Adjusted EBITDA1 was $182 million, a decrease of 5% ($10 million) compared to the same period in 2013, or a decrease of 7% ($13 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin1 was 80% for the third quarter of 2014 compared to 81% for the same period in 2013.

 

For the nine month period ended September 30, 2014, consolidated revenue was $695 million, an increase of 3% ($22 million) compared to the same period in 2013. During the first nine months of 2014, the U.S. dollar was 6% stronger than it was during the first nine months of 2013. When adjusted for foreign exchange rate changes, revenue increased by 1% ($4 million) compared to the same period in 2013. The increase was primarily due to revenue earned on the Anik G1 satellite, which entered commercial service in May 2013, partially offset by a decrease in revenue earned on the Nimiq 2 satellite and by lower equipment sales. Operating expenses were $142 million, a decrease of 6% ($9 million) compared to the first nine months of 2013 or 8% ($12 million) when adjusted for foreign exchange rate changes. This decrease was related to lower cost of equipment sales and lower expenses in certain other areas. Adjusted EBITDA1 was $563 million, an increase of 5% ($29 million) compared to the same period in 2013, or an increase of 3% ($14 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin1 for the first nine months of 2014 was 81% compared to 79% in the same period in 2013.

 

Telesat’s net loss for the quarter ended September 30, 2014 was $41 million compared to net income of $102 million for the same period in 2013. The reduction in net income was principally due to a non-cash loss on foreign exchange resulting from the Canadian dollar weakening during the quarter relative to the U.S dollar, negatively impacting the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars. The decrease was partially offset   by non-cash gains on the fair value of financial instruments. For the nine month period ended September 30, 2014, net income was $39 million compared to a net income of $20 million for the same period in 2013, primarily as a result of higher revenues.

 

 

“I am pleased with our performance in the third quarter and year to date,” commented Dan Goldberg, Telesat’s President and CEO. “The market environment has been relatively stable throughout the course of the year and, as a result of our strategic focus and disciplined execution, we grew revenues, reduced operating expenses, increased Adjusted EBITDA1 and expanded our Adjusted EBITDA margin1 compared to the first nine months of last year. Our revenues remain well diversified and our industry-leading contractual backlog provides strong visibility into the stability of our future revenue and cash flow.”