Telesat
Reports Results for the Quarter and Year Ended
December 31, 2015
February 25, 2016
Telesat
Holdings Inc. announced its financial results
for the three month and one year periods ended
December 31, 2015. All amounts are in Canadian
dollars and are reported under International
Financial Reporting Standards (“IFRS”) unless
otherwise noted.
For the
quarter ended December 31, 2015, Telesat
reported consolidated revenue of $257 million,
an increase of 13% ($29 million) compared to the
same period in 2014. During the quarter, the
U.S. dollar was 17% stronger than it was during
the fourth quarter of 2014, 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 6% ($13 million) compared
to the same period in 2014. The increase in
revenue was principally from short-term services
provided to other satellite operators,
international consulting services, and equipment
sales.
Operating expenses of $51 million were 11% ($5
million) higher than the same period in 2014 or
4% ($2 million) higher when taking into account
changes in foreign exchange rates. The increase
was primarily related to higher revenue related
expenses and higher cost of equipment sales.
Adjusted EBITDA1 was $208 million, an
increase of 14% ($25 million) compared to the
same period in 2014, or an increase of 7% ($12
million) when adjusted for foreign exchange rate
changes. The Adjusted EBITDA margin1 was
81.1% for the fourth quarter of 2015 compared to
80.6% for the same period in 2014.
Telesat’s net loss for the quarter ended
December 31, 2015 was $29 million compared to a
net loss of $26 million for the same period in
2014. The higher net loss in 2015 was
principally due to an almost entirely non-cash
loss on foreign exchange of $126 million
(compared to a loss on foreign exchange of $102
million in the same period in 2014) which
resulted from the weaker Canadian dollar
relative to the U.S. dollar and the resulting
unfavorable translation of Telesat’s U.S. dollar
denominated debt into Canadian dollars. The
higher net loss was also due to lower non-cash
gains on the changes in the fair value of
financial instruments and higher tax expense in
the 2015 quarter compared to 2014, partially
offset by an increase in operating income.
For the
year ended December 31, 2015, consolidated
revenue was $955 million, or $32 million higher
compared to 2014. During 2015, the U.S. dollar
was 16% stronger than it was during 2014. When
adjusted for foreign exchange rate changes,
revenue decreased by 2% ($23 million) compared
to 2014. The decrease was due primarily to lower
revenues from the energy and resource industries
and certain international markets, as well as
lower equipment sales. Operating expenses were
$184 million, a decrease of 2% ($4 million)
compared to 2014 or 7% ($14 million) lower when
adjusted for foreign exchange rate changes. The
largest contributors to the operating expense
reduction were lower share-based compensation
expense and lower cost of equipment sales.
Adjusted EBITDA1 was $778 million, an
increase of 4% ($32 million) compared to 2014,
or a decrease of 2% ($13 million) when adjusted
for foreign exchange rate changes. The Adjusted
EBITDA margin1 for 2015 was 81.5%
compared to 80.9% in 2014.
Telesat’s net loss for 2015 was $267 million,
compared to net income of $13 million for
2014. The negative year-over-year variation was
principally due to an increased, almost entirely
non-cash, loss on foreign exchange of $540
million (compared to a loss on foreign exchange
of $241 million in 2014) which resulted from the
weaker Canadian dollar relative to the U.S.
dollar and the resulting unfavorable translation
of Telesat’s U.S. dollar denominated debt into
Canadian dollars. The net loss was also due to
lower non-cash gains on the changes in the fair
value of financial instruments and higher tax
expense in 2015 compared to 2014, partially
offset by an increase in operating income and
lower interest expense.
“I am
pleased with our financial and operating
performance in 2015,” commented Dan Goldberg,
Telesat’s President and CEO. “Although revenue and
Adjusted EBITDA1 grew on a reported
basis relative to the prior year, they declined
roughly 2% after taking foreign exchange rate
changes into account, a decline that reflects
headwinds in certain markets we serve,
particularly the energy market. Nonetheless, we
achieved a reduction in operating expenses and
an expansion of our Adjusted EBITDA margin1,
continued to generate a significant amount of
cash, and maintained our industry-leading
contractual backlog. On the operating side, we
launched and brought into service Telstar 12
VANTAGE; announced the procurement of Telstar 19
VANTAGE for the Americas, a significant portion
of which is under long term contract to Hughes
Network Systems LLC (“HNS”); and announced the
procurement of Telstar 18 VANTAGE for Asia, with
Telesat’s longstanding partner APT Satellite
Company Limited (“APSTAR”) providing the capital
for slightly more than half the satellite’s
capital cost in consideration for the use of
slightly more than half its capacity. In sum, it
was a productive year and, looking
forward, we remain focused on continuing to
develop our key initiatives in the year ahead.”
