Telesat
Reports Preliminary
Results for the
Quarter Ended
September 30, 2016
and Provides
Preliminary Guidance
for 2016 and 2017
October 26, 2016
Telesat
Holdings Inc.
announced its
preliminary
consolidated
financial results
for the three and
nine month periods
ended September 30,
2016. All amounts
are in Canadian
dollars and are
reported under
International
Financial Reporting
Standards (“IFRS”)
unless otherwise
noted.
Telesat’s
preliminary results
and financial
guidance are being
released in
connection with
potential debt
refinancing
transactions.
Telesat does
not intend to
provide financial
guidance on an
ongoing basis.
Although
Telesat has
not yet finalized
the accounting of
its results for the
three and nine month
periods ended
September 30, 2016,
Telesat
expects to announce
the results outlined
below. See
“Cautionary
Statements Relating
To Preliminary
Estimates” for
additional
information relating
to the preliminary
results discussed in
this release.
Telesat
intends to file full
condensed
consolidated
financial statements
on November 2,
2016.
Three
Months Ended
September 30, 2016
For the
quarter ended
September 30, 2016,
Telesat
expects to report
revenues of $224
million, a decrease
of approximately 7%
($18 million)
compared to the same
period in 2015.
During the quarter,
the U.S. dollar was
approximately 1%
stronger than it was
during the third
quarter of 2015 and,
as a result, there
was a favorable
impact on the
conversion of U.S.
dollar denominated
revenues. When
adjusted for foreign
exchange rate
changes, revenue
declined by 8% (a
decrease of $19
million) compared to
the same period in
2015. The
largest contributor
to the anticipated
reduction in revenue
relative to the same
period last year was
short-term services
provided to another
satellite operator
in the third quarter
of 2015 that did not
recur in the third
quarter of 2016.
Operating
expenses are
expected to be $40
million for the
quarter were 10% ($4
million) lower than
the same period in
2015, with no impact
from changes in
foreign exchange
rates. The
anticipated
reduction in
operating expenses
is principally
attributable to
lower costs of third
party satellite
capacity, lower
Canadian spectrum
license fees and
lower equipment
sales.
Adjusted
EBITDA1
for the quarter is
expected to be $186
million, a decrease
of 6% ($12 million)
compared to the same
period in 2015 and a
decrease of 7% ($13
million) when
adjusted for foreign
exchange rate
changes. The
Adjusted EBITDA
margin1
is expected to
improve to 83.0% in
the third quarter of
2016 from 81.9%
during the same
period in 2015.
Telesat’s
net income for the
quarter is expected
to be $15 million
compared to a net
loss of $139 million
for the quarter
ended September 30,
2015. The $154
million difference
was principally the
result of a
reduction in the
loss on foreign
exchange partially
offset by higher
depreciation
expense.
Nine Months
Ended September 30,
2016
For the nine
month period ended
September 30, 2016,
revenue is expected
to be $691 million,
a decrease of 1% ($7
million) compared to
the same period in
2015. During the
first three quarters
of 2016, the U.S.
dollar was 6%
stronger than it was
during the first
three quarters of
2015. When adjusted
for changes in
foreign exchange
rates, revenues are
expected to decline
3% ($22 million)
compared to the same
period in 2015.
The largest
contributor to the
anticipated
reduction in revenue
relative to the same
period last year was
lower revenue from
the energy and
resource sector.
Operating
expenses are
expected to be $129
million, or 3% ($4
million) lower than
the first nine
months of 2015 or 5%
($7 million) lower
when adjusted for
foreign exchange
rate changes. The
anticipated
reduction in
operating expenses
is principally
attributable to
lower costs of third
party satellite
capacity and lower
Canadian spectrum
license fees.
Adjusted
EBITDA1
for the nine months
ended September 30,
2016 is expected to
be $568 million,
virtually unchanged
compared to the same
period in 2015 and
2% ($13 million)
lower when adjusted
for foreign exchange
rate changes. The
Adjusted EBITDA
margin1
for the nine months
ended September 30,
2016 is expected to
be 82.3%, compared
to 81.6% in the same
period in 2015
For the nine
month period ended
September 30, 2016,
net income is
expected to be $314
million, compared to
a net loss of $237
million for the same
period in 2015. The
variation for the
nine month period
ended September 30,
2016 was principally
the result of a gain
on foreign exchange
in 2016 compared to
a loss on foreign
exchange in 2015
arising from the
translation of
Telesat’s
U.S. dollar
denominated debt
into Canadian
dollars.
Business
Highlights
·
At September
30, 2016:
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Telesat
had contracted
backlog for future
services of
approximately $4.4
billion.
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Fleet
utilization was 94%
for
Telesat’s
North American fleet
and 66% for
Telesat’s
international fleet.
Telesat
is today providing
financial guidance
in connection with
the release of its
preliminary results.
·
For the 2016
financial year
ending on December
31, 2016:
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Telesat
expects revenues and
Adjusted EBITDA1
for the
quarter ending
December 31, 2016 to
be approximately
$235 million and
$195 million,
respectively;
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Telesat
expects revenues and
Adjusted EBITDA1
for the full 2016
year to be
approximately $926
million and $763
million,
respectively;
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Telesat
expects capital
expenditures for
satellites and other
property additions
for the full 2016
year to be in the
range of $255 - $265
million including
additions to
intangible assets.
·
For the 2017
financial year
ending on December
31, 2017:
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Telesat
expects that its
revenues and
Adjusted EBITDA1
will be at
approximately the
same levels as 2016
at constant foreign
exchange rates.
Telesat
today also announced
that it intends to
complete a cash
distribution of up
to US$400 million to
its shareholders. If
completed, the cash
distribution is
expected to take
place in the first
quarter of 2017. The
completion of any
such cash
distribution is
subject to a number
of conditions,
including, among
others, the
successful
implementation of
certain
restructuring
transactions which
will require
regulatory approval.
There can be no
assurance that any
cash distribution
will be paid or, if
paid, as to the
amount and timing of
any such payment.
