Telesat Reports Results for the Quarter and Year Ended December 31, 2016
March 2, 2017
Telesat today announced its consolidated financial results for the three month and one year periods ended December 31, 2016. All amounts are in Canadian dollars and are reported under International Financial Reporting Standards (“IFRS”) unless otherwise noted.
Three Months Ended December 31, 2016
For the quarter ended December 31, 2016, Telesat reported revenues of $240 million, a decrease of approximately 7% ($17 million) compared to the same period in 2015. The reduction was due to lower equipment sales, lower revenues resulting from the transition of services from Telstar 12 to Telstar 12 VANTAGE, and lower revenues from the energy and resource industries.
Operating expenses of $46 million for the quarter were 12% ($6 million) lower than the same period in 2015. The reduction in operating expenses was principally attributable to lower costs for third party satellite capacity, lower Canadian spectrum license fees, lower cost of equipment sales and lower other expenses, partially offset by higher performance based compensation and certain employee benefit costs.
Adjusted EBITDA1 for the quarter was $194 million, a decrease of 7% ($14 million) compared to the same period in 2015. The Adjusted EBITDA margin1 was 81.0% in the fourth quarter of 2016, virtually unchanged from 81.1% during the same period in 2015. The impact of changes in foreign exchange rates on operating results was not material.
Telesat’s loss for the quarter was $21 million compared to a loss of $29 million for the quarter ended December 31, 2015.
Year Ended December 31, 2016
For the year ended December 31, 2016, revenue was $931 million, a decrease of 3% ($24 million) compared to the same period in 2015. During 2016, the U.S. dollar was 4% stronger than it was during 2015. When adjusted for changes in foreign exchange rates, revenues declined 4% ($41 million) compared to 2015. The largest contributors to the reduction in revenue relative to the prior year were lower revenues resulting from the transition of services from Telstar 12 to Telstar 12 VANTAGE and lower revenues from the energy and resource industries.
Operating expenses were $175 million, or 5% ($9 million) lower than the prior year or 7% ($12 million) lower when adjusted for foreign exchange rate changes. The reduction in operating expenses was principally attributable to lower costs of third party satellite capacity, lower Canadian spectrum license fees, lower in-orbit insurance expense and lower cost of equipment sales partially offset by higher performance based compensation and certain employee benefit costs.
Adjusted EBITDA1 for the year ended December 31, 2016 was $763 million, or 2% ($15 million) lower compared to 2015 and 4% ($29 million) lower when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin1 for the year ended December 31, 2016, was 81.9% compared to 81.5% in 2015.
For the year ended December 31, 2016, net income was $293 million, compared to a net loss of $267 million in 2015. The variation was principally the result of a gain on foreign exchange in 2016 compared to a loss on foreign exchange in 2015, partially offset by higher depreciation charges, higher interest expense, and a loss on refinancing in 2016.
“I am pleased with our performance over the past year, particularly given the challenging conditions prevailing in certain of the markets we serve,” commented Dan Goldberg, Telesat’s President and CEO. “Our solid performance highlights the strength and stability of our overall business, which is underpinned by our industry leading contractual backlog to revenue ratio, as well our strong operating discipline, which is reflected in part in our favorable Adjusted EBITDA margin.1 We also took significant steps in 2016 to best position Telesat for the years ahead, including making progress on the construction of our planned Telstar 18 VANTAGE and Telstar 19 VANTAGE satellites (which we anticipate to launch in the first half of 2018), refinancing our balance sheet, and procuring two prototype Low Earth Orbit (LEO) satellites that we expect to launch later this year to support the development of our planned high capacity, advanced, global LEO satellite constellation. Looking ahead, we remain focused on increasing the utilization of our in-orbit satellites and executing on our other key growth initiatives.”