Telesat Reports Results for the Quarter Ended June 30, 2017

 

July 25, 2017

Telesat Canada announced its financial results for the three and six-month periods ended June 30, 2017. All amounts are in Canadian dollars and are reported under International Financial Reporting Standards (“IFRS”) unless otherwise noted. 

For the quarter ended June 30, 2017, Telesat reported consolidated revenues of $226 million, or a decline of 3% ($6 million) from the same period in 2016.  The decline in revenue was primarily due to short-term services provided to another satellite operator in the second quarter of 2016, partially offset by favorable foreign exchange rate changes on the conversion of U.S. dollar revenue, as the U.S. dollar was approximately 5% stronger on average against the Canadian dollar than it was during the second quarter of 2016.  Excluding the impact of foreign exchange rate changes, revenue decreased by 5% ($12 million) compared to the same period in 2016.   

Operating expenses of $44 million for the quarter were 5% ($2 million) higher than the same period in 2016, or 2% ($1 million) higher excluding the impact of changes in foreign exchange rates.  Adjusted EBITDA¹ for the quarter was $184 million, a decrease of 4% ($7 million) compared to the same period in 2016 and a decrease of 7% ($13 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin¹ for the second quarter of 2017 was 81.3%, as compared to 82.5% in the same period in 2016. 

For the six-month period ended June 30, 2017, revenue was $461 million, a decrease of 1% ($6 million) compared to the same period in 2016. When adjusted for changes in foreign exchange rates, revenues declined 2% ($9 million) compared to the same period in 2016. Operating expenses were $99 million, an increase of 11% ($10 million) from the first half of 2016.  The increase in operating expenses was due to compensation expense associated with certain payments to option holders made in connection with the cash distribution to shareholders in the first quarter of 2017.  Adjusted EBITDA¹ was $376 million, a decrease of 2% ($6 million). When adjusted for foreign exchange rate changes Adjusted EBITDA¹ declined by 2.5% ($10 million) compared to 2016. The Adjusted EBITDA margin¹ for the first half of 2017 was 81.6%, compared to 81.9% in the same period in 2016. 

Telesat’s net income for the quarter was $148 million compared to net income of $62 million for the quarter ended June 30, 2016. The $86 million difference was the result of a higher non-cash gain on foreign exchange arising principally from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars and favorable changes in the fair value of financial instruments in the second quarter of 2017. 

For the six-month period ended June 30, 2017, net income was $236 million, compared to net income of $299 million for the same period in 2016. The decrease in net income for the first half of the year was principally the result of lower gains on foreign exchange in the first half of 2017, arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars, partially offset by favorable changes in the fair value of financial instruments. 

“Lower revenue and Adjusted EBITDA¹ in the second quarter compared to the same period last year is a function principally of certain short-term satellite services we provided to another satellite operator in the prior period that did not recur in the second quarter of this year,” commented Dan Goldberg, Telesat’s President and CEO. “Absent that item our results would have been more stable. Looking ahead, we are focused on increasing the utilization of our available in-orbit capacity, maintaining our operating discipline and executing on our key growth initiatives.”