Telesat Reports Results for the Quarter

 

November 2, 2017

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

For the quarter ended September 30, 2017, Telesat reported consolidated revenues of $214 million, a decline of 4% ($10 million) from the same period in 2016.  The U.S. dollar was approximately 3% weaker on average against the Canadian dollar than it was during the third quarter of 2016.  After adjusting for the impact of changes in foreign exchange rates, revenue decreased by 3% ($7 million) compared to the same period in 2016.   

Operating expenses of $42 million for the quarter were 5% ($2 million) higher than the same period in 2016, or 6% ($3 million) higher after adjusting for the impact of changes in foreign exchange rates.  Adjusted EBITDA¹ for the quarter was $174 million, a decrease of 6% ($12 million) compared to the same period in 2016 and a decrease of 5% ($9 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin¹ for the third quarter of 2017 was 81.3%, as compared to 83.0% in the same period in 2016. 

Telesat’s net income for the quarter was $197 million compared to net income of $15 million for the quarter ended September 30, 2016. The $182 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 third quarter of 2017. 

For the nine-month period ended September 30, 2017, revenue was $675 million, a decrease of 2% ($16 million) compared to the same period in 2016. Operating expenses were $141 million, an increase of 9% ($12 million) from the first nine months 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 $550 million, a decrease of 3% ($18 million). The Adjusted EBITDA margin¹ for the first nine months of 2017 was 81.5%, compared to 82.3% in the same period in 2016. 

For the nine-month period ended September 30, 2017, net income was $433 million, compared to net income of $314 million for the same period in 2016. The increase in net income for the first nine months of the year was principally the result of higher gains on foreign exchange in the first nine months of 2017, arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars, and from favorable changes in the fair value of financial instruments. 

“I am pleased with our performance for the quarter,” commented Dan Goldberg, Telesat’s President and CEO. “Although revenue and Adjusted EBITDA¹ were lower relative to the same period last year, fleet utilization and contractual backlog improved slightly compared to the second quarter of this year, which shows a favorable level of business activity.  In this regard, we closed a significant pre-launch, fifteen-year contract with our longstanding customer Bell Canada for nearly all of the high throughput capacity serving northern Canada on the Telstar 19 VANTAGE satellite.  Looking ahead, we remain focused on increasing the utilization of our available in-orbit capacity, maintaining our operating discipline and executing on our key growth initiatives, including the launch later this year of the first of our Low Earth Orbit satellites and the construction of Telstar 19 VANTAGE and Telstar 18 VANTAGE for launch in 2018.”