Telesat Holdings Inc. ("Telesat") today announced its financial
results for the three month and one year periods ended December 31,
2014. All amounts are in Canadian dollars and are reported under
International Financial Reporting Standards ("IFRS") unless
otherwise noted.
For the year ended December 31, 2014, Telesat reported
consolidated revenues of $923 million, an increase of approximately
3% ($26 million) compared to 2013. Revenue was favorably impacted
by the conversion of Telesat's U.S. dollar denominated revenue into
Canadian dollars as a result of a stronger U.S. dollar to Canadian
dollar exchange rate in 2014. When adjusted for foreign exchange
rate changes, revenue was unchanged compared to 2013 as increased
revenue earned on the Anik G1 satellite was offset by a decrease in
revenue earned on the Nimiq 2 satellite and lower equipment sales
revenue.
Operating expenses of $188 million were 6% ($13 million) lower
than in 2013 or 9% ($18 million) lower when taking into account
changes in foreign exchange rates. This reduction was primarily due
to a decrease in share-based compensation expense related to stock
options granted during the second quarter of 2013, a decrease in
the provision for variable compensation expense and lower cost of
equipment sales in 2014.
Adjusted EBITDA1 was $746 million, an increase of 5% ($35
million) over 2013. When adjusted for foreign exchange rate
changes, Adjusted EBITDA was 2% ($14 million) higher than in 2013.
The Adjusted EBITDA margin1 for 2014 was 81% compared to 79% for
2013.
Telesat's net income for 2014 was $13 million compared to net
income of $68 million for 2013. The variation was primarily due to
a larger non-cash loss on foreign exchange and reduced gains on
financial instruments in 2014. The foreign exchange loss was
principally driven by a stronger U.S. dollar to Canadian dollar
spot rate at December 31, 2014, compared to December 31, 2013, and
the resulting impact on the translation of Telesat's U.S. dollar
denominated debt. Increased revenue, lower operating
expenses and lower interest expense mitigated, in part, the impact
of the foreign exchange loss on net income.
For the three month period ended December 31, 2014, consolidated
revenues were $227 million, an increase of approximately 1% ($3
million) compared to the same period in 2013. When adjusted for
foreign exchange rate changes, revenue decreased by 2% ($4 million)
compared to the same period in 2014. Operating expenses were $46
million, a decrease of 8% ($4 million) compared to the same period
in 2013, or a decrease of 10% ($5 million) taking into account
foreign exchange rate changes. The decrease was primarily due to
lower compensation expense compared to the same period in 2013.
Adjusted EBITDA1 for the fourth quarter of 2014 was $183 million,
an increase of 3% ($6 million) compared to the fourth quarter of
2013. When adjusted for foreign exchange rate changes,
Adjusted EBITDA1 was unchanged compared to the same period in
2013. The Adjusted EBITDA margin1 was 81% for the fourth
quarter of 2014 compared to 79% for the same period in 2013.
"I am very pleased with our performance last quarter and last
year," commented Dan Goldberg, Telesat's President and CEO.
"Through careful and focused execution, we achieved stable
revenues, reduced operating expenses, modestly increased Adjusted
EBITDA1 and expanded our Adjusted EBITDA margin1 relative to 2013.
Our industry-leading contractual backlog provides visibility into
the stability of our future revenue and cash flow, and anticipated
growing demand for satellite services positions us well to expand
our activities going forward."
Business Highlights
- At December 31, 2014:
- Telesat had contracted backlog for future services of
approximately $4.5 billion.
- Fleet utilization was 92% for Telesat's North American fleet
and 82% for Telesat's international fleet.
Telesat's report on Form 20-F for the year ended December 31,
2014 has been filed with the U.S. Securities and Exchange
Commission (SEC) and may be accessed on the SEC's website at
www.sec.gov.
Telesat has scheduled a conference call on Thursday, February
26, 2015 at 10:30 a.m. ET to discuss its financial results for the
year ended December 31, 2014 and other recent developments. The
call will be hosted by Daniel S. Goldberg, President and Chief
Executive Officer, and Michel Cayouette, Chief Financial Officer,
of Telesat.
Dial-in Instructions:
The toll-free dial-in number for the
teleconference is +1 (800) 396-7098. Callers outside of North
America should dial +1 (416) 340-2218. The conference reference
number is 4210279. Please allow at least 15 minutes prior to the
scheduled start time to connect to the teleconference.
Dial-in Audio Replay:
A replay of the teleconference will be
available one hour after the end of the call on February 26, 2015,
until 11:59 p.m. ET on March 12, 2015. To access the replay, please
call +1 (800) 408-3053. Callers outside of North America should
dial +1 (905) 694-9451. The access code is 9330944 followed by the
number sign (#).
All Adjusted EBITDA and Adjusted EBITDA margins included in this
release are non-IFRS financial measures, as described in the End
Notes section of this release. For information reconciling non-IFRS
financial measures to the most comparable IFRS financial measures,
please see the consolidated financial information below.
Forward-Looking Statements Safe Harbor
This news release contains statements that are not based on
historical fact and are ''forward-looking statements'' within the
meaning of the Private Securities Litigation Reform Act of 1995.
When used in this news release, the words "visibility", "future",
"anticipated", "positions us well", "going forward" or other
variations of these words or other similar expressions are intended
to identify forward-looking statements and information. Actual
results may differ materially from the expectations expressed or
implied in the forward-looking statements as a result of known and
unknown risks and uncertainties. Detailed information about some of
the known risks and uncertainties is included in the "Risk Factors"
section of Telesat Holdings Inc.'s Annual Report on Form 20-F for
the fiscal year ended December 31, 2014 which can be obtained on
the United States Securities and Exchange Commission (SEC) website
at http://www.sec.gov. Known risks and uncertainties include but
are not limited to: risks associated with operating satellites and
providing satellite services, including satellite construction or
launch delays, launch failures, in-orbit failures or impaired
satellite performance, volatility in exchange rates and risks
associated with domestic and foreign government regulation. The
foregoing list of important factors is not exhaustive. The
information contained in this news release reflects Telesat's
beliefs, assumptions, intentions, plans and expectations as of the
date of this news release. Except as required by law, Telesat
disclaims any obligation or undertaking to update or revise the
information herein.
About Telesat (www.telesat.com)
Telesat is a leading global satellite operator, providing
reliable and secure satellite-delivered communications solutions
worldwide to broadcast, telecom, corporate and government
customers. Headquartered in Ottawa, Canada, with offices and
facilities around the world, the company's state-of-the-art fleet
consists of 14 satellites and the Canadian payload on ViaSat-1 with
another satellite under construction. Telesat also manages the
operations of additional satellites for third parties. Privately
held, Telesat's principal shareholders are Canada's Public Sector
Pension Investment Board and Loral Space & Communications Inc.
(Nasdaq:LORL).
|
|
|
|
|
Telesat Holdings
Inc. |
Consolidated Statements
of (Loss) Income |
For the period ended
December 31 |
|
|
|
|
|
|
|
|
Three
months |
Twelve
months |
(in thousands of Canadian
dollars) |
2014 |
2013 |
2014 |
2013 |
Revenue |
$ 227,475 |
$ 224,127 |
$ 922,871 |
$ 896,896 |
Operating expenses |
(45,936) |
(50,144) |
(187,789) |
(201,062) |
|
181,539 |
173,983 |
735,082 |
695,834 |
Depreciation |
(54,177) |
(54,273) |
(216,496) |
(211,151) |
Amortization |
(7,668) |
(8,143) |
(30,825) |
(32,659) |
Other operating (losses) gains, net |
(58) |
26,928 |
(304) |
25,335 |
Operating income |
119,636 |
138,495 |
487,457 |
477,359 |
Interest expense |
(46,872) |
(53,497) |
(206,933) |
(224,099) |
Gain (loss) on financing |
-- |
6 |
-- |
(18,487) |
Interest and other (expense) income |
(222) |
355 |
3,056 |
11,668 |
Gain on changes in fair value of financial
instruments |
24,883 |
69,399 |
48,931 |
80,928 |
Loss on foreign exchange |
(101,654) |
(84,031) |
(241,087) |
(194,909) |
(Loss) income before tax |
(4,229) |
70,727 |
91,424 |
132,460 |
Tax expense |
(21,404) |
(22,400) |
(78,220) |
(64,367) |
Net (loss) income |
$ (25,633) |
$ 48,327 |
$ 13,204 |
$ 68,093 |
|
Telesat Holdings
Inc. |
Consolidated Balance
Sheets |
|
|
(in thousands of Canadian dollars) |
December 31,
2014 |
December 31,
2013 |
Assets |
|
|
Cash and cash equivalents |
$ 497,356 |
$ 298,713 |
Trade and other receivables |
49,534 |
50,266 |
Other current financial assets |
765 |
7,174 |
Prepaid expenses and other current
assets |
17,202 |
18,665 |
Total current assets |
564,857 |
374,818 |
Satellites, property and other equipment |
1,861,015 |
1,962,759 |
Deferred tax assets |
3,183 |
10,024 |
Other long-term financial assets |
38,442 |
76,006 |
Other long-term assets |
3,170 |
2,765 |
Intangible assets |
820,572 |
845,286 |
Goodwill |
2,446,603 |
2,446,603 |
Total assets |
$ 5,737,842 |
$ 5,718,261 |
|
|
|
Liabilities |
|
|
Trade and other payables |
$ 36,714 |
$ 34,484 |
Other current financial liabilities |
35,633 |
164,755 |
Other current liabilities |
124,145 |
122,058 |
Current indebtedness |
58,822 |
57,364 |
Total current
liabilities |
255,314 |
378,661 |
Long-term indebtedness |
3,486,857 |
3,284,502 |
Deferred tax liabilities |
484,758 |
515,207 |
Other long-term financial liabilities |
60,753 |
72,803 |
Other long-term liabilities |
318,992 |
345,185 |
Total liabilities |
4,606,674 |
4,596,358 |
|
|
|
Shareholders' Equity |
|
|
Share capital |
656,874 |
656,660 |
Accumulated earnings |
451,628 |
456,013 |
Reserves |
22,666 |
9,230 |
Total shareholders'
equity |
1,131,168 |
1,121,903 |
Total liabilities and shareholders'
equity |
$ 5,737,842 |
$ 5,718,261 |
|
Telesat Holdings
Inc. |
Consolidated Statements
of Cash Flows |
For the year ended
December 31 |
|
(in thousands of Canadian dollars) |
2014 |
2013(2) |
Cash flows from operating
activities |
|
|
Net income |
$ 13,204 |
$ 68,093 |
Adjustments to reconcile net income to cash
flows from operating activities |
|
|
Depreciation |
216,496 |
211,151 |
Amortization |
30,825 |
32,659 |
Tax expense |
78,220 |
64,367 |
Interest expense |
206,933 |
224,099 |
Interest income |
(2,711) |
(1,288) |
Unrealized foreign exchange loss |
238,386 |
194,041 |
Gain on changes in fair value of
financial instruments |
(48,931) |
(80,928) |
Share-based compensation |
9,655 |
13,517 |
Impairment reversal on intangible
assets |
-- |
(17,274) |
Gain on other post-employment benefit
plan amendment |
-- |
(9,786) |
Loss on disposal of assets |
304 |
1,725 |
Loss on financing |
-- |
18,487 |
Other |
(57,538) |
(49,755) |
Income taxes paid, net of income taxes
received |
(80,799) |
(12,569) |
Interest paid, net of capitalized interest
and interest received |
(192,897) |
(211,141) |
Customer prepayments on future satellite
services |
-- |
32,305 |
Repurchase of stock options and exercise of
share appreciation rights |
-- |
(1,196) |
Operating assets and liabilities |
1,052 |
3,023 |
Net cash from operating
activities |
$ 412,199 |
$ 479,530 |
Cash flows used in investing
activities |
|
|
Satellite programs, including capitalized
interest |
$ (84,591) |
$ (71,178) |
Purchase of other property and equipment |
(10,695) |
(8,772) |
Purchase of intangible assets |
(185) |
(6) |
Proceeds from sale of assets |
311 |
1,081 |
Net cash used in investing
activities |
$ (95,160) |
$ (78,875) |
Cash flows used in financing
activities |
|
|
Repayment of indebtedness |
$ (70,692) |
$ (271,448) |
Settlement of derivatives |
(60,824) |
(1,219) |
Payment of premium on early retirement of
indebtedness |
-- |
(13,793) |
Payment of debt issue costs |
-- |
(810) |
Proceeds from exercise of stock options |
202 |
99 |
Dividends paid on preferred shares |
(20) |
(10) |
Satellite performance incentive payments |
(5,452) |
(4,770) |
Net cash used in financing
activities |
$ (136,786) |
$ (291,951) |
|
|
|
Effect of changes in exchange rates on cash
and cash equivalents |
$ 18,390 |
$ 9,048 |
|
|
|
Increase in cash and cash equivalents |
$ 198,643 |
$ 117,752 |
Cash and cash equivalents, beginning of
year |
298,713 |
180,961 |
Cash and cash equivalents, end of
year |
$ 497,356 |
$ 298,713 |
|
|
|
|
|
Telesat's Adjusted EBITDA
margin(1) |
|
|
|
|
|
|
Three
months |
Twelve
months |
(in thousands of Canadian
dollars) |
2014 |
2013 |
2014 |
2013 |
Net (loss) income |
$ (25,633) |
$ 48,327 |
$ 13,204 |
$ 68,093 |
Tax expense |
21,404 |
21,404 |
21,404 |
21,404 |
Gain on changes in fair value of financial
instruments |
(24,883) |
(24,883) |
(24,883) |
(24,883) |
Loss on foreign exchange |
101,654 |
101,654 |
101,654 |
101,654 |
Interest and other expense (income) |
222 |
222 |
222 |
222 |
(Gain) loss on financing |
-- |
-- |
-- |
-- |
Interest expense |
46,872 |
46,872 |
46,872 |
46,872 |
Depreciation |
54,177 |
54,177 |
54,177 |
54,177 |
Amortization |
7,668 |
7,668 |
7,668 |
7,668 |
Other operating losses (gains), net |
58 |
58 |
58 |
58 |
Special compensation, benefits expense and
severance payments |
450 |
450 |
450 |
450 |
Non-cash expense related to share-based
compensation |
1,375 |
1,375 |
1,375 |
1,375 |
Adjusted EBITDA |
$ 183,364 |
$ 177,598 |
$ 746,292 |
$ 711,499 |
|
|
|
|
|
Revenue |
$ 227,475 |
$ 224,127 |
$ 922,871 |
$ 896,896 |
Adjusted EBITDA Margin |
80.6% |
79.2% |
80.9% |
79.3% |
End Notes
1 The common definition of EBITDA is "Earnings Before Interest,
Taxes, Depreciation and Amortization." In evaluating financial
performance, Telesat uses revenue and deducts certain operating
expenses (including share-based compensation expense and unusual
and non-recurring items, including restructuring related expenses)
to obtain operating income before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") and the Adjusted EBITDA margin
(defined as the ratio of Adjusted EBITDA to revenue) as measures of
Telesat's operating performance.
Adjusted EBITDA allows Telesat and investors to compare
Telesat's operating results with that of competitors exclusive of
depreciation and amortization, interest and investment income,
interest expense, taxes and certain other expenses. Financial
results of competitors in the satellite services industry have
significant variations that can result from the timing of capital
expenditures, the amount of intangible assets recorded, the
differences in assets' lives, the timing and amount of investments,
the effects of other income (expense), and unusual and
non-recurring items. The use of Adjusted EBITDA assists Telesat and
investors in making comparisons of operating results exclusive of
these items. Competitors in the satellite services industry have
significantly different capital structures. Telesat believes the
use of Adjusted EBITDA improves comparability of performance by
excluding interest expense.
Telesat believes the use of Adjusted EBITDA and the Adjusted
EBITDA margin along with IFRS financial measures enhances the
understanding of Telesat's operating results and is useful to
Telesat and investors in comparing performance with competitors,
estimating enterprise value and making investment decisions.
Adjusted EBITDA as used here may not be the same as similarly
titled measures reported by competitors. Adjusted EBITDA should be
used in conjunction with IFRS financial measures and is not
presented as a substitute for cash flows from operations as a
measure of Telesat's liquidity or as a substitute for net income as
an indicator of Telesat's operating
performance.
2 Changes in accounting policies have resulted in changes to the
2013 comparative figures on the consolidated statement of cash
flows. For more information on the impacts of these changes,
please refer to Note 3 of Telesat's audited consolidated financial
statements, filed with the SEC on a Form 20-F dated
today.
CONTACT: Michael Bolitho, Telesat,
+1 (613) 748-8700 ext. 2336
(ir@telesat.com)
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