OTTAWA, CANADA – May 10, 2024Telesat (NASDAQ and TSX: TSAT), one of the world’s largest and most innovative satellite operators, today announced its financial results for the quarter ended March 31, 2024. All amounts are in Canadian dollars and reported under International Financial Reporting Standards (IFRS) unless otherwise noted. 

“I am pleased with our financial and operating performance for the first quarter,” commented Dan Goldberg, Telesat’s President and CEO. “We remain on track to meet our 2024 guidance and, as a result of our continued disciplined execution, delivered industry-leading Adjusted EBITDA margins1, high capacity utilization, a substantial contractual backlog2 of $1.2 billion, and a cash balance of $1.8 billion.” 

Goldberg added: “Our focus this year remains twofold. First, in our geostationary activities, maximize our Adjusted EBITDA1 and cash flow by seeking to mitigate anticipated revenue declines and rigorously manage our legacy cost structure. Second, accelerate implementation and commercialization of Telesat Lightspeed now that we have agreed to terms with the Government of Canada on funding for the program. We believe Telesat Lightspeed, our state-of-the-art Low Earth Orbit (LEO) global broadband constellation, will revolutionize broadband connectivity for enterprise and government users and represents a highly compelling growth and value creation opportunity for Telesat and its stakeholders.” 

For the quarter ended March 31, 2024, Telesat reported consolidated revenue of $152 million, a decrease of 17% ($31 million) compared to the same period in 2023. The change in foreign exchange rates had a minimal impact. The decrease was primarily due to a reduction of services and lower rate on the renewal of a long-term agreement with a North American direct-to-home customer as well as lower revenue from certain mobility and Latin American customers and lower equipment sales to Canadian Government customers.      

Operating expenses for the quarter were $47 million, a decrease of 12% ($6 million) from 2023.

The change in foreign exchange rates had a minimal impact. The decrease was primarily due to lower non-cash share-based compensation and higher capitalized engineering expense relative to the prior period.   

Adjusted EBITDA1 for the quarter was $111 million, a decrease of 20% ($28 million). The change in foreign exchange rates had a minimal impact. The Adjusted EBITDA margin1 was 72.8%, compared to 75.7% in the same period in 2023. 

Telesat net loss for the quarter was $52 million compared to net income of $28 million for the same period in the prior year. The change was primarily due to a negative variation in the gain (loss) on foreign exchange. 

Business Highlights 

  • Government of Canada Funding for Telesat Lightspeed:
    • On March 28, 2024, Telesat and Government of Canada agreed to terms on a $2.14 billion loan for Telesat Lightspeed.
    • Government of Canada to receive warrants for 10% of the common shares of Telesat LEO Inc. based upon an equity valuation of US$3 billion.
    • The Government of Canada investment is subject to certain conditions, including the entry of definitive documentation with the Government of Canada and Telesat’s other financing sources. 
  • At March 31, 2024:
    • Telesat had contracted backlog2 for future services of approximately $1.2 billion (excluding approximately $740 million in revenue commitments associated with Telesat Lightspeed).
    • Fleet utilization was 77%. 
  • Debt Repurchase:
    • Subsequent to quarter end and up to May 8, 2024, Telesat repurchased debt with a cumulative principal amount of US$219.5 million in exchange for an aggregate cost including accrued interest of US$98.9 million.
      • Combined with the debt repurchases completed in 2022 and 2023, Telesat has repurchased a cumulative principal amount of US$806.5 million for an aggregate cost including accrued interest of US$438.3 million. 

2024 Financial Outlook

(assumes a foreign exchange rate of US$1=C$1.35) 

For 2024, Telesat continues to expect full year: 

  • revenues to be between $545 million and $565 million;
  • Adjusted EBITDA1 to be between $340 million and $360 million, which reflects Telesat Lightspeed operating expenses of between $80 million and $90 million; and
  • cash flows used in investing activities to be in the range of $1,000 million to $1,400 million, which is nearly all related to expected Telesat Lightspeed capital expenditures.

Telesat’s quarterly report on Form 6-K for the quarter ended March 31, 2024, has been filed with the United States Securities and Exchange Commission (SEC) and the Canadian securities regulatory authorities, and may be accessed on the SEC’s website at www.sec.gov and on the System for Electronic Document Analysis and Retrieval+ (SEDAR) website at www.sedarplus.ca. 

Conference Call 

Telesat has scheduled a conference call on Friday, May 10, 2024, at 10:30 a.m. ET to discuss its financial results for the Quarter ended March 31, 2024. The call will be hosted by Daniel S. Goldberg, President and Chief Executive Officer, and Andrew Browne, Chief Financial Officer, of Telesat. 

Dial-in Instructions: 

The toll-free dial-in number for the teleconference is +1 800 806 5484. Callers outside of North America should dial +1 416 340 2217. The access code is 6484355 followed by the number sign (#). Please allow at least 15 minutes prior to the scheduled start time to connect to the teleconference. In the event of technical issues, please dial *0 and advise the conference call operator of the company name (Telesat) and the name of the moderator (Michael Bolitho).

Webcast:

The conference call can also be accessed, as a listen in only, at https://edge.media-server.com/mmc/p/ddumsxtm A replay of the webcast will be archived on Telesat’s website under the tab “Investors”. 

Dial-in Audio Replay:

A replay of the teleconference will be available one hour after the end of the call on May 10, 2024 until 11:59 p.m. ET on May 24, 2024. To access the replay, please call +1 800 408 3053. Callers from outside North America should dial +1 905 694 9451. The access code is 7879436 followed by the number sign (#).