OTTAWA, CANADA – August 14, 2024 –Telesat (NASDAQ and TSX: TSAT), one of the world’s largest and most innovative satellite operators, today announced its financial results for the three and six-month periods ended June 30, 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 second 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 $1.1 billion, and a cash balance of $1.4 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 managing our legacy cost structure. Second, move forward expeditiously on implementing and deploying Telesat Lightspeed as we complete the definitive documentation on the Government of Canada and Government of Quebec 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 June 30, 2024, Telesat reported consolidated revenue of $152 million, a decrease of 15% ($27 million) compared to the same period in 2023 and in line with our expectations. When adjusted for changes in foreign exchange rates, revenue declined 16% ($29 million) compared to 2023. 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 television customer as well as lower revenue from certain mobility and Latin American customers.
Operating expenses for the quarter were $56 million, an increase of $5 million from 2023. The impact from foreign exchange was minimal. The increase was primarily due to higher wages and benefits, bad debt expense, and costs associated with consulting contracts, partially offset by lower non-cash share-based compensation and higher capitalized engineering associated with Telesat Lightspeed.
Adjusted EBITDA1 for the quarter was $103 million, a decrease of 25% ($35 million) or 27% ($37 million) when adjusted for foreign exchange rates. The Adjusted EBITDA margin1 was 67.8%, compared to 77.1% in the same period in 2023.
Telesat net income for the quarter was $129 million compared to net income of $519 million for the same period in the prior year. The change was primarily due to the recognition of C-band clearing income in 2023, along with a loss associated with the impact of changes in foreign exchange rates during the quarter on the value of our US dollar denominated debt, compared with a gain in the same period in 2023.
For the six-month period ended June 30, 2024, Telesat reported consolidated revenue of $305 million, a decrease of 16% ($59 million) compared to the same period in 2023 and in line with our expectations.When adjusted for changes in foreign exchange rates, revenue declined 17% ($60 million) compared to 2023. 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 television 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 six-month period were $103 million, a decrease of $2 million from 2023. The impact from foreign exchange was minimal. The decrease was primarily due to lower non-cash share-based compensation and higher capitalized engineering associated with Telesat Lightspeed, partially offset by higher wages and benefits, bad debt expense, and costs associated with consulting contracts.
Adjusted EBITDA1 for the six-month period was $214 million, a decrease of 23% ($64 million) or 24% ($66 million) when adjusted for foreign exchange rates. The Adjusted EBITDA margin1 was 70.3%, compared to 76.4% in the same period in 2023.
For the six months ended June 30, 2024, Telesat’s net income was $77 million compared to net income of $547 million for the same period in the prior year. The change was primarily due to the recognition of C-band clearing income in 2023, along with a loss associated with the impact of changes in foreign exchange rates during the period on the value of our US dollar denominated debt, compared with a gain in the same period in 2023.
Business Highlights
- At June 30, 2024:
- Telesat had contracted backlog2 for future services of approximately $1.1 billion (excluding revenue commitments associated with Telesat Lightspeed).
- Fleet utilization was 75%.
- Debt Repurchase:
- To date in 2024, Telesat has repurchased US$262 million of debt for an aggregate price of US$119.5 million (including US$5.5 million in accrued interest). This includes a principal amount of US$42.5 million repurchased for US$20.9 million (including US$0.7 million in accrued interest) subsequent to the end of the second quarter.
- Combined with the debt repurchases completed in 2022 and 2023, Telesat has repurchased a cumulative principal amount of US$849 million for an aggregate cost of US$458.9 million (including US$12.2 million in accrued interest).
2024 Financial Outlook
(assumes an average 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 June 30, 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 Wednesday, August 14, 2024, at 10:30 a.m. ET to discuss its financial results for the Quarter ended June 30, 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 (James Ratcliffe).
Webcast:
The conference call can also be accessed, as a listen in only, at https://edge.media-server.com/mmc/p/ytrh4nae. 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 August 14, 2024 until 11:59 p.m. ET on August 28, 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 (#).
About Telesat
Backed by a legacy of engineering excellence, reliability and industry-leading customer service, Telesat (NASDAQ and TSX: TSAT) is one of the largest and most successful global satellite operators. Telesat works collaboratively with its customers to deliver critical connectivity solutions that tackle the world’s most complex communications challenges, providing powerful advantages that improve their operations and drive profitable growth.
Continuously innovating to meet the connectivity demands of the future, Telesat Lightspeed, the company’s state-of-the-art Low Earth Orbit (LEO) satellite network, has been optimized to meet the rigorous requirements of telecom, government, maritime and aeronautical customers. Telesat Lightspeed will redefine global satellite connectivity with ubiquitous, affordable, high-capacity links with fibre-like speeds. For updates on Telesat, follow us on X, LinkedIn, or visit www.telesat.com.