Telesat Reports 3% Increase in Revenues in 2014

Ottawa, Canada, February 26, 2015--For the year ended December 31, 2014, Telesat reported consolidated revenues of Cdn.$ 923 million, an increase of approximately 3% (Cdn.$ 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 Cdn.$ 188 million were 6% (Cdn.$ 13 million) lower than in 2013 or 9% (Cdn. $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 EBITDA was Cdn. $746 million, an increase of 5% (Cdn. $35 million) over 2013. When adjusted for foreign exchange rate changes,

Adjusted EBITDA was 2% (Cdn. $14 million) higher than in 2013. The Adjusted EBITDA margin for 2014 was 81% compared to 79% for 2013. Telesat’s net income for 2014 was Cdn. $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 Cdn. $227 million, an increase of approximately 1% (Cdn. $3 million) compared to the same period in 2013. When adjusted for foreign exchange rate changes, revenue decreased by 2% (Cdn. $4 million) compared to the same period in 2014. Operating expenses were Cdn.$ 46 million, a decrease of 8% ($4 million) compared to the same period in 2013, or a decrease of 10% (Cdn. $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 EBITDA for the fourth quarter of 2014 was Cdn. $183 million, an increase of 3% (Cdn. $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 margin 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,”  he added.

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