Telesat Reports Drop in Revenues for the Quarter Ended June 30
Ottawa, Canada, August 2, 2018 — Telesat Canada today reported consolidated revenues of CDN$ 212 million for the three and six-month periods ended June 30, 2018, compared to CDN$ 226 million in the same period in 2017.
Telesat said that during the quarter, the U.S. dollar was approximately 4% weaker against the Canadian dollar than it was during the second quarter of 2017. As a result, there was an unfavorable impact on the conversion of U.S. dollar denominated revenues, Telesat said. Excluding the impact of foreign exchange rate changes, revenue decreased by 4% (CD$ 8 million) compared to the same period in 2017.
Operating expenses of Ca$36 million for the quarter were 18% (CDN$ 8 million) lower than the same period in 2017, or 16% (CDN$ 7 million) lower excluding the impact of changes in foreign exchange rates. Adjusted EBITDA for the quarter was CDN$ 179 million; a decrease of 3% (Ca$5 million) compared to the same period in 2017 and unchanged when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin for the second quarter of 2018 was 84.3%, compared to 81.3% in the same period in 2017.
On January 1, 2018, Telesat adopted IFRS 9, Financial Instruments, and IFRS 15, Revenue from Contracts with Customers. For the three-month period ended June 30, 2018, the adoption of IFRS 15 had a net positive impact of approximately CDN$ 3 million on revenues, an approximately Ca$6 million reduction in operating expenses and a positive impact of approximately CDN$ 9 million on Adjusted EBITDA.The adoption of IFRS 9 had no impact on revenues, operating expenses and Adjusted EBITDA.
Telesat’s net loss for the quarter was CDN$ 6 million compared to net income of Ca$148 million for the quarter ended June 30, 2017. The CDN$ 154 million difference was the result of a higher non-cash loss on foreign exchange arising principally from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars in the second quarter of 2018.
For the six-month period ended June 30, 2018, revenue was CDN$ 444 million, a decrease of 4% (CDN$ 16 million) compared to the same period in 2017. When adjusted for changes in foreign exchange rates, revenues declined 1% (CDN$ 4 million) compared to the same period in 2017. Operating expenses were CDN$ 74 million, a decrease of 25% (CDN$ 25 million) from the first half of 2017. The decrease in operating expenses was due to the impact of IFRS 15 implementation in 2018 and lower 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 EBITDA was CDN$ 373 million, a decrease of 1% (CDN$ 2 million). When adjusted for foreign exchange rate changes Adjusted EBITDA increased by 2% (CDN$ 8 million) compared to 2017. The Adjusted EBITDA margin for the first half of 2018 was 84.1%, compared to 81.6% in the same period in 2017.
For the six-month period ended June 30, 2018, the adoption of IFRS 15 had a net positive impact of approximately CDN$ 7 million on revenues, an approximate CDN$ 11 million reduction in operating expenses and a positive impact of approximately Ca$18 million on Adjusted EBITDA.
For the six-month period ended June 30, 2018, the net loss was CDN$ 21 million, compared to net income of CDN$ 236 million for the same period in 2017. The decrease in net income for the first half of the year was principally the result of higher foreign exchange losses in the first half of 2018, arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars.
“I am pleased with our performance for the second quarter and first half of the year,” said Dan Goldberg, Telesat’s President and CEO. “In addition to achieving solid financial results, we took a number of concrete steps to strengthen our business and position the company for future growth. In this regard, we completed the construction of our state-of-the-art Telstar 19 VANTAGE satellite and, last month, successfully launched it on a SpaceX Falcon 9 rocket. We also continued to make progress on our planned Telstar 18 VANTAGE satellite, which we anticipate will launch later this month. Moreover, our first Low Earth Orbit (LEO) satellite became operational in the quarter."
Goldberg added Telstar 19 will be used to demonstrate some of the key advantages of our planned LEO constellation. "The Telesat LEO constellation will deliver transformative, low latency, fiber-like broadband to commercial and government users worldwide. Earlier this week we announced that Telesat entered into two important contracts — one with a consortium comprised of Thales Alenia Space and Maxar and the other with Airbus — to further develop and validate the system design for our LEO constellation. Also in the quarter we repriced our outstanding Term Loan, reducing our borrowing costs and strengthening our financial position. Looking ahead, we remain focused on increasing the utilization of our in-orbit satellites and executing on our key growth initiatives.”
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