Inmarsat plc, the leading provider of global mobile satellite communications services, today provided the following unaudited information for the three months ended 31 March 2017.
Solid performance in Q1 2017, despite markets which continue to be challenging:
o Group revenue grew 11.3% to $332.2m, (grew 7.5% to $301.7m, excluding Ligado)
o EBITDA2 grew 9.2% to $181.5m (grew 1.8% to $151.0m, excluding Ligado) Outlook and future guidance, disclosed on 8 March 2017, remain unchanged
Continued positive impact of Global Xpress (“GX”):
o GX delivered revenue of $32.1m in Q1 2017, mainly from Government customers
o Continue to expect launch of I-5 F4 satellite during Q2 2017 Maritime:
o Now over 10,000 vessels committed to Fleet Xpress (“FX”)
o Distribution agreement signed with Satlink to install FX on over 1,500 vessels
o Resilient performance from FleetBroadband (“FB”) Government:
o Another strong performance, despite continued market uncertainty
o FirstNet contract win provides further validation of our strong US Government relationships Aviation:
o Core business continued to grow, with over 16,500 connected terminals, and the first installations of JetConneX completed
Further positive momentum achieved in in-flight connectivity (“IFC”), with 65 GX terminals installed by the end of the quarter, and over 950 expected aircraft under signed contracts o Commitments to GX announced by AirAsia and Qatar Airways so far in second quarter, representing an additional 250 aircraft to utilise GX for IFC services o On track for commercial service introduction of European Aviation Network (“EAN”) during H2 2017, with launch of S-band satellite expected to take place by end of Q2 2017 Enterprise: o Key end markets remain challenging, in particular Oil & Gas o On-going focus on commercial opportunities around “Internet of Things” Rupert Pearce, Chief Executive Officer, commented: “Positive momentum was maintained across our business in the first quarter of 2017, following on from an encouraging performance in the final quarter of last year. This was achieved in spite of cyclical recession and other headwinds in many of our core markets. In Maritime, we continued to successfully ramp up the installation of Fleet Xpress, supported by a number of installation partners, whilst our market-leading distribution network for Fleet Xpress was further bolstered by the addition of Satlink during the quarter. Our core FleetBroadband product delivered a resilient performance in the quarter and we made good progress on the new growth opportunities afforded by our new Fleet One service. Our Government businesses delivered another good performance, supported by the introduction of GX and sustained operational tempo in one particular region. During the period, we announced our selection by AT&T as a core team member for the U.S. FirstNet network, for the provision of satellite communications solutions. In Aviation, our core business produced further strong growth in the quarter, during which time we installed our first terminals for JetConneX, our GX-based product for the Business and General Aviation (“BGA”) market. In IFC, we had completed 65 installations for the Deutsche Lufthansa Group by the end of the period, up from 20 at the end of 2016, and we confirmed that IAG have agreed to utilise our IFC services over the EAN, for which our plans for commercial deployment remain on track. So far in the second quarter of 2017, AirAsia and Qatar Airways have announced commitments to utilise GX for their IFC services, representing excellent progress on building revenue backlog for this new business, and we remain in discussions with a number of other airlines for the provision of our IFC services. Supported by our performance in the first quarter of 2017, Inmarsat remains well placed for the medium term. We have well-established and proven communication networks, substantial spectrum assets to fuel those networks, differentiated capability in running global mobility services, a market-leading global distribution network and a significant base of loyal customers to whom we will continue to provide high quality service and delivery. These elements, particularly in challenging markets at a time of substantial change, provide Inmarsat with a strong foundation from which to capture the significant growth opportunities that will emerge in the coming years. Finally, we have announced separately today that Warren Finegold will join our Board later this year as a non-Executive Director. Warren has a wealth of diverse and relevant experience – combining a knowledge of mobility and technology markets, having been a member of the Vodafone Group Executive Committee for over 10 years, plus significant experience in investment banking, and we look forward to his contribution.”
Outlook & future guidance
We remain confident about the medium to long term outlook for the business. However, whilst we delivered robust performances in both the fourth quarter of 2016 and in the first quarter of 2017, our markets remain challenging and the outlook continues to be difficult to predict, as we highlighted in our FY 2016 results in March 2017. As outlined at that time, our performance in 2017 and 2018 will be particularly determined by our results in the IFC market and in the Government sector.
Given the combination of these factors, we reiterate the guidance disclosed in March of:
2017 revenue, excluding Ligado, of $1,200m to $1,300m; 2018 revenue, excluding Ligado, of $1,300m to $1,500m, including a contribution from I-5 F4. Higher outcomes continue to be possible, depending principally on our performance in IFC and Government; Capex at $500m to $600m per annum for each of 2017 and 2018; Annual GX revenues at a run rate of $500m by the end of 2020; and Leverage to normally remain below 3.5x.
As previously disclosed, the Group’s EBITDA margin will be adversely impacted by the inclusion of additional lower margin service revenues related to IFC, by the cost of investment in our Aviation capabilities to ensure we deliver on the IFC opportunity and by higher central operational delivery costs.
We do not expect any significant changes to consensus forecasts for 2017 and 2018 as a consequence of our performance in Q1 2017.