Telesat Canada today announced its financial results for the three-month period ended March 31, 2018. All amounts are in Canadian dollars and reported under International Financial Reporting Standards (“IFRS”) unless otherwise noted.
For the quarter ended March 31, 2018, Telesat reported consolidated revenues of $232 million, compared to $235 million in the same period in 2017. During the quarter, the U.S. dollar was approximately 5% weaker against the Canadian dollar than it was during the first quarter of 2016 and, as a result, there was an unfavorable impact on the conversion of U.S. dollar denominated revenues. Excluding the impact of foreign exchange rate changes, revenue increased by 2% ($4 million) compared to the same period in 2017.
Operating expenses of $38 million for the quarter were 31% ($17 million) lower than the same period in 2017, or 29% ($16 million) lower excluding the impact of changes in foreign exchange rates. The decrease in operating expenses was primarily due to a decrease in compensation and employee benefits expense arising from a special payment of $12 million made during the first quarter of 2017 to stock option holders in connection with a return of capital to Telesat’s shareholders. Adjusted EBITDA1 for the quarter was $195 million, an increase of 1% ($3 million) compared to the same period in 2017 and an increase of 4% ($8 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin1 for the first quarter of 2018 was 83.9%, compared to 81.9% 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 March 31, 2018, the adoption of IFRS 15 had a net positive impact of approximately $4 million on revenues, a reduction of approximately $5 million on operating expenses and a positive impact of approximately $9 million on Adjusted EBITDA1. The adoption of IFRS 9 had no impact on revenues, operating expenses and Adjusted EBITDA1.
Telesat’s net loss for the quarter was $15 million compared to net income of $88 million for the quarter ended March 31, 2017. The $103 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 first quarter of 2018.
“I am pleased with our performance for the first quarter,” commented Dan Goldberg, Telesat’s President and CEO. “Our results underscore the stability of our business, underpinned by our substantial contractual backlog, as well as our strong operating discipline. Beyond the financial results, we continue to make progress on our planned Telstar 18 VANTAGE and Telstar 19 VANTAGE satellites, which we anticipate will launch mid this year. In addition, we successfully launched and deployed our first Low Earth Orbit (LEO) satellite to support the development of our planned state-of-the-art, high capacity LEO constellation that will deliver transformative, low latency, fiber-like broadband to commercial and government users worldwide. Looking ahead, we remain focused on increasing the utilization of our in-orbit satellites and executing on our key growth initiatives.”