Telesat Canada today announced its financial results for the three-month period ended March 31, 2017. All amounts are in Canadian dollars and are reported under International Financial Reporting Standards (“IFRS”) unless otherwise noted.
For the quarter ended March 31, 2017, Telesat reported consolidated revenues of $235 million, unchanged from the same period in 2016. During the quarter, the U.S. dollar was approximately 4% 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 1% ($3 million) compared to the same period in 2016.
Operating expenses of $55 million for the quarter were 18% ($8 million) higher than the same period in 2016, or 20% ($9 million) higher excluding the impact of changes in foreign exchange rates. The increase in operating expenses was due to an increase in compensation and employee benefits expense arising from a special payment made during the quarter to stock option holders in connection with a return of capital of US$387 million to Telesat’s shareholders, partially offset by lower share-based compensation. Adjusted EBITDA1 for the quarter was $192 million, an increase of 1% ($1 million) compared to the same period in 2016 and an increase of 2% ($3 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin1 for the first quarter of 2017 was 81.9%, as compared to 81.3% in the same period in 2016.
Telesat’s net income for the quarter was $88 million compared to net income of $237 million for the quarter ended March 31, 2016. The $149 million difference was the result of a lower non-cash gain on foreign exchange arising principally from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars partially offset by favorable changes in the fair value of financial instruments in the first quarter of 2017.
“I am pleased with our performance in the first quarter,” commented Dan Goldberg, Telesat’s President and CEO. “Compared to the same period last year, we achieved modest growth in revenue, Adjusted EBITDA1 and our Adjusted EBITDA margin.1 Looking ahead, we are focused on increasing the utilization of our available in-orbit capacity, maintaining our operating discipline and executing on our key growth initiatives.”
At March 31, 2017:
Telesat had contracted backlog for future services of approximately $4.1 billion.
Fleet utilization was 94% for Telesat’s North American fleet and 67% for Telesat’s international fleet.
In January, 2017, the Board of Directors approved a special cash distribution to shareholders, as a reduction of stated capital, in the amount of approximately US $387.2 million. This distribution was made during the first quarter of 2017.
In February, 2017, Telesat entered into amended Senior Secured Credit Facilities which reduced the applicable margin from 3.75% to 3.0% on the then outstanding borrowings of US $2,424 million.
In April, 2017, Telesat announced that Erwin Hudson, one of the industry’s most accomplished executives in the field of satellite-enabled broadband networks, joined the company as Vice President, Telesat LEO. Mr. Hudson will be based at Telesat’s headquarters in Ottawa and will direct the development and implementation of Telesat’s planned advanced, high throughput, low latency, global LEO constellation.