Inmarsat plc, the leading provider of global mobile satellite communications services, today provided the following unaudited information for the third quarter, and the nine months, ended 30 September 2017.
Rupert Pearce, Chief Executive Officer, commented on the results: “Inmarsat made further progress in the third quarter, with revenues again ahead of last year. Maritime revenues were unchanged year-on-year, but grew sequentially for the second consecutive quarter. Government and Enterprise delivered higher revenues, whilst Aviation revenues were particularly strong, supported by the continued expansion of our contracted aircraft order book in in-flight connectivity (“IFC”). We have continued to invest in this significant opportunity, and in our core operational capabilities, albeit at the expense of lower EBITDA margins, to ensure that we remain uniquely positioned as the leading operator in global mobility markets. Consequently, whilst our markets remain challenging and the outlook continues to be difficult to predict, I remain confident about the medium to long term prospects for Inmarsat.”
In the third quarter, revenues grew by 4.8%, or $16.4m:
• Maritime: Revenues unchanged year-on-year but increased sequentially reflecting 26% increase in VSAT revenues but lower FleetBroadband (“FB”) and legacy product revenues
• Government: Revenues grew 4%, mainly reflecting stronger US results
• Aviation: Revenues up 50% with growth in both Core business and IFC installation activity. Air Asia’s selection of GX confirmed in Q3, bringing aircraft expected under signed IFC contracts to 1,300
• Enterprise: Returned to growth, driven by higher airtime usage and terminal sales following recent hurricanes
• GX airtime and related revenues, across the business units, of $42.3m (YTD: $102.1m)
EBITDA2 was 6.5%, or $13.3m, lower:
• Favourable impact of higher revenues more than offset by changes in revenue mix, particularly in Aviation, by further investment in IFC market capture and delivery, and by higher central operational delivery costs
Outlook & future guidance
The progress being made in Maritime, Government and Aviation provides confidence about the medium to long term outlook for Inmarsat. However, our markets remain challenging and the outlook continues to be difficult to predict. Inmarsat’s performance in 2017 and 2018 will continue to be particularly determined by our results in IFC and in Government, as we outlined in March 2017. Given the combination of these factors, our guidance is as follows:
• 2017 revenue guidance, excluding Ligado, narrowed to $1,225m to $1,275m, from $1,200m to $1,300m;
• 2018 revenue guidance, excluding Ligado, of $1,300m to $1,500m (unchanged);
• Capex guidance of $500m to $600m per annum for each of 2017 and 2018 (unchanged);
• Annual GX revenues at a run rate of $500m by the end of 2020 (unchanged); and
• Leverage (Net debt: EBITDA) to normally remain below 3.5x (unchanged).
As previously highlighted, and as our results for 2017 to date continue to clearly demonstrate, the Group’s EBITDA margin is being adversely impacted by the inclusion of additional lower margin service revenues related to IFC, by the cost of investment in IFC market capture and delivery, and by higher central operational delivery costs.