OTTAWA – The struggling Canadian dollar weighed heavily on Telesat’s year-end results, which saw 2014 profits plunge $55 million from the year prior.
For the year ended December 31, 2014, the global satellite operator reported net income of $13 million, compared to net income of $68 million for 2013, which it said was primarily due to a larger non-cash loss on foreign exchange and reduced gains on financial instruments in 2014. Increased revenue, lower operating expenses and lower interest expense mitigated, in part, the impact of the foreign exchange loss on net income.
Consolidated revenues of $923 million increased 3% from $897 million year-over-year, favorably impacted by the conversion of Telesat’s U.S. dollar denominated revenue into Canadian dollars as a result of a stronger U.S. dollar to Canadian dollar exchange rate in 2014. When adjusted for foreign exchange rate changes, revenue was unchanged compared to 2013 as increased revenue earned on the Anik G1 satellite was offset by a decrease in revenue earned on the Nimiq 2 satellite and lower equipment sales revenue.
Operating expenses of $188 million were 6% lower than in 2013 or 9% lower when taking into account changes in foreign exchange rates, primarily due to a decrease in share-based compensation expense related to stock options granted during the second quarter of 2013, a decrease in the provision for variable compensation expense and lower cost of equipment sales in 2014.
Adjusted EBITDA was $746 million, an increase of 5% over last year, and the adjusted EBITDA margin for 2014 was 81% compared to 79% for 2013.
For fourth quarter ended December 31, 2014, consolidated revenues were up 1% year-over-year to $227 million, operating expenses dropped 8% to $46 million, and adjusted EBITDA grew 3% to $183 million. The adjusted EBITDA margin was 81% for the fourth quarter of 2014 compared to 79% for the same period in 2013.
At December 31, 2014, Telesat said that it had contracted backlog for future services of approximately $4.5 billion, and fleet utilization was 92% for its North American fleet and 82% for its international fleet.
“I am very pleased with our performance last quarter and last year,” said president and CEO Dan Goldberg, in a statement. “Through careful and focused execution, we achieved stable revenues, reduced operating expenses, modestly increased Adjusted EBITDA and expanded our Adjusted EBITDA margin relative to 2013. Our industry-leading contractual backlog provides visibility into the stability of our future revenue and cash flow, and anticipated growing demand for satellite services positions us well to expand our activities going forward.”
