OTTAWA – The struggling Canadian dollar continued to weigh on Telesat’s year-end results, which saw the global satellite operator end 2015 with a $267 million net loss, versus a $13 million profit in 2014.
Telesat said that the negative year-over-year variation was principally due to an increased, almost entirely non-cash, loss on foreign exchange of $540 million (compared to a loss on foreign exchange of $241 million in 2014) which resulted from the weaker Canadian dollar relative to the U.S. dollar and the resulting unfavorable translation of its U.S. dollar denominated debt into Canadian dollars. The net loss was also due to lower non-cash gains on the changes in the fair value of financial instruments and higher tax expense in 2015 compared to 2014, partially offset by an increase in operating income and lower interest expense.
For the year ended December 31, 2015, consolidated revenue was $955 million, or $32 million higher compared to 2014. During 2015, the U.S. dollar was 16% stronger than it was during 2014. When adjusted for foreign exchange rate changes, revenue decreased by 2% ($23 million) compared to 2014, due primarily to lower revenues from the energy and resource industries and certain international markets, as well as lower equipment sales.
Operating expenses were $184 million, a decrease of 2% ($4 million) compared to 2014 or 7% ($14 million) lower when adjusted for foreign exchange rate changes. The largest contributors to the operating expense reduction were lower share-based compensation expense and lower cost of equipment sales. Adjusted EBITDA was $778 million, an increase of 4% ($32 million) compared to 2014, or a decrease of 2% ($13 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin for 2015 was 81.5% compared to 80.9% in 2014.
For the fourth quarter ended December 31, 2015, consolidated revenues were up 13% year-over-year to $257 million. When adjusted for foreign exchange rate changes, revenue increased by 6% over the same period in 2014, principally from short-term services provided to other satellite operators, international consulting services, and equipment sales. The net loss for the quarter was $29 million compared to a net loss of $26 million year-over-year.
Operating expenses of $51 million were 11% higher than the same period in 2014 or 4% higher when taking into account changes in foreign exchange rates. The increase was primarily related to higher revenue related expenses and higher cost of equipment sales. Adjusted EBITDA was $208 million, an increase of 14% year-over-year, or an increase of 7% when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin was 81.1% for the fourth quarter of 2015 compared to 80.6% for the same period in 2014.
At December 31, 2015, Telesat said that it had contracted backlog for future services of approximately $4.8 billion, and that fleet utilization was 93% for its North American fleet and 80% for its international fleet.
“I am pleased with our financial and operating performance in 2015,” said president and CEO Dan Goldberg, in a statement. “Although revenue and Adjusted EBITDA grew on a reported basis relative to the prior year, they declined roughly 2% after taking foreign exchange rate changes into account, a decline that reflects headwinds in certain markets we serve, particularly the energy market. Nonetheless, we achieved a reduction in operating expenses and an expansion of our Adjusted EBITDA margin, continued to generate a significant amount of cash, and maintained our industry-leading contractual backlog. In sum, it was a productive year and, looking forward, we remain focused on continuing to develop our key initiatives in the year ahead.”
