OTTAWA – Foreign exchange rates weighed down first quarter revenues at Telesat, but profits bounded back to the black.
For the quarter ended March 31, 2016, the global satellite operator reported net income of $237 million compared to a net loss of $154 million year-over-year. The company said that the $391 million difference was principally the result of a mainly non-cash gain on foreign exchange arising from the translation of its U.S. dollar denominated debt into Canadian dollars, partially offset by unfavorable changes in the fair value of financial instruments, and by higher interest expense in the first quarter of 2016.
Consolidated revenues of $235 million grew approximately 3% ($6 million) compared to the same period last year. During the quarter, the U.S. dollar was approximately 12% stronger than it was during the first quarter of 2015 and, as a result, there was a favorable impact on the conversion of U.S. dollar denominated revenues. When adjusted for foreign exchange rate changes, revenue decreased by 1% ($3 million) compared to the same period in 2015. The decrease was primarily due to lower revenues from the energy and resource sector.
Operating expenses of $47 million for the quarter were 4% ($2 million) higher than the same period in 2015, but largely unchanged when taking into account changes in foreign exchange rates.
Adjusted EBITDA for the quarter was $191 million, an increase of 3% ($5 million) compared to Q1 2015 and a decrease of 2% ($3 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin of 81% for the first quarter of 2016 was unchanged from the same period in 2015.
At March 31, 2016, Telesat said it had contracted backlog for future services of approximately $4.6 billion, and fleet utilization was 93% for its North American fleet and 65% for its international fleet.
“Compared to the first quarter of 2015, our revenue and Adjusted EBITDA were down slightly, after adjusting for foreign exchange rate changes, as a result of continuing headwinds in certain markets we serve,” said president and CEO Dan Goldberg, in a statement. “Notwithstanding this slight reduction, our Adjusted EBITDA margin was stable given our continued operating discipline and our contractual backlog remains robust. Looking ahead, we are focused on the sale of our available in-orbit capacity, the construction of Telstar 19 Vantage and Telstar 18 Vantage, and the further development of certain other important growth initiatives.”
