OTTAWA – Despite a 7% drop in revenue, Telesat's preliminary third quarter profits bounced back to the black.
For the quarter ended September 30, 2016, Telesat said that it expects to report net income of $14.8 million compared to a net loss of $139.4 million year-over-year. The company said that the $154 million difference was principally the result of a reduction in the loss on foreign exchange partially offset by higher depreciation expense.
Anticipated revenues of $224.2 million are approximately 7% ($18 million) lower compared to the same period last year. During the quarter, the U.S. dollar was approximately 1% stronger than it was during the third 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 declined by 8% (a decrease of $19 million) compared to the same period in 2015. The largest contributor to the reduction in revenue relative to the same period last year was short-term services provided to another satellite operator in the third quarter of 2015 that did not recur in the third quarter of 2016.
Operating expenses of $39.6 million for the quarter were 10% ($4 million) lower than the same period in 2015, with no impact from changes in foreign exchange rates. The reduction in operating expenses is principally attributable to lower costs of third party satellite capacity, lower Canadian spectrum license fees and lower equipment sales.
Adjusted EBITDA for the quarter was $186 million, a decrease of 6% ($12 million) compared to the same period in 2015 and a decrease of 7% ($13 million) when adjusted for foreign exchange rate changes. The adjusted EBITDA margin improved to 83.0% in the third quarter of 2016 from 81.9% year-over-year.
At September 30, 2016, Telesat said it had contracted backlog for future services of approximately $4.4 billion, and fleet utilization was 94% for its North American fleet and 66% for its international fleet.
The global satellite operator will announce its finalized third quarter numbers on November 2.
