OTTAWA — Despite a net loss in its third quarter of 2019, Telesat’s year-to-date income increased to $185 million for the nine months ended September 30, 2019, compared to a net income of $96 million for the same nine-month period in 2018, the company reported Tuesday.
Telesat reported a net loss for the third quarter this year of $123 million, a significant decrease from the net income of $117 million the company reported for the same quarter in 2018. The $240 million difference was the result of higher non-cash losses on financial instruments and a larger non-cash loss on foreign exchange arising principally from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars in the third quarter of 2019, the company said in a news release.
For the quarter ended September 30, 2019, Telesat’s consolidated revenue was $237 million, an increase of $10 million or 4% compared to the same quarter in 2018. This increase was due to higher revenue related to the Telstar 19 Vantage and Telstar 18 Vantage satellites, which entered into commercial service in August 2018 and October 2018, respectively, combined with an increase from short-term services provided to other satellite operators, Telesat said.
The company’s operating expenses of $38 million for the third quarter were $2 million or 6% lower than the same period in 2018. Telesat said the decrease was primarily related to lower cost of sales and other expenses offset by higher compensation expenses. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the third quarter was $203 million, an increase of $15 million or 8% compared to the same quarter in 2018. When adjusted for foreign exchange rate changes, adjusted EBITDA increased by $14 million or 7%. The company’s adjusted EBITDA margin for the third quarter of 2019 was 85.7%, compared to 82.8% in the same period in 2018.
For the nine months ended September 30, 2019, Telesat’s revenue was $691 million, an increase of $19 million or 3% compared to the same nine-month period in 2018. When adjusted for changes in foreign exchange rates, revenue increased by only $10 million or 2% compared to 2018. The year-to-date revenue increase was primarily due to revenue related to the Telstar 19 Vantage and Telstar 18 Vantage satellites, offset by lower equipment sales and lower revenue from certain customers in the resource sector, Telesat said.
Operating expenses for the first nine months of 2019 were $115 million, unchanged from 2018. When adjusting for the impact of foreign exchange rate changes, expenses decreased by $2 million or 1%. Adjusted EBITDA was $587 million for the nine months ended September 30, which represents an increase of $26 million or 5% compared to the first nine months of 2018. When adjusted for foreign exchange rates, adjusted EBITDA increased by $19 million or 3%. Telesat’s adjusted EBITDA margin for the first nine months of 2019 was 85.1%, compared to 83.7% in the same period in 2018.
“I am pleased with our financial and operating performance in the third quarter of 2019 and the first nine months of the year,” said Dan Goldberg, Telesat’s president and CEO, in the news release. “Our Telstar 19V and 18V satellites, as well as certain short-term satellite services provided to another satellite operator, contributed to top-line growth relative to Q3 last year, and our continued operating discipline resulted in an increase in both Adjusted EBITDA and our Adjusted EBITDA margin. In addition to our strong performance in the quarter and year to date, last month we successfully refinanced our existing 8.875% Notes to reduce our borrowing costs and extend our borrowing maturities. Looking ahead, we remain heavily focused on continuing to increase the utilization of our in-orbit satellites and executing on our key growth initiatives, including our planned Low Earth Orbit satellite constellation.”
Among Telesat’s business highlights for the third quarter, as of September 30, 2019, Telesat had contracted backlog for future services of approximately $3.4 billion, and fleet utilization was 85% across the company’s fleet.
The full details of Telesat’s financial results for the three- and nine-month periods ended September 30, 2019, can be found here.
