OTTAWA – Despite an uptick in revenue, Telesat saw third quarter profits fall by some $98 million.
For the quarter ended September 30, 2015, the global satellite operator reported a net loss of $139 million compared to a net loss of $41 million for the same period in 2014. Results were positively impacted by higher operating income and lower interest expense, however, these positive impacts were more than offset by the negative impact of the weaker Canadian dollar on the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars, changes in the fair value of financial instruments, and higher tax expense.
Consolidated revenue increased $14 million to $242.2 million, up from $227.8 million in the same period last year. During the quarter, the U.S. dollar was 19% stronger than it was during the third quarter of 2014, resulting in a positive impact on the conversion of U.S. dollar denominated revenue and a negative impact on the conversion of U.S. dollar denominated expenses. When adjusted for foreign exchange rate changes, revenue decreased by 1% ($3 million) compared to the same period year-over-year. The decrease in revenue, which was principally from the energy and resource industries, was partially offset by an increase in revenue earned during the quarter from short term services provided to another satellite operator.
Operating expenses of $44 million were 10% ($5 million) lower than the same period in 2014 or 16% ($8 million) lower when taking into account changes in foreign exchange rates. The decrease was related to lower share-based compensation expense, lower bad debt expense and lower cost of equipment sales.
Adjusted EBITDA was $198 million, an increase of 9% ($16 million) year-over-year, or an increase of 1% ($2 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin for the quarter was 81.9% compared to 79.9% for the same period in 2014.
At September 30, 2015, Telesat said it had contracted backlog for future services of approximately $4.5 billion, and fleet utilization was 94% for its North American fleet and 81% for its international fleet.
“Telesat had a solid third quarter notwithstanding weakness in certain markets we serve”, said president and CEO Dan Goldberg, in a statement. “Although revenue grew on a reported basis relative to the third quarter last year, it declined 1% after taking foreign exchange rate changes into account. Nonetheless, we achieved a reduction in operating expenses, a slight increase in Adjusted EBITDA, an expansion of our Adjusted EBITDA margin, and continued to generate a significant amount of cash from our operating activities. Looking ahead, we anticipate the launch of the Telstar 12 VANTAGE satellite, to take place toward the end of next month.”
