Workflow
Telesat(TSAT) - 2024 Q2 - Earnings Call Transcript
TSATTelesat(TSAT)2024-08-14 19:04
Filings

Financial Data and Key Metrics Changes - In Q2 2024, Telesat reported consolidated revenues of 152million,adecreaseof152 million, a decrease of 27 million compared to the same period in 2023 [6] - Adjusted EBITDA for Q2 2024 was 103million,down103 million, down 35 million from the previous year, with an adjusted EBITDA margin of 67.8% compared to 77.1% in Q4 2023 [6][7] - Operating expenses increased by 556million,primarilyduetohigherwages,benefits,andconsultingcosts[7]−NetincomeforQ22024was556 million, primarily due to higher wages, benefits, and consulting costs [7] - Net income for Q2 2024 was 129 million, significantly higher than 19millioninthesameperiodlastyear,mainlyduetoaone−timerecognitionofC−bandclearingincomeinQ22023[8]BusinessLineDataandKeyMetricsChanges−TherevenuedecreasewasattributedtoreducedservicesandalowerrenewalratefromaNorthAmericandirect−to−homecustomer,aswellaslowerrevenuesfrommobilityandLatinAmericancustomers[6][7]−Cashinflowsfromoperatingactivitiesforthefirstsixmonthsof2024were19 million in the same period last year, mainly due to a one-time recognition of C-band clearing income in Q2 2023 [8] Business Line Data and Key Metrics Changes - The revenue decrease was attributed to reduced services and a lower renewal rate from a North American direct-to-home customer, as well as lower revenues from mobility and Latin American customers [6][7] - Cash inflows from operating activities for the first six months of 2024 were 66 million, with capital expenditures of 334million,mostlyrelatedtoTelesatLightspeed[8][10]MarketDataandKeyMetricsChanges−ThecompanyendedQ22024with334 million, mostly related to Telesat Lightspeed [8][10] Market Data and Key Metrics Changes - The company ended Q2 2024 with 1.4 billion in cash and approximately 200millioninborrowingcapacityavailableontherevolvingcreditfacility[10]−Thetotalleverageratiowasreportedat5.6200 million in borrowing capacity available on the revolving credit facility [10] - The total leverage ratio was reported at 5.6%, with Telesat in compliance with all covenants [10][11] Company Strategy and Development Direction - Telesat is focused on maximizing EBITDA and cash flow from its GEO activities while executing the Lightspeed program, which includes building out satellites and ground infrastructure [4][5] - The company is optimistic about concluding funding agreements with the governments of Canada and Quebec by the end of summer 2024 [3][4] - Telesat expects full-year revenues between 545 million and 565million,withadjustedEBITDAprojectedbetween565 million, with adjusted EBITDA projected between 340 million and 360million[9]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementexpressedconfidenceintheprogressoftheLightspeedprogramandthecompany′sabilitytodelivervaluetocustomersandshareholders[5]−Themanagementnotedthatwhiletherearechallenges,suchastherestructuringofcustomerXplore,theoverallbusinessisunfoldingasexpected[27][56]−ThecompanyismonitoringthesituationwithEchoStarclosely,withexpectationsthattheywillfindawaytocontinuepaymentsduetotheimportanceoftheNimiq−5satellite[38][41]OtherImportantInformation−Telesathasrepurchased360 million [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the progress of the Lightspeed program and the company's ability to deliver value to customers and shareholders [5] - The management noted that while there are challenges, such as the restructuring of customer Xplore, the overall business is unfolding as expected [27][56] - The company is monitoring the situation with EchoStar closely, with expectations that they will find a way to continue payments due to the importance of the Nimiq-5 satellite [38][41] Other Important Information - Telesat has repurchased 262 million in debt at a cost of 120millionyear−to−date,resultinginannualinterestsavingsofapproximately120 million year-to-date, resulting in annual interest savings of approximately 55 million [11] - The company has spent approximately CAD 334 million on the Lightspeed project so far in 2024, with total CapEx expected to be between 1billionand1 billion and 1.4 billion for the year [9][23] Q&A Session Summary Question: Are negotiations on track for funding agreements? - Management confirmed that they expect to conclude the agreements in the next couple of weeks [13][16] Question: Update on DTH customer negotiations? - Management stated they are engaged with EchoStar for the Nimiq-5 satellite renewal, with expectations to reach a resolution soon [21][22] Question: Insights on CapEx guidance? - Management explained that the CapEx range reflects expected spending patterns, with significant expenditures in Q2 indicating the program is on track [17][19] Question: Concerns about EchoStar's revenue contribution? - Management indicated that guidance includes a range of outcomes for EchoStar, and they expect to maintain cash flow from the DTH business [38][39] Question: Update on Xplore's restructuring impact? - Management acknowledged the restructuring of Xplore and its impact on bad debt provisions, but they continue to recognize revenue from Xplore [27][51] Question: Any incremental bookings since the last earnings call? - Management stated there have been no significant new bookings, but engagement with prospective users remains strong [44]