-
Third quarter revenue of $542.7 million
-
Third quarter net income attributable to Intelsat S.A. of $195.6
million, including $219.6 million pre-tax gain on early extinguishment
of debt
-
$8.9 billion contracted backlog provides visibility for future
revenue and cash flow
-
Intelsat 33e and Intelsat 36 successfully launched in August 2016;
Intelsat 36 in-service late 3Q16
-
Intelsat reaffirms 2016 Guidance
LUXEMBOURG--(BUSINESS WIRE)--Oct. 27, 2016--
Intelsat S.A. (NYSE: I), operator of the world’s first Globalized
Network, powered by its leading satellite backbone, today announced
financial results for the three months ended September 30, 2016.
Intelsat reported total revenue of $542.7 million for the three months
ended September 30, 2016. Net income attributable to Intelsat S.A. was
$195.6 million for the three months ended September 30, 2016.
Intelsat reported EBITDA1, or earnings before net interest,
gain on early extinguishment of debt, taxes and depreciation and
amortization, of $395.6 million and Adjusted EBITDA1 of
$404.9 million, or 75 percent of revenue for the three months ended
September 30, 2016.
“Our third quarter financial results, $543 million in revenue and $405
million in Adjusted EBITDA, demonstrate stability in revenues and are on
track with our guidance for 2016,” said Stephen Spengler, Chief
Executive Officer, Intelsat. “Our objective for this year is to build a
solid foundation that will support Intelsat’s strategy to deploy
space-based solutions that unlock new and faster growing opportunities.
We are delivering on this plan. During the third quarter, we
successfully launched two satellites, bringing the total number of
satellites launched to four in 2016. Intelsat 36 is now in service and
Intelsat 33e is scheduled to enter into service in the first quarter of
2017.”
Mr. Spengler continued, “As we build momentum in our Intelsat EpicNG
program, we bring the higher performance and improved economics vitally
required by our telecom and mobility customers, improving our network
services business over time. Two fully incremental media satellites are
now in service: Intelsat 31 and Intelsat 36. They are enhancing strong
direct-to-home neighborhoods and lifting the trajectory of our media
business. The extension of the CBSP contract through the end of the
fiscal year, as well as strong renewal rates across this customer set,
create stability for our government business. Backlog as of September
30, 2016 was $8.9 billion, over four times Intelsat’s annual revenue.”
Mr. Spengler concluded, “Moving forward, we will build the commercial
pipeline for our new Intelsat EpicNG satellites, implement a
new IntelsatOne® Flex service strategy for maritime and enterprise
customers, and continue our liability management initiatives.”
Third Quarter 2016 Business Highlights
Intelsat provides critical communications infrastructure to customers in
the network services, media and government sectors. Our customers use
our services for broadband connectivity to deliver fixed and mobile
telecommunications, enterprise, video distribution and fixed and mobile
government applications. For additional details regarding the
performance of our customer sets, see our Quarterly Commentary.
Network Services
Network Services revenue was $222.3 million (or 41 percent of Intelsat’s
total revenue) for the three months ended September 30, 2016, a decrease
of 16 percent compared to the three months ended September 30, 2015.
Media
Media revenue was $216.6 million (or 40 percent of Intelsat’s total
revenue) for the three months ended September 30, 2016, essentially flat
when compared to the three months ended September 30, 2015.
Government
Government revenue was $96.8 million (or 18 percent of Intelsat’s total
revenue) for the three months ended September 30, 2016, an increase of 2
percent compared to the three months ended September 30, 2015.
Average Fill Rate
Intelsat’s average fill rate on our approximately 2,125 station-kept
wide-beam transponders was 77 percent at September 30, 2016, an increase
compared to the average fill rate of 76% as of June 30, 2016. Note that
Intelsat 31, an in-orbit spare satellite, is not included in the
station-kept transponder count. Because we report our high throughput
Intelsat EpicNG capacity separately, the station-kept count
reported above excludes the 270 units of high throughput capacity
related to our first Intelsat EpicNG satellite, Intelsat 29e,
which entered into service late in the first quarter of 2016.
Satellite Launches
On August 24, 2016, Intelsat 33e and Intelsat 36 were successfully
launched. Intelsat 36 entered into service late in the third quarter of
2016. On September 9, 2016, the company announced that due to a
malfunction in the primary thruster used for orbit raising, the
in-service date for Intelsat 33e would be delayed. The satellite is
expected to arrive at its 60°E orbital location for in-orbit testing
late this year, and is currently scheduled to enter into service in the
first quarter of 2017. The Intelsat 33e antennas and reflectors have
been deployed; there is no evidence of any impact to the communications
payload.
The company has three satellite launches scheduled for 2017: Intelsat
32e, an Intelsat EpicNG Ku-band payload in the first quarter
of 2017; Intelsat 35e in the second quarter of 2017, providing that
there are no changes to SpaceX’s launch manifest as a result of its
recent anomaly; and Intelsat 37e in the fourth quarter of 2017.
Contracted Backlog
At September 30, 2016, Intelsat’s contracted backlog, representing
expected future revenue under existing contracts with customers, was
$8.9 billion, as compared to $9.2 billion at June 30, 2016.
Capital Structure Updates and Debt Transactions
In September 2016, our subsidiary, Intelsat Jackson Holdings S.A.
(“Intelsat Jackson”), completed a debt exchange receiving $141.4 million
aggregate principal amount of Intelsat Jackson’s 6 5/8% Senior Notes due
2022 (“2022 Jackson Notes”) in exchange for $99.7 million aggregate
principal amount of newly issued Intelsat Jackson 8% Senior Secured
Notes due 2024 and $17.0 million in cash. In connection with this
exchange, Intelsat Jackson also received a consent from holders of
$141.5 million aggregate principal amount of 2022 Jackson Notes in
exchange for $9.2 million in cash to amend the indenture governing the
2022 Jackson Notes, among other things to: (i) eliminate substantially
all of the restrictive covenants and certain events of default
pertaining to the 2022 Jackson Notes, and (ii) waive any defaults or
events of default potentially existing under the indenture governing the
2022 Jackson Notes as of September 12, 2016.
Financial Results for the Three Months Ended September 30, 2016
On-Network revenue generally includes revenue from any services
delivered via our satellite or ground network. Off-Network and Other
Revenue generally includes revenue from transponder services, Mobile
Satellite Services (“MSS”) and other satellite-based transmission
services using capacity procured from other operators, often in
frequencies not available on our network. Off-Network and Other Revenues
also include revenue from consulting and other services and sales of
customer premises equipment.
Total On-Network Revenues reported a decline of $40.3 million, or
8 percent, to $493.3 million as compared to the three months ended
September 30, 2015:
-
Transponder services reported an aggregate decrease of $32.5
million, primarily due to a $36.3 million decrease in revenue from
network services customers, partially offset by a $4.2 million
increase from media customers. The network services decline was mainly
due to non-renewals and renewal pricing at lower rates for enterprise
and wireless infrastructure services, together with reduced volumes
from non-renewals of point-to-point connectivity, which is shifting to
fiber alternatives. The media increase resulted primarily from growth
in direct-to-home television services in the Latin America and
Caribbean region, partially offset by declines in the Asia-Pacific and
North America regions. Our sector is undergoing a period of increased
supply across all regions; the resulting competitive environment is
causing pricing pressure in certain regions and applications,
primarily with respect to our network services business, and we expect
this to continue to impact our business negatively in the near to
mid-term.
-
Managed services reported an aggregate increase of $1.7
million, largely due to an increase of $12.2 million in revenue from
network services customers for broadband services for air and maritime
mobility applications and for services from government customers,
partially offset by declines of $6.5 million in revenues primarily
from network services customers for point-to-point trunking
applications, which are switching to fiber alternatives and $2.1
million from media customers for occasional video solutions.
-
Channel reported an aggregate decrease of $9.5 million due to
the continued migration of international point-to-point satellite
traffic to fiber optic cable. This legacy product is no longer
actively marketed to our customers.
Total Off-Network and Other Revenues reported an aggregate
increase of $2.1 million, or 5 percent, to $49.4 million as compared to
the three months ended September 30, 2015:
-
Transponder, MSS and other off-network services reported an
aggregate increase of $1.7 million, primarily due to increases in
services for government applications, largely related to sales of
customer premises equipment, partially offset by lower revenue from
third-party transponder services.
-
Satellite-related services reported an aggregate increase of
$0.5 million, primarily due to increased revenue from support for
third-party satellites and other services.
For the three months ended September 30, 2016, changes in operating
expenses, interest expense, net, and other significant income statement
items are described below.
Direct costs of revenue (excluding depreciation and amortization)
increased by $10.5 million, or 14 percent, to $88.5 million, as compared
to the three months ended September 30, 2015. This reflects an increase
of $4.6 million largely due to higher costs of sales for customer
premises equipment primarily in support of the company’s government
business, a $1.5 million increase in staff-related expenses and a $1.4
million increase in satellite-related insurance costs due to recent
launches.
Selling, general and administrative expenses increased by $12.4
million, or 27 percent, to $58.9 million, as compared to the three
months ended September 30, 2015. This was primarily due to an increase
of $7.9 million in bad debt expense largely related to a limited number
of customers in the Latin America and Caribbean region, and an increase
of $3.0 million in professional fees primarily related to the company’s
liability management initiatives.
Depreciation and amortization expense increased by $3.5 million,
or 2 percent, to $174.9 million, as compared to the three months ended
September 30, 2015, primarily related to an increase of $16.8 million in
depreciation expense due to the impact of satellites placed in service.
The increase was partially offset by a net decrease of $10.5 million in
depreciation expense due to the timing of certain satellites and ground
equipment becoming fully depreciated, and a decrease of $2.9 million in
amortization expense primarily due to changes in the pattern of
consumption of amortizable intangible assets, as these assets mainly
include acquired backlog, which relates to contracts covering varying
periods that expire over time, and acquired customer relationships, for
which the value diminishes over time.
Interest expense, net consists of the interest expense we incur
together with gains and losses on interest rate swaps (which reflect net
interest accrued on the interest rate swaps as well as the change in
their fair value), offset by interest income earned and the amount of
interest we capitalize related to assets under construction. Interest
expense, net increased by $22.3 million, or 10 percent, to $243.0
million for the three months ended September 30, 2016, as compared to
the three months ended September 30, 2015. The increase was principally
due to a net increase of $21.9 million in interest expense primarily
resulting from the issuance of new debt in 2016, portions of the
proceeds of which (a) are currently expected to be used for liquidity
purposes in lieu of a revolving credit facility, and (b) may be used for
repayment or redemption of other debt of the Company and its
subsidiaries; and a net increase of $1.6 million from lower capitalized
interest for the three months ended September 30, 2016, primarily
resulting from decreased levels of satellites and related assets under
construction.
The non-cash portion of total interest expense, net was $6.7 million for
the three months ended September 30, 2016, due to the amortization of
deferred financing fees and the accretion and amortization of discounts
and premiums.
Gain on early extinguishment of debt was $219.6 million for the
three months ended September 30, 2016 with no comparable gain or loss
for the three months ended September 30, 2015. In the third quarter of
2016, Intelsat Jackson repurchased $673.5 million in aggregate principal
amount of the 2022 Jackson Notes. The gain of $219.6 million, consisted
of the difference between the carrying value of the debt repurchased and
the total cash amount paid (including related fees), together with a
write-off of unamortized debt premium and unamortized debt issuance
costs.
Other income (expense), net was $0.3 million for the three months
ended September 30, 2016, as compared to other expense, net of $4.4
million for the three months ended September 30, 2015. The difference of
$4.7 million was primarily due to a $4.5 million decrease in expenses
mainly related to our business conducted in Brazilian reais.
Provision for (benefit from) income taxes was $0.7 million for
the three months ended September 30, 2016, as compared to an income tax
benefit of $19.2 million for the three months ended September 30, 2015.
The difference was principally due to the recognition of previously
unrecognized tax benefits related to our U.S. subsidiaries in the three
months ended September 30, 2015. Cash paid for income taxes, net
of refunds, totaled $3.9 million for the three months ended September
30, 2016, as compared to $3.1 million for the three months ended
September 30, 2015.
Net Income, Net Income per Diluted Common Share attributable to
Intelsat S.A., EBITDA and Adjusted EBITDA
Net income attributable to Intelsat S.A.was $195.6 million for
the three months ended September 30, 2016, compared to $78.0 million for
the same period in 2015.
Net income per diluted common share attributable to Intelsat S.A.
was $1.65 for the three months ended September 30, 2016, compared to
$0.66 per diluted common share for the same period in 2015.
EBITDA was $395.6 million for the three months ended September
30, 2016, compared to $452.0 million for the same period in 2015.
Adjusted EBITDA was $404.9 million for the three months ended
September 30, 2016, or 75 percent of revenue, compared to $458.1
million, or 79 percent of revenue, for the same period in 2015.
Intelsat management has reviewed the data pertaining to the use of the
Intelsat network, and is providing revenue information with respect to
that use by customer set and service type in the following tables.
Intelsat management believes this provides a useful perspective on the
changes in revenue and customer trends over time.
|
|
|
|
|
|
|
|
|
|
|
|
By Customer Set
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Three Months Ended
September 30,
|
|
|
|
|
2015
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Network Services
|
|
|
$
|
263,111
|
|
45
|
%
|
|
$
|
222,302
|
|
41
|
%
|
|
Media
|
|
|
|
216,618
|
|
37
|
%
|
|
|
216,637
|
|
40
|
%
|
|
Government
|
|
|
|
94,704
|
|
16
|
%
|
|
|
96,825
|
|
18
|
%
|
|
Other
|
|
|
|
6,414
|
|
1
|
%
|
|
|
6,963
|
|
1
|
%
|
|
|
|
|
$
|
580,847
|
|
100
|
%
|
|
$
|
542,727
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Service Type
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Three Months Ended
September 30,
|
|
|
|
|
2015
|
|
2016
|
|
On-Network Revenues
|
|
|
|
|
|
|
|
|
|
|
Transponder services
|
|
|
$
|
420,855
|
|
72
|
%
|
|
$
|
388,372
|
|
72
|
%
|
|
Managed services
|
|
|
|
101,295
|
|
17
|
%
|
|
|
103,034
|
|
19
|
%
|
|
Channel services
|
|
|
|
11,386
|
|
2
|
%
|
|
|
1,873
|
|
0
|
%
|
|
Total on-network revenues
|
|
|
|
533,536
|
|
92
|
%
|
|
|
493,279
|
|
91
|
%
|
|
Off-Network and Other Revenues
|
|
|
|
|
|
|
|
|
|
|
Transponder, MSS and other off-network services
|
|
|
|
37,694
|
|
6
|
%
|
|
|
39,365
|
|
7
|
%
|
|
Satellite-related services
|
|
|
|
9,617
|
|
2
|
%
|
|
|
10,083
|
|
2
|
%
|
|
Total off-network and other revenues
|
|
|
|
47,311
|
|
8
|
%
|
|
|
49,448
|
|
9
|
%
|
|
Total
|
|
|
$
|
580,847
|
|
100
|
%
|
|
$
|
542,727
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow From (Used in) Operations
Free cash flow from operations1 was $33.1 million for the
three months ended September 30, 2016. Free cash flow from operations is
defined as net cash provided by operating activities, less payments for
satellites and other property and equipment (including capitalized
interest).
Payments for satellites and other property and equipment from investing
activities and payments for satellites from financing activities during
the three months ended September 30, 2016 were $202.8 million and $18.3
million, respectively.
Financial Outlook 2016
Today, Intelsat reaffirmed, in all material respects, its 2016 financial
outlook previously provided in guidance issued on February 22, 2016, in
which the company expects the following:
Revenue: Intelsat forecasts full year 2016 revenue of $2.14 billion to
$2.20 billion.
Adjusted EBITDA: Intelsat forecasts Adjusted EBITDA performance
for the full year 2016 to be in a range of $1.625 billion to $1.675
billion.
Capital Expenditures: Intelsat issued its 2016 capital
expenditure guidance for the three calendar years 2016 through 2018 (the
“Guidance Period”).
We expect the following capital expenditures ranges, all of which are
consistent with prior guidance:
-
2016: $725 million to $800 million;
-
2017: $625 million to $700 million; and
-
2018: $425 million to $525 million.
Capital expenditure guidance for 2016 through 2018 assumes investment in
three satellites in the manufacturing and design or recently launched
phases during the Guidance Period. In addition, we are developing
capacity on three other satellites for which we do not incur capital
expenditures. This includes custom payloads being built for us on two
third-party satellites, as well as our Horizons 3e joint venture, which
is building a satellite for the Asia-Pacific region. Following Intelsat
36’s successful entry into service in October 2016 and the expectation
of Intelsat 33e entering into service in the first quarter of 2017, we
plan to launch two satellites in 2017 and one satellite in 2018, and
will continue work on the three remaining satellites for which
construction will extend beyond the Guidance Period.
We are scheduled to launch two more of our new Intelsat EpicNG
high throughput satellites during the Guidance Period, as well as our
Intelsat 32e payload and the Horizons 3e satellite, thereby increasing
our total transmission capacity. Over the course of the Guidance Period,
the net number of transponder equivalents is expected to increase by a
compound annual growth rate (“CAGR”) of approximately 10 percent as a
result of the satellites entering service during the Guidance Period.
Our capital expenditures guidance includes capitalized interest.
Cash Taxes: Annual 2016 cash taxes are expected to total
approximately $30 million to $35 million.
- - - - - - - - - - - - - - - - - - - - - - - - - -
1In this release, financial measures are presented both in
accordance with U.S. GAAP and also on a non-U.S. GAAP basis. EBITDA,
Adjusted EBITDA (or “AEBITDA”), free cash flow from operations and
related margins included in this release are non-U.S. GAAP financial
measures. Please see the consolidated financial information below for
information reconciling non-U.S. GAAP financial measures to comparable
U.S. GAAP financial measures.
Q3 2016 Quarterly Commentary
Intelsat provides a detailed quarterly commentary on the company’s
business trends and performance. Please visit www.intelsat.com/investors
for management’s commentary on the company’s progress against its
operational priorities and financial outlook.
Conference Call Information
Intelsat management will hold a public conference call at 8:30 a.m. EDT
on Thursday, October 27, 2016 to discuss the company’s financial results
for the quarter ended September 30, 2016. Access to the live conference
call will also be available via the Internet at www.intelsat.com/investors.
To participate on the live call, participants should dial +1
844-834-1428 from North America, and +1 920-663-6274 from all other
locations. The participant pass code is 85567545.
Participants will have access to a replay of the conference call through
November 3, 2016. The replay number for North America is +1
855-859-2056, and for all other locations it is +1 404-537-3406. The
participant pass code for the replay is 85567545.
About Intelsat
Intelsat S.A. (NYSE: I) operates the world’s first Globalized Network,
delivering high-quality, cost-effective video and broadband services
anywhere in the world. Intelsat’s Globalized Network combines the
world’s largest satellite backbone with terrestrial infrastructure,
managed services and an open, interoperable architecture to enable
customers to drive revenue and reach through a new generation of network
services. Thousands of organizations serving billions of people
worldwide rely on Intelsat to provide ubiquitous broadband connectivity,
multi-format video broadcasting, secure satellite communications and
seamless mobility services. The end result is an entirely new world, one
that allows us to envision the impossible, connect without boundaries
and transform the ways in which we live. For more information, visit www.intelsat.com.
Intelsat Safe Harbor Statement:
Some of the information and statements contained in this earnings
release and certain oral statements made from time to time by
representatives of Intelsat constitute "forward-looking statements" that
do not directly or exclusively relate to historical facts. When used in
this earnings release, the words “may,” “will,” “might,” “should,”
“expect,” “plan,” “anticipate,” “project,” “believe,” “estimate,”
“predict,” “intend,” “potential,” “outlook,” and “continue,” and the
negative of these terms, and other similar expressions are intended to
identify forward-looking statements and information. Forward-looking
statements include: our expectation that the launches of our satellites
in the future will position us for growth; our plans for satellite
launches in the near to mid-term; our guidance regarding our
expectations for our revenue performance and Adjusted EBITDA
performance; our capital expenditure guidance over the next several
years; our expectations as to the increased number of transponder
equivalents on our fleet over the next several years; and our
expectations as to the level of our cash tax payments in the future.
The forward-looking statements reflect Intelsat's intentions, plans,
expectations, anticipations, projections, estimations, predictions,
outlook, assumptions and beliefs about future events and are subject to
risks, uncertainties and other factors, many of which are outside of
Intelsat's control. Important factors that could cause actual results to
differ materially from the expectations expressed or implied in the
forward-looking statements include known and unknown risks. Some of the
factors that could cause actual results to differ from historical
results or those anticipated or predicted by these forward-looking
statements include: risks associated with operating our in-orbit
satellites; satellite launch failures, satellite launch and construction
delays and in-orbit failures or reduced performance; potential changes
in the number of companies offering commercial satellite launch services
and the number of commercial satellite launch opportunities available in
any given time period that could impact our ability to timely schedule
future launches and the prices we pay for such launches; our ability to
obtain new satellite insurance policies with financially viable
insurance carriers on commercially reasonable terms or at all, as well
as the ability of our insurance carriers to fulfill their obligations;
possible future losses on satellites that are not adequately covered by
insurance; U.S. and other government regulation; changes in our
contracted backlog or expected contracted backlog for future services;
pricing pressure and overcapacity in the markets in which we compete;
our ability to access capital markets for debt or equity; the
competitive environment in which we operate; customer defaults on their
obligations to us; our international operations and other uncertainties
associated with doing business internationally; and litigation. Known
risks include, among others, the risks described in Intelsat’s annual
report on Form 20-F for the year ended December 31, 2015, and its other
filings with the U.S. Securities and Exchange Commission, the political,
economic and legal conditions in the markets we are targeting for
communications services or in which we operate and other risks and
uncertainties inherent in the telecommunications business in general and
the satellite communications business in particular.
Because actual results could differ materially from Intelsat's
intentions, plans, expectations, anticipations, projections,
estimations, predictions, outlook, assumptions and beliefs about the
future, you are urged to view all forward-looking statements with
caution. Intelsat does not undertake any obligation to update or revise
any forward-looking statements, whether as a result of new information,
future events or otherwise.
|
|
|
|
|
|
|
|
INTELSAT S.A.
|
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
($ in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
2015
|
|
Three Months
Ended
September 30,
2016
|
|
Revenue
|
|
|
$
|
580,847
|
|
|
$
|
542,727
|
|
|
Operating expenses:
|
|
|
|
|
|
|
Direct costs of revenue (excluding depreciation and amortization)
|
|
|
|
77,936
|
|
|
|
88,460
|
|
|
Selling, general and administrative
|
|
|
|
46,503
|
|
|
|
58,948
|
|
|
Depreciation and amortization
|
|
|
|
171,409
|
|
|
|
174,909
|
|
|
Total operating expenses
|
|
|
|
295,848
|
|
|
|
322,317
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
|
284,999
|
|
|
|
220,410
|
|
|
Interest expense, net
|
|
|
|
220,774
|
|
|
|
243,039
|
|
|
Gain on early extinguishment of debt
|
|
|
|
-
|
|
|
|
219,560
|
|
|
Other income (expense), net
|
|
|
|
(4,407
|
)
|
|
|
324
|
|
|
Income before income taxes
|
|
|
|
59,818
|
|
|
|
197,255
|
|
|
Provision for (benefit from) income taxes
|
|
|
|
(19,149
|
)
|
|
|
650
|
|
|
Net income
|
|
|
|
78,967
|
|
|
|
196,605
|
|
|
Net income attributable to noncontrolling interest
|
|
|
|
(985
|
)
|
|
|
(983
|
)
|
|
Net income attributable to Intelsat S.A.
|
|
|
$
|
77,982
|
|
|
$
|
195,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share attributable to Intelsat S.A.:
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.73
|
|
|
$
|
1.66
|
|
|
Diluted
|
|
|
$
|
0.66
|
|
|
$
|
1.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTELSAT S.A.
|
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
($ in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
2015
|
|
Three Months
Ended
September 30,
2016
|
|
Net income
|
|
|
$
|
78,967
|
|
|
$
|
196,605
|
|
|
Add (Subtract):
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
220,774
|
|
|
|
243,039
|
|
|
Gain on early extinguishment of debt
|
|
|
|
-
|
|
|
|
(219,560
|
)
|
|
Provision for (benefit from) income taxes
|
|
|
|
(19,149
|
)
|
|
|
650
|
|
|
Depreciation and amortization
|
|
|
|
171,409
|
|
|
|
174,909
|
|
|
EBITDA
|
|
|
$
|
452,001
|
|
|
$
|
395,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Margin
|
|
|
|
78
|
%
|
|
|
73
|
%
|
|
|
|
|
|
|
|
Note:
Intelsat calculates a measure called EBITDA to assess the operating
performance of Intelsat S.A. EBITDA consists of earnings before net
interest, gain on early extinguishment of debt, taxes and depreciation
and amortization. Given our high level of leverage, refinancing
activities are a frequent part of our efforts to manage our costs of
borrowing. Accordingly, we consider gain on early extinguishment of debt
an element of interest expense. EBITDA is a measure commonly used in the
Fixed Satellite Services (“FSS”) sector, and we present EBITDA to
enhance the understanding of our operating performance. We use EBITDA as
one criterion for evaluating our performance relative to that of our
peers. We believe that EBITDA is an operating performance measure, and
not a liquidity measure, that provides investors and financial analysts
with a measure of operating results unaffected by differences in capital
structures, capital investment cycles and ages of related assets among
otherwise comparable companies.
EBITDA is not a measure of financial performance under U.S. GAAP, and
our EBITDA may not be comparable to similarly titled measures of other
companies. EBITDA should not be considered as an alternative to
operating income (loss) or net income (loss), determined in accordance
with U.S. GAAP, as an indicator of our operating performance, or as an
alternative to cash flows from operating activities, determined in
accordance with U.S. GAAP, as an indicator of cash flows, or as a
measure of liquidity.
|
|
|
|
|
|
|
|
INTELSAT S.A.
|
|
UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
2015
|
|
Three Months
Ended
September 30,
2016
|
|
Net income
|
|
|
$
|
78,967
|
|
|
$
|
196,605
|
|
|
Add (Subtract):
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
220,774
|
|
|
|
243,039
|
|
|
Gain on early extinguishment of debt
|
|
|
|
-
|
|
|
|
(219,560
|
)
|
|
Provision for (benefit from) income taxes
|
|
|
|
(19,149
|
)
|
|
|
650
|
|
|
Depreciation and amortization
|
|
|
|
171,409
|
|
|
|
174,909
|
|
|
EBITDA
|
|
|
|
452,001
|
|
|
|
395,643
|
|
|
Add (Subtract):
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
|
6,144
|
|
|
|
4,855
|
|
|
Non-recurring and other non-cash items
|
|
|
|
(30
|
)
|
|
|
4,375
|
|
|
Adjusted EBITDA
|
|
|
$
|
458,115
|
|
|
$
|
404,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin
|
|
|
|
79
|
%
|
|
|
75
|
%
|
|
|
|
|
|
|
|
Note:
Intelsat calculates a measure called Adjusted EBITDA to assess the
operating performance of Intelsat S.A. Adjusted EBITDA consists of
EBITDA as adjusted to exclude or include certain unusual items, certain
other operating expense items and certain other adjustments as described
in the table above. Our management believes that the presentation of
Adjusted EBITDA provides useful information to investors, lenders and
financial analysts regarding our financial condition and results of
operations, because it permits clearer comparability of our operating
performance between periods. By excluding the potential volatility
related to the timing and extent of non-operating activities, our
management believes that Adjusted EBITDA provides a useful means of
evaluating the success of our operating activities. We also use Adjusted
EBITDA, together with other appropriate metrics, to set goals for and
measure the operating performance of our business, and it is one of the
principal measures we use to evaluate our management’s performance in
determining compensation under our incentive compensation plans.
Adjusted EBITDA measures have been used historically by investors,
lenders and financial analysts to estimate the value of a company, to
make informed investment decisions and to evaluate performance. Our
management believes that the inclusion of Adjusted EBITDA facilitates
comparison of our results with those of companies having different
capital structures.
Adjusted EBITDA is not a measure of financial performance under U.S.
GAAP, and our Adjusted EBITDA may not be comparable to similarly titled
measures of other companies. Adjusted EBITDA should not be considered as
an alternative to operating income (loss) or net income (loss),
determined in accordance with U.S. GAAP, as an indicator of our
operating performance, or as an alternative to cash flows from operating
activities, determined in accordance with U.S. GAAP, as an indicator of
cash flows, or as a measure of liquidity.
|
|
|
|
|
|
|
|
INTELSAT S.A.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
($ in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
As of
December 31,
2015
|
|
As of
September 30,
2016
|
|
|
|
|
|
|
(unaudited)
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
171,541
|
|
|
$
|
957,867
|
|
|
Receivables, net of allowance of $37,178 in 2015 and $58,243 in 2016
|
|
|
|
232,775
|
|
|
|
214,552
|
|
|
Prepaid expenses and other current assets
|
|
|
|
35,784
|
|
|
|
54,574
|
|
|
Total current assets
|
|
|
|
440,100
|
|
|
|
1,226,993
|
|
|
Satellites and other property and equipment, net
|
|
|
|
5,988,317
|
|
|
|
6,189,165
|
|
|
Goodwill
|
|
|
|
2,620,627
|
|
|
|
2,620,627
|
|
|
Non-amortizable intangible assets
|
|
|
|
2,452,900
|
|
|
|
2,452,900
|
|
|
Amortizable intangible assets, net
|
|
|
|
440,330
|
|
|
|
403,961
|
|
|
Other assets
|
|
|
|
311,316
|
|
|
|
348,054
|
|
|
Total assets
|
|
|
$
|
12,253,590
|
|
|
$
|
13,241,700
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
$
|
164,381
|
|
|
$
|
137,240
|
|
|
Taxes payable
|
|
|
|
11,742
|
|
|
|
15,581
|
|
|
Employee related liabilities
|
|
|
|
35,361
|
|
|
|
41,611
|
|
|
Accrued interest payable
|
|
|
|
161,493
|
|
|
|
300,833
|
|
|
Deferred satellite performance incentives
|
|
|
|
19,411
|
|
|
|
23,734
|
|
|
Deferred revenue
|
|
|
|
108,779
|
|
|
|
143,384
|
|
|
Other current liabilities
|
|
|
|
63,275
|
|
|
|
53,290
|
|
|
Total current liabilities
|
|
|
|
564,442
|
|
|
|
715,673
|
|
|
Long-term debt, net of current portion
|
|
|
|
14,611,379
|
|
|
|
15,144,501
|
|
|
Deferred satellite performance incentives, net of current portion
|
|
|
|
162,177
|
|
|
|
215,103
|
|
|
Deferred revenue, net of current portion
|
|
|
|
1,010,242
|
|
|
|
939,985
|
|
|
Deferred income taxes
|
|
|
|
160,802
|
|
|
|
164,580
|
|
|
Accrued retirement benefits
|
|
|
|
195,385
|
|
|
|
188,237
|
|
|
Other long-term liabilities
|
|
|
|
169,516
|
|
|
|
150,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' deficit:
|
|
|
|
|
|
|
Common shares; nominal value $0.01 per share
|
|
|
|
1,076
|
|
|
|
1,178
|
|
|
5.75% Series A mandatory convertible junior non-voting preferred
shares; nominal value $0.01 per share; aggregate liquidation
preference of $172,500 ($50 per share)
|
|
|
|
35
|
|
|
|
-
|
|
|
Paid-in capital
|
|
|
|
2,133,891
|
|
|
|
2,151,718
|
|
|
Accumulated deficit
|
|
|
|
(6,706,128
|
)
|
|
|
(6,378,751
|
)
|
|
Accumulated other comprehensive loss
|
|
|
|
(78,439
|
)
|
|
|
(76,620
|
)
|
|
Total Intelsat S.A. shareholders' deficit
|
|
|
|
(4,649,565
|
)
|
|
|
(4,302,475
|
)
|
|
Noncontrolling interest
|
|
|
|
29,212
|
|
|
|
25,379
|
|
|
Total liabilities and shareholders' deficit
|
|
|
$
|
12,253,590
|
|
|
$
|
13,241,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTELSAT S.A.
|
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
2015
|
|
Three Months
Ended
September 30,
2016
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net income
|
|
|
$
|
78,967
|
|
|
$
|
196,605
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
171,409
|
|
|
|
174,909
|
|
|
Provision for doubtful accounts
|
|
|
|
1,648
|
|
|
|
9,553
|
|
|
Foreign currency transaction (gain) loss
|
|
|
|
6,663
|
|
|
|
(501
|
)
|
|
Share-based compensation
|
|
|
|
6,026
|
|
|
|
4,855
|
|
|
Deferred income taxes
|
|
|
|
(5,766
|
)
|
|
|
(4,972
|
)
|
|
Amortization of discount, premium, issuance costs and related costs
|
|
|
|
5,057
|
|
|
|
6,722
|
|
|
Gain on early extinguishment of debt
|
|
|
|
-
|
|
|
|
(212,724
|
)
|
|
Unrealized gains on derivative financial instruments
|
|
|
|
(6,033
|
)
|
|
|
-
|
|
|
Amortization of actuarial loss and prior service credits for
retirement benefits
|
|
|
|
1,287
|
|
|
|
840
|
|
|
Other non-cash items
|
|
|
|
(157
|
)
|
|
|
844
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Receivables
|
|
|
|
(12,461
|
)
|
|
|
14,116
|
|
|
Prepaid expenses and other assets
|
|
|
|
(296
|
)
|
|
|
(9,840
|
)
|
|
Accounts payable and accrued liabilities
|
|
|
|
(327
|
)
|
|
|
(4,178
|
)
|
|
Accrued interest payable
|
|
|
|
149,924
|
|
|
|
118,093
|
|
|
Deferred revenue
|
|
|
|
44,174
|
|
|
|
(32,109
|
)
|
|
Accrued retirement benefits
|
|
|
|
(1,632
|
)
|
|
|
(2,496
|
)
|
|
Other long-term liabilities
|
|
|
|
(31,230
|
)
|
|
|
(5,412
|
)
|
|
Net cash provided by operating activities
|
|
|
|
407,253
|
|
|
|
254,305
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Payments for satellites and other property and equipment (including
capitalized interest)
|
|
|
|
(152,130
|
)
|
|
|
(202,837
|
)
|
|
Capital contributions to unconsolidated affiliates
|
|
|
|
-
|
|
|
|
(5,490
|
)
|
|
Other investing activities
|
|
|
|
3
|
|
|
|
(401
|
)
|
|
Net cash used in investing activities
|
|
|
|
(152,127
|
)
|
|
|
(208,728
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Proceeds from drawdown of long-term debt
|
|
|
|
130,000
|
|
|
|
-
|
|
|
Repayments of long-term debt
|
|
|
|
(155,000
|
)
|
|
|
-
|
|
|
Debt issuance costs
|
|
|
|
-
|
|
|
|
(756
|
)
|
|
Payments on tender, debt exchange and consent
|
|
|
|
-
|
|
|
|
(34,009
|
)
|
|
Dividends paid to preferred shareholders
|
|
|
|
(2,480
|
)
|
|
|
-
|
|
|
Payments for satellites
|
|
|
|
-
|
|
|
|
(18,333
|
)
|
|
Principal payments on deferred satellite performance incentives
|
|
|
|
(3,830
|
)
|
|
|
(4,190
|
)
|
|
Dividends paid to noncontrolling interest
|
|
|
|
(2,240
|
)
|
|
|
(2,210
|
)
|
|
Other financing activities
|
|
|
|
(1,543
|
)
|
|
|
1,942
|
|
|
Net cash used in financing activities
|
|
|
|
(35,093
|
)
|
|
|
(57,556
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(6,663
|
)
|
|
|
281
|
|
|
Net change in cash and cash equivalents
|
|
|
|
213,370
|
|
|
|
(11,698
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
114,404
|
|
|
|
969,565
|
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
327,774
|
|
|
$
|
957,867
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
Interest paid, net of amounts capitalized
|
|
|
$
|
71,797
|
|
|
$
|
120,778
|
|
|
Income taxes paid, net of refunds
|
|
|
|
3,130
|
|
|
|
3,858
|
|
|
Supplemental disclosure of non-cash investing activities:
|
|
|
|
|
|
|
Accrued capital expenditures and payments for satellites
|
|
|
$
|
(19,617
|
)
|
|
$
|
(50,987
|
)
|
|
Capitalization of deferred satellite performance incentives
|
|
|
|
-
|
|
|
|
38,309
|
|
|
Supplemental disclosure of non-cash financing activities:
|
|
|
|
|
|
|
Restricted cash used
|
|
|
$
|
-
|
|
|
$
|
(480,200
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTELSAT S.A.
|
|
UNAUDITED RECONCILIATION OF NET CASH PROVIDED BY OPERATING
ACTIVITIES
|
|
TO FREE CASH FLOW FROM (USED IN) OPERATIONS
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Three Months Ended
September 30,
|
|
|
|
|
2015
|
|
2016
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
$
|
407,253
|
|
|
$
|
254,305
|
|
|
Payments for satellites and other property and
equipment (including capitalized interest)
|
|
|
|
(152,130
|
)
|
|
|
(202,837
|
)
|
|
Payments for satellites from financing activities
|
|
|
|
-
|
|
|
|
(18,333
|
)
|
|
Free cash flow from operations
|
|
|
$
|
255,123
|
|
|
$
|
33,135
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
Free cash flow from (used in) operations consists of net cash provided
by operating activities, less payments for satellites and other property
and equipment (including capitalized interest) from investing activities
and payment for satellites from financing activities. Free cash flow
from (used in) operations is not a measurement of cash flow under U.S.
GAAP. Intelsat believes free cash flow from (used in) operations is a
useful measure of financial performance that shows a company’s ability
to fund its operations. Free cash flow from (used in) operations is used
by Intelsat in comparing its performance to that of its peers and is
commonly used by financial analysts and investors in assessing
performance. Free cash flow from (used in) operations does not give
effect to cash used for debt service requirements and thus does not
reflect funds available for investment or other discretionary uses. Free
cash flow from (used in) operations is not a measure of financial
performance under U.S. GAAP, and free cash flow from (used in)
operations may not be comparable to similarly titled measures of other
companies. You should not consider free cash flow from (used in)
operations as an alternative to operating income (loss) or net income
(loss), determined in accordance with U.S. GAAP, as an indicator of
Intelsat’s operating performance, or as an alternative to cash flows
from operating activities, determined in accordance with U.S. GAAP, as
an indicator of cash flows, or as a measure of liquidity.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161027005325/en/
Source: Intelsat
Intelsat
Dianne VanBeber
Vice President, Investor Relations
and Corporate Communications
+1 703-559-7406
dianne.vanbeber@intelsat.com
