News Release
Intelsat Announces First Quarter 2018 Results
-
First quarter revenue of
$543.8 million ;$518.8 million excluding effects of new revenue recognition rules (ASC 606) -
First quarter net loss attributable to
Intelsat S.A. of$66.8 million -
First quarter Adjusted EBITDA of
$418.6 million or 77 percent of revenue;$392.3 million or 76 percent of revenue excluding effects of ASC 606 -
$8.6 billion contracted backlog, or$7.6 billion excluding the effects of ASC 606
In the first quarter of 2018, we adopted the provisions of the Financial
Accounting Standards Board Accounting Standards Codification Topic 606,
Revenue from Contracts with Customers (“ASC 606”). As a result of the
adoption of ASC 606, total revenue for the three months ended
Total revenue excluding the effects of ASC 606 was
Intelsat’s Chief Executive Officer,
Mr. Spengler continued, “Our two planned launches for the second half of
2018,
First Quarter 2018 Business Highlights
Network Services
Network services revenue was
Media
Media revenue was
Government
Government revenue was
Average Fill Rate
Intelsat’s average fill rate on our approximately 1,850 station-kept
wide-beam transponders was 80 percent at
Satellite Launches
Contracted Backlog
At
Financial Results for the Three Months Ended
On-Network revenues generally include revenue from any services delivered via our satellite and ground network. Off-Network and Other Revenues generally include 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 revenue for the three months ended
Total On-Network Revenues increased by
-
Transponder services revenue of
$395.7 million reflects an aggregate increase of$6.8 million , of which$23.7 million is attributable to ASC 606, comprised of$15.4 million and$8.2 million from the media and government businesses, respectively. Exclusive of these revenues attributable to ASC 606, transponder services declined by an aggregate amount of$16.9 million , due primarily to a net decrease in revenue from network services applications of$11.2 million , reflecting non-renewals and renewal pricing at lower rates for wide-beam services inLatin America andEurope , partially offset by growth in maritime and aeronautical mobility services on the Intelsat EpicNG platform. In addition, transponder services for media applications declined by$5.3 million , due to lower termination fees from certain customers inNorth America and lower revenues from cash basis customers as compared to the first quarter of 2017. -
Managed services revenue of
$100.7 million reflects an aggregate decrease of$0.2 million , of which$1.7 million was attributable to ASC 606, substantially all of which was related to the media business. Excluding the effects of ASC 606, managed services declined by$1.9 million , related in part to a$3.6 million decline in revenue from network services customers for point-to-point trunking, which are switching to fiber alternatives, and a$4.4 million decline related to a previously disclosed government contract which ended in the first quarter of 2017, offset somewhat by a$3.9 million increase in revenue from network services customers for mobility applications and a$1.6 million increase in revenue from managed media solutions.
Total Off-Network and Other Revenues reported an aggregate
decline of
-
Transponder, MSS and other Off-Network services reported an
aggregate decrease of
$0.5 million , inclusive of a decrease of$0.4 million attributable to ASC 606 adjustments. Excluding this, Transponder, MSS and other Off-Network services decreased slightly from the first quarter of 2017, reflecting a$3.8 million decline in revenue for third party government applications in connection with a previously disclosed termination of a maritime contract, partially offset by an increase of$2.8 million from managed off-network revenues for network services and media services and an increase of$1.4 million in revenue from MSS services. -
Satellite-related services reported a slight aggregate decrease
of
$0.4 million , primarily due to decreased revenue from professional services supporting third-party satellites.
For the three months ended
Direct costs of revenue (excluding depreciation and amortization)
decreased by
Selling, general and administrative expenses increased by
Depreciation and amortization expense decreased by
Interest expense, net consists of the interest expense we incur
offset by interest income earned and the amount of interest we
capitalize related to assets under construction. Interest expense, net
increased by
The non-cash portion of total interest expense, net was
Other income, net was
Provision for income taxes increased by
Net Income (Loss), Net Income (Loss) per Diluted Common Share
attributable to
Net loss attributable to
Net loss per diluted common share attributable to
EBITDA was
Adjusted EBITDA was
Free Cash Flow From (Used In) Operations
Net cash provided by operating activities was
Financial Outlook 2018
Today,
Revenue:
Adjusted EBITDA:
Capital Expenditures:
We expect the following capital expenditure ranges:
-
2018:
$375 million to $425 million ; -
2019:
$425 million to $500 million ; and -
2020:
$375 million to $475 million .
By early 2019, we plan to have completed the investment program in the current series of Intelsat EpicNG high-throughput satellites and payloads, thereby increasing our total transmission capacity. By the conclusion of the Guidance Period at the end of 2020, the net number of transponder equivalents is expected to increase by a compound annual growth rate (“CAGR”) of approximately 5 percent, reflecting the net activity of satellites entering and leaving service during the Guidance Period. Capital expenditure incurrence is subject to the timing of achievement of contract, satellite manufacturing, launch and other milestones.
Our capital expenditure guidance includes capitalized interest, which is
expected to average approximately
- - - - - - - - - - - - - - - - - - - - - - - - - -
1In this release, financial measures are presented both in accordance with U.S. GAAP and also on a non-U.S. GAAP basis. EBITDA, Adjusted EBITDA (or “AEBITDA”), free cash flow from (used in) operations and related margins included in this release are non-U.S. GAAP financial measures. Please see the consolidated financial information below for information reconciling non-U.S. GAAP financial measures to comparable U.S. GAAP financial measures.
Q1 2018 Quarterly Commentary
Conference Call Information
Participants will have access to a replay of the conference call through
About
Intelsat Safe Harbor Statement:
Some of the information and statements contained in this earnings
release and certain oral statements made from time to time by
representatives of
The forward-looking statements reflect
Because actual results could differ materially from
INTELSAT S.A. |
||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
($ in thousands, except per share amounts) | ||||||||
Three Months | Three Months | |||||||
Ended | Ended | |||||||
March 31, | March 31, | |||||||
2017 | 2018 | |||||||
Revenue | $ | 538,484 | $ | 543,782 | ||||
Operating expenses: | ||||||||
Direct costs of revenue (excluding depreciation and amortization) |
|
84,461 |
82,571 |
|||||
Selling, general and administrative | 57,295 | 60,282 | ||||||
Depreciation and amortization | 179,132 | 166,457 | ||||||
Total operating expenses |
|
320,888 |
|
|
|
309,310 |
|
|
Income from operations |
217,596 |
234,472 | ||||||
Interest expense, net | 246,246 | 282,454 | ||||||
Gain on early extinguishment of debt | 504 | 65 | ||||||
Other income, net | 1,344 | 4,429 | ||||||
Loss before income taxes | (26,802 | ) | (43,488 | ) | ||||
Provision for income taxes | 6,840 | 22,361 | ||||||
Net loss | (33,642 | ) | (65,849 | ) | ||||
Net income attributable to noncontrolling interest | (928 | ) | (952 | ) | ||||
Net loss attributable to Intelsat S.A. | $ | (34,570 | ) | $ | (66,801 | ) | ||
Cumulative preferred dividends | - | - | ||||||
Net loss attributable to common shareholders | $ | (34,570 | ) | $ | (66,801 | ) | ||
Net loss per common share attributable to Intelsat S.A.: | ||||||||
Basic | $ | (0.29 | ) | $ | (0.56 | ) | ||
Diluted | $ | (0.29 | ) | $ | (0.56 | ) |
INTELSAT S.A. | ||||||||
UNAUDITED RECONCILIATION OF NET INCOME/(LOSS) TO EBITDA | ||||||||
($ in thousands) | ||||||||
Three Months | Three Months | |||||||
Ended | Ended | |||||||
March 31, | March 31, | |||||||
2017 | 2018 | |||||||
Net loss | $ | (33,642 | ) | $ | (65,849 | ) | ||
Add (Subtract): | ||||||||
Interest expense, net | 246,246 | 282,454 | ||||||
Gain on early extinguishment of debt | (504 | ) | (65 | ) | ||||
Provision for income taxes | 6,840 | 22,361 | ||||||
Depreciation and amortization | 179,132 | 166,457 | ||||||
EBITDA | 398,072 | 405,358 | ||||||
Effect of ASC 606 Adoption | - | (26,390 | ) | |||||
EBITDA excluding ASC 606 adoption effect | $ | 398,072 | $ | 378,968 | ||||
EBITDA Margin | 74 | % | 75 | % | ||||
EBITDA Margin excluding ASC 606 adoption effect | 74 | % | 73 | % | ||||
Note:
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/(LOSS) TO ADJUSTED EBITDA | ||||||||
($ in thousands) | ||||||||
Three Months | Three Months | |||||||
Ended | Ended | |||||||
March 31, | March 31, | |||||||
2017 | 2018 | |||||||
Net loss | $ | (33,642 | ) | $ | (65,849 | ) | ||
Add (Subtract): | ||||||||
Interest expense, net | 246,246 | 282,454 | ||||||
Gain on early extinguishment of debt | (504 | ) | (65 | ) | ||||
Provision for income taxes | 6,840 | 22,361 | ||||||
Depreciation and amortization | 179,132 | 166,457 | ||||||
EBITDA | 398,072 | 405,358 | ||||||
Add : | ||||||||
Compensation and benefits | 4,902 | 1,303 | ||||||
Non-recurring and other non-cash items | 6,864 | 11,979 | ||||||
Adjusted EBITDA | 409,838 | 418,640 | ||||||
Effect of ASC 606 Adoption | - | (26,390 | ) | |||||
Adjusted EBITDA excluding ASC 606 adoption effect | $ | 409,838 | $ | 392,250 | ||||
Adjusted EBITDA Margin |
76 | % | 77 | % | ||||
Adjusted EBITDA Margin excluding ASC 606 adoption effect |
76 | % | 76 | % | ||||
Note:
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. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
($ in thousands, except per share amounts) | ||||||||
As of
December 31, 2017 |
As of
March 31, 2018 |
|||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 525,215 | $ | 492,349 | ||||
Restricted cash | 16,176 | 18,905 | ||||||
Receivables, net of allowances of $29,669 in 2017 and $30,759 in 2018 | 221,223 | 226,714 | ||||||
Contract assets | - | 48,589 | ||||||
Prepaid expenses and other current assets | 56,862 | 26,567 | ||||||
Total current assets | 819,476 | 813,124 | ||||||
Satellites and other property and equipment, net | 5,923,619 | 5,835,893 | ||||||
Goodwill | 2,620,627 | 2,620,627 | ||||||
Non-amortizable intangible assets | 2,452,900 | 2,452,900 | ||||||
Amortizable intangible assets, net | 349,584 | 339,964 | ||||||
Contract assets, net of current portion | - | 94,470 | ||||||
Other assets | 443,830 | 361,447 | ||||||
Total assets | $ | 12,610,036 | $ | 12,518,425 | ||||
LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 116,396 | $ | 96,489 | ||||
Taxes payable | 12,007 | 31,841 | ||||||
Employee related liabilities | 29,328 | 25,112 | ||||||
Accrued interest payable | 263,207 | 285,833 | ||||||
Current portion of long-term debt | 96,572 | 64,016 | ||||||
Contract liabilities | - | 151,757 | ||||||
Deferred satellite performance incentives | 25,780 | 29,203 | ||||||
Deferred revenue | 149,749 | - | ||||||
Other current liabilities | 47,287 | 46,636 | ||||||
Total current liabilities | 740,326 | 730,887 | ||||||
Long-term debt, net of current portion | 14,112,086 | 14,124,237 | ||||||
Contract liabilities, net of current portion | - | 1,134,132 | ||||||
Deferred satellite performance incentives, net of current portion | 215,352 | 232,988 | ||||||
Deferred revenue, net of current portion | 794,707 | - | ||||||
Deferred income taxes | 48,434 | 8,595 | ||||||
Accrued retirement benefits | 191,079 | 187,635 | ||||||
Other long-term liabilities | 296,616 | 66,458 | ||||||
Shareholders' deficit: | ||||||||
Common shares; nominal value $0.01 per share | 1,196 | 1,206 | ||||||
Paid-in capital | 2,173,367 | 2,175,441 | ||||||
Accumulated deficit | (5,894,659 | ) | (6,073,622 | ) | ||||
Accumulated other comprehensive loss | (87,774 | ) | (87,189 | ) | ||||
Total Intelsat S.A. shareholders' deficit | (3,807,870 | ) | (3,984,164 | ) | ||||
Noncontrolling interest | 19,306 | 17,657 | ||||||
Total liabilities and shareholders' deficit | $ | 12,610,036 | $ | 12,518,425 |
INTELSAT S.A. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
($ in thousands) | ||||||||
Three Months | Three Months | |||||||
Ended | Ended | |||||||
March 31, | March 31, | |||||||
2017 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (33,642 | ) | $ | (65,849 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 179,132 | 166,457 | ||||||
Provision for doubtful accounts | (329 | ) | 1,266 | |||||
Foreign currency transaction gain | (1,539 | ) | (741 | ) | ||||
Loss on disposal of assets | 24 | - | ||||||
Share-based compensation | 4,902 | 1,303 | ||||||
Deferred income taxes | (1,325 | ) | (50 | ) | ||||
Amortization of discount, premium, issuance costs and related costs | 11,812 | 12,109 | ||||||
Gain on early extinguishment of debt | (504 | ) | (65 | ) | ||||
Amortization of actuarial loss and prior service credits for retirement benefits | 893 | 1,224 | ||||||
Unrealized gains on derivatives and investments | - | (21,309 | ) | |||||
Other non-cash items | 18 | (769 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Receivables | 6,653 | (17,204 | ) | |||||
Prepaid expenses, contract and other assets | (6,433 | ) | (7,441 | ) | ||||
Accounts payable and accrued liabilities | (39,932 | ) | 14,377 | |||||
Accrued interest payable | 85,078 | 22,626 | ||||||
Deferred revenue and contract liabilities | (23,408 | ) | (22,250 | ) | ||||
Accrued retirement benefits | (3,106 | ) | (3,444 | ) | ||||
Other long-term liabilities | 70 | 617 | ||||||
Net cash provided by operating activities | 178,364 | 80,857 | ||||||
Cash flows from investing activities: | ||||||||
Payments for satellites and other property and equipment (including capitalized interest) | (178,473 | ) | (68,027 | ) | ||||
Purchase of cost method investments | (16,000 | ) | - | |||||
Capital contributions to unconsolidated affiliates | (3,022 | ) | (12,129 | ) | ||||
Proceeds from insurance settlements | - | 5,709 | ||||||
Other proceeds from satellites | - | 3,750 | ||||||
Net cash used in investing activities | (197,495 | ) | (70,697 | ) | ||||
Cash flows from financing activities: | ||||||||
Payments on debt exchange | (14 | ) | - | |||||
Repayments of long-term debt | - | (32,603 | ) | |||||
Other payments for satellites | (18,333 | ) | - | |||||
Principal payments on deferred satellite performance incentives | (4,570 | ) | (7,109 | ) | ||||
Dividends paid to noncontrolling interest | (2,500 | ) | (2,601 | ) | ||||
Other financing activities | 503 | 1,233 | ||||||
Net cash used in financing activities | (24,914 | ) | (41,080 | ) | ||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 696 | 783 | ||||||
Net change in cash, cash equivalents and restricted cash | (43,349 | ) | (30,137 | ) | ||||
Cash, cash equivalents, and restricted cash beginning of period | 666,024 | 541,391 | ||||||
Cash, cash equivalents, and restricted cash end of period | $ | 622,675 | $ | 511,254 | ||||
Supplemental cash flow information: | ||||||||
Interest paid, net of amounts capitalized | $ | 149,724 | $ | 241,008 | ||||
Income taxes paid, net of refunds | 16,489 | 2,174 | ||||||
Supplemental disclosure of non-cash investing activities: | ||||||||
Accrued capital expenditures | $ | 46,775 | $ | 14,447 | ||||
Capitalization of deferred satellite performance incentives | 27,325 | 28,161 |
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
March 31, |
Three Months Ended
March 31, |
|||||||
2017 | 2018 | |||||||
Net cash provided by operating activities | $ | 178,364 | $ | 80,857 | ||||
Payments for satellites and other property
and equipment (including capitalized interest) |
(178,473 | ) | (68,027 | ) | ||||
Other proceeds from satellites from investing
activities |
- | 3,750 | ||||||
Payments for satellites from financing activities | (18,333 | ) | - | |||||
Free cash flow (used in) from operations | $ | (18,442 | ) | $ | 16,580 | |||
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 other 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 S.A. |
SUPPLEMENTARY TABLE |
REVENUE BY CUSTOMER SET AND SERVICE TYPE |
($ in thousands) |
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 March 31, 2018 | ||||||||||||||||||||||||||||||||||||
Three Months Ended
March 31, 2017 |
Revenues Without the Adoption of ASC 606 | ASC 606 Adjustments | Revenues After the Adoption of ASC 606 | Increase (Decrease) With Adoption of ASC 606 | Percentage Change With Adoption of ASC 606 | Increase (Decrease) Without Adoption of ASC 606 | Percentage Change Without Adoption of ASC 606 | |||||||||||||||||||||||||||||
Network Services | $ | 212,933 | 39 | % | $ | 198,554 | 38 | % | $ | 34 | $ | 198,588 | 37 | % | $ | (14,345 | ) | (7 | )% | $ | (14,379 | ) | (7 | )% | ||||||||||||
Media | 225,054 | 42 | 222,538 | 43 | 16,739 | 239,277 | 44 | 14,223 | 6 | (2,516 | ) | (1 | ) | |||||||||||||||||||||||
Government | 91,919 | 17 | 89,075 | 17 | 8,239 | 97,314 | 18 | 5,395 | 6 | (2,844 | ) | (3 | ) | |||||||||||||||||||||||
Other | 8,578 | 2 | 8,603 | 2 | - | 8,603 | 2 | 25 | 0 | 25 | 0 | |||||||||||||||||||||||||
$ | 538,484 | 100 | % | $ | 518,770 | 100 | % | $ | 25,012 | $ | 543,782 | 100 | % | $ | 5,298 | 1 | % | $ | (19,714 | ) | (4 | )% | ||||||||||||||
By Service Type | ||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2018 | ||||||||||||||||||||||||||||||||||||
Three Months Ended
March 31, 2017 |
Revenues Without the Adoption of ASC 606 | ASC 606 Adjustments | Revenues After the Adoption of ASC 606 | Increase (Decrease) With Adoption of ASC 606 | Percentage Change With Adoption of ASC 606 | Increase (Decrease) Without Adoption of ASC 606 | Percentage Change Without Adoption of ASC 606 | |||||||||||||||||||||||||||||
On-Network Revenues | ||||||||||||||||||||||||||||||||||||
Transponder services | $ | 388,878 | 72 | % | $ | 371,937 | 72 | % | $ | 23,759 | $ | 395,696 | 73 | % | $ | 6,818 | 2 | % | $ | (16,941 | ) | (4 | )% | |||||||||||||
Managed services | 100,917 | 19 | 98,980 | 19 | 1,702 | 100,682 | 19 | (235 | ) | (0 | ) | (1,937 | ) | (2 | ) | |||||||||||||||||||||
Channel | 1,640 | 0 | 1,184 | 0 | - | 1,184 | 0 | (456 | ) | (28 | ) | (456 | ) | (28 | ) | |||||||||||||||||||||
Total on-network revenues | 491,435 | 91 | 472,101 | 91 | 25,461 | 497,562 | 92 | 6,127 | 1 | (19,334 | ) | (4 | ) | |||||||||||||||||||||||
Off-Network and Other Revenues | ||||||||||||||||||||||||||||||||||||
Transponder, MSS and other off-network services |
35,439 | 7 | 35,432 | 7 | (449 | ) | 34,983 | 6 | (456 | ) | (1 | ) | (7 | ) | (0 | ) | ||||||||||||||||||||
Satellite-related services | 11,610 | 2 | 11,237 | 2 | - | 11,237 | 2 | (373 | ) | (3 | ) | (373 | ) | (3 | ) | |||||||||||||||||||||
Total off-network and other revenues | 47,049 | 9 | 46,669 | 9 | (449 | ) | 46,220 | 8 | (829 | ) | (2 | ) | (380 | ) | (1 | ) | ||||||||||||||||||||
Total | $ | 538,484 | 100 | % | $ | 518,770 | 100 | % | $ | 25,012 | $ | 543,782 | 100 | % | $ | 5,298 | 1 | % | $ | (19,714 | ) | (4 | )% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20180501005814/en/
Source:
Intelsat
Dianne VanBeber
Vice President, Investor Relations
+1
703-559-7406
dianne.vanbeber@intelsat.com