-
Third quarter revenue of $538.8 million
-
Third quarter net loss attributable to Intelsat S.A. of $30.4
million
-
Third quarter Adjusted EBITDA of $420.5 million or 78 percent of
revenue
-
$7.9 billion contracted backlog
-
Intelsat 35e entered into service, Intelsat 37e launched in third
quarter 2017
LUXEMBOURG--(BUSINESS WIRE)--Oct. 26, 2017--
Intelsat S.A. (NYSE: I), operator of the world’s first Globalized
Network and leader in integrated satellite communications, today
announced financial results for the three months ended September 30,
2017.
Intelsat reported total revenue of $538.8 million and a net loss
attributable to Intelsat S.A. of $30.4 million for the three months
ended September 30, 2017.
Intelsat reported EBITDA1, or earnings before net interest,
loss/(gain) on early extinguishment of debt, taxes and depreciation and
amortization, of $414.6 million and Adjusted EBITDA1 of
$420.5 million, or 78 percent of revenue, for the three months ended
September 30, 2017.
Intelsat’s Chief Executive Officer, Stephen Spengler, said, “Our network
services business is continuing to move toward a high-throughput
satellite model of greater volume and lower price applications, such as
mobility, while our media and government businesses are generally
performing according to plan. Our third quarter 2017 revenue of $539
million, and Adjusted EBITDA of $420 million reflect the on-going
transition of our business.”
Mr. Spengler continued, “During the third quarter, we launched two
satellites successfully, completing our schedule for this year. Intelsat
35e entered into service in August, and Intelsat 37e, our fifth Intelsat
EpicNG satellite, launched on September 29th and
is expected to enter service in the first quarter of 2018. We now have a
global, resilient, highly efficient and high performance technology base
that will support our efforts in mobile broadband, wireless
infrastructure, government, and corporate data networks for the next
decade.”
Mr. Spengler concluded, “As we look to the fourth quarter and 2018, our
emphasis is on commercializing Intelsat EpicNG and promoting
Intelsat EpicNG -enabled managed services, such as
IntelsatOne Flex, to improve the dynamics in our fixed and mobile
broadband businesses. We continue to support the development of antenna
and ground technologies that will simplify access and optimize the
efficiency of our satellite technology, enabling Intelsat to unlock new
growth opportunities in areas such as mobility and deliver ongoing
performance improvements to our customers.”
Third Quarter 2017 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 $211.5 million (or 39 percent of Intelsat’s
total revenue) for the three months ended September 30, 2017; a decrease
of 5 percent compared to the three months ended September 30, 2016.
Media
Media revenue was $236.7 million (or 44 percent of Intelsat’s total
revenue) for the three months ended September 30, 2017; an increase of 9
percent compared to the three months ended September 30, 2016. The
increase was largely a result of advance payments forfeited and fees
paid by a customer upon partial termination of services.
Government
Government revenue was $84.6 million (or 16 percent of Intelsat’s total
revenue) for the three months ended September 30, 2017; a decline of 13
percent compared to the three months ended September 30, 2016.
Average Fill Rate
Intelsat’s average fill rate on our approximately 2,025 station-kept
wide-beam 36 MHz equivalent transponders was 78 percent at September 30,
2017, consistent with 78 percent as of June 30, 2017. Separately, our
fleet includes approximately 825 36 MHz equivalent units of
high-throughput Intelsat EpicNG capacity.
Satellite Launches
Intelsat 35e, the fourth of our Intelsat EpicNG next
generation high-throughput satellites, completed in-orbit testing and
entered service at 325.5°E on August 15, 2017.
Intelsat 37e was successfully launched on September 29, 2017, on an
Arianespace, Ariane 5 rocket. This satellite, which will replace
Intelsat 901 in the Atlantic Ocean region, is expected to enter into
service in the first quarter of 2018 following the completion of
in-orbit testing.
Contracted Backlog
At September 30, 2017, Intelsat’s backlog, representing expected future
revenue under existing contracts with customers, was $7.9 billion, as
compared to $8.2 billion at June 30, 2017.
Capital Structure Activities
On July 5, 2017, Intelsat Jackson completed an offering of $1.5 billion
aggregate principal amount of 9.75% Senior Notes due 2025, and used the
net proceeds from the sale of the notes, along with other available
cash, to satisfy and discharge all $1.5 billion aggregate principal
amount of Intelsat Jackson’s senior notes due in 2019, and to pay
related fees and expenses.
Financial Results for the Three Months Ended September 30, 2017
On-Network revenues generally include revenue from any services
delivered via our satellite or ground network. On-Network services also
include revenues from our channel services product, which are not
detailed here as they are immaterial in size and we no longer actively
market these services. 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 On-Network Revenues reported an increase of $3.3 million to
$496.6 million, or an increase of 1 percent, as compared to the three
months ended September 30, 2016:
-
Transponder services reported an aggregate decrease of $5.1
million, primarily due to a $10.4 million decline in revenue from
network services customers, which was partially offset by a
$4.9 million increase in revenue from media customers. The network
services decline was largely due to non-renewals and contraction of
services for enterprise and wireless infrastructure in the Latin
America, Europe, and Asia-Pacific regions, partially offset by revenue
recovery from a customer in Latin America. The increase in media
revenue resulted primarily from growth in direct-to-home (“DTH”)
television services in Africa, partially offset by non-renewals and
termination of services related in part to the end of life of certain
satellites. 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
$8.8 million, largely due to an increase of $13.5 million in revenue
related to advance payments forfeited and fees paid by a customer upon
partial termination of services and an increase of $4.3 million in
revenue from network services customers for broadband solutions for
maritime mobility and aero applications. These increases were
partially offset by a decrease of $4.9 million in revenue from our
network services customers for point-to-point trunking applications,
which are switching to fiber alternatives, and a decrease of $3.8
million in managed services for our government applications, primarily
related to the previously announced termination of a contract.
Total Off-Network and Other Revenues reported an aggregate
decline of $7.2 million, or a decrease of 15 percent, to $42.2 million,
as compared to the three months ended September 30, 2016:
-
Transponder, MSS and other Off-Network services reported an
aggregate decrease of $5.8 million, primarily due to decreases in
services for government applications, largely related to sales of
customer premises equipment that occurred in 2016. This was partially
offset by increased revenue from third-party services for a media
customer.
-
Satellite-related services reported an aggregate decrease of
$1.5 million, primarily resulting from decreased revenue from support
for third-party satellites and the previously announced termination of
a government contract.
For the three months ended September 30, 2017, changes in operating
expenses, interest expense, net, and other significant income statement
items are described below.
Direct costs of revenue (excluding depreciation and amortization)
decreased by $10.3 million, or 12 percent, to $78.1 million, as compared
to the three months ended September 30, 2016. Of this decrease, $8.2
million was largely due to lower cost of sales for customer premises
equipment related to our government customer set; and declines in costs
of our satellite-related services business, off-network fixed satellite
services and managed services capacity purchased in support of our
government business. There was also a decrease of $1.4 million in
staff-related expenses.
Selling, general and administrative expenses declined by $11.1
million, or 19 percent, to $47.9 million, as compared to the three
months ended September 30, 2016. The decrease was largely due to an $8.0
million decline in bad debt expense primarily in the Latin America
region and a $2.3 million decline in staff-related expenses.
Depreciation and amortization expense increased by $3.8 million,
or 2 percent, to $178.7 million, as compared to the three months ended
September 30, 2016, due to the net increase in depreciation related to
new satellites entering service over the course of the last 12 months.
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 $18.8 million, or 8 percent, to $261.8 million for the
three months ended September 30, 2017, as compared to $243.0 million in
the three months ended September 30, 2016. This increase was principally
due to a net increase of $12.3 million driven by the Company’s new debt
issuances at higher interest rates, partially offset by certain debt
repurchases and exchanges in 2016 and 2017; together with a net increase
of $6.3 million from lower capitalized interest for the three months
ended September 30, 2017, primarily resulting from a decreased number of
satellites and related assets under construction.
The non-cash portion of total interest expense, net was $12.3 million
for the three months ended September 30, 2017, due to the amortization
of deferred financing fees and the accretion and amortization of
discounts and premiums.
Other income, net was $1.8 million for the three months ended
September 30, 2017, as compared to $0.3 million for the three months
ended September 30, 2016. The variance of $1.5 million was primarily due
to a $1.5 million increase in income mainly related to our business
conducted in Brazilian reais.
Income tax benefit increased by $1.8 million to $1.2 million for
the three months ended September 30, 2017, as compared to income tax
expense of $0.7 million for the three months ended September 30, 2016.
The increase was principally due to lower income for the three months
ended September 30, 2017. Cash paid for income taxes, net of
refunds, totaled $11.4 million for the three months ended September 30,
2017, as compared to $3.9 million for the three months ended September
30, 2016.
Net Income (Loss), Net Income (Loss) per Diluted Common Share
attributable to Intelsat S.A., EBITDA and Adjusted EBITDA
Net loss attributable to Intelsat S.A. was $30.4 million for the
three months ended September 30, 2017, compared to net income
attributable to Intelsat S.A. of $195.6 million for the same period in
2016, which included a net gain on extinguishment of debt of $219.6
million.
Net loss per diluted common share attributable to Intelsat S.A.
was $0.26 for the three months ended September 30, 2017, compared to net
income per diluted common share of $1.65 for the same period in 2016.
EBITDA was $414.6 million for the three months ended September
30, 2017, compared to $395.6 million for the same period in 2016.
Adjusted EBITDA increased 4 percent to $420.5 million for the
three months ended September 30, 2017, or 78 percent of revenue,
compared to $404.9 million, or 75 percent of revenue, for the same
period in 2016.
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,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
Network Services
|
|
$
|
222,302
|
|
41
|
%
|
|
$
|
211,497
|
|
39
|
%
|
|
Media
|
|
|
216,637
|
|
40
|
%
|
|
|
236,670
|
|
44
|
%
|
|
Government
|
|
|
96,825
|
|
18
|
%
|
|
|
84,556
|
|
16
|
%
|
|
Other
|
|
|
6,963
|
|
1
|
%
|
|
|
6,036
|
|
1
|
%
|
|
|
|
$
|
542,727
|
|
100
|
%
|
|
$
|
538,759
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Service Type
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
2016
|
|
2017
|
|
On-Network Revenues
|
|
|
|
|
|
|
|
|
|
Transponder services
|
|
$
|
388,372
|
|
72
|
%
|
|
$
|
383,316
|
|
71
|
%
|
|
Managed services
|
|
|
103,034
|
|
19
|
%
|
|
|
111,835
|
|
21
|
%
|
|
Channel services
|
|
|
1,873
|
|
0
|
%
|
|
|
1,407
|
|
0
|
%
|
|
Total on-network revenues
|
|
|
493,279
|
|
91
|
%
|
|
|
496,558
|
|
92
|
%
|
|
Off-Network and Other Revenues
|
|
|
|
|
|
|
|
|
|
Transponder, MSS and other off-network services
|
|
|
39,365
|
|
7
|
%
|
|
|
33,594
|
|
6
|
%
|
|
Satellite-related services
|
|
|
10,083
|
|
2
|
%
|
|
|
8,607
|
|
2
|
%
|
|
Total off-network and other revenues
|
|
|
49,448
|
|
9
|
%
|
|
|
42,201
|
|
8
|
%
|
|
Total
|
|
$
|
542,727
|
|
100
|
%
|
|
$
|
538,759
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow From (Used in) Operations
Net cash provided by operating activities was $212.9 million for the
three months ended September 30, 2017, and free cash flow from operations1
was $97.0 million for the same period. Free cash flow from (used
in) 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 during the three months ended September 30, 2017 was $98.9
million, and payments for satellites from financing activities was $17.1
million for the three months ended September 30, 2017.
Financial Outlook 2017
Today, Intelsat provided an update on its 2017 revenue and Adjusted
EBITDA guidance issued on June 16, 2017, stating that the Company
expects the following:
Revenue: As a result of current business trends, the Company now
expects to come in at the bottom of the previously disclosed revenue
guidance range of $2.150 billion to $2.180 billion for 2017.
Adjusted EBITDA: Intelsat maintained its forecast for Adjusted
EBITDA performance for the full-year 2017 to be in a range of $1.640
billion to $1.670 billion.
Capital Expenditures: Intelsat maintained its 2017 capital
expenditure guidance ranges for the three calendar years 2017 through
2019 (the “Guidance Period”) issued on June 16, 2017:
-
2017: $500 million to $550 million;
-
2018: $400 million to $475 million; and
-
2019: $400 million to $500 million.
Our capital expenditure guidance includes capitalized interest. The net
number of transponder equivalents is expected to increase by a compound
annual growth rate (“CAGR”) of 10 percent as a result of the net new
capacity entering service between January 1, 2017 and December 31, 2019.
This reflects the incremental capacity related to the launches of the
Intelsat EpicNG high-throughput satellites, five of which are
expected to enter service during the Guidance Period, net of satellites
de-orbited or moved to inclined service. Capital expenditure incurrence
is subject to timing of achievement of contract, satellite
manufacturing, launch and other milestones.
Cash Taxes: We expect annual cash taxes to be 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 (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.
|
|
|
Q3 2017 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. ET
on Thursday, October 26, 2017 to discuss the Company’s third quarter
financial results for the period ended September 30, 2017. 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 72710316.
Participants will have access to a replay of the conference call through
November 2, 2017. The replay number for North America is +1
855-859-2056, and for all other locations is +1 404-537-3406. The
participant pass code for the replay is 72710316.
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 statements regarding certain plans,
expectations, goals, projections, anticipations, estimations,
predictions, intentions, outlook and beliefs about 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 belief that the scale of our fleet can reduce
the financial impact of satellite or launch failures and protect against
service interruptions; our belief that the diversity of our revenue and
customer base allow us to recognize trends across regions and capture
new growth opportunities; our expectation that developing differentiated
services and investing in new technology will allow us to unlock
essential opportunities; 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 anomalies, 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; potential adverse reactions or changes to business or
employee relationships resulting from the termination of the proposed
combination of the businesses of Intelsat and OneWeb pursuant to a
Combination Agreement (the “Merger”), and the proposed cash investment
by SoftBank pursuant to a Share Purchase Agreement (the “SoftBank
Investment”); competitive responses to the terminated Merger and
SoftBank Investment; diversion of management’s attention from ongoing
business operations and opportunities as a result of the terminated
Merger and SoftBank Investment; 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, 2016, as amended by Amendment No. 1
on Form 20-F/A filed on October 11, 2017 (the “Form 20-F”), 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 CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
($ in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
2016
|
|
Three Months
Ended
September 30,
2017
|
|
Revenue
|
|
$
|
542,727
|
|
|
$
|
538,759
|
|
|
Operating expenses:
|
|
|
|
|
|
Direct costs of revenue (excluding depreciation and amortization)
|
|
|
88,460
|
|
|
|
78,111
|
|
|
Selling, general and administrative
|
|
|
58,948
|
|
|
|
47,873
|
|
|
Depreciation and amortization
|
|
|
174,909
|
|
|
|
178,742
|
|
|
Total operating expenses
|
|
|
322,317
|
|
|
|
304,726
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
220,410
|
|
|
|
234,033
|
|
|
Interest expense, net
|
|
|
243,039
|
|
|
|
261,834
|
|
|
Gain (loss) on early extinguishment of debt
|
|
|
219,560
|
|
|
|
(4,565
|
)
|
|
Other income, net
|
|
|
324
|
|
|
|
1,797
|
|
|
Income (loss) before income taxes
|
|
|
197,255
|
|
|
|
(30,569
|
)
|
|
Provision for (benefit from) income taxes
|
|
|
650
|
|
|
|
(1,153
|
)
|
|
Net income (loss)
|
|
|
196,605
|
|
|
|
(29,416
|
)
|
|
Net income attributable to noncontrolling interest
|
|
|
(983
|
)
|
|
|
(996
|
)
|
|
Net income (loss) attributable to Intelsat S.A.
|
|
$
|
195,622
|
|
|
$
|
(30,412
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share attributable to Intelsat S.A.:
|
|
|
|
|
|
Basic
|
|
$
|
1.66
|
|
|
$
|
(0.26
|
)
|
|
Diluted
|
|
$
|
1.65
|
|
|
$
|
(0.26
|
)
|
|
|
|
|
|
|
|
INTELSAT S.A.
|
|
UNAUDITED RECONCILIATION OF NET INCOME/(LOSS) TO EBITDA
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
2016
|
|
Three Months
Ended
September 30,
2017
|
|
Net income (loss)
|
|
$
|
196,605
|
|
|
$
|
(29,416
|
)
|
|
Add (Subtract):
|
|
|
|
|
|
Interest expense, net
|
|
|
243,039
|
|
|
|
261,834
|
|
|
Loss (gain) on early extinguishment of debt
|
|
|
(219,560
|
)
|
|
|
4,565
|
|
|
Provision for (benefit from) income taxes
|
|
|
650
|
|
|
|
(1,153
|
)
|
|
Depreciation and amortization
|
|
|
174,909
|
|
|
|
178,742
|
|
|
EBITDA
|
|
$
|
395,643
|
|
|
$
|
414,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Margin
|
|
|
73
|
%
|
|
|
77
|
%
|
|
|
|
|
|
|
|
|
|
|
Note:
Intelsat calculates a measure called EBITDA to assess the operating
performance of Intelsat S.A. EBITDA consists of earnings before net
interest expense, net loss (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/(LOSS) TO ADJUSTED EBITDA
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
2016
|
|
Three Months
Ended
September 30,
2017
|
|
Net income (loss)
|
|
$
|
196,605
|
|
|
$
|
(29,416
|
)
|
|
Add (Subtract):
|
|
|
|
|
|
Interest expense, net
|
|
|
243,039
|
|
|
|
261,834
|
|
|
Loss (gain) on early extinguishment of debt
|
|
|
(219,560
|
)
|
|
|
4,565
|
|
|
Provision for (benefit from) income taxes
|
|
|
650
|
|
|
|
(1,153
|
)
|
|
Depreciation and amortization
|
|
|
174,909
|
|
|
|
178,742
|
|
|
EBITDA
|
|
|
395,643
|
|
|
|
414,572
|
|
|
Add:
|
|
|
|
|
|
Compensation and benefits
|
|
|
4,855
|
|
|
|
4,494
|
|
|
Non-recurring and other non-cash items
|
|
|
4,375
|
|
|
|
1,385
|
|
|
Adjusted EBITDA
|
|
$
|
404,873
|
|
|
$
|
420,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin
|
|
|
75
|
%
|
|
|
78
|
%
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
CONSOLIDATED BALANCE SHEETS
|
|
($ in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
As of
December 31,
2016
|
|
As of
September 30,
2017
|
|
|
|
|
|
(unaudited)
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
666,024
|
|
|
$
|
580,694
|
|
|
Restricted cash
|
|
|
-
|
|
|
|
17,541
|
|
|
Receivables, net of allowance of $54,744 in 2016 and $44,372 in 2017
|
|
|
203,036
|
|
|
|
194,953
|
|
|
Prepaid expenses and other current assets
|
|
|
55,908
|
|
|
|
59,125
|
|
|
Total current assets
|
|
|
924,968
|
|
|
|
852,313
|
|
|
Satellites and other property and equipment, net
|
|
|
6,185,842
|
|
|
|
6,028,395
|
|
|
Goodwill
|
|
|
2,620,627
|
|
|
|
2,620,627
|
|
|
Non-amortizable intangible assets
|
|
|
2,452,900
|
|
|
|
2,452,900
|
|
|
Amortizable intangible assets, net
|
|
|
391,838
|
|
|
|
360,147
|
|
|
Other assets
|
|
|
365,834
|
|
|
|
403,480
|
|
|
Total assets
|
|
$
|
12,942,009
|
|
|
$
|
12,717,862
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
215,987
|
|
|
$
|
97,599
|
|
|
Taxes payable
|
|
|
16,733
|
|
|
|
8,343
|
|
|
Employee related liabilities
|
|
|
50,178
|
|
|
|
31,208
|
|
|
Accrued interest payable
|
|
|
204,840
|
|
|
|
295,030
|
|
|
Current portion of long-term debt
|
|
|
-
|
|
|
|
96,527
|
|
|
Deferred satellite performance incentives
|
|
|
23,455
|
|
|
|
23,855
|
|
|
Deferred revenue
|
|
|
157,684
|
|
|
|
169,040
|
|
|
Other current liabilities
|
|
|
64,786
|
|
|
|
45,642
|
|
|
Total current liabilities
|
|
|
733,663
|
|
|
|
767,244
|
|
|
Long-term debt, net of current portion
|
|
|
14,198,084
|
|
|
|
14,120,002
|
|
|
Deferred satellite performance incentives, net of current portion
|
|
|
210,706
|
|
|
|
220,477
|
|
|
Deferred revenue, net of current portion
|
|
|
906,744
|
|
|
|
824,393
|
|
|
Deferred income taxes
|
|
|
168,445
|
|
|
|
168,693
|
|
|
Accrued retirement benefits
|
|
|
186,284
|
|
|
|
175,739
|
|
|
Other long-term liabilities
|
|
|
148,081
|
|
|
|
126,391
|
|
|
|
|
|
|
|
|
Shareholders' deficit:
|
|
|
|
|
|
Common shares; nominal value $0.01 per share
|
|
|
1,180
|
|
|
|
1,190
|
|
|
Paid-in capital
|
|
|
2,156,911
|
|
|
|
2,171,011
|
|
|
Accumulated deficit
|
|
|
(5,715,931
|
)
|
|
|
(5,804,708
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(76,305
|
)
|
|
|
(73,040
|
)
|
|
Total Intelsat S.A. shareholders' deficit
|
|
|
(3,634,145
|
)
|
|
|
(3,705,547
|
)
|
|
Noncontrolling interest
|
|
|
24,147
|
|
|
|
20,470
|
|
|
Total liabilities and shareholders' deficit
|
|
$
|
12,942,009
|
|
|
$
|
12,717,862
|
|
|
|
|
|
|
|
|
INTELSAT S.A.
|
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
2016
|
|
Three Months
Ended
September 30,
2017
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income (loss)
|
|
$
|
196,605
|
|
|
$
|
(29,416
|
)
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
174,909
|
|
|
|
178,742
|
|
|
Provision for doubtful accounts
|
|
|
9,553
|
|
|
|
1,571
|
|
|
Foreign currency transaction gain
|
|
|
(501
|
)
|
|
|
(2,062
|
)
|
|
Loss on disposal of assets
|
|
|
-
|
|
|
|
2
|
|
|
Share-based compensation
|
|
|
4,855
|
|
|
|
4,494
|
|
|
Deferred income taxes
|
|
|
(4,972
|
)
|
|
|
(8,055
|
)
|
|
Amortization of discount, premium, issuance costs and related costs
|
|
|
6,722
|
|
|
|
12,292
|
|
|
(Gain) loss on early extinguishment of debt
|
|
|
(212,724
|
)
|
|
|
4,565
|
|
|
Amortization of actuarial loss and prior service credits for
retirement benefits
|
|
|
840
|
|
|
|
822
|
|
|
Other non-cash items
|
|
|
844
|
|
|
|
(332
|
)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Receivables
|
|
|
14,116
|
|
|
|
1,008
|
|
|
Prepaid expenses and other assets
|
|
|
(9,840
|
)
|
|
|
3,768
|
|
|
Accounts payable and accrued liabilities
|
|
|
(4,178
|
)
|
|
|
(7,186
|
)
|
|
Accrued interest payable
|
|
|
118,093
|
|
|
|
87,610
|
|
|
Deferred revenue
|
|
|
(32,109
|
)
|
|
|
(23,710
|
)
|
|
Accrued retirement benefits
|
|
|
(2,496
|
)
|
|
|
(2,944
|
)
|
|
Other long-term liabilities
|
|
|
(5,412
|
)
|
|
|
(8,236
|
)
|
|
Net cash provided by operating activities
|
|
|
254,305
|
|
|
|
212,933
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Payments for satellites and other property and equipment (including
capitalized interest)
|
|
|
(202,837
|
)
|
|
|
(98,857
|
)
|
|
Capital contributions to unconsolidated affiliates
|
|
|
(5,891
|
)
|
|
|
(7,160
|
)
|
|
Proceeds from insurance settlements
|
|
|
-
|
|
|
|
26,804
|
|
|
Net cash used in investing activities
|
|
|
(208,728
|
)
|
|
|
(79,213
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Proceeds from issuance of long-term debt
|
|
|
-
|
|
|
|
1,500,000
|
|
|
Repayments of long-term debt
|
|
|
-
|
|
|
|
(1,500,000
|
)
|
|
Debt issuance costs
|
|
|
(756
|
)
|
|
|
(21,188
|
)
|
|
Payments on tender, debt exchange, and consent
|
|
|
(34,009
|
)
|
|
|
-
|
|
|
Other payments for satellites
|
|
|
(18,333
|
)
|
|
|
(17,063
|
)
|
|
Principal payments on deferred satellite performance incentives
|
|
|
(4,190
|
)
|
|
|
(23,319
|
)
|
|
Dividends paid to noncontrolling interest
|
|
|
(2,210
|
)
|
|
|
(1,876
|
)
|
|
Restricted cash for collateral
|
|
|
-
|
|
|
|
525
|
|
|
Other financing activities
|
|
|
1,942
|
|
|
|
175
|
|
|
Net cash used in financing activities
|
|
|
(57,556
|
)
|
|
|
(62,746
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
281
|
|
|
|
877
|
|
|
Net change in cash and cash equivalents
|
|
|
(11,698
|
)
|
|
|
71,851
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
969,565
|
|
|
|
508,843
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
957,867
|
|
|
$
|
580,694
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
Interest paid, net of amounts capitalized
|
|
$
|
120,778
|
|
|
$
|
163,086
|
|
|
Income taxes paid, net of refunds
|
|
|
3,858
|
|
|
|
11,409
|
|
|
Supplemental disclosure of non-cash investing activities:
|
|
|
|
|
|
Accrued capital expenditures and payments for satellites
|
|
$
|
(50,987
|
)
|
|
$
|
(6,962
|
)
|
|
Capitalization of deferred satellite performance incentives
|
|
|
38,309
|
|
|
|
17,120
|
|
|
Supplemental disclosure of non-cash financing activities:
|
|
|
|
|
|
Restricted cash used
|
|
$
|
(480,200
|
)
|
|
$
|
-
|
|
|
Restricted cash - letters of credit collateral
|
|
|
-
|
|
|
|
(525
|
)
|
|
|
|
|
|
|
|
INTELSAT S.A.
|
|
UNAUDITED RECONCILIATION OF NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
|
|
TO FREE CASH FLOW FROM (USED IN) OPERATIONS
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Three Months
Ended
September 30,
|
|
|
|
|
2016
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
254,305
|
|
|
$
|
212,933
|
|
|
Payments for satellites and other property
and equipment (including capitalized
interest)
|
|
|
(202,837
|
)
|
|
|
(98,857
|
)
|
|
Payments for satellites from financing activities
|
|
|
(18,333
|
)
|
|
|
(17,063
|
)
|
|
Free cash flow from operations
|
|
$
|
33,135
|
|
|
$
|
97,013
|
|
|
|
|
|
|
|
|
|
|
|
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). 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/20171026005287/en/
Source: Intelsat
Intelsat
Dianne VanBeber
Vice President, Investor Relations
and Corporate Communications
+1 703-559-7406
dianne.vanbeber@intelsat.com
