News Release
Intelsat Announces Third Quarter 2019 Results
- Third quarter revenue of
$506.7 million - Third quarter net loss attributable to
Intelsat S.A. of$148.3 million - Third quarter Adjusted EBITDA of
$356.1 million , or 70 percent of revenue September 30, 2019 contracted backlog of$7.2 billion - 2019 Financial Guidance Affirmed
Intelsat’s Chief Executive Officer,
Spengler concluded, “The progression of our
Third Quarter 2019 Business Highlights
Network Services
Network services revenue was
Media
Media revenue was
Government
Government revenue was
Average Fill Rate
Intelsat’s average fill rate at
Satellite Launches
Subsequent to quarter end, on
Contracted Backlog
At
C-band Proceeding at the
Financial Results for the Three Months Ended
Total revenue for the three months ended
Total On-Network Revenues decreased by
Transponder services reported an aggregate decrease of
Managed services reported an aggregate decrease of
Total Off-Network and Other Revenues increased by
- Transponder, MSS and other Off-Network services revenues increased by an aggregate of
$1.5 million to $39.1 million , primarily due to$3.1 million in revenue from network services customers, inclusive of$3.4 million for off-network restoration of services following theIntelsat 29e failure.
- Satellite-related services reported an increase of
$0.7 million to $9.5 million , primarily due to increased revenues from launch consulting services.
Direct costs of revenue (excluding depreciation and amortization) increased by
26 percent, to
Selling, general and administrative expenses increased by
Depreciation and amortization expense decreased by
Interest expense, net consists of the gross interest expense we incur, together with gains and losses on interest rate cap contracts (which reflect the change in their fair value), offset by interest income earned and the amount of interest we capitalize related to assets under construction. As of
Interest expense, net increased by
- a net increase of
$14.8 million in interest expense primarily resulting from our refinancing activities in 2018 and our$400 million aggregate principal amount incremental debt raise completed in the second quarter of 2019; and - an increase of
$7.0 million corresponding to the decrease in fair value of the interest rate cap contracts; partially offset by - a decrease of
$2.3 million resulting from increased interest income largely due to higher cash balances; - a decrease of
$1.5 million from higher capitalized interest primarily resulting from increased levels of satellites and related assets under construction; and - a decrease of
$1.5 million from lower interest expense associated with our deferred satellite performance incentives.
The non-cash portion of total interest expense, net was
Loss on early extinguishment of debt. No gain or loss on early extinguishment of debt was recognized for the three months ended
Other expense, net was
Provision for income taxes was
Cash paid for income taxes, net of refunds, totaled
Net Income, Net Income 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) Operations1
Net cash provided by operating activities was
Financial Outlook 2019
Revenue Guidance:
Adjusted EBITDA Guidance:
For further details on our financial outlook, please see our Quarterly Commentary.
Capital Expenditure Guidance:
We continue to expect the following capital expenditure ranges:
- 2019:
$250 million to $300 million ; - 2020:
$275 million to $350 million ; and - 2021:
$250 million to $350 million .
Our capital expenditure guidance includes capitalized interest. Capitalized interest is expected to average approximately
Our capital expenditure plan excludes up to four satellites which we may be required to build should our C-band proposal to the FCC be adopted in all material respects.
Cash Taxes: We expect cash taxes to range from
- - - - - - - - - - - - - - - - - - - - - - - - - -
1In this release, financial measures are presented both in accordance with U.S. GAAP and also on a non-U.S. GAAP basis. EBITDA, Adjusted EBITDA (or AEBITDA), free cash flow from (used in) operations and related margins included in this release are non-U.S. GAAP financial measures. Please see the consolidated financial information below for information reconciling non-U.S. GAAP financial measures to comparable U.S. GAAP financial measures.
3Q 2019 Quarterly Commentary
Conference Call Information
Participants will have access to a replay of the conference call through
About
Intelsat Safe Harbor Statement:
Some of the information and statements contained in this earnings release and certain oral statements made from time to time by representatives of
The forward-looking statements reflect
INTELSAT S.A. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ($ in thousands, except per share amounts) |
|||||||
|
Three Months Ended |
|
Three Months Ended |
||||
Revenue |
$ |
536,922 |
|
|
$ |
506,658 |
|
Operating expenses: |
|
|
|
||||
Direct costs of revenue (excluding depreciation and amortization) |
83,308 |
|
|
104,743 |
|
||
Selling, general and administrative |
42,904 |
|
|
60,750 |
|
||
Depreciation and amortization |
173,441 |
|
|
161,536 |
|
||
Total operating expenses |
299,653 |
|
|
327,029 |
|
||
Income from operations |
237,269 |
|
|
179,629 |
|
||
Interest expense, net |
299,777 |
|
|
315,964 |
|
||
Loss on early extinguishment of debt |
(204,056 |
) |
|
— |
|
||
Other income (expense), net |
785 |
|
|
(5,115 |
) |
||
Loss before income taxes |
(265,779 |
) |
|
(141,450 |
) |
||
Provision for income taxes |
107,863 |
|
|
6,248 |
|
||
Net loss |
(373,642 |
) |
|
(147,698 |
) |
||
Net income attributable to noncontrolling interest |
(989 |
) |
|
(594 |
) |
||
Net loss attributable to Intelsat S.A. |
$ |
(374,631 |
) |
|
$ |
(148,292 |
) |
Net loss per common share attributable to Intelsat S.A.: |
|
|
|
||||
Basic |
$ |
(2.74 |
) |
|
$ |
(1.05 |
) |
Diluted |
$ |
(2.74 |
) |
|
$ |
(1.05 |
) |
INTELSAT S.A. UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO EBITDA ($ in thousands) |
|||||||
|
Three Months Ended |
|
Three Months Ended |
||||
Net loss |
$ |
(373,642 |
) |
|
$ |
(147,698 |
) |
Add: |
|
|
|
||||
Interest expense, net |
299,777 |
|
|
315,964 |
|
||
Loss on early extinguishment of debt |
204,056 |
|
|
— |
|
||
Provision for income taxes |
107,863 |
|
|
6,248 |
|
||
Depreciation and amortization |
173,441 |
|
|
161,536 |
|
||
EBITDA |
$ |
411,495 |
|
|
$ |
336,050 |
|
|
|
|
|
||||
EBITDA Margin |
77 |
% |
|
66 |
% |
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 Ended |
|
Three Months Ended |
||||
Net loss |
$ |
(373,642 |
) |
|
$ |
(147,698 |
) |
Add: |
|
|
|
||||
Interest expense, net |
299,777 |
|
|
315,964 |
|
||
Loss on early extinguishment of debt |
204,056 |
|
|
— |
|
||
Provision for income taxes |
107,863 |
|
|
6,248 |
|
||
Depreciation and amortization |
173,441 |
|
|
161,536 |
|
||
EBITDA |
411,495 |
|
|
336,050 |
|
||
Add: |
|
|
|
||||
Compensation and benefits(1) |
1,766 |
|
|
3,924 |
|
||
Non-recurring and other non-cash items(2) |
3,060 |
|
|
11,944 |
|
||
Proportionate share from unconsolidated joint venture(3): |
|
|
|
||||
Interest expense, net |
— |
|
|
1,345 |
|
||
Depreciation and amortization |
— |
|
|
2,814 |
|
||
Adjusted EBITDA(4)(5) |
$ |
416,321 |
|
|
$ |
356,077 |
|
|
|
|
|
||||
Adjusted EBITDA margin |
78 |
% |
|
70 |
% |
- Reflects non-cash expenses incurred relating to our equity compensation plans.
- Reflects certain non-recurring gains and losses and non-cash items, including the following: professional fees related to our liability, business strategy and tax management initiatives; costs associated with our C-band spectrum solution proposal; severance, retention and relocation payments; change in value of certain investments; certain foreign exchange gains and losses; and other various non-recurring expenses. These costs were partially offset by non-cash income related to the recognition of deferred revenue on a straight-line basis for certain prepaid capacity service contracts.
- Reflects adjustments related to our interest in
Horizons-3 Satellite LLC ("Horizons 3"). - For the three months ended
September 30, 2018 and 2019, Adjusted EBITDA included$25,139 and$25,811 , respectively, of revenue relating to the significant financing component identified in customer contracts in accordance with the adoption of ASC 606. These impacts are not permitted to be reflected in the applicable consolidated and Adjusted EBITDA definitions under our debt agreements. - For the three months ended
September 30, 2019 ,Intelsat S.A. Adjusted EBITDA reflects$5.1 million of Adjusted EBITDA attributable toIntelsat Horizons-3 LLC , its subsidiaries and its proportionate share of Horizons 3, with a nominal amount for the comparative period in 2018. These entities are considered to be unrestricted subsidiaries under the definitions set forth in our applicable debt agreements.
Note:
Adjusted EBITDA is not a measure of financial performance under U.S. GAAP, and our Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Adjusted EBITDA should not be considered as an alternative to operating income (loss) or net income (loss), determined in accordance with U.S. GAAP, as an indicator of our operating performance, or as an alternative to cash flows from operating activities, determined in accordance with U.S. GAAP, as an indicator of cash flows, or as a measure of liquidity.
INTELSAT S.A. CONDENSED CONSOLIDATED BALANCE SHEETS ($ in thousands) |
|||||||
|
December 31, 2018 |
|
September 30, 2019 |
||||
|
|
|
(unaudited) |
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
485,120 |
|
|
$ |
802,383 |
|
Restricted cash |
22,037 |
|
|
22,251 |
|
||
Receivables, net of allowances of $28,542 in 2018 and $37,068 in 2019 |
271,393 |
|
|
261,698 |
|
||
Contract assets |
45,034 |
|
|
53,982 |
|
||
Prepaid expenses and other current assets |
24,075 |
|
|
32,861 |
|
||
Total current assets |
847,659 |
|
|
1,173,175 |
|
||
Satellites and other property and equipment, net |
5,511,702 |
|
|
4,799,558 |
|
||
Goodwill |
2,620,627 |
|
|
2,620,627 |
|
||
Non-amortizable intangible assets |
2,452,900 |
|
|
2,452,900 |
|
||
Amortizable intangible assets, net |
311,103 |
|
|
285,340 |
|
||
Contract assets, net of current portion |
96,108 |
|
|
82,053 |
|
||
Other assets |
401,414 |
|
|
467,687 |
|
||
Total assets |
$ |
12,241,513 |
|
|
$ |
11,881,340 |
|
LIABILITIES AND SHAREHOLDERS’ DEFICIT |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable and accrued liabilities |
$ |
108,101 |
|
|
$ |
87,118 |
|
Taxes payable |
5,679 |
|
|
7,202 |
|
||
Employee related liabilities |
29,696 |
|
|
39,858 |
|
||
Accrued interest payable |
284,649 |
|
|
283,572 |
|
||
Contract liabilities |
137,746 |
|
|
134,301 |
|
||
Deferred satellite performance incentives |
35,261 |
|
|
37,092 |
|
||
Other current liabilities |
59,080 |
|
|
56,787 |
|
||
Total current liabilities |
660,212 |
|
|
645,930 |
|
||
Long-term debt |
14,028,352 |
|
|
14,454,626 |
|
||
Contract liabilities, net of current portion |
1,131,319 |
|
|
1,117,813 |
|
||
Deferred satellite performance incentives, net of current portion |
210,346 |
|
|
159,307 |
|
||
Deferred income taxes |
82,488 |
|
|
88,349 |
|
||
Accrued retirement benefits, net of current portion |
133,735 |
|
|
124,119 |
|
||
Other long-term liabilities |
77,670 |
|
|
163,952 |
|
||
Shareholders’ deficit: |
|
|
|
||||
Common shares; nominal value $0.01 per share |
1,380 |
|
|
1,410 |
|
||
Paid-in capital |
2,551,471 |
|
|
2,562,646 |
|
||
Accumulated deficit |
(6,606,426 |
) |
|
(7,388,871 |
) |
||
Accumulated other comprehensive loss |
(43,430 |
) |
|
(59,291 |
) |
||
Total Intelsat S.A. shareholders’ deficit |
(4,097,005 |
) |
|
(4,884,106 |
) |
||
Noncontrolling interest |
14,396 |
|
|
11,350 |
|
||
Total liabilities and shareholders’ deficit |
$ |
12,241,513 |
|
|
$ |
11,881,340 |
|
INTELSAT S.A. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in thousands) |
|||||||
|
Three Months Ended |
|
Three Months Ended |
||||
Cash flows from operating activities: |
|
|
|
||||
Net loss |
$ |
(373,642 |
) |
|
$ |
(147,698 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
173,441 |
|
|
161,536 |
|
||
Provision for (benefit from) doubtful accounts |
(2,481 |
) |
|
6,901 |
|
||
Foreign currency transaction loss |
2,304 |
|
|
4,333 |
|
||
Loss on disposal of assets |
2 |
|
|
— |
|
||
Share-based compensation |
1,765 |
|
|
3,924 |
|
||
Deferred income taxes |
116,526 |
|
|
4,084 |
|
||
Amortization of discount, premium, issuance costs and related costs |
13,527 |
|
|
10,658 |
|
||
Loss on early extinguishment of debt |
204,056 |
|
|
— |
|
||
Amortization of actuarial loss and prior service credits for retirement benefits |
957 |
|
|
112 |
|
||
Unrealized (gains) losses on derivatives and investments |
(5,556 |
) |
|
5,238 |
|
||
Other non-cash items |
251 |
|
|
27 |
|
||
Changes in operating assets and liabilities: |
|
|
|
||||
Receivables |
374 |
|
|
(14,185 |
) |
||
Prepaid expenses, contract and other assets |
1,584 |
|
|
1,351 |
|
||
Accounts payable and accrued liabilities |
(26,709 |
) |
|
4,391 |
|
||
Accrued interest payable |
(60,423 |
) |
|
(261 |
) |
||
Deferred revenue and contract liabilities |
(3,257 |
) |
|
(743 |
) |
||
Accrued retirement benefits |
(3,505 |
) |
|
(2,486 |
) |
||
Other long-term liabilities |
(3,100 |
) |
|
(7,318 |
) |
||
Net cash provided by operating activities |
36,114 |
|
|
29,864 |
|
||
Cash flows from investing activities: |
|
|
|
||||
Payments for satellites and other property and equipment (including capitalized interest) |
(55,558 |
) |
|
(43,761 |
) |
||
Purchase of investments |
(6,500 |
) |
|
(6,000 |
) |
||
Capital contributions to unconsolidated affiliates |
(16,454 |
) |
|
— |
|
||
Other proceeds from satellites |
3,750 |
|
|
3,750 |
|
||
Net cash used in investing activities |
(74,762 |
) |
|
(46,011 |
) |
||
Cash flows from financing activities: |
|
|
|
||||
Repayments of long-term debt |
(3,157,891 |
) |
|
— |
|
||
Proceeds from issuance of long-term debt |
3,478,125 |
|
|
— |
|
||
Debt issuance costs |
(34,821 |
) |
|
(38 |
) |
||
Payment of premium on early extinguishment of debt |
(19,648 |
) |
|
— |
|
||
Principal payments on deferred satellite performance incentives |
(5,122 |
) |
|
(5,796 |
) |
||
Dividends paid to noncontrolling interest |
(2,626 |
) |
|
(1,436 |
) |
||
Proceeds from exercise of employee stock options |
712 |
|
|
754 |
|
||
Other financing activities |
1 |
|
|
2 |
|
||
Net cash provided by (used in) financing activities |
258,730 |
|
|
(6,514 |
) |
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
(1,734 |
) |
|
(878 |
) |
||
Net change in cash, cash equivalents and restricted cash |
218,348 |
|
|
(23,539 |
) |
||
Cash, cash equivalents and restricted cash, beginning of period |
462,952 |
|
|
848,173 |
|
||
Cash, cash equivalents and restricted cash, end of period |
$ |
681,300 |
|
|
$ |
824,634 |
|
|
|
|
|
||||
Supplemental cash flow information: |
|
|
|
||||
Interest paid, net of amounts capitalized |
$ |
324,785 |
|
|
$ |
279,149 |
|
Income taxes paid, net of refunds |
13,673 |
|
|
2,533 |
|
||
Supplemental disclosure of non-cash investing activities: |
|
|
|
||||
Accrued capital expenditures |
$ |
4,349 |
|
|
$ |
3 |
|
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 |
|
Three Months Ended |
||||
Net cash provided by operating activities |
$ |
36,114 |
|
|
$ |
29,864 |
|
Other proceeds from satellites from investing activities |
3,750 |
|
|
3,750 |
|
||
Payments for satellites and other property and equipment (including capitalized interest) |
(55,558 |
) |
|
(43,761 |
) |
||
Free cash flow from (used in) operations |
$ |
(15,694 |
) |
|
$ |
(10,147 |
) |
Note:
Free cash flow from (used in) operations consists of net cash provided by (used in) operating activities and other proceeds from satellites from investing activities, less payments for satellites and other property and equipment (including capitalized interest) from investing activities and other payments 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) |
|||||||||||||
By Customer Set |
|
|
|
|
|
|
|
||||||
|
Three Months Ended |
|
Three Months Ended |
|
Increase (Decrease) |
|
Percentage change |
||||||
Network Services |
$ |
198,983 |
|
37% |
$ |
180,761 |
|
36% |
$ |
(18,222 |
) |
|
(9)% |
Media |
233,106 |
|
43% |
222,853 |
|
44% |
(10,253 |
) |
|
(4)% |
|||
Government |
98,375 |
|
18% |
95,743 |
|
19% |
(2,632 |
) |
|
(3)% |
|||
Other |
6,458 |
|
1% |
7,301 |
|
1% |
843 |
|
|
13% |
|||
Total |
$ |
536,922 |
|
|
$ |
506,658 |
|
|
$ |
(30,264 |
) |
|
(6)% |
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||
By Service Type |
|
|
|
|
|
|
|
||||||
|
Three Months Ended |
|
Three Months Ended |
|
Increase (Decrease) |
|
Percentage change |
||||||
On-Network Revenues: |
|
|
|
|
|
|
|
||||||
Transponder services |
$ |
391,927 |
|
73% |
$ |
364,312 |
|
72% |
$ |
(27,615 |
) |
|
(7)% |
Managed services |
97,576 |
|
18% |
93,080 |
|
18% |
(4,496 |
) |
|
(5)% |
|||
Channel |
976 |
|
—% |
601 |
|
—% |
(375 |
) |
|
(38)% |
|||
Total on-network revenues |
490,479 |
|
91% |
457,993 |
|
90% |
(32,486 |
) |
|
(7)% |
|||
Off-Network and Other Revenues: |
|
|
|
|
|
|
|
||||||
Transponder, MSS and other off-network services |
37,655 |
|
7% |
39,129 |
|
8% |
1,474 |
|
|
4% |
|||
Satellite-related services |
8,788 |
|
2% |
9,536 |
|
2% |
748 |
|
|
9% |
|||
Total off-network and other revenues |
46,443 |
|
9% |
48,665 |
|
10% |
2,222 |
|
|
5% |
|||
Total |
$ |
536,922 |
|
|
$ |
506,658 |
|
|
$ |
(30,264 |
) |
|
(6)% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20191029005533/en/
Source:
Dianne VanBeber
Vice President, Investor Relations
Dianne.vanbeber@intelsat.com
+1 703 559 7406 (o)
+1 703 627 5100 (m)