News Release
Intelsat Announces Third Quarter 2020 Results
-
Third quarter revenue of
$489.4 million -
Third quarter net loss attributable to Intelsat S.A. of
$15.9 million -
Third quarter Adjusted EBITDA of
$332.9 million or 68% of revenue -
September 30, 2020 contracted backlog of$6.2 billion
LUXEMBOURG--(BUSINESS WIRE)--Nov. 5, 2020--
Intelsat S.A. (the "Company") (OTC:
Intelsat reported total revenue of
Intelsat reported EBITDA1, or earnings before net interest, gain on early extinguishment of debt, taxes and depreciation and amortization, of
Intelsat’s Chief Executive Officer,
Spengler concluded, “During the period we announced an agreement to purchase Gogo Inc.'s commercial aviation business, which pairs the world’s largest integrated satellite and terrestrial infrastructure with the leading provider of in-flight broadband connectivity. This transaction is a cornerstone of our growth strategy to deliver end-to-end managed solutions for customers who rely on our satellite capabilities to stay connected around the world. Moving toward a vertically integrated managed services model is paramount because end users demand a world-class broadband experience. We believe our Company has the capability to meet these demands, and we are investing in future innovations to further enhance our service offerings.”
Third Quarter 2020 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.
Network Services
Network services revenue was
Media
Media revenue was
Government
Government revenue was
Average Fill Rate
Intelsat’s average fill rate as of
Contracted Backlog
At
Agreement to Acquire Gogo’s Commercial Aviation Business
On
C-band Proceeding at the
On
During the period, Intelsat finalized contracts with satellite manufacturers and launch vehicle providers. On
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
$10.6 million , primarily due to lower revenue from media and government customers, both driven by non-renewals and lower pricing. This was partially offset by new business in network services as a result of a renegotiated contract with a maritime mobility customer and new contracts for enterprise wireless infrastructure. -
Managed services reported an aggregate decrease of
$23.6 million , primarily due to a decline in network services and media revenues. The decline in network services was driven largely by credits given to mobility customers related to COVID-19 and the transfer of managed services to transponder services, partially offset by increased revenue from Flex managed services. The decline in media was mainly driven by termination of a managed services video contract and lower occasional use video services.
Total Off-Network and Other Revenues increased by
-
Transponder, MSS and other Off-Network services revenues increased by an aggregate of
$15.3 million to$54.5 million , largely driven by the transfer of certain services from on-network to off-network and the sale of customer premise equipment.
Direct costs of revenue (excluding depreciation and amortization) increased by
Selling, general and administrative expenses increased by
Depreciation and amortization expense increased by
Interest expense, net consists of the gross interest expense we incur, together with gains and losses on interest rate cap contracts we hold (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.
Interest expense, net decreased by
The non-cash portion of total interest expense, net was
Other income (expense), net was
Reorganization items reflect direct costs incurred in connection with our Chapter 11 cases. Reorganization items of
Provision for (Benefit from) income taxes decreased from income tax expense by
Net Income, Net Income per Diluted Common Share attributable to Intelsat S.A., EBITDA and Adjusted EBITDA
Net loss attributable to Intelsat S.A. was
Net loss per diluted common share attributable to Intelsat S.A. was
EBITDA was
Adjusted EBITDA was
Free Cash Flow Used In Operations1
Net cash provided by operating activities was
|
____ |
| 1In this release, financial measures are presented both in accordance with |
Conference Call Information
In light of the Company and certain of its subsidiaries’ decision to file voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the
About Intelsat
As the foundational architects of satellite technology, Intelsat S.A. (OTC:
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" within the meaning of the Private Securities Litigation Reform Act of 1995 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 statements regarding: the effects of the Company and certain of its subsidiaries’ voluntary commencement of cases under Chapter 11 (the “Chapter 11 Cases”) of the United States Bankruptcy Code in the
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 satellite 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;
|
INTELSAT S.A. (DEBTOR-IN-POSSESSION) UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ($ in thousands, except per share amounts) |
|||||||
|
|
Three Months Ended
|
|
Three Months Ended
|
||||
|
Revenue |
$ |
506,658 |
|
|
$ |
489,449 |
|
|
Operating expenses: |
|
|
|
||||
|
Direct costs of revenue (excluding depreciation and amortization) |
104,743 |
|
|
120,267 |
|
||
|
Selling, general and administrative |
60,750 |
|
|
69,215 |
|
||
|
Depreciation and amortization |
161,536 |
|
|
162,573 |
|
||
|
Total operating expenses |
327,029 |
|
|
352,055 |
|
||
|
Income from operations |
179,629 |
|
|
137,394 |
|
||
|
Interest expense, net |
315,964 |
|
|
138,075 |
|
||
|
Other income (expense), net |
(5,115) |
|
|
3,067 |
|
||
|
Reorganization items |
— |
|
|
(36,367) |
|
||
|
Loss before income taxes |
(141,450) |
|
|
(33,981) |
|
||
|
Provision for (benefit from) income taxes |
6,248 |
|
|
(18,650) |
|
||
|
Net loss |
(147,698) |
|
|
(15,331) |
|
||
|
Net income attributable to noncontrolling interest |
(594) |
|
|
(600) |
|
||
|
Net loss attributable to Intelsat S.A. |
$ |
(148,292) |
|
|
$ |
(15,931) |
|
|
Net loss per common share attributable to Intelsat S.A.: |
|
|
|
||||
|
Basic |
$ |
(1.05) |
|
|
$ |
(0.11) |
|
|
Diluted |
$ |
(1.05) |
|
|
$ |
(0.11) |
|
|
INTELSAT S.A. (DEBTOR-IN-POSSESSION) UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO EBITDA ($ in thousands) |
|||||||
|
|
Three Months Ended
|
|
Three Months Ended
|
||||
|
Net loss |
$ |
(147,698) |
|
|
$ |
(15,331) |
|
|
Add (Subtract): |
|
|
|
||||
|
Interest expense, net |
315,964 |
|
|
138,075 |
|
||
|
Provision for (benefit from) income taxes |
6,248 |
|
|
(18,650) |
|
||
|
Depreciation and amortization |
161,536 |
|
|
162,573 |
|
||
|
EBITDA |
$ |
336,050 |
|
|
$ |
266,667 |
|
|
|
|
|
|
||||
|
EBITDA Margin |
66 |
% |
|
54 |
% |
||
|
|
|
|
|
||||
Note:
Intelsat calculates a measure called EBITDA to assess the operating performance of Intelsat S.A. EBITDA consists of earnings before net interest, 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 loss (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
|
INTELSAT S.A. (DEBTOR-IN-POSSESSION) UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA ($ in thousands) |
|||||||
|
|
Three Months Ended
|
|
Three Months Ended
|
||||
|
|
|
|
|
||||
|
Net loss |
$ |
(147,698) |
|
|
$ |
(15,331) |
|
|
Add (Subtract): |
|
|
|
||||
|
Interest expense, net |
315,964 |
|
|
138,075 |
|
||
|
Provision for (benefit from) income taxes |
6,248 |
|
|
(18,650) |
|
||
|
Depreciation and amortization |
161,536 |
|
|
162,573 |
|
||
|
EBITDA |
336,050 |
|
|
266,667 |
|
||
|
Add: |
|
|
|
||||
|
Compensation and benefits(1) |
3,924 |
|
|
15,484 |
|
||
|
Non-recurring and other non-cash items(2) |
11,944 |
|
|
10,510 |
|
||
|
Reorganization items, net(3) |
— |
|
|
36,367 |
|
||
|
Proportionate share from unconsolidated joint venture:(4) |
|
|
|
||||
|
Interest expense, net |
1,345 |
|
|
1,074 |
|
||
|
Depreciation and amortization |
2,814 |
|
|
2,815 |
|
||
|
Adjusted EBITDA(5)(6) |
$ |
356,077 |
|
|
$ |
332,917 |
|
|
|
|
|
|
||||
|
Adjusted EBITDA margin |
70 |
% |
|
68 |
% |
||
|
|
|
|
|
||||
|
(1) |
Reflects non-cash expenses incurred relating to our equity compensation plans and, for the three months ended |
|
|
(2) |
Reflects certain non-recurring expenses, gains and losses and non-cash items, including the following: professional fees related to our liability management initiatives; costs associated with our C-band spectrum proposal; corporate development and strategy costs; certain research and development costs; severance, retention and relocation payments; changes in fair value of certain investments; certain foreign exchange gains and losses; and other various non-recurring expenses. In 2019, 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. | |
|
(3) |
Reflects direct costs incurred in connection with our Chapter 11 proceedings. | |
|
(4) |
Reflects adjustments related to our interest in |
|
|
(5) |
Adjusted EBITDA included |
|
|
(6) |
Intelsat S.A. Adjusted EBITDA reflected |
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
|
INTELSAT S.A. (DEBTOR-IN-POSSESSION) CONDENSED CONSOLIDATED BALANCE SHEETS ($ in thousands) |
|||||||
|
|
|
|
|
||||
|
|
|
|
(unaudited) |
||||
|
ASSETS |
|
|
|
||||
|
Current assets: |
|
|
|
||||
|
Cash and cash equivalents |
$ |
810,626 |
|
|
$ |
1,001,000 |
|
|
Restricted cash |
20,238 |
|
|
19,350 |
|
||
|
Receivables, net of allowances of |
255,722 |
|
|
215,725 |
|
||
|
Contract assets |
47,721 |
|
|
40,479 |
|
||
|
Prepaid expenses and other current assets |
39,230 |
|
|
104,838 |
|
||
|
Total current assets |
1,173,537 |
|
|
1,381,392 |
|
||
|
Satellites and other property and equipment, net |
4,702,063 |
|
|
4,696,123 |
|
||
|
|
2,620,627 |
|
|
2,620,627 |
|
||
|
Non-amortizable intangible assets |
2,452,900 |
|
|
2,440,700 |
|
||
|
Amortizable intangible assets, net |
276,752 |
|
|
253,425 |
|
||
|
Contract assets, net of current portion |
74,109 |
|
|
57,715 |
|
||
|
Other assets |
504,394 |
|
|
564,434 |
|
||
|
Total assets |
$ |
11,804,382 |
|
|
$ |
12,014,416 |
|
|
LIABILITIES AND SHAREHOLDERS’ DEFICIT |
|
|
|
||||
|
Current liabilities: |
|
|
|
||||
|
Accounts payable and accrued liabilities |
$ |
88,107 |
|
|
$ |
172,271 |
|
|
Taxes payable |
6,402 |
|
|
8,223 |
|
||
|
Employee related liabilities |
44,648 |
|
|
35,371 |
|
||
|
Accrued interest payable |
308,657 |
|
|
13,837 |
|
||
|
Current portion of long-term debt |
— |
|
|
5,400,953 |
|
||
|
Contract liabilities |
137,706 |
|
|
127,879 |
|
||
|
Deferred satellite performance incentives |
42,835 |
|
|
42,337 |
|
||
|
Other current liabilities |
62,446 |
|
|
58,416 |
|
||
|
Total current liabilities |
690,801 |
|
|
5,859,287 |
|
||
|
Long-term debt |
14,465,483 |
|
|
— |
|
||
|
Contract liabilities, net of current portion |
1,113,450 |
|
|
1,060,732 |
|
||
|
Deferred satellite performance incentives, net of current portion |
175,837 |
|
|
146,559 |
|
||
|
Deferred income taxes |
55,171 |
|
|
63,922 |
|
||
|
Accrued retirement benefits, net of current portion |
125,511 |
|
|
113,258 |
|
||
|
Other long-term liabilities |
166,977 |
|
|
224,728 |
|
||
|
Liabilities subject to compromise |
— |
|
|
10,170,344 |
|
||
|
Shareholders’ deficit: |
|
|
|
||||
|
Common shares, nominal value |
1,411 |
|
|
1,421 |
|
||
|
Paid-in capital |
2,565,696 |
|
|
2,572,324 |
|
||
|
Accumulated deficit |
(7,503,830) |
|
|
(8,144,803) |
|
||
|
Accumulated other comprehensive loss |
(63,135) |
|
|
(61,191) |
|
||
|
|
(4,999,858) |
|
|
(5,632,249) |
|
||
|
Noncontrolling interest |
11,010 |
|
|
7,835 |
|
||
|
Total liabilities and shareholders’ deficit |
$ |
11,804,382 |
|
|
$ |
12,014,416 |
|
|
INTELSAT S.A. (DEBTOR-IN-POSSESSION) UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in thousands) |
|||||||
|
|
Three Months Ended
|
|
Three Months Ended
|
||||
|
Cash flows from operating activities: |
|
|
|
||||
|
Net loss |
$ |
(147,698) |
|
|
$ |
(15,331) |
|
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
||||
|
Depreciation and amortization |
161,536 |
|
|
162,573 |
|
||
|
Provision for doubtful accounts |
6,901 |
|
|
6,818 |
|
||
|
Foreign currency transaction loss |
4,333 |
|
|
403 |
|
||
|
Share-based compensation |
3,924 |
|
|
2,919 |
|
||
|
Deferred income taxes |
4,084 |
|
|
(911) |
|
||
|
Amortization of discount, premium, issuance costs and related costs |
10,658 |
|
|
2,412 |
|
||
|
Amortization of actuarial loss and prior service credits for retirement benefits |
112 |
|
|
659 |
|
||
|
Unrealized losses on derivative financial instruments |
5,238 |
|
|
23 |
|
||
|
Unrealized losses on investments and loans held-for-investment |
— |
|
|
(17) |
|
||
|
Other non-cash items |
27 |
|
|
— |
|
||
|
Changes in operating assets and liabilities: |
|
|
|
||||
|
Receivables |
(14,185) |
|
|
1,503 |
|
||
|
Prepaid expenses, contract and other assets |
1,351 |
|
|
(39,167) |
|
||
|
Accounts payable and accrued liabilities |
4,391 |
|
|
33,085 |
|
||
|
Accrued interest payable |
(261) |
|
|
(62) |
|
||
|
Contract liabilities |
(743) |
|
|
(22,372) |
|
||
|
Accrued retirement benefits |
(2,486) |
|
|
(3,986) |
|
||
|
Other long-term liabilities |
(7,318) |
|
|
11,686 |
|
||
|
Net cash provided by operating activities |
29,864 |
|
|
140,235 |
|
||
|
Cash flows from investing activities: |
|
|
|
||||
|
Payments for satellites and other property and equipment (including capitalized interest) |
(43,761) |
|
|
(220,060) |
|
||
|
Origination of loans held-for-investment |
(6,000) |
|
|
(1,150) |
|
||
|
Proceeds from loans held-for-investment |
— |
|
|
249 |
|
||
|
Other proceeds from satellites |
3,750 |
|
|
— |
|
||
|
Net cash used in investing activities |
(46,011) |
|
|
(220,961) |
|
||
|
Cash flows from financing activities: |
|
|
|
||||
|
Debt issuance costs |
(38) |
|
|
— |
|
||
|
Principal payments on deferred satellite performance incentives |
(5,796) |
|
|
(6,233) |
|
||
|
Dividends paid to noncontrolling interest |
(1,436) |
|
|
(3,080) |
|
||
|
Proceeds from exercise of employee stock options |
754 |
|
|
— |
|
||
|
Other financing activities |
2 |
|
|
— |
|
||
|
Net cash provided by financing activities |
(6,514) |
|
|
(9,313) |
|
||
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
(878) |
|
|
(596) |
|
||
|
Net change in cash, cash equivalents and restricted cash |
(23,539) |
|
|
(90,635) |
|
||
|
Cash, cash equivalents, and restricted cash, beginning of period |
848,173 |
|
|
1,110,985 |
|
||
|
Cash, cash equivalents, and restricted cash, end of period |
$ |
824,634 |
|
|
$ |
1,020,350 |
|
|
Supplemental cash flow information: |
|
|
|
||||
|
Cash paid for reorganization items included in cash flows from operating activities |
$ |
— |
|
|
$ |
25,070 |
|
|
Interest paid, net of amounts capitalized |
279,149 |
|
|
109,395 |
|
||
|
Income taxes paid, net of refunds |
2,533 |
|
|
2,089 |
|
||
|
Supplemental disclosure of non-cash investing activities: |
|
|
|
||||
|
Accrued capital expenditures |
$ |
3 |
|
|
$ |
(13,221) |
|
|
Conversion of loans held-for-investment to equity securities |
— |
|
|
— |
|
||
|
INTELSAT S.A. (DEBTOR-IN-POSSESSION) 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 |
$ |
29,864 |
|
|
$ |
140,235 |
|
|
Other proceeds from satellites from investing activities |
3,750 |
|
|
— |
|
||
|
Payments for satellites and other property and equipment (including
|
(43,761) |
|
|
(220,060) |
|
||
|
Free cash flow used in operations |
$ |
(10,147) |
|
|
$ |
(79,825) |
|
|
|
|
|
|
||||
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
|
INTELSAT S.A. (DEBTOR-IN-POSSESSION) SUPPLEMENTARY TABLE REVENUE BY CUSTOMER SET AND SERVICE TYPE ($ in thousands) |
||||||||||||||||
|
By Customer Set |
|
|
|
|
|
|
|
|||||||||
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Increase
|
|
Percentage
|
|||||||||
|
Network Services |
$ |
180,761 |
|
36 |
% |
$ |
169,594 |
|
35 |
% |
$ |
(11,167) |
|
|
(6) |
% |
|
Media |
222,853 |
|
44 |
% |
203,552 |
|
42 |
% |
(19,301) |
|
|
(9) |
|
|||
|
Government |
95,743 |
|
19 |
% |
107,981 |
|
22 |
% |
12,238 |
|
|
13 |
|
|||
|
Other |
7,301 |
|
1 |
% |
8,322 |
|
2 |
% |
1,021 |
|
|
14 |
|
|||
|
Total |
$ |
506,658 |
|
|
$ |
489,449 |
|
|
$ |
(17,209) |
|
|
(3) |
% |
||
|
|
|
|
|
|
|
|
|
|||||||||
|
By Service Type |
|
|
|
|
|
|
|
|||||||||
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Increase
|
|
Percentage
|
|||||||||
|
On-Network Revenues: |
|
|
|
|
|
|
|
|||||||||
|
Transponder services |
$ |
364,312 |
|
72 |
% |
$ |
353,758 |
|
72 |
% |
$ |
(10,554) |
|
|
(3) |
% |
|
Managed services |
93,080 |
|
18 |
% |
69,438 |
|
14 |
% |
(23,642) |
|
|
(25) |
|
|||
|
Channel |
601 |
|
— |
% |
280 |
|
— |
% |
(321) |
|
|
(53) |
|
|||
|
Total on-network revenues |
457,993 |
|
90 |
% |
423,476 |
|
87 |
% |
(34,517) |
|
|
(8) |
|
|||
|
Off-Network and Other Revenues: |
|
|
|
|
|
|
|
|||||||||
|
Transponder, MSS and other off-network services |
39,129 |
|
8 |
% |
54,478 |
|
11 |
% |
15,349 |
|
|
39 |
|
|||
|
Satellite-related services |
9,536 |
|
2 |
% |
11,495 |
|
2 |
% |
1,959 |
|
|
21 |
|
|||
|
Total off-network and other revenues |
48,665 |
|
10 |
% |
65,973 |
|
13 |
% |
17,308 |
|
|
36 |
|
|||
|
Total |
$ |
506,658 |
|
|
$ |
489,449 |
|
|
$ |
(17,209) |
|
|
(3) |
% |
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20201105006177/en/
Vice President, Investor Relations
Investor.Relations@intelsat.com
+1 703 559 7406 (o)
Source: Intelsat