Foreign Exchange Rates Affect Telesat Revenues in 2Q 2015
Ottawa, Canada, July 30, 2015--For the quarter ended June 30, 2015, Telesat reported consolidated revenue of CDN$ 227 million, an increase of CDN$ 1 million compared to the same period in 2014. During the quarter, the U.S. dollar was 13% stronger than it was during the second quarter of 2014, resulting in a positive impact on the conversion of U.S. dollar denominated revenue and a negative impact on the conversion of U.S. dollar denominated expenses.
When adjusted for foreign exchange rate changes, revenue decreased by 4% (CDN$ 9 million) compared to the same period in 2014. The decrease was mainly related to lower revenue from Telesat’s international satellite services and lower equipment sales. Operating expenses of CDN$ 44 million were 4% (CDN$ 2 million) lower than the same period in 2014 or 9% (CDN$ 4 million) lower when taking into account changes in foreign exchange rates. The decrease was mainly related to lower cost of equipment sales.
Adjusted EBITDA was CDN$ 185 million, an increase of 1% (CDN$ 2 million) compared to the same period in 2014, or a decrease of 3% (CDN$ 6 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin was 81.4% for the second quarter of 2015 compared to 81.0% for the same period in 2014.
For the six month period ended June 30, 2015, consolidated revenue was CDN$ 456 million, a decrease of 3% (CDN$ 12 million) compared to the same period in 2014. During the first half of 2015, the U.S. dollar was 13% stronger than it was during the first half of 2014. When adjusted for foreign exchange rate changes, revenue decreased by 7% (CDN$ 34 million) compared to the same period in 2014. The decrease was primarily due to short-term services provided to other satellite operators in the first half of 2014 which did not recur in the first half of 2015 and lower equipment sales compared to the same period in 2014.
Adjusted EBITDA was CDN$ 371 million, a decrease of 3% ($10 million) compared to the same period in 2014, or a decrease of 7% (CDN$ 28 million) when adjusted for foreign 2 exchange rate changes. The Adjusted EBITDA margin1 for the first half of 2015 was 81.4%, compared to 81.5% in the same period in 2014.
Telesat’s net income for the quarter ended June 30, 2015 was CDN$ 56 million compared to net income of CDN$ 108 million for the same period in 2014. The reduction in net income arose principally from a reduced foreign exchange gain and an increased loss in the fair value of financial instruments compared to 2014.
For the six month period ended June 30, 2015, the net loss was $98 million, compared to net income of $80 million for the same period in 2014. The reduction in net income for the first half of the year was principally the result of a first quarter noncash loss on foreign exchange arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars.
“Telesat had a solid second quarter notwithstanding weakness in certain markets we serve”, commented Dan Goldberg, Telesat’s President and CEO. “Although revenue and Adjusted EBITDA grew on a reported basis relative to the second quarter last year, they declined 4% and 3%, respectively, after taking foreign exchange rate changes into account. Nonetheless, we achieved a reduction of operating expenses, a modest expansion of our Adjusted EBITDA margin, and continued to generate a significant amount of cash from our operating activities. Looking ahead, the Telstar 12 VANTAGE satellite remains on schedule and we anticipate its launch toward the end of this year. Our industry-leading contractual backlog provides visibility into the stability of our future revenue and cash flow, and anticipated growing demand for satellite services positions us well to expand our activities going forward,” he added.
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