Telesat Reports Results for the Quarter Ended March 31, 2023

Ottawa, Canada, May 11, 2023 - Satellite operator Telesat (NASDAQ and TSX: TSAT), today announced its financial results for the three month period ended March 31, 2023. All amounts are in Canadian dollars and reported under International Financial Reporting Standards (“IFRS”) unless otherwise noted.

“I am pleased with our first quarter results and the steps we are taking to strengthen our business and execute on our long term plan,” commented Dan Goldberg, Telesat’s President and CEO. “Our financial results in the quarter were consistent with our expectations and we continue to generate strong cash flow, ending the first quarter with $1.7 billion in cash. Through our operational discipline and focus we have been able to deliver industry-leading Adjusted EBITDA margins1 and maintain high capacity utilization and a substantial contractual backlog, closing the quarter with $1.7 billion. We reaffirm at this time all of our previously issued financial guidance for 2023 and note also that, subsequent to quarter end, we took steps to strengthen our financial position by repurchasing a portion of our debt.”

Goldberg added: “We continue to progress our discussions with our suppliers and financing sources for Telesat Lightspeed, our revolutionary planned Low Earth Orbit satellite constellation. We strongly believe Telesat Lightspeed represents a transformative growth opportunity for the company and a highly compelling value proposition for enterprise and government customers.”

For the quarter ended March 31, 2023, Telesat reported consolidated revenue of $183 million, a decrease of 1% ($2 million) compared to the same period in 2022. When adjusted for changes in foreign exchange rates, revenue declined 5% ($9 million) compared to 2022. The decrease was mainly due to a reduction of revenue from one of Telesat’s North American DTH customers, partially offset by higher equipment sales to Canadian government customers combined with increased services provided to aero and maritime customers.

Operating expenses for the quarter were $53 million, a decrease of $11 million from 2022. When adjusted for changes in foreign exchange rates, operating expenses decreased by $12 million compared to 2022. The decrease was primarily due to higher non-cash share-based compensation recognized in the three months ended March 31, 2022, related to restricted share units issued in the second quarter of 2021.

Adjusted EBITDA1 for the quarter was $139 million, a decrease of 5% ($7 million) or, when adjusted for foreign exchange rates, a decrease of 8% ($12 million). The Adjusted EBITDA margin1 was 75.7%, compared to 78.4% in the same period in 2022.

For the quarter ended March 31, 2023, Telesat’s net income was $29 million compared to net income of $61 million for the same period in the prior year. The negative variation of $32 million was primarily due to the gain on extinguishment of debt in the first quarter of 2022, combined with higher interest expense and lower foreign exchange gains, partially offset by higher interest income.

2023 Preliminary Financial Outlook

  • Telesat continues to expect its full year 2023 revenues (assuming a foreign exchange rate of US$1 = C$1.35) to be between $690 million and $710 million.
  • Telesat continues to expect its Adjusted EBITDA1 (assuming a foreign exchange rate of US$1 =C$1.35) to be between $500 million and $515 million in 2023.
  • For 2023, Telesat continues to expect its cash flows used in investing activities to be in the range of $40 million to $70 million. Once Telesat has finalized arrangements around the construction and financing of its Telesat Lightspeed program, it will provide a further update on the anticipated capital expenditures for the year.

Business Highlights

  • At March 31, 2023:
    • Telesat had contracted backlog2 for future services of approximately $1.7 billion (excluding contractual backlog associated with Telesat Lightspeed).
    • Fleet utilization was 88%.
       
  • Subsequent to quarter end and up to May 10, 2023, Telesat repurchased debt with an aggregate principal amount of US$103.0 million by way of open market purchases at an aggregate cost of US$56.0 million.

Telesat’s quarterly report on Form 6-K for the quarter ended March 31, 2023, has been filed with the United States Securities and Exchange Commission (“SEC”) and the Canadian securities regulatory authorities, and may be accessed on the SEC’s website at www.sec.gov and on the System for Electronic Document Analysis and Retrieval (“SEDAR”) website at www.sedar.com.