Telesat (NASDAQ and TSX: TSAT), one of the world’s largest and most
innovative satellite operators, today announced its financial
results for the three- month and one-year periods ended December
31, 2022. All amounts are in Canadian dollars and reported under
International Financial Reporting Standards (“IFRS”) unless
otherwise noted.
“I am pleased to report that we outperformed our
2022 financial guidance, including the increased and updated
guidance we provided when we released our second quarter results in
August last year,” commented Dan Goldberg, Telesat’s President and
CEO. “Telesat continues to generate strong cash flow, ending the
year with $1.7 billion in cash, deliver industry-leading Adjusted
EBITDA margins1, and maintain high capacity utilization and a
substantial contractual backlog, closing the year at $1.8
billion.”
Goldberg added: “Last year we progressed our
discussions with our suppliers and financing sources for Telesat
Lightspeed, our revolutionary planned Low Earth Orbit satellite
constellation. Although we had planned to complete our financing
arrangements around the end of last year, it has taken longer than
anticipated and we now believe that we will have greater clarity on
those arrangements in the near term. Telesat Lightspeed represents
a transformative growth opportunity for the company and a highly
compelling value proposition for enterprise and government
customers.”
For the year ended December 31, 2022, Telesat
reported consolidated revenue of $759 million, stable compared to
the same period in 2021. When adjusted for changes in foreign
exchange rates, revenue declined 2% ($15 million) compared to 2021.
The slight reduction in revenue is primarily due to a reduction on
the renewal of a long term agreement with a North American DTH
customer and, to a lesser extent, revenue from short term services
provided to another satellite operator in 2021 that did not recur
in 2022. This was offset by higher revenue from aero and maritime
customers as well as the completion of an equipment sale in 2022 to
the U.S. Defense Advanced Research Projects Agency (“DARPA”)
combined with higher consulting revenue arising from DARPA and a
NASA project. The DARPA and NASA projects both relate to U.S.
government LEO programs.
Operating expenses for the full year 2022 were
$259 million, an increase of $22 million from 2021. When adjusted
for changes in foreign exchange rates, operating expenses increased
by $20 million compared to 2021. The increase was primarily due to
higher equipment sales relating to the DARPA program and higher
expenses associated with becoming a public company. This was
partially offset by lower non-cash share-based compensation and
bonus expense relative to 2021.
Adjusted EBITDA1 for the full year 2022 was $568
million, a decrease of 5% ($32 million) or, when adjusted for
foreign exchange rates, a decrease of 8% ($46 million). The
Adjusted EBITDA margin1 was 74.8%, compared to 79.2% in 2021.
For the year ended December 31, 2022, Telesat’s
net loss was $80 million compared to net income of $155 million for
the prior year. The negative variation of $235 million was
principally due to the negative non-cash foreign exchange impact on
the conversion of our U.S. dollar denominated debt combined with
the recognition of Phase I accelerated clearing payments for the
repurposing of C-band spectrum in 2021. This was partially offset
by the gain on the extinguishment of debt associated with our debt
repurchases in 2022.
For the quarter ended December 31, 2022, Telesat
reported consolidated revenue of $207 million, an increase of 10%
($19 million) compared to the same period in 2021. When adjusted
for changes in foreign exchange rates, revenue increased 6% ($11
million) compared to 2021. The revenue increase was primarily due
to the completion of an equipment sale in 2022 to DARPA and higher
revenue from aero and maritime customers. This was partially offset
by a reduction in revenue upon renewal of a long term agreement
with a North American DTH customer.
Operating expenses for the quarter were $80
million, an increase of 12% ($8 million) compared to the same
period in 2021. When adjusted for changes in foreign exchange
rates, operating expenses increased by 10% ($7 million) compared to
2021. The increase was primarily due to higher equipment sales
related to the DARPA program, partly offset by lower non-cash
share-based compensation and bonus expense relative to the same
period in 2021.
Adjusted EBITDA1 for the quarter was $139
million, a decrease of 4% ($6 million) or, when adjusted for
foreign exchange rates, a decrease of 9% ($12 million). The
Adjusted EBITDA margin1 was 67.2%, compared to 77.1% in the same
period in 2021.
Telesat net income for the quarter was $92
million, compared to net income of $113 million for the same period
in 2021. The negative variation of $21 million was principally due
to the recognition of Phase I accelerated clearing payments for the
repurposing of C-band spectrum in 2021, partially offset by a
positive non-cash foreign exchange impact on the conversion of our
U.S. dollar denominated debt as well as lower income tax
expense.
2023 Preliminary Financial
Outlook
- Telesat expects 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 expects 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 expects 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 December 31, 2022:
- Telesat had contracted backlog2 for future services of
approximately $1.8 billion (excluding contractual backlog
associated with Telesat Lightspeed)
- Fleet utilization was 89%.
Telesat’s annual report on Form 20-F for the
year ended December 31, 2022, 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.
Conference Call
Telesat has scheduled a conference call on
Wednesday, March 29, 2023, at 10:30 a.m. ET to discuss its
financial results for the three months and one year periods ended
December 31, 2022. The call will be hosted by Daniel S. Goldberg,
President and Chief Executive Officer, and Andrew Browne, Chief
Financial Officer, of Telesat.
Dial-in Instructions:
The toll-free dial-in number for the
teleconference is +1 800 806 5484. Callers outside of North America
should dial +1 416 340 2217. The access code is 8861182 followed by
the number sign (#). Please allow at least 15 minutes prior to the
scheduled start time to connect to the teleconference. In the event
of technical issues, please dial *0 and advise the conference call
operator of the company name (“Telesat”) and the name of the
moderator (Michael Bolitho).
Webcast:
The conference call can also be accessed, as a listen in only,
at https://edge.media-server.com/mmc/p/o4qyzpii A replay of the
webcast will be archived on Telesat’s website under the tab
“Investors”.
Dial-in Audio Replay:
A replay of the teleconference will be available
one hour after the end of the call on March 29, 2023 until 11:59
p.m. ET on April 12, 2023. To access the replay, please call +1 800
408 3053. Callers from outside North America should dial +1 905 694
9451. The access code is 2726574 followed by the number sign
(#).
About Telesat
Backed by a legacy of engineering excellence,
reliability and industry-leading customer service, Telesat (NASDAQ
and TSX: TSAT) is one of the largest and most successful global
satellite operators. Telesat works collaboratively with its
customers to deliver critical connectivity solutions that tackle
the world’s most complex communications challenges, providing
powerful advantages that improve their operations and drive
profitable growth.
Continuously innovating to meet the connectivity
demands of the future, Telesat Lightspeed, the company’s Low Earth
Orbit (“LEO”) satellite network, will be the first and only LEO
network optimized to meet the rigorous requirements of telecom,
government, maritime and aeronautical customers. Telesat Lightspeed
will redefine global satellite connectivity with ubiquitous,
affordable, high-capacity links with fibre-like speeds. For updates
on Telesat, follow us on @Telesat on Twitter, LinkedIn, or visit
www.telesat.com.
Contacts: |
|
Investor Relations |
|
|
|
Hugh Harley |
Michael Bolitho |
+1 613 748 8424 |
+1 613 748 8828 |
ir@telesat.com |
ir@telesat.com |
Forward-Looking Statements Safe
Harbor
This news release contains statements that are
not based on historical fact, including financial outlook for 2023
and the growth opportunities and expected timing around the
financing of Telesat Lightspeed, and are “forward-looking
statements’’ within the meaning of the Private Securities
Litigation Reform Act of 1995 and Canadian securities laws. When
used herein, statements which are not historical in nature, or
which contain the words “will,” “expect,” “planned,” “believe”,
“opportunity”, ”finalized” or similar expressions, are
forward-looking statements. Actual results may differ materially
from the expectations expressed or implied in the forward-looking
statements as a result of known and unknown risks and
uncertainties. All statements made in this press release are made
only as of the date set forth at the beginning of this release.
Telesat Corporation undertakes no obligation to update the
information made in this release in the event facts or
circumstances subsequently change after the date of this press
release.
These forward-looking statements are based on
Telesat Corporation’s current expectations and are subject to a
number of risks, uncertainties and assumptions. These statements
are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond Telesat
Corporation’s control, are difficult to predict, and could cause
actual results to differ materially from those expressed or
forecasted in the forward-looking statements. Known risks and
uncertainties include but are not limited to: inflation and rising
interest rates, risks associated with operating satellites and
providing satellite services, including satellite construction or
launch delays, launch failures, in-orbit failures or impaired
satellite performance; the impact of COVID-19 on Telesat
Corporation’s business and the economic environment; the ability to
deploy successfully an advanced global LEO satellite constellation,
and the timing of any such deployment; the availability of
government and/or other funding for the LEO satellite
constellation; the receipt of additional proceeds in relation to
the re-allocation of C-band spectrum; volatility in exchange rates;
the ability to expand Telesat Corporation’s existing satellite
utilization; and risks associated with domestic and foreign
government regulation. The foregoing list of important factors is
not exhaustive. Investors should review the other risk factors
discussed in Telesat Corporation’s annual report on Form 20-F for
the year ended December 31, 2022, that was filed on March 29, 2023,
with the United States Securities and Exchange Commission (“SEC”)
and the Canadian securities regulatory authorities at the System
for Electronic Document Analysis and Retrieval (“SEDAR”), and may
be accessed on the SEC’s website at www.sec.gov and SEDAR’s website
at www.sedar.com.
Telesat
Corporation |
Consolidated Statements of Income (Loss) |
For the
periods ended December 31, |
|
|
|
Three months |
|
Twelve months |
(in
thousands of Canadian dollars, except per share amounts) |
|
|
2022 |
|
2021(4) |
|
2022 |
|
2021(4) |
Revenue |
|
|
$ |
206,684 |
|
|
$ |
187,497 |
|
|
$ |
759,169 |
|
|
$ |
758,212 |
|
Operating expenses |
|
|
|
(79,961 |
) |
|
|
(71,526 |
) |
|
|
(258,989 |
) |
|
|
(236,949 |
) |
Depreciation |
|
|
|
(46,691 |
) |
|
|
(50,370 |
) |
|
|
(188,755 |
) |
|
|
(203,772 |
) |
Amortization |
|
|
|
(3,775 |
) |
|
|
(3,932 |
) |
|
|
(14,979 |
) |
|
|
(15,983 |
) |
Other operating gains (losses), net |
|
|
|
7 |
|
|
|
108,392 |
|
|
|
7 |
|
|
|
107,615 |
|
Operating income |
|
|
|
76,264 |
|
|
|
170,061 |
|
|
|
296,453 |
|
|
|
409,123 |
|
Interest expense |
|
|
|
(67,304 |
) |
|
|
(48,841 |
) |
|
|
(221,756 |
) |
|
|
(187,994 |
) |
Gain on extinguishment of debt |
|
|
|
— |
|
|
|
— |
|
|
|
106,916 |
|
|
|
— |
|
Interest and other income |
|
|
|
12,915 |
|
|
|
632 |
|
|
|
23,476 |
|
|
|
3,418 |
|
Gain (loss) on changes in fair value of financial instruments |
|
|
|
— |
|
|
|
1,673 |
|
|
|
4,314 |
|
|
|
(18,684 |
) |
Gain (loss) on foreign exchange |
|
|
|
72,251 |
|
|
|
20,196 |
|
|
|
(239,591 |
) |
|
|
27,539 |
|
Income (loss) before income taxes |
|
|
|
94,126 |
|
|
|
143,721 |
|
|
|
(30,188 |
) |
|
|
233,402 |
|
Tax (expense) recovery |
|
|
|
(1,786 |
) |
|
|
(30,786 |
) |
|
|
(49,929 |
) |
|
|
(78,377 |
) |
Net income (loss) |
|
|
$ |
92,340 |
|
|
$ |
112,935 |
|
|
$ |
(80,117 |
) |
|
$ |
155,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telesat Corporation shareholders |
|
|
$ |
23,121 |
|
|
$ |
43,100 |
|
|
$ |
(23,396 |
) |
|
$ |
85,190 |
|
Non-controlling interest |
|
|
|
69,219 |
|
|
|
69,835 |
|
|
|
(56,721 |
) |
|
|
69,835 |
|
|
|
|
$ |
92,340 |
|
|
$ |
112,935 |
|
|
$ |
(80,117 |
) |
|
$ |
155,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share attributable to Telesat
Corporation shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
1.83 |
|
|
$ |
1.35 |
|
|
$ |
(1.90 |
) |
|
$ |
1.89 |
|
Diluted |
|
|
$ |
1.76 |
|
|
$ |
1.28 |
|
|
$ |
(1.90 |
) |
|
$ |
1.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Weighted Average Common Shares
Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
12,611,700 |
|
|
|
32,007,083 |
|
|
|
12,311,264 |
|
|
|
45,168,650 |
|
Diluted |
|
|
|
14,610,705 |
|
|
|
32,705,326 |
|
|
|
12,311,264 |
|
|
|
46,620,495 |
|
Telesat
Corporation |
Consolidated Balance Sheets |
|
|
|
December 31, |
|
December 31, |
(in
thousands of Canadian dollars) |
|
|
2022 |
|
2021(4) |
Assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
$ |
1,677,792 |
|
|
$ |
1,449,593 |
|
Trade and other
receivables |
|
|
|
41,248 |
|
|
|
122,698 |
|
Other current financial
assets |
|
|
|
515 |
|
|
|
861 |
|
Current income tax
recoverable |
|
|
|
18,409 |
|
|
|
3,219 |
|
Prepaid expenses and other
current assets |
|
|
|
50,324 |
|
|
|
41,064 |
|
Total current
assets |
|
|
|
1,788,288 |
|
|
|
1,617,435 |
|
Satellites, property and other
equipment |
|
|
|
1,364,084 |
|
|
|
1,429,688 |
|
Deferred tax assets |
|
|
|
49,984 |
|
|
|
46,187 |
|
Other long-term financial
assets |
|
|
|
10,476 |
|
|
|
16,348 |
|
Long-term income tax
recoverable |
|
|
|
15,303 |
|
|
|
12,277 |
|
Other long-term assets |
|
|
|
47,977 |
|
|
|
31,254 |
|
Intangible assets |
|
|
|
756,878 |
|
|
|
762,659 |
|
Goodwill |
|
|
|
2,446,603 |
|
|
|
2,446,603 |
|
Total
assets |
|
|
$ |
6,479,593 |
|
|
$ |
6,362,451 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
$ |
43,555 |
|
|
$ |
54,628 |
|
Other current financial
liabilities |
|
|
|
48,397 |
|
|
|
36,647 |
|
Income taxes payable |
|
|
|
3,476 |
|
|
|
5,622 |
|
Other current liabilities |
|
|
|
75,968 |
|
|
|
85,058 |
|
Current indebtedness |
|
|
|
— |
|
|
|
— |
|
Total current
liabilities |
|
|
|
171,396 |
|
|
|
181,955 |
|
Long-term indebtedness |
|
|
|
3,850,081 |
|
|
|
3,792,597 |
|
Deferred tax liabilities |
|
|
|
275,696 |
|
|
|
296,318 |
|
Other long-term financial
liabilities |
|
|
|
19,663 |
|
|
|
23,835 |
|
Other long-term
liabilities |
|
|
|
327,055 |
|
|
|
371,453 |
|
Total
liabilities |
|
|
|
4,643,891 |
|
|
|
4,666,158 |
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Equity |
|
|
|
|
|
|
|
|
|
Share capital |
|
|
|
46,554 |
|
|
|
42,841 |
|
Accumulated earnings |
|
|
|
355,202 |
|
|
|
350,029 |
|
Reserves |
|
|
|
78,609 |
|
|
|
22,804 |
|
Total Telesat
Corporation shareholders’ equity |
|
|
|
480,365 |
|
|
|
415,674 |
|
Non-controlling interest |
|
|
|
1,355,337 |
|
|
|
1,280,619 |
|
Total shareholders’
equity |
|
|
|
1,835,702 |
|
|
|
1,696,293 |
|
Total liabilities and
shareholders’ equity |
|
|
$ |
6,479,593 |
|
|
$ |
6,362,451 |
|
Telesat
Corporation |
Consolidated Statements of Cash Flows |
For the
years ended December 31 |
(in
thousands of Canadian dollars) |
|
|
2022 |
|
2021(4) |
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
$ |
(80,117 |
) |
|
$ |
155,025 |
|
Adjustments to reconcile net
income (loss) to cash flows from operating activities |
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
188,755 |
|
|
|
203,772 |
|
Amortization |
|
|
|
14,979 |
|
|
|
15,983 |
|
Tax expense (recovery) |
|
|
|
49,929 |
|
|
|
78,377 |
|
Interest expense |
|
|
|
221,756 |
|
|
|
187,994 |
|
Interest income |
|
|
|
(23,564 |
) |
|
|
(4,392 |
) |
(Gain) loss on foreign exchange |
|
|
|
239,591 |
|
|
|
(27,539 |
) |
(Gain) loss on changes in fair value of financial instruments |
|
|
|
(4,314 |
) |
|
|
18,684 |
|
Share-based compensation |
|
|
|
67,428 |
|
|
|
73,723 |
|
(Gain) loss on disposal of assets |
|
|
|
(7 |
) |
|
|
848 |
|
Gain on extinguishment of debt |
|
|
|
(106,916 |
) |
|
|
— |
|
Deferred revenue amortization |
|
|
|
(77,075 |
) |
|
|
(64,998 |
) |
Pension expense |
|
|
|
7,587 |
|
|
|
8,133 |
|
C–band clearing proceeds |
|
|
|
— |
|
|
|
(42,860 |
) |
Other |
|
|
|
(1,184 |
) |
|
|
(1,953 |
) |
Income taxes paid, net of
income taxes received |
|
|
|
(98,143 |
) |
|
|
(94,242 |
) |
Interest paid, net of interest
received |
|
|
|
(163,113 |
) |
|
|
(154,433 |
) |
Operating assets and
liabilities |
|
|
|
(6,744 |
) |
|
|
(58,625 |
) |
Net cash from
operating activities |
|
|
|
228,848 |
|
|
|
293,497 |
|
Cash flows (used in)
generated from investing activities |
|
|
|
|
|
|
|
|
|
Satellite programs |
|
|
|
(31,805 |
) |
|
|
(279,941 |
) |
Purchase of property and other
equipment |
|
|
|
(32,701 |
) |
|
|
(31,725 |
) |
Purchase of intangible
assets |
|
|
|
(71 |
) |
|
|
(1,162 |
) |
C-band clearing proceeds |
|
|
|
64,651 |
|
|
|
42,860 |
|
Net cash (used in)
generated from investing activities |
|
|
|
74 |
|
|
|
(269,968 |
) |
Cash flows (used in)
generated from financing activities |
|
|
|
|
|
|
|
|
|
Proceeds from
indebtedness |
|
|
|
— |
|
|
|
619,900 |
|
Payment of debt issue
costs |
|
|
|
— |
|
|
|
(6,834 |
) |
Repayment of indebtedness |
|
|
|
(97,234 |
) |
|
|
— |
|
Payments of principal on lease
liabilities |
|
|
|
(2,498 |
) |
|
|
(2,178 |
) |
Satellite performance
incentive payments |
|
|
|
(6,667 |
) |
|
|
(6,914 |
) |
Proceeds from exercise of
stock options |
|
|
|
— |
|
|
|
16 |
|
Government grant received |
|
|
|
22,324 |
|
|
|
— |
|
Initial costs from
transaction |
|
|
|
— |
|
|
|
1,260 |
|
Final Transaction adjustment
payment |
|
|
|
(20,790 |
) |
|
|
— |
|
Dividends on Director Voting
Preferred shares |
|
|
|
— |
|
|
|
(10 |
) |
Net cash (used in)
generated from financing activities |
|
|
|
(104,865 |
) |
|
|
605,240 |
|
Effect of changes in exchange
rates on cash and cash equivalents |
|
|
|
104,142 |
|
|
|
2,446 |
|
Changes in cash and cash
equivalents |
|
|
|
228,199 |
|
|
|
631,215 |
|
Cash and cash equivalents,
beginning of year |
|
|
|
1,449,593 |
|
|
|
818,378 |
|
Cash and cash
equivalents, end of year |
|
|
$ |
1,677,792 |
|
|
$ |
1,449,593 |
|
Telesat’s
Adjusted EBITDA
margin(1): |
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
December 31, |
(in
thousands of Canadian dollars) (unaudited) |
|
2022 |
|
2021(4) |
|
2022 |
|
2021(4) |
Net income (loss) |
|
$ |
92,340 |
|
|
$ |
112,935 |
|
|
$ |
(80,117 |
) |
|
$ |
155,025 |
|
Tax expense (recovery) |
|
|
1,786 |
|
|
|
30,786 |
|
|
|
49,929 |
|
|
|
78,377 |
|
(Gain) loss on changes in fair
value of financial instruments |
|
|
— |
|
|
|
(1,673 |
) |
|
|
(4,314 |
) |
|
|
18,684 |
|
(Gain) loss on foreign
exchange |
|
|
(72,251 |
) |
|
|
(20,196 |
) |
|
|
239,591 |
|
|
|
(27,539 |
) |
Interest and other income |
|
|
(12,915 |
) |
|
|
(632 |
) |
|
|
(23,476 |
) |
|
|
(3,418 |
) |
Interest expense |
|
|
67,304 |
|
|
|
48,841 |
|
|
|
221,756 |
|
|
|
187,994 |
|
Gain on extinguishment of
debt |
|
|
— |
|
|
|
— |
|
|
|
(106,916 |
) |
|
|
— |
|
Depreciation |
|
|
46,691 |
|
|
|
50,370 |
|
|
|
188,755 |
|
|
|
203,772 |
|
Amortization |
|
|
3,775 |
|
|
|
3,932 |
|
|
|
14,979 |
|
|
|
15,983 |
|
Other operating (gains)
losses, net |
|
|
(7 |
) |
|
|
(108,392 |
) |
|
|
(7 |
) |
|
|
(107,615 |
) |
Non-recurring compensation
expenses(3) |
|
|
303 |
|
|
|
5,049 |
|
|
|
305 |
|
|
|
5,423 |
|
Non-cash expense related to
share-based compensation |
|
|
11,968 |
|
|
|
23,546 |
|
|
|
67,428 |
|
|
|
73,723 |
|
Adjusted
EBITDA |
|
$ |
138,994 |
|
|
$ |
144,566 |
|
|
$ |
567,913 |
|
|
$ |
600,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
206,684 |
|
|
$ |
187,497 |
|
|
$ |
759,169 |
|
|
$ |
758,212 |
|
Adjusted EBITDA Margin |
|
|
67.2 |
% |
|
|
77.1 |
% |
|
|
74.8 |
% |
|
|
79.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End Notes
1 The common definition of
EBITDA is “Earnings Before Interest, Taxes, Depreciation and
Amortization.” In evaluating financial performance, Telesat uses
revenue and deducts certain operating expenses (including
share-based compensation expense and unusual and non-recurring
items, including restructuring related expenses) to obtain
operating income before interest expense, taxes, depreciation and
amortization (“Adjusted EBITDA”) and the Adjusted EBITDA margin
(defined as the ratio of Adjusted EBITDA to revenue) as measures of
Telesat’s operating performance.
Adjusted EBITDA allows Telesat and investors to
compare Telesat’s operating results with that of competitors
exclusive of depreciation and amortization, interest and investment
income, interest expense, taxes and certain other expenses.
Financial results of competitors in the satellite services industry
have significant variations that can result from timing of capital
expenditures, the amount of intangible assets recorded, the
differences in assets’ lives, the timing and amount of investments,
the effects of other income (expense), and unusual and
non-recurring items. The use of Adjusted EBITDA assists Telesat and
investors to compare operating results exclusive of these items.
Competitors in the satellite services industry have significantly
different capital structures. Telesat believes the use of Adjusted
EBITDA improves comparability of performance by excluding interest
expense.
Telesat believes the use of Adjusted EBITDA and
the Adjusted EBITDA margin along with IFRS financial measures
enhances the understanding of Telesat’s operating results and is
useful to Telesat and investors in comparing performance with
competitors, estimating enterprise value and making investment
decisions. Adjusted EBITDA as used here may not be the same as
similarly titled measures reported by competitors. Adjusted EBITDA
should be used in conjunction with IFRS financial measures and is
not presented as a substitute for cash flows from operations as a
measure of Telesat’s liquidity or as a substitute for net income as
an indicator of Telesat’s operating performance.
2 Remaining performance
obligations, which Telesat refers to as contracted revenue backlog
(‘‘backlog’’), represents Telesat’s expected future revenue from
existing service contracts (without discounting for present value)
including any deferred revenue that Telesat will recognize in the
future in respect of cash already received. The calculation of the
backlog reflects the revenue recognition policies adopted under
IFRS 15. The majority of Telesat’s contracted revenue backlog is
generated from contractual agreements for satellite capacity.
3 Includes severance payments and special
compensation and benefits for executives and employees and one-time
bonus as a result of the close of the Transaction.
4 2021 balances were adjusted
to take into account the retroactive impact of the change in
accounting policy associated with the capitalization of software as
a service arrangements. In addition, a formal valuation of
restricted share units in the fourth quarter of 2021 resulted in an
increase in compensation and employee benefits of $6.9 million and
$9.5 million in the second and third quarter of 2021, respectively,
with corresponding decrease of $16.4 million in the fourth quarter
of 2021. For additional details, refer to Note 3 and Note 26 of the
financial statements included in the Telesat’s Form 20-F for the
year ended December 31, 2022, which has been filed with the SEC and
at the SEDAR, and may be accessed on the SEC’s website at
www.sec.gov and SEDAR’s website at www.sedar.com.
Telesat (NASDAQ:TSAT)
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Telesat (NASDAQ:TSAT)
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