Telesat(US:TSAT)2023-03-29 18:27Financial Data and Key Metrics Changes - Telesat reported revenues of $759 million for the year 2022, with adjusted EBITDA of $568 million and cash from operations of $229 million, ending the year with $1.7 billion in cash on the balance sheet [7][10] - In Q4 2022, revenues increased by $19 million to $207 million compared to Q4 2021, while adjusted EBITDA decreased by $6 million to $139 million, resulting in an adjusted EBITDA margin of 67.2% compared to 77.1% in the same period last year [7][8] - The company experienced a foreign exchange gain of $72 million in Q4 2022, compared to a gain of $20 million in Q4 2021, primarily due to the stronger US dollar against the Canadian dollar [9][10] Business Line Data and Key Metrics Changes - Revenue growth in Q4 was driven by the completion of an equipment sale to DARPA and higher revenues from aero and maritime customers, partially offset by reduced revenues from a long-term agreement renewal with a North American DTH customer [8] - Operating expenses increased by $8 million to $80 million in Q4 2022, primarily due to higher equipment sales related to the DARPA program [8] Market Data and Key Metrics Changes - The company anticipates revenue and adjusted EBITDA declines in 2023, primarily due to residual headwinds from the DISH renewal on Anik F3 and an expected renewal with Bell for Nimiq 4 at a lower rate [5][10] - Telesat expects full-year revenues for 2023 to be between $690 million and $710 million, with adjusted EBITDA projected between $500 million and $550 million [10] Company Strategy and Development Direction - Telesat is focused on advancing the Lightspeed program, which is seen as a significant commercial opportunity despite delays in securing financing [5][16] - The company has authorized up to $200 million for debt repurchases if deemed beneficial, indicating a proactive approach to managing its capital structure [5][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for a well-engineered LEO constellation, citing ongoing discussions with commercial and government customers as reinforcing the strategic importance of Lightspeed [16][17] - The company remains optimistic about securing the necessary financing for Lightspeed, with over $4 billion in financing commitments already lined up [17][30] Other Important Information - Telesat has complied with all covenants in its credit agreement and has a leverage ratio of 6.17 times [11] - The company has received approximately $85 million in US C-band clearing proceeds to date, with expected future proceeds of approximately $260 million [10] Q&A Session Summary Question: Should expectations for SG&A be frozen until financing for Lightspeed is secured? - Management indicated that they are currently spending on OpEx for Lightspeed and are confident in moving forward with the program, with guidance reflecting ongoing investments [12][13] Question: What is the percentage mix of SG&A related to Lightspeed? - Management stated that they are confident in the business case for Lightspeed and that the incremental costs related to LEO are not significant [15] Question: What kind of equity partner is Telesat looking for regarding Lightspeed? - Management clarified that they are in discussions with potential equity investors, but no new updates were provided beyond previous statements [19] Question: What are the key dates for maintaining US spectrum authorizations? - Management expressed confidence in having the necessary regulatory rights when ready to move forward with Lightspeed, with ongoing regulatory activities at the FCC [20] Question: How does Telesat plan to address capital structure and debt maturities? - Management highlighted that they have a significant amount of cash on hand and are generating cash from operations, with plans to evaluate opportunities as they arise [41][42]