Telesat(US:TSAT)2022-05-07 13:51Financial Data and Key Metrics Changes - Telesat reported revenues of $186 million for Q1 2022, a decrease of $5 million compared to the same period in 2021 [14] - Adjusted EBITDA for the quarter was $146 million, down $6 million from the previous year, with an adjusted EBITDA margin of 78.4% compared to 79.8% in 2021 [14][15] - Operating expenses increased by $24 million to $64 million, primarily due to higher noncash share-based compensation and increased public company expenses [15][16] - Cash from operations was $43 million, with over $1.5 billion in cash on the balance sheet at the end of the quarter [14][22] Business Line Data and Key Metrics Changes - A key contract with DISH network for the Anik F3 satellite was partially renewed, with DISH renewing a little more than half the capacity at a lower rate [6][7] - A new contract was secured for the remaining capacity, aimed at broadband connectivity for the cruise market [7] - The mobility market showed increased service demand as it recovers from COVID-19 impacts [15] Market Data and Key Metrics Changes - The overall market for satellite services is experiencing stronger activity and demand compared to the previous year, with a stable pricing environment [8] - Capacity utilization rate improved to 84% at the end of the last quarter, although challenges remain in finding available capacity to meet demand [9][56] Company Strategy and Development Direction - Telesat is focused on advancing the Telesat Lightspeed program, with plans for 188 satellites and 10 in-orbit spares, while managing cost increases due to supply chain issues [11][12] - The company is actively working with export credit agencies to secure financing for the Lightspeed program, aiming for clarity by the end of June [12][28] - Telesat is optimistic about the potential for growth in the enterprise and government markets, particularly with the Lightspeed initiative [45][88] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting the 2022 guidance of $720 million to $740 million in revenues and $525 million to $545 million in adjusted EBITDA [20][62] - The company noted that delays in new satellite constellations could create opportunities for GEO assets to remain fully utilized, potentially improving pricing dynamics [66] - Management highlighted an uptick in demand in the aero and maritime markets as COVID-19 restrictions ease, with bandwidth requirements exceeding pre-pandemic levels [80][81] Other Important Information - Telesat repurchased $60 million in unsecured notes, which is expected to be accretive to the company [10][17] - The company has approximately $1 billion in cash held in unrestricted subsidiaries and $200 million available under a revolving credit facility [22] Q&A Session Summary Question: What are the additional steps needed for Lightspeed funding? - Management indicated that discussions with export credit agencies are the missing piece for closing financing, with a focus on finalizing these discussions by the end of June [26][28] Question: How much is Anik F3 generating in revenue and EBITDA now? - Management refrained from providing specific run rate figures for Anik F3 but expressed confidence in meeting guidance based on recent contract renewals [31][32] Question: What is the outlook for the GEO business given delays in LEO constellations? - Management noted that delays in new constellations could benefit GEO operators by maintaining higher asset utilization and potentially improving pricing dynamics [66] Question: Can you elaborate on the increase in utilization from 80% to 84%? - The increase was attributed to the removal of the Anik F1R satellite from utilization calculations as it was put into inclined operations, which had a lower utilization rate [56][55] Question: What is the expected ramp-up for the $750 million LEO backlog? - Management indicated that once financing is secured and full-scale production begins, they expect to sign more contracts, increasing the backlog significantly [58] Question: How does the pricing compare between broadcast and enterprise use cases? - Management stated that pricing dynamics vary significantly between different contracts and markets, making it difficult to generalize [75] Question: What is the current state of demand in the aero and maritime markets? - Management noted that demand in both sectors has rebounded significantly, with bandwidth requirements exceeding pre-pandemic levels [80][81]