- Earnings call transcript Q3 2022

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Operator

Good morning, ladies and gentlemen. Welcome to the conference call to report the third quarter 2022 financial results for Telesat.

Our speakers today will be Dan Goldberg, President and Chief Executive Officer of Telesat; and Andrew Browne, Chief Financial Officer of Telesat. I would now like to turn the meeting over to Mr. Michael Bolitho, Director of Treasury and Risk Management. Mr. ahead, go Please Bolitho.

Michael Bolitho

good Form morning, and X-K and quarterly on filed report on with morning. you, we This our SEDAR. Thank the SEC

risks and may today Telesat's forward-looking results statements remarks may result forward-looking and the There Our of uncertainties. a known contain contemplated by actual risks materially differ are results as from unknown the statements. that

statements. Telesat's assumes For a revise I SEC, reports Telesat no filed call Dan to quarterly now over these discussion Officer. of and Goldberg, will forward-looking annual known the turn Telesat's with and risks, Chief or responsibility seek update to the Executive President

Daniel Goldberg

of X% like that approximately an more represents of evaluate end I'm expected anticipated the to to the order service, has We noted and pricing fX provide the previously reduced could to from third-party that satellite and slightly who be we versus to the Okay. anik our was to our with year. extend we them we speak in year our satellites, XXXX. the questions. numbers even year. stable roughly that we working to This other feels revenue the to and the we'll results environment tick fX pleased much Thanks, utilization hand expect line morning, continuity developed our on to XXXX that's with closely open anomaly services then satellite include team, the continue this total range our say be and have satellite C-band another everyone. expectations, an up offer disclosed now detail, anik on revenue glove give months. support and coming Andrew, quarter. our absent to to on perspective, of thoughts that anik adjusted satellite, at on We what in last to fX. working see and next finding update one capacity fX to co-located quarter the call our in some repositioned to are hand plans came continue and very with of will provided customers I noted Michael. a continuity demand a the we company. the we reduces implement making with The its expected guidance third up antennas on Telesat through it of to existing and for overall the using then and by plans outset gave in morning, our for revenue pleased that exceed in QX business. the with an satellite customers on in customers impact lifetime These the communicating service in from also purchasing mitigate We of revenue from operating our station-kept and service and and measures pretty I'll to Good be relying I'll EBITDA share to Inorbit over operator adverse ways that anik changes and

with anik to of fX. some additional team, combined and anticipate important requirements, hard over everyone of for associated We'll are revenue of continuity expenditures some there in things do provide leasing as on anik with investments now the the retain XX% all our although update capacity we provide works the the recognize occur as far efforts expenditures to other ground year, we the of originally customers, we'll our planned, infrastructure. customer and third-party next making a other Assuming release Telesat purchasing of when that want as further I the we QX to numbers, satellite these the fX third-party and services applaud partners well expected supported operating capital as thus associated from

have of sense sources the Telesat of end better financing with unrestricted and be program expected call, where the Lightspeed. stood financing on discussions addition, at investments. in to government this our increased a that cover be securing of around and say call, On the to ECA would we We last our Turning We remain financing the to our pleased year. we made had connection grow gives opportunity last financing to subsidiary noted the business. level we the to us would this the ECA of we were and Canada extremely about I we've bullish tangible Quebec Lightspeed that financing. the sustained to that the that with I'm Lightspeed cost Since engagement to lenders in regular and lenders contemplated additional and progress subordinate seek as certain the mentioned with and finalize the have Telesat in

$X a design over the and in arrangements having in over at in our various the million partners constellation and financing with Canada. discussions there opportunity. is federal support robust will sources advanced Lightspeed successful represents government And and contractual disruptive provincial highly to no and we're compelling although levels a conclusion. $XXX have billion come investment here assurance of a that strong the financing We backlog

commencing is the the program. full-scale focus the completing and overwhelming construction on Our financing of

first last million and had notes debt. our Board in noted additional face to of that further that USD of to an XXX half repurchase X.X% I USD value on in face earnings the unsecured us authorized repurchased Telesat our year, call million this our up we XXX value Lastly,

over the trading think we why we've we As it doing and given closely why last decided we on I'll hold monitor as everything required, of additional the XXX to which repurchases that's and make. addressing for repurchases past is although debt, company hand financing, the right continue And that updates going provide debt on the how to to have. at an the might we value, then believe else trading having additional off Andrew debt is makes to million we're discussions to company. questions so forward to have and Lightspeed to look sense we've further now, previously, repurchase including in repurchased With said you below USD up any on is we any continue We'll the our securing on that, fair authority quarter.

Andrew Browne

million, you, end. Telesat from release $XXX at the Thank XXXX, on this the now with billion EBITDA everyone. third million, revenues press cash focus $X.X Dan. filings. Good quarter and of on of I like generated would morning's In of $XX operations to morning, highlights quarter of from of million $XXX sheet cash adjusted reported balance and

the to XXXX. on EBITDA decrease of a a $X million $X expenses rates, in $XXX period negative a decreased for on EBITDA Interest rate services impact recur and impact did North program. $X decreased increase due the U.S. of decreased The by increased by renewal by the by revenues in in adjusted higher revenues revenues at ages. was not The in million Term long-term non-cash of to XXXX $XXX was same project by $XX third $X on partially in due was another was from expenses, exchange The compared U.S. same the to by had $XX communication to in compared third positive This operating the in a offset EBITDA customers million customer revenue was impact mobility Loan exchange quarter $XX reduction XXXX, offset adjusted expenses $XX million decreased on million by changes million share-based decreased quarter XXXX of the revenues, interest million. offset to XX.X% B to positive U.S. higher with $X combined repurchase dollar short-term in was which rates operator debt. of XXXX. operating of revenues increase a XXXX, million and million facility, million decrease the conversion Operating in asset from to adjusted by For by to the and the period adjusted an due and expenses impact compensation, compared impact lower to margin unsecured million million. the for by with But foreign XXXX senior expense compared million. XXXX. primarily and decreased agreement of primarily adjusted partially a to notes the partially on the This XX% EBITDA. $X to in to satellite exchange XXXX. The American foreign $XX of XXXX, DTH provided changes services dollar-denominated XXXX. and Between Operating

quarter during loss million. on foreign $XX.X dollar-denominated the principal the compared X, as with been the third repurchased XXXX, spot was our loss to a gain X represent of and we in a June These impact on quarter with million. retired recorded of of compared $XXX first to loss interest of notes the Turkey million the of dollar third result in the CAD XXXX, savings September resulting Just an of notes XXX mainly also in rate a $XX stronger to ended repurchases to million. USD the for annual months of we dollar, U.S. US amount X the These months the resulted Canadian in of debt. of XX, XXX unfavorable a the million quarter approximately translation the as have and note, exchange discussed In

of million compared compared million loss third prior in loss loss exchange net net last was The to period the variation same principally foreign Our the $XX a to $XXX the million due was higher XXXX for year. $XXX quarter of to of a non-cash year.

XX investing $XX capital to million $XX have remaining million. virtually lower million months further lately. proceeds of inflows all in X are made expect way of proceeds, terms and $XXX cash by activities band a first approximately were or C-band USC expenditures constellation $XXX Included the of XXXX, million X the related from in the overall approximately were Telesat of flow receipt received from the USD activities of was the clearing we and Phase proceeds to cash of For terms million generated date, operating

and provided X, we be has second have quarter XXXX. earnings increased you'll year million our release between and this XX.X our also will recognize to noted the Telesat revenues as mentioned, and $XXX expects a full-year we with start release we the in we is expectation our guidance, As on reiterated million later $XXX services our included have part related USD of as hardware as stated Dan this August that results contract. Also, morning our to of of revenues in before, the provision significant million. sale which

$XXX adjusted EBITDA, still between of sale expense million Hesedexpectes don't $X.X hardware million used advance short-term in flows U.S. dollar anticipated less exchange we of we approximately update the with unrestricted guidance cash $X.X on this of to next adjusted of XX in of payments be approximately of capital further facility. expenditures, billion more expect rate around we months, in the the as terms our range now Lightspeed as XXX X.X. expected as got from the including activities To borrowings to the expenditures equivalent EBITDA million, be investments In the USD expected million, cash requirements Approximately of end Canadian to credit at million. is our under and to investing or available the greater as we Also, visibility have Once associated program. expenditures subsidiaries. our $XXX will XX to expenditures, our our contract other September reminder, our revolving the any and capital held further expect $ and capital respect well expected construction program, cash meet a was to for billion and reflects dollar a a financing in provide year. have $XX our capital for cash In including we XXXX interest

amended In of under continue from operating information of addition, the in our facilities Telesat generate terms unrestricted of this the supplied the attach covenants the indenture. senior complied X-K has essentially third credit leverage condensed and we our subsidiaries with X.XXx At the A as X. was all the the significant and non-Garanter secured end interim morning. in in report provides minor we financial covenant differences. ongoing quarter, credit to a the are activities. filed are shown consolidating NDA. calculations our subsidiaries The reconciliation agreement unaudited The between financial financial statements calculated

have, our you questions the So for Thank remarks operator. call, answer turn may you. and to will concludes be we very to this that prepared that back happy and I'll

Operator

question [Operator First LightShed. Piecyk from from is Instructions] Walter

Unidentified Analyst

And available the of now and parts is second, Telesat there questions, on This any Joe are Maybe specific that ] couple about then [ can being it more And little seem One maybe is when flat the for you delays. A are there then provide a was quarter-over-quarter. ramp? has LEO Walt. some we visibility? And Amazon start-up that expect and are like effectively little you of that that that behind or given components progress. And for capitalized the that some LEO expenses the progress. OpEx appears with currently? been finally, to kind launching should getting showing like give for process Is the smaller having better there's feel be Lib weren't please. Do any Telesat to suppliers details? any some then a color bit, ECAs before

Daniel Goldberg

I'll to question. of sort there's try Joe. so Dan, It's a -- right. X-part All

see. Let's

calls around I year lot sort from that on Dallas supply else. of hearing on they do pricing. of chain, we supply schedule, all any chain over are whole schedule, more from of Talison of about with did also that perspective whole work their connection yes, work So update -- have that And different Talos chain not did kind nothing's whatnot? with program, We've think, where there in supply said, the anything a a with there We're they it first the we and of with part past to did with last No, a insight expectations anything update our holds. of is work was the lot their that couple update Telesat we did the about supply changed. and

we're engaged And around to last have -- to the and year. them of think, that much the sense our were that we end lenders, where this I that remains by So hoping the better stood with we a as say, lenders, lot trying of I the the on to a said, sessions, we've on intense things call to be we case talking ball financing lots forward. since with well. the I'd We've with hosted. call should engagement had the sources with earnings of say last been the move including that of lenders, that

taking all whether it questions things and of place last that So being continues. think Oh, you I around the that's right about question actually, the also a then OpEx kind on competitive had and environment. light speed, And are now, was capitalized.

Andrew, expense us And of that maybe, you out I'll LEO environment answer competitive the seeing talk one. we're they their No, in So the terms anything there then makes can one. to not environment the competitive track with of on about OneWeb differently because is their our activity. Ukraine Lightspeed. had launch ability successful pause to to think sort of campaign Certainly, back be Russian getting program and that

on mentioned that, with -- doing seeing had that or that the very nothing there's think Amazon be So Lightspeed. we're the but to closely they're to I doing engage it our we with ability changes successful seeing you we mean is customer about that we're Amazon Lightspeed. community way continue

about And proposition huge our amount We that yes, Lightspeed. be the see a continue that of to there's about that. changes that bringing thinking with seeing we're the from enthusiasm value customers nothing we'll

that? about talk to want you do Andrew, So

Andrew Browne

question very, XX% as control see on almost that obviously, we very the on Yes, you the high a margin what that OpEx of the OpEx. tightly. And

advancing so and on we're of ECA as other and OpEx our expanding. very investor sort support, the with And focused and we're hiring discussions

you very So would And indeed terms Obviously, to would an capital is coming program capitalization, we manage that that that going, of do costs. we from typically those when then what increase of gets in a that. would you very, closely. the expect with the just program course, capitalize see

we where that's So are.

Unidentified Analyst

Okay.

I'm will shouldn't of -- a little you implementing the more. actual lead program ramp That's the up will actually to... we of like So OpEx what trying finalized some before it ahead

Andrew Browne

you up delays teams Thales, expect appropriate at our support we that put with until to to back provide and mean day and are get it supply once terms need on, back will that that design areas we more. have then to engineering us of we I the et then But we the to are need the to indeed Yes, of get actually with do. obviously, got have expect support going dealing we But the people the going. ramp held in we we with delays, we would sort Thales, we as in cetera, we going, once chain where program. obviously other obviously, ramp, would

Operator

is from from question Credit Dan Bono next Management. The De [ph] Invesco

Unidentified Analyst

the at is of segment quarter. which enterprise X, I Page information, love And the Item would looking to color XX the get I'm on the on for supplement. some side

diverse Looking at of a it's if growth pretty you rates segment. where and thinking -- we're could running,

wins of about of would If be the next losses you bit could the and you little how some couple That talk feel a that quarters. helpful. about and for

Daniel Goldberg

I a favorable. the say of I'll environment been mentioned utilization consistent too year. been hand, my to opening in make the -- that for yes, this. one remarks the Looking over has operating pleased the at kind John I'd start we've this on at grow been Flaherty, colleague, I've yes, year, with expectations my that fleet our of able the

I particular, particularly far back think, sectors during A those was seen mobility was were the kind mean, interest, sectors traveling eased would COVID, the the that we aeronautical even held and would stronger back from be segment so come year, that strong probably the we've than that I this of -- maritime. of lot of that were people and during are predictable. more back. it restrictions more those came again, expected. they But and predictable as in and

flight segment. the paths like capacity we the of taking the routes, Caribbean places market, the the demand the if where Aero cruise for key of most sort of would mostly limitations a in for That maritime key it's have of opportunities Med, think exists. of problem some the there, kind advantage I areas the because be

seen continue I'd those like business, to challenging doing frankly, thinking were, they then winning no years. but know. over conditions harder America, we're the more couple So think, maintaining renewals, Latin in don't be say like yes, job a regionally, of nice markets past particularly just And challenging, Africa, and I I where like. utilization, the we've And Latin than America, getting

add So I that's observations. any know you'd And anything. off-the-top event, if John, in don't

Michael Bolitho

pretty you much hit the think I points, of No, major all Dan.

Operator

from The Kennedy next question Karsch Brandon from Lewis. is

Brandon Karsch

you more to the of not just new gains. existing mobility really question with was kind of cope? any Is seeing the up expansions on there? significant or I it organic Are any business following just other be recovery wins wondering, customers last

Daniel Goldberg

capacity into in when certainly it overnight, I'd partial put come another in market, did with almost on year we really there big was the say win with back to that pleased the work just mobility And that. the the the that the DISH renewal side. earlier and we And that half capacity in inventory had first of another customer year, us. was had we aero more we're took

given and have. the as -- it's doubles and it know, So constraints I that's I mentioned like... feels that capacity then don't like, what just that, beyond more singles we Yes,

Brandon Karsch

helpful. Okay. business anticipate elsewhere? impact That's with Shaw do or any the potential the your on all And from in you broadcast side and the headlines Rogers that around merger,

Daniel Goldberg

think so. we so. don't think No, don't We

Brandon Karsch

fully financing? on then this looking of side, maybe that point further types LEO you're behind you of after back? the of too government you this next what there to and if already maybe where untenable And terms conditions scaling months, secure over detail -- Okay. maybe unable talking are bill to becomes is financing? you're you any couple for? focused a you're given to the And market agencies is that it on in think Is about private it it Are more possible provide financing far

Daniel Goldberg

always program. longer X now. a sort that financing right that discussions on costs costs given now come that fact then we some consideration value, that going that given of that what on interested of we're been doing And our program schedule all right market we we're agencies. financing that side, are of with to was, that that at we are we something of additional we was credit the are consider inflation focused issuing a we're those below and where them trying there with sort part just the the mentioned some successful markets to of and there's know, quarter, And equity we're there incremental export and we're coming the just in last now believe And was potentially the some But At negotiations One a public, one on Telesat's path financing securing less in financing, the and combination activity is lot I the past over on driving incremental the to with with conclusion. in to as So kind a some from call past some could looking certainly of active increases the complete I trading had the is the point, we're paths said that. need if of don't which the needed we fair now, right and the to. that. trading coupled mentioned

we're and on as last the as We subordinate of and on level getting senior some from secure we seek to and of Canada the structure focused it's sure about kind side overall call accretive profile. of kind financing at was it, the that kind talked subordinated over being to to are mentioned to who making capital that the looking making all very that the investments other making and that sure ECA that in of we on it being Quebec government LEO subsidiary LEO So lenders that the company the our that government the we're at of sources.

beyond anything that focus. that don't at making continues to But be so stage we're I on that progress add mentioned front in discussions think advanced that I that this right our we'll mentioned now. And we're

Brandon Karsch

I question you're of my had if part was guess that to... last asked I Then the Okay. unable

Daniel Goldberg

telegraphed ourselves questions need very to the we're -- we on We're that's everyone. financing right closing now, that asking Right focused now. those Yes,. that the frame we've not in up time

program. our said We've right a of are great of our the shareholders, with a of constellation. on amount this from yes, got amount support got partners great in communities. So discussions an focus amount And that's got We here board, now. good already enormous our Canada, an from consistently. We really customer significant support fundamentally, backlog enormous having government a got the we've constellation and the

there finishing So the the that's our the focus financing, market going in out Lightstream. is with program getting getting and

Operator

no time. There this further turn like Mr. questions Goldberg. over I meeting would are at back to the to

Daniel Goldberg

and QX thank you much, you when morning. forward for us and to our We year we numbers. Operator, Okay. joining all full issue very thank chatting this look

So thank you very much.

Operator

The conference has now ended. Please disconnect your you lines at your for this time and participation. thank

Telesat (TSAT) 13 Nov 222022 Q3 Earnings call transcript