Loral Space & Communications, Inc. (NASDAQ:LORL) Q2 2019 Earnings Conference Call Transcript

Aug 01, 2019 • 10:30 am ET

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Loral Space & Communications, Inc. (NASDAQ:LORL) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, ladies and gentlemen. Welcome to the conference call to report the Second Quarter 2019 Financial Results for Telesat. Our speakers today will be Dan Goldberg, President and Chief Executive Officer of Telesat; and Micheal Cayouette -- sorry, Michel Cayouette, Chief Financial Officer of Telesat.

I would now like to turn the meeting over to Mr. Michael Bolitho, Director of Treasury and Risk Management. Please go ahead, Mr. Bolitho.

Executive
Michael Bolitho

Thank you, and good morning. Earlier today, we issued a news release containing Telesat's consolidated financial results for the three- and six-month period ended June 30, 2019. This news release is available on Telesat's website at www.telesat.com under the tab Investor Relations. We also filed our quarterly report on Form 6-K with the SEC this morning. Our remarks today may contain forward-looking statements. There are risks that Telesat's actual results may differ materially from the results contemplated by the forward-looking statements as a result of known and unknown risks and uncertainties.

For additional information about known risks, we refer you to the risk factors section of our Annual Report on Form 20-F for the fiscal year ended December 31, 2018 filed with the SEC on March 1, 2019. The information that we are discussing today reflects our expectations as of today and is subject to change. Except as required by securities laws, Telesat disclaims any obligation or undertaking to update or revise this information whether as a result of new information, future events or otherwise.

I will now turn the call over to Dan Goldberg, Telesat's President and CEO.

Executive
Daniel S. Goldberg

Thank you, Michael. This morning, I'll discuss our second quarter financial results and give an update on the business. I'll then hand over to Michel, who will speak to the numbers in more detail and then we'll open the call up to questions. Adjusting for foreign exchange rate changes, revenue in the second quarter was 8% higher than the same period last year, adjusted EBITDA was 9% higher and our adjusted EBITDA margin was 85.2%.

The revenue increase was principally due to revenue contributions from our Telstar 19 VANTAGE and Telstar 18 VANTAGE satellites, which entered commercial service, respectively, in August and October last year, combined with an increase from short-term services provided to other satellite operators. Looking up the first half of this year relative to the same period last year, revenue and adjusted EBITDA were both slightly higher and the adjusted EBITDA margin was 84.7%, up from 84.1% last year.

The revenue increase was primarily due to revenue related to the Telstar 19 VANTAGE and Telstar 18 VANTAGE satellites, offset by lower short-term services provided to other satellite operators, lower equipment sales and lower revenue from certain customers in the resource sector.

Turning to some key metrics, backlog at the end of the second quarter was CAD3.5 billion and fleet utilization was 85%. Broadcast represented approximately 49% of total revenue in the quarter, enterprise services 48% and consulting another 3%. And on a geographic basis for the quarter, North America