Stronger American greenback dampens Telesat’s 2015 Q2

Ottawa-based Telesat Holdings said Thursday second-quarter revenues fell four per cent year-over-year when adjusted for a stronger American dollar.

“Telesat had a solid second quarter, notwithstanding weakness in certain markets we serve,” CEO Dan Goldberg said in a statement.

While consolidated revenue for the three months ending June 30 was $227 million, an increase of $1 million compared with the same quarter of 2014, the number actually fell by $9 million when adjusted for foreign currency.

Telesat blamed the drop mostly on a decline in revenues from its international satellite services and lower equipment sales.

While its adjusted EBITDA, at $185 million, increased one per cent or $2 million in real terms, it too dropped three per cent or $6 million when adjusted for foreign currency exchange rates. The company’s adjusted EBITDA margin was up to 81.4 per cent, compared with 81 per cent for the same quarter last year.

Telesat did cut operating expenses to $44 million, a drop of four per cent when adjusted for foreign currency.

But net income for the quarter fell to $56 million, down from the $108 million it posted in the same quarter in 2014. The company is blaming a reduced foreign exchange gain and an increased loss in the fair value of financial instruments compared with last year.

The stronger American dollar has also affected Telesat’s consolidated year-to-date revenue. At $456 million, that number is down seven per cent, or $34 million, from same time last year. The company said the drop is due mainly to short-term services offered to other satellite operators in the first half of 2014 that did not happen this year. Lower equipment sales also played a role, the company said.

Telesat’s adjusted EBITDA year-to-date was $371 million, down seven percent when foreign exchange rates are factored in. Adjusted EBITDA margin so far this year is down a tenth of a point to 81.4 per cent.

Telesat is reporting a net year-to-date loss of $98 million, compared with a net income of $80 million for the first six months of 2014, thanks in large part to the translation of its U.S. dollar debt into Canadian dollars.

Mr. Goldberg said Telesat’s future looks bright, with a new satellite scheduled to launch late this year.

“Our industry-leading contractual backlog provides visibility into the stability of our future revenue and cash flow, and anticipated growing demand for satellite services positions us well to expand our activities going forward,” he said.