Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Telesat Corp (TSAT, Financial) reaffirmed its 2024 guidance, indicating confidence in meeting its financial targets for the year.
- The company reported strong progress on the Lightspeed program, with 90% of suppliers selected and onboarded by MDA, the prime satellite contractor.
- Telesat Corp (TSAT) increased its headcount by nearly 20% to support the execution of the Lightspeed program, demonstrating commitment to its strategic initiatives.
- The company successfully reduced its overall debt by approximately 26% through strategic debt repurchases, resulting in annual interest savings of about $55 million.
- Telesat Corp (TSAT) ended the second quarter with $1.4 billion in cash, providing a strong liquidity position to support future investments and operations.
Negative Points
- Revenues for the second quarter of 2024 decreased by $27 million compared to the same period in 2023, primarily due to reductions in services and lower renewal rates with key customers.
- Adjusted EBITDA decreased by $35 million to $103 million, with the EBITDA margin dropping from 77.1% in Q1 2023 to 67.8% in Q2 2024.
- The company recorded a foreign exchange loss of $34 million in the second quarter, compared to a gain of $67 million in the same period in 2023.
- Net income for the second quarter was significantly lower at $129 million, compared to $519 million in the prior year, impacted by the absence of one-time C-band clearing income and foreign exchange losses.
- Telesat Corp (TSAT) is facing potential revenue headwinds from the restructuring of its customer Xplore, leading to increased bad debt provisions and uncertainty in future revenue contributions.
Q & A Highlights
Q: Are the negotiations for the Lightspeed funding agreements on track to conclude soon?
A: Yes, we expect to conclude the agreements in the next couple of weeks and will make a separate announcement once finalized. (Daniel Goldberg, CEO)
Q: What factors will determine if capital expenditures end up closer to $1 billion or $1.4 billion?
A: The flow of CapEx in Q2 was about $309 million, and multiplying that by three gets us to $1 billion. The program is on track, and suppliers are achieving milestones, which supports our guidance. (Andrew Browne, CFO)
Q: Can you provide an update on the renewal negotiations with EchoStar?
A: We are still in discussions with EchoStar, and expect to resolve the renewal by early October. We have a long-standing relationship with them, and anticipate providing more details by our Q3 call. (Daniel Goldberg, CEO)
Q: Has there been any progress in presales for the Lightspeed project?
A: While there are no new announcements, we are engaged with prospective users in key verticals. We have about $750 million in take-or-pay commitments for Lightspeed, separate from our reported backlog. (Daniel Goldberg, CEO)
Q: How should we think about GEO operating expenses and bad debt expense moving forward?
A: GEO OpEx is expected to be down 4% as planned. The bad debt expense related to Xplore is about $2 million to $3 million, which is not materially significant. We continue to recognize revenue from Xplore as they make partial payments. (Andrew Browne, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
