Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Telesat Corp (TSAT, Financial) reported a significant multi-year agreement with ViaSat, highlighting the capabilities of the Lightspeed constellation.
- The company has nearly CAD1.1 billion in LEO backlog, indicating strong momentum and a robust pipeline of opportunities.
- Telesat Corp (TSAT) ended the quarter with $797 million in cash, providing a solid financial position.
- Interest expense decreased by $8 million due to debt repurchases and lower market rates, resulting in annual interest savings of approximately USD54 million.
- The company has reiterated its guidance for 2025, showing confidence in achieving its financial targets.
Negative Points
- Revenues decreased by $25 million compared to the first quarter of 2024, primarily due to a lower rate on the renewal of a long-term agreement with a North American direct-to-home customer.
- Operating expenses increased by $6 million, driven by increased headcount at Telesat Lightspeed and higher legal and professional fees.
- Adjusted EBITDA decreased by $43 million, with a margin of 57.7%, indicating pressure on profitability.
- The company recorded a net loss of $51 million for the first quarter, similar to the previous year's loss.
- Cash flows used by investing activities were $235 million, reflecting significant capital expenditures related to Telesat Lightspeed.
Q & A Highlights
Q: Can you provide an update on the Lightspeed revenue and EBITDA targets set in late 2023, and any changes in assumptions since then?
A: Daniel Goldberg, President and CEO, stated that the projections for Lightspeed's revenue and EBITDA remain intact. The build-out of the constellation is on schedule, and the market outlook for LEO is strong, particularly in government services due to recent geopolitical shifts. The company maintains its conviction in achieving its targets.
Q: What is Telesat's government go-to-market strategy, and where will efforts be focused?
A: Daniel Goldberg explained that Telesat's focus is on allied governments, with direct engagement in Canada and the US. The company has a foreign mitigated entity in the US to facilitate direct business with the government. Internationally, Telesat will work with domestic partners in allied countries, leveraging Lightspeed's capabilities for government services.
Q: What are the next major milestones for the Lightspeed project?
A: Daniel Goldberg mentioned that the first satellite launch is expected towards the end of next year, with critical design reviews and landing station announcements as upcoming milestones. The company is also building a facility for satellite operations, expected to be operational by the end of the year.
Q: Can you discuss the significance of the Viasat agreement and potential for similar deals?
A: Daniel Goldberg noted that the Viasat contract is significant, and there are other commercial and government opportunities that could result in substantial deals. While Viasat is a major customer, Telesat is engaged in discussions with other potential large-scale customers and government entities.
Q: How is Telesat managing the financial aspects of the Lightspeed project, including drawdowns and interest capitalization?
A: Andrew Browne, CFO, explained that drawdowns from government funding are tied to vendor milestones, primarily with MDA. Interest on these drawdowns is capitalized until the end of the program, which is when the entire constellation is operational.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
