Intelsat Announces First
Quarter 2021 Results
May 05, 2021
Intelsat S.A. announced
financial results for the three months ended
March 31, 2021.
Intelsat reported total
revenue was $502.8 million and net loss
attributable to Intelsat S.A. was $174.9 million
for the three months ended March 31, 2021.
Intelsat reported EBITDA1,
or earnings before net interest, taxes and
depreciation and amortization, of $130.5 million
and Adjusted EBITDA1 of $275.0 million, or 55%
of revenue, for the three months ended March 31,
2021.
Intelsat’s Chief Executive
Officer, Stephen Spengler, said, “Overall, we
delivered solid quarterly operational results
which now include our Gogo Commercial Aviation
business. Network Services benefited from new
business from mobility and fixed network
operators, as well as the addition of the
Commercial Aviation in-flight connectivity
business in the quarter. Government produced
modest growth supported by the addition of new
services both on and off our network and
continued growth of our FlexGround managed land
mobility services. Ongoing secular business
trends and a large planned service migration
from the Intelsat network to assets owned by a
specific customer impacted results in our media
business.”
Spengler concluded, “We see
increased signs of economic activity across our
business sectors as COVID-19 restrictions ease.
Passenger traffic at airports is increasing in
key markets, including the U.S. Global
uncertainty about the pandemic remains so we
continue to closely engage with our customers as
they anticipate their service needs in advance
of a potential economic recovery. Intelsat is
investing in our next-generation
software-defined network and vertical
integration to leverage the opportunity to
deliver end-to-end managed services to a larger
addressable market. We are well-positioned to
benefit from an expected economic expansion as
we anticipate emergence from our financial
restructuring as a stronger and more agile
company ready to deliver innovative solutions to
our customers."
First Quarter 2021 Business
Highlights
Intelsat provides critical
communications infrastructure to customers in
the network services, media and government
sectors. Our customers use our services for
broadband connectivity to deliver fixed and
mobile telecommunications, enterprise, video
distribution and fixed and mobile government
applications.
Network Services
Network services revenue
was $214.0 million (or 43% of Intelsat’s total
revenue, which now consolidates revenue from our
Gogo Commercial Aviation business), for the
three months ended March 31, 2021, an increase
of 43% compared to the three months ended March
31, 2020. Other factors positively impacting
revenue included new business from the expansion
of service with certain mobility and enterprise
customers. The increase in revenue was partially
offset by non-renewals across our mobility and
enterprise customer sets, as well as contract
terminations, including by a specific enterprise
customer.
Media
Media revenue was $185.0
million (or 37% of Intelsat’s total revenue) for
the three months ended March 31, 2021, a
decrease of 10% compared to the three months
ended March 31, 2020. The decline in media was
primarily driven by a planned service migration
by a specific customer from Intelsat's network
to the customer's own network assets.
Additionally, ongoing secular trends resulting
in lower demand impacted terminations and
renewals, and occasional use services did not
rebound to 2020 levels. The declines in revenue
were slightly offset by new business.
Government
Government revenue was
$97.9 million (or 19% of Intelsat’s total
revenue) for the three months ended March 31,
2021, an increase of 2% compared to the three
months ended March 31, 2020. The increase in
government was primarily driven by new business,
including a one-time customer premises equipment
sale, the expansion of FlexGround services and
the entry of our Galaxy-30 satellite into
service. The increase in revenue was partially
offset by non-renewals and a decline in
third-party off-network services.
Average Fill Rate
Intelsat’s average fill
rate as of March 31, 2021 on our approximately
1,670 36 MHz station-kept wide-beam transponders
was 73%, similar to our average fill rate at
December 31, 2020. In addition, as of March 31,
2021 our fleet included approximately 1,215 36
MHz equivalent transponders of high-throughput
Intelsat Epic capacity, consistent with the
prior quarter.
Satellite Activity
On April 12, 2021,
Intelsat, in coordination with Northrop Grumman
Corporation and its wholly-owned subsidiary,
SpaceLogistics, LLC, successfully completed the
docking of Mission Extension Vehicle-2 (MEV-2)
to the Intelsat 10-02 satellite ("IS-10-02"),
delivering approximately 5 years of life
extension for IS-10-02.
Contracted Backlog
At March 31, 2021,
Intelsat’s contracted backlog, representing
expected future revenue under existing contracts
with customers, was $5.9 billion, as compared to
$6.1 billion at December 31, 2020.
Financial Results for the
Three Months Ended March 31, 2021
Total revenue for the three
months ended March 31, 2021 increased by $43.9
million to $502.8 million, or an increase of 10
percent as compared to the three months ended
March 31, 2020, primarily reflecting the
consolidation of revenue from our Gogo
Commercial Aviation business.
Direct costs of revenue
(excluding depreciation and amortization)
increased by $60.1 million, or 57 percent, to
$165.2 million for the three months ended March
31, 2021, as compared to the three months ended
March 31, 2020. The increase was primarily due
to a $61.2 million increase in costs
attributable to our Gogo Commercial Aviation
business and a $3.3 million increase in
staff-related expenses largely relating to our
employee retention incentive plans. These
increases were partially offset by a $3.5
million decrease in third-party managed capacity
costs.
Selling, general and
administrative expenses increased by $21.6
million, or 27 percent, to $102.6 million for
the three months ended March 31, 2021, as
compared to the three months ended March 31,
2020. The increase was primarily due to a $28.9
million increase in costs attributable to our
Gogo Commercial Aviation business and a $7.2
million increase in staff-related expenses
largely relating to our employee retention
incentive plans. These increases were partially
offset by a $13.4 million decrease in bad debt
expense due to higher bad debt expense for the
three months ended March 31, 2020, largely
relating to a certain customer that filed for
Chapter 11 bankruptcy protection in the prior
year period.
Depreciation and
amortization expense increased by $2.2 million,
or 1 percent, to $165.2 million for the three
months ended March 31, 2021, as compared to the
three months ended March 31, 2020. Significant
items impacting depreciation and amortization
included an increase of $6.7 million in
depreciation and amortization expense
attributable to our Gogo Commercial Aviation
business and an increase of $1.0 million in
depreciation expense resulting from the impact
of a certain satellite placed into service.
These increases were partially offset by a
decrease of $5.4 million in depreciation expense
due to the timing of certain satellites becoming
fully depreciated.
Other operating
expense—C-band consists of reimbursable and
non-reimbursable costs associated with our
C-band spectrum relocation efforts. We incurred
$58.4 million of C-band clearing related
expenses for the three months ended March 31,
2021, with no comparable amounts for the three
months ended March 31, 2020.
Interest expense, net
consists of the gross interest expense we incur,
together with gains and losses on interest rate
cap contracts we held that matured in February
2021 (which reflected the change in their fair
value), offset by interest income earned and the
amount of interest we capitalize related to
assets under construction.
Interest expense, net
decreased by $186.0 million, or 58 percent, to
$132.3 million for the three months ended March
31, 2021, as compared to the three months ended
March 31, 2020. This was primarily due to a
decrease of $171.4 million in interest expense
resulting from our Chapter 11 restructuring
activities.
The non-cash portion of
interest expense, net was $26.7 million for the
three months ended March 31, 2021, primarily
consisting of interest expense related to the
significant financing component identified in
customer contracts, amortization and accretion
of discounts and premiums, and amortization of
deferred financing fees.
Other income, net was $9.7
million for the three months ended March 31,
2021, as compared to $2.7 million for the three
months ended March 31, 2020. The net increase in
other income primarily consisted of a $5.3
million gain on one of our investments and lower
foreign currency losses of $3.8 million,
partially offset by a net decrease of $3.0
million on the sale of assets for the three
months ended March 31, 2021.
Reorganization items
reflect direct costs incurred in connection with
our Chapter 11 cases. Reorganization items of
$55.8 million for the three months ended March
31, 2021 primarily consisted of professional
fees. There were no comparable amounts for the
three months ended March 31, 2020.
Income tax expense
increased by $7.0 million to $7.2 million for
the three months ended March 31, 2021, as
compared to the three months ended March 31,
2020. The increase was principally attributable
to higher income from our U.S. subsidiaries,
withholding taxes on revenue earned in some of
the foreign markets in which we operate and
prior year adjustments from impacts of the
Coronavirus Aid, Relief, and Economic Security
(CARES) Act.
Net Income, Net Income per
Diluted Common Share attributable to Intelsat
S.A., EBITDA and Adjusted EBITDA
Net loss attributable to
Intelsat S.A. was $174.9 million for the three
months ended March 31, 2021, compared to a net
loss of $218.8 million for the same period in
2020.
Net loss per diluted common
share attributable to Intelsat S.A. was $1.23
for the three months ended March 31, 2021,
compared to net loss of $1.55 per diluted common
share for the same period in 2020.
EBITDA was $130.5 million
for the three months ended March 31, 2021,
compared to $263.3 million for the same period
in 2020, reflecting higher operating costs
related to our Gogo Commercial Aviation business
and costs associated with our C-band spectrum
relocation efforts, as described above.
Adjusted EBITDA was $275.0
million for the three months ended March 31,
2021, or 55 percent of revenue, compared to
$294.0 million, or 64 percent of revenue, for
the same period in 2020.
Free Cash Flow Used In
Operations1
Net cash provided by
operating activities was $12.4 million for the
three months ended March 31, 2021. Free cash
flow used in operations was $232.2 million for
the same period. Free cash flow from (used in)
operations is defined as net cash provided by
(used in) operating activities and other
proceeds from satellites from investing
activities, less payments for satellites and
other property and equipment (including
capitalized interest) from investing activities.
Payments for satellites and other property and
equipment from investing activities, net during
the three months ended March 31, 2021 were
$244.6 million.
1In this release, financial
measures are presented both in accordance with
U.S. GAAP and also on a non-U.S. GAAP basis.
EBITDA, Adjusted EBITDA (or AEBITDA), free cash
flow from (used in) operations and related
margins included in this release are non-U.S.
GAAP financial measures. Please see the
condensed consolidated financial information
below for information reconciling non-U.S. GAAP
financial measures to comparable U.S. GAAP
financial measures.