Telesat Shares Surge After Earnings Surprise, 2024 Guidance Remains Strong

Telesat TSAT shares are rising following the company’s stronger-than-expected second-quarter 2024 results.

Telesat reported a consolidated revenue decline of 15.2% year-over-year to C$152.44 million, beating the consensus estimate of C$141.15 million. The revenue decrease was due to reduced services and lower rates on a renewed agreement with a North American TV customer.

Quarterly operating income was C$61.66 million, down from C$422.973 million, with a margin of 40.5%.

EPS was C$2.45, down from C$10.05 year-over-year, but above the consensus estimate of C$1.71.

Telesat’s net income for the quarter was C$129 million, down from C$519 million last year, mainly due to C-band clearing income in 2023 and losses from foreign exchange rate changes on U.S. dollar-denominated debt.

Adjusted EBITDA declined 25.5% year-over-year to C$103.303 million, with the margin contracting by 936 basis points to 67.8%.

Net cash provided by operating activities for the six months ended June 30 totaled C$66.40 million, down from C$102.349 million.

"We remain on track to meet our 2024 guidance and, as a result of our continued disciplined execution, delivered industry-leading Adjusted EBITDA margins, high capacity utilization, a substantial contractual backlog of C$1.1 billion, and a cash balance of C$1.4 billion," said Dan Goldberg, Telesat's President and CEO.

"Our focus this year remains twofold. First, in our geostationary activities, we aim to maximize our Adjusted EBITDA and cash flow by mitigating anticipated revenue declines and rigorously managing our legacy cost structure. Second, we are moving forward expeditiously with the implementation and deployment of Telesat Lightspeed as we finalize the definitive documentation for the Government of Canada and Government of Quebec funding for the program," added Goldberg.

2024 Outlook: Telesat expects revenues to be between C$545 million and C$565 million versus C$562 million; Adjusted EBITDA is expected to be between C$340 million and C$360 million.

The company anticipates cash flows used in investing activities to be in the range of C$1 billion to C$1.4 billion, nearly all related to expected Telesat Lightspeed capital expenditures.

Price Action: TSAT shares are trading higher by 8.48% at $9.08 at last check on Wednesday.

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