{"id":80503,"date":"2013-08-01T22:38:32","date_gmt":"2013-08-01T14:38:32","guid":{"rendered":"https:\/\/wp-productionenv-bjg9h2g2bgg5b8aa.southeastasia-01.azurewebsites.net\/news\/intelsats-second-quarter-results-reflect-408-million-loss\/"},"modified":"2013-08-01T22:38:32","modified_gmt":"2013-08-01T14:38:32","slug":"intelsats-second-quarter-results-reflect-408-million-loss","status":"publish","type":"post","link":"https:\/\/starpath.global\/news\/intelsats-second-quarter-results-reflect-408-million-loss\/","title":{"rendered":"Intelsat\u2019s Second Quarter Results Reflect $408 Million Loss"},"content":{"rendered":"\n\n\n\n
\"\"<\/td>\n<\/tr>\n
\nIntelsat\u2019s Q2 2013 results reflect tough economic times with the U.S. Government\u2019s budget sequestration.
\n<\/i>
\nImage credit: WikiCommons\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

[Satellite TODAY 08-01-13] On Thursday, Intelsat <\/b>reveled its Q2 results for 2013 reporting revenues of $653.8 million and a net loss of $408.3 million, or $4.19 per share. Company officials noted that the U.S. Government budget sequestration remains a top concern.<\/p>\n

      During a conference call on Thursday, David McGlade, Intelsat\u2019s chairman and CEO said the sequestration has created a fog as far as forecasting the company\u2019s fiscal future in the government sector. \u201cVisibility remains limited. For example, [satellite service] renewals typically awarded for one year periods are now funded for shorter periods in some instances,\u201d he said noting that \u201csequestration, and its potential effect on government spending, remains a top concern as we look out over the balance of 2013 and into 2014.\u201d <\/p>\n

On July 31, U.S. Deputy Defense Secretary Ash Carter released a memo providing more specifics for a further 20-percent reduction in U.S. Department of Defense<\/b> spending over the next five fiscal years, which will take place regardless of budget levels approved by Congress, according to DoD officials.<\/p>\n

     Intelsat is clearly not alone with feeling the ripple effects of sequestration. \u201cI think that\u2019s fairly consistent with the market,\u201d said Sima Fishman, director of strategy consulting with Futron Corporation<\/b> in an interview with SatelliteTODAY.com<\/i> after the Intelsat conference call.<\/p>\n

\u201cAs predicted, sequestration\u2019s impacts \u2026 have been very unfortunate and far-reaching,\u201d said U.S. Deputy Defense Secretary Ash Carter while testifying before Congress on Thursday.<\/p>\n

And ironically, according to McGlade, DoD\u2019s budget cuts will end up costing taxpayers more money. \u201cFrom my discussion with a number of senators and congressmen and women, they know if they procure for longer periods of time they can get better pricing,\u201d he said.<\/p>\n

McGlade also said that based on Intelsat\u2019s current level of government sales activity, \u201cour government business will be an offset to our growth in 2013,\u201d he said. But, despite concerns, he remains optimistic. \u201cWhile it is uncertain that this mix trend will continue, we do believe that careful management of operating expenses will help mitigate the effects of sequestration at the Adjusted EBITDA level,\u201d he said. \u201cOur second quarter results reflect business trends consistent with those of recent quarters.\u201d<\/p>\n

On another positive note, Mike McDonnell, Intelsat\u2019s CFO, said that managed services increased by $8 million dollars, or 12 percent, to $75 million, led by increased demand from network services customers for broadband mobility applications, especially in Europe and North America. \u201cThe bottom line, we have achieved a substantial portion of the first phase of our investment thesis,\u201d McDonnell said.<\/p>\n

      Among the other positives unveiled during Thursday\u2019s call, McGlade reported growth on the company\u2019s network services and media businesses. \u201cThe performance is a reflection of our fleet investment activities in 2011 and \u201812, which created our broadband mobility infrastructure and refreshed the capacity at our video neighborhoods,\u201d he said.<\/p>\n

     Still, the company reported EBITDA, (earnings before net interest, taxes and depreciation and amortization) of $439.2 million, and Adjusted EBITDA of $509.4 million, or 78 percent of revenue, for the three months ending June 30, 2013.<\/p>\n

   Despite fiscal challenges, there are other mitigating factors. \u201cWith the completion of our April IPO and successful debt refinancing initiatives in the first half of 2013, we\u2019re driving a positive cycle of delivering our balance sheet. Lower interest costs and reduced capital expenditures will enable increased cash flow, which in turn should allow us to further reduce debt,\u201d McGlade said in a written statement issued before Thursday\u2019s call.<\/p>\n

      However, Intelsat\u2019s net loss included $366.8 million for pre-tax charges, which is related to early extinguishment of debt resulting from debt paydowns resulting from the company\u2019s April 2013 initial public offering and debt refinancing activity in the second quarter. <\/p>\n

    One of the negatives in Intelsat\u2019s Q2 earnings was their MSS business as customers move from L- to Ku-band, Fishman said, noting that this is common place industry-wide. \u201cWe see the MSS business falling off everywhere,\u201d Fishman said. But McGlade said Intelsat has also engaged significant refinancing activity helping to mitigate any negative impacts of MSS and sequestration. \u201cOn a going forward basis, the combined benefits of the debt repayments and lower interest provide $245 million in annual interest savings. Our reduced interest obligations, as well as lower expected capex in 2013 and 2014, sets into motion the positive cycle that will allow us to continue to de-lever our balance sheet,\u201d he said.<\/p>\n

He also noted that the second part of Intelsat\u2019s plan is to generate revenue and earnings growth, which will be catalyzed by new satellites. \u201cThis includes Intelsat 30, benefiting the media business as it comes into service in 2015, and Intelsat 29e, benefiting network services starting in 2016,\u201d he added.<\/p>\n

     Overall Intelsat\u2019s Q2 results were not surprising, Fishman said after the conference call. \u201cI didn\u2019t see any surprises here. What we are seeing here is consistent with industry trends,\u201d she said.<\/p>\n

 <\/b>Satmex Acquisition<\/b><\/p>\n

 <\/b>     Intelsat officials said that although their eyes were on Satmex<\/b>, the recent purchase by Eutelsat<\/b> will not have a significant impact on Intelsat\u2019s bottom line.<\/p>\n

      \u201cWhile it [Satmex] is an interesting company that we\u2019ve looked at for many years, we feel we [Intelsat] are well positioned across those regions. We feel very comfortable that we have the assets and market potion to continue to be successful without Satmex,\u201d McGlade said during the conference call.<\/p>\n

      Fishman agreed with McGlade, noting that Intelsat\u2019s \u201cappetite for acquisitions is moderate because after the IPO they have already achieved the final position they wanted and can be selective. \u201cThey [Intelsat] aren\u2019t going to buy anything they can\u2019t integrate easily with and they already have good capacity for Latin America,\u201d Fishman said.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Intelsat\u2019s Q2 2013 results reflect tough economic times with the U.S. Government\u2019s budget sequestration. Image credit: WikiCommons [Satellite TODAY 08-01-13] On Thursday, Intelsat reveled its Q2 results for 2013 reporting revenues of $653.8 million and a net loss of $408.3 million, or $4.19 per share. Company officials noted that the U.S. Government budget sequestration remains a […]<\/p>\n","protected":false},"author":1,"featured_media":80507,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[],"class_list":["post-80503","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/80503"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=80503"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/80503\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media\/80507"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=80503"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=80503"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=80503"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}