Telesat Corp. Q4 FY2024 earnings call

• 2024 was a pivotal year with GEO business delivering above guidance revenue and EBITDA, and debt repurchases strengthening financial position.
• Telesat Lightspeed secured funding from Canada and Quebec in September 2024, invested over $1 billion in development, and made progress on the LEO constellation.
• For 2025, expected revenue decline of ~$155 million at midpoint, with pressure on video and enterprise segments; LEO OpEx expected to increase by ~$40 million at midpoint; consolidated adjusted EBITDA expected down ~$200 million at midpoint.
• Focus on disciplined execution in GEO and building out/commercializing Lightspeed; refinancing restricted group debt is a priority.
• Andrew Browne announced retirement, with a smooth transition planned.

In 2024, the GEO segment delivered revenue and adjusted EBITDA above guidance. The GEO segment's adjusted EBITDA margin, excluding LEO investments, was 78% in Q4 2024 compared to 82.2% in Q4 2023. The LEO segment (Telesat Lightspeed) saw significant progress with over $1 billion invested in 2024, securing funding from Canada and Quebec, and making development milestones. Revenue for 2024 was $571 million, adjusted EBITDA was $384 million, cash from operations was $62 million, and cash on hand at year end was $552 million.

• 2025 full year revenues expected between $405 million to $425 million.
• Consolidated adjusted EBITDA expected between $170 million to $190 million.
• LEO operating expenses expected in range of $110 million to $120 million, a $38 million to $48 million increase from 2024.
• Capital expenditures in 2025 expected in range of $900 million to $1.1 billion, virtually all related to Telesat Lightspeed.

• Geopolitical shifts could impact market dynamics and customer requirements.
• Competition from Starlink and others in the LEO and GEO markets could affect revenue and market share.
• GEO market challenges with revenue declines from contract renewals, satellite end-of-life, and enterprise consulting activities.

Q: Good morning, everyone. Thank you for taking our questions. First-off, I know you mentioned tectonic shifts happening in part due to the geopolitics. Can you give us a sense on how those discussions have changed? Was it one of those things where a couple months ago literally your phone just kind of blew up or had these things been going on in the background and then it just accelerated? Some color there would be great.

A: Okay. Thanks, Edison. It's Dan. Yeah. I think that's probably a fair characterization. The -- where they going on in the background and then did they accelerate? I think that's kind of probably best captures it and maybe less accelerate but maybe it's the same thing, but just seems to be more concrete now. There's just a much greater focus, it feels like with -- yeah, kind of sovereign customers in thinking about their need to have access to an advanced LEO network. Their focus on making sure that they've got options in terms of who they work with.

Q: Understood. Appreciate the color. On the comment you made about the backlog for Lightspeed, can you give us a sense of magnitude? I think the last disclosure made was $600 million or something. Could we see that double, triple in the next year or two? Any kind of color around, maybe the pipeline to getting that number much larger?

A: Yeah. I'll say something about that. And I'll say a couple things. One, we had promised to start disclosing LEO backlog and to break that out in our financial statements. And we are going to do that. It's not in our 20-F, but we'll start doing that looking around the table. My colleagues will start doing that in Q1, which isn't that far off at this point, so you'll see that. We disclosed GEO backlog at year end this time around, which was $1.1 billion. But here's what I'd say. We've talked about LEO backlog before and we'll do that more formally in our public filings. But your recollection is correct. We've talked about LEO backlog being an order of magnitude about $600 million.