Telesat Corp. Q1 FY2025 earnings call

• Dan Goldberg noted positive performance in both GEO and LEO segments. In GEO, the team demonstrated disciplined execution in a challenging market. In LEO, excellent progress was made with Telesat Lightspeed, including new agreements with ViaSat, Orange, ADN, and Space Norway. - Andrew Browne provided details on financials: consolidated revenues were $117M, adjusted EBITDA was $67M, and cash from operations was $139M. He mentioned that revenue decreased due to factors like a lower rate on a long-term agreement renewal and reductions in certain services, while operating expenses increased due to higher headcount and legal fees. Interest expense decreased due to debt repurchases and lower market rates. - The company reiterated 2025 guidance, including full year revenues expected between $405 million to $425 million, Telesat Lightspeed operating expenses excluding share-based compensation expected to be approximately $110 million to $120 million, total adjusted EBITDA expected to be between CAD 170 million to CAD 190 million, and 2025 capital expenditures expected in the range of CAD 900 million to CAD 1.1 billion, practically all related to Telesat Lightspeed.

In the first quarter of 2025, Telesat reported consolidated revenues of $117 million. The GEO segment had a margin of approximately 74%. In the LEO segment, the company signed significant multiyear agreements with ViaSat, Orange, ADN, and Space Norway, with LEO backlog nearly reaching CAD 1.1 billion. Consolidated adjusted EBITDA was $67 million, cash from operations was $139 million, and the company ended the quarter with $797 million in cash. Revenue decreased due to a lower rate on a long-term agreement renewal and reductions in certain services, while operating expenses increased due to higher headcount at Telesat Lightspeed and legal fees, partially offset by increased capitalized engineering costs and lower share-based compensation.

• For 2025, the company continues to expect full year revenues to be between $405 million to $425 million. - In terms of operating expenses, excluding share-based compensation, Telesat expects to spend approximately $110 million to $120 million on Telesat Lightspeed in 2025 compared to $72 million in 2024. - Total adjusted EBITDA is expected to be between CAD 170 million to CAD 190 million on a consolidated basis. - The company continues to expect its 2025 capital expenditures to be in the range of CAD 900 million to CAD 1.1 billion, practically all related to Telesat Lightspeed. - At the end of March, the company had approximately $800 million of cash and short-term investments and $2.2 billion available under its funding agreements with the government of Canada and Quebec.

Remarks may contain forward-looking statements. Telesat's actual results may differ materially from the results contemplated by the forward-looking statements as a result of known and unknown risks and uncertainties. For a discussion of known risks, please see Telesat's Annual Report and update filed with the SEC. Telesat assumes no responsibility to update or revise these forward-looking statements.

Q: About Lightspeed outlook, including how the company feels about previous targets and assumptions, and variables and when to update the framework.

A: Dan Goldberg said the projections for Lightspeed are still the plan, variables are intact, build-out is on plan, market reinforces conviction in LEO's ascendance, especially in government services.

Q: About government go-to-market strategy, including focus domestically and internationally, and combination of direct and partnering.

A: Dan Goldberg said focus on allied governments, have a foreign mitigated entity in US, work with long-standing partners and new partners, both direct and partnering.

Q: About Lightspeed milestones, like first satellite deliveries, critical design review, landing station announcements, user terminal development.

A: Dan Goldberg said first launch expected toward end of next year, critical design review in six months, more landing station announcements expected, update on user terminal development.

Q: About user terminal, IFC portion, electronic KA market, and LEO vs multi-orbit for airlines.

A: Dan Goldberg said existing antennas are Lightspeed compatible, positive for backwards compatibility, Lightspeed well architected for government services, bullish on Aero segment.

Q: About LEO backlog, $600 million sequential increase, other large customers.

A: Andrew Browne said mix of deals, Viasat contract is meaningful, other commercial players and government segment could have significant commitments.

Q: About LEO EBITDA loss cadence to reach $110M to $120M.

A: Andrew Browne said timing and hiring ramp up staff, consistent with guidance, headcount driven.

Q: About Viasat using Lightspeed in all verticals, other GEO operators discussions.

A: Dan Goldberg said Viasat press release covers pretty much all verticals, engaged with regional GEO operators interested in LEO solution.

Q: About Space Norway deal magnitude and timeline.

A: Dan Goldberg said deal not closed yet, expected to conclude latter half of year, quantum to be seen.

Q: About Taiwan's decision on licensing Lightspeed.

A: Dan Goldberg said had multiple conversations with governments, but no specific updates to confirm.

Q: About negotiations with debt holders.

A: Dan Goldberg said important corporate priority to refinance restricted group balance sheet, not fully engaged yet.

Q: About Lightspeed build-out drawdown schedule and interest capitalization.

A: Dan Goldberg said drawdowns tied to vendor milestones, if vendors late, drawdowns shift, interest capitalized at end of program.

Q: About Viasat user terminals regulatory approval status.

A: Dan Goldberg said responsibility mainly with Viasat, but working with them to ensure compatibility.