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Intelsat SA (I)
Q1 2013 Earnings Call
May 9, 2013 11:00 am ET
Dianne VanBeber - Vice President, Investor Relations & Corporate Communications
David McGlade - Chairman & Chief Executive Officer
Michael McDonnell - Executive Vice President & Chief Financial Officer
Jason Kim - Goldman Sachs
Keith Hanauer - Barclays Capital
Brian Russo - Deutsche Bank
Henrik Nyblom - Nomura
Joe Mastrogiovanni - Credit Suisse
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I would now like to turn the presentation over to Ms. Dianne VanBeber, Vice President, Investor Relations and Corporate Communications. Please proceed.
Thank you. And welcome to Intelsat’s first quarter 2013 earnings conference call. Our earnings release went out this morning and is available on our website. Our Chairman and CEO, David McGlade; and Michael McDonnell, Executive Vice President and Chief Financial Officer are here to discuss Intelsat’s business and financial performance. After their opening remarks, we will open the phone lines for your questions.
In conjunction with our recent IPO, we undertook a reorganization to simplify our corporate structure. This was completely described in our offering document and includes renaming some of our legal entities. For instance. The corporate entity that completed the IPO in April, Intelsat-SA, which previously known as Intelsat Global holdings SA. Later today we will file a quarterly report on Form-6K for this entity, we will also provide eight quarters of data for the publicly listed Intelsat SA on our website to assist you in building a comparable financial model.
From the second quarter of 2013 forward, we will file Form-6K for the entity with the public shares Intelsat SA, with the quarterly information that’s typically provided in a 10-Q. Also later today, we will issue a 10-Q for Intelsat investments SA, formerly known as Intelsat SA. This is a top most entity for which we are historically reported publicly and what are publicly held (inaudible). This entity will no longer be a reporting company after this quarter.
Now generally speaking, the total revenues for these two entities is identical and earnings are different only by a few million dollars but we just wanted to make sure that later on today what your are really looking for is the Intelsat SA 6K.
During our call today, we will discuss adjusted EBITDA and other metrics not prepared in accordance with the U.S. Generally Accepted Accounting Principle, such as EBITDA related margins and free cash flow from operations. We provide reconciliations of these metrics to the most directly comparable GAAP measures in the earnings release in on our website.
In our conversation today, we will include forward-looking statements reflecting our current expectations for future industry condition as well as our business strategy, market trends and positioning are expected future financial performance. These forward-looking statements are statistical risks and uncertainties many of which are outside of our control.
Please refer to the Safe Harbor statement included in a registration statement on Form F1, for information regarding some of the factors that could cause other actual results to differ materially from our expectations. Finally, please be aware of conference call today is opened to the investment community and media, with the media invited to participate in a listen-only mode. Members of the media are not authorized to quote either directly or in substance to any participant in the call is not representative of eventual fact.
Thank you, again, for joining us today and I’m pleased now to introduce David McGlade, Intelsat’s, Chairman and Chief Executive Officer.
Thank you, Dianne and good morning to everyone listening to today especially our new shareholders following our April initial public offering. Overall, our business trends are consistent with those of recent quarters. Total company revenue in the first quarter was in line with the guidance we provided in our IPO perspectives. Growing by nearly 2%, the $655 million as compared to the first quarter of 2012.
Our media business continue to pose strong growth, reflection of the refreshed video neighborhood capacity, we added to the network over the past 18 months. Network services was stable overall but mobility revenue continuing to build. Our government business declined somewhat, the challenges of the U.S. budget environment have evolved over the past several weeks and we are now beginning to experience some of the effects of sequestration.
Adjusted EBITDA in the first quarter of 2013, with $506 million or 77% of revenue increasing 2% from the year ago period. As always we concentrate our efforts on growing our adjusted EBTIDA, given that our government business includes lower margin of network services combined with careful management of operating expenses.
We will be disciplined in managing through any short-term disruptions like a result from sequestration. Our contracted backlog ended the quarter at $10.4 billion. Those of you familiar with the satellite sector know that backlog growth trends are not even. The biggest catalysts in this typically near term satellite launches. Our backlog reflects that we are between launch campaigns. Additionally, it reflects a decrease in backlog from the government sector were customer uncertainty and sequestration are affecting business activity. At four times trailing revenue, our healthy backlog provides our business with predictability and visibility in the future cash flow.
As a company, we are focused on a number of initiatives designed to create increased equity value for our investors over time. Our two part investment thesis starts by applying the proceeds of our stock offerings and increased cash flows from reduced interest expense and capital expenditures to pay down debt, beginning a positive cycle that will allow us to deleverage our balance sheet. Mike will cover our capital markets activities during his commentary.