Loral Reports First Quarter 2007 Financial Results
Consolidated Revenue Up 28 Percent; Backlog Rises 40 Percent Over First Quarter 2006
NEW YORK - Loral Space & Communications Inc. (NASDAQ: LORL) today announced its financial results for the three months ended March 31, 2007.
ďLoralís results remain on course, carrying our success from 2006 into a solid first quarter in 2007,Ē said Michael Targoff, chief executive officer of Loral. "Our satellite manufacturing business, Space Systems/Loral (SS/L), continues to perform well, winning two awards during the quarter. SS/L has successfully expanded its market over the last year to capture opportunities in the growth of high-definition video services by direct-to-home service providers, mobile multimedia and communications platforms, and broadband data services Ė all applications that are driving satellite industry growth.
ďWe remain enthusiastic about the Telesat Canada transaction. Integration plans for Loral Skynet and Telesat Canada are continuing and the transaction is proceeding through the required U.S. and Canadian regulatory approval process, including approvals from the Federal Communications Commission (FCC) and Industry Canada. We continue to expect to close the transaction this summer.Ē
Financial Results for the Period Ended March 31, 2007
Loralís reported revenue rose 28 percent over last yearís first quarter to $221 million, as a result of a 44 percent increase in revenue before eliminations at SS/L.
Adjusted EBITDA(1) for the first quarter was $8 million, compared to Adjusted EBITDA of $11 million reported in the same period a year ago.
Results for the quarter reflect higher research and development and marketing expenses to respond to the increase in opportunities we are experiencing at SS/L. Results also reflect higher litigation expense and intercompany activity in the quarter.
Loral reported a net loss in the quarter of $17 million, compared to a net loss of $16 million in the first quarter of 2006.
Loral ended the first quarter of 2007 with $507 million in available cash and short term investments. In February, Loral completed its $300 million of preferred stock financing with MHR Fund Management LLC. As previously discussed, Loral intends to utilize its cash and short term investments primarily for working capital requirements and facilities upgrades at SS/L, for the continued construction of Loral Skynetís Telstar 11N satellite and to complete the Telesat Canada transaction.
Loralís total consolidated backlog at March 31, 2007 was $1.559 billion, compared to $1.347 billion at December 31, 2006 and $1.115 billion on March 31, 2006.
Space Systems/Loral continues to book new awards and benefit from the satellite construction contracts it has been awarded over the past two years. Since 2005, SS/L has won contracts for 13 new satellite programs, including two in the first quarter: Intelsat 14 and EchoStar XIV.
In the first quarter of 2007, Space Systems/Loral reported revenues before eliminations of $200 million, a 44 percent increase from the $139 million reported in the first quarter of 2006. SS/Lís Adjusted EBITDA was $7.4 million in the quarter, a 27 percent increase compared to Adjusted EBITDA of $5.8 million in the year-ago period. First quarter Adjusted EBITDA reflects SS/Lís increased investments of $3 million in research and development and bid and proposal activities, offset by the substantial increase in revenue.
With SS/Lís two new bookings in the first quarter, in addition to the seven orders SS/L received in 2006, backlog at SS/L at March 31, 2007 rose to $1.297 billion, including intercompany backlog of $103 million compared to backlog at December 31, 2006 of $1.118 billion, including intercompany backlog of $116 million. SS/Lís backlog on March 31, 2006 was $830 million, including intercompany backlog of $129 million. Intercompany backlog primarily includes the Telstar 11N satellite being built for Loralís satellite services division, Loral Skynet.
In 2007, there are four geostationary satellites scheduled for delivery: EchoStar XI, Galaxy 18, ICO G1 and XM-5, as well as eight low earth orbit satellites for Globalstar.
Loralís satellite services subsidiary, Loral Skynet, experienced continued steady performance on its four-satellite fleet. Loral Skynetís revenue and Adjusted EBITDA results in the quarter reflect the impact of the Connexion by Boeing contract termination in the third quarter of 2006 and the elimination of lower profit network services contracts in the fourth quarter of 2006, partially offset by additional new sales.
Loral Skynet reported first quarter 2007 revenues before eliminations of $34 million, down slightly from $36 million reported in the first quarter of 2006. Loral Skynetís Adjusted EBITDA in the first quarter totaled $11.9 million, compared to $12.6 million for the prior year quarter, as a result of lower revenues, offset by cost savings related to personnel reductions in the fourth quarter of 2006.
Loral Skynetís backlog on March 31, 2007 was $375 million, including intercompany backlog of $9 million compared to backlog on December 31, 2006 of $355 million, including intercompany backlog of $10 million. Loral Skynetís backlog on March 31, 2006 was $433 million, including intercompany backlog of $19 million.
Capacity utilization on Loral Skynetís satellite fleet at the end of the first quarter was at 72 percent.
Telesat Canada Update
On December 16, 2006, the joint venture company formed by Loral and its Canadian partner, PSP Investments, entered into a definitive agreement with BCE Inc. (TSX/NYSE: BCE) to acquire 100 percent of the stock of Telesat Canada from BCE for CAD 3.25 billion. Loral expects to close the transaction this summer.
Telesat Canada reported first quarter 2007 revenues of CAD 122 million and Adjusted EBITDA of CAD 67 million. The companyís backlog at March 31, 2007 was CAD 5.1 billion. This backlog includes the benefit of two satellites under construction where all of the capacity has been leased for the entire life of the satellites. It also includes the lifetime lease to EchoStar of the Ku-band payload on Anik F3, which was successfully launched on April 9, 2007. Anik F3, which also carries 24 C-band transponders and a small Ka-band payload, completed in-orbit testing and entered commercial service on May 1, 2007.
A full discussion of Loralís results is contained in the companyís Form 10-Q, which, when filed, will be available on the companyís web site at www.loral.com or on the SECís EDGAR service at www.sec.gov.
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