(COMTEX) B: Loral Reports 2001 First Quarter Results; Continued EBITD
B: Loral Reports 2001 First Quarter Results; Continued EBITDA Growth Driven by
Fixed Satellite Services
NEW YORK, Apr 30, 2001 (BUSINESS WIRE) -- Loral Space & Communications (NYSE:
LOR) today reported its financial results for the three months ended March 31,
2001.
"The restoration of shareholder value is management's primary focus," said
chairman and chief executive officer Bernard L. Schwartz. "To this end, we are
implementing our previously announced strategy to refocus our energies and
resources on our core businesses: satellite manufacturing and technology, and
fixed satellite services. Each of these Loral businesses is a leader in its
market and each has strong and favorable fundamentals.
"We believe the company's value is significantly greater than the current stock
price suggests," Mr. Schwartz continued. "We expect strong EBITDA performance
throughout the year and that 2001 EBITDA will be double that of 2000. This will
help to validate our focused strategy and, we believe, will lead to a more
realistic valuation of our common stock."
Financial Results for the Quarter Ended March 31, 2001
Reported EBITDA (earnings before interest, taxes, depreciation and amortization)
for the quarter rose 24 percent to $58 million, from $47 million in the
year-earlier quarter. EBITDA margins rose to 22 percent in the first quarter of
this year from 15 percent in 2000, fueled by fixed satellite services (FSS)
growth. FSS is expected to achieve steady year-over-year gains and will be the
primary driver of Loral's growth and profitability.
This trend should continue as capacity utilization of the current fleet climbs
and as the fleet expands. At the end of the quarter utilization was 74 percent,
excluding Europe*Star which initiated service during the quarter. On the same
basis, utilization of the current fleet is expected to reach in excess of 80
percent by year-end and, by the end of 2002, should reach optimum utilization of
90 to 95 percent. At that time, three new Loral satellites now under
construction will be in service and contributing incremental revenue and
profits. They are: Telstar 8, Telstar 13 and Estrela do Sul
Loral posted positive operating profit in the first quarter of $3.9 million
versus a loss of $6.0 million during the same period last year.
The net loss for the quarter was $75 million, or $0.25 per common share,
compared with a net loss of $142 million, or $0.49 per common share in the first
quarter of 2000.
Per share calculations are based on 298.7 million weighted average shares of
common stock outstanding versus 293.3 million for the first quarter of 2000.
Revenue for the first quarter declined to $261 million. Segment sales during the
period for fixed satellite services increased to $129 million from $102 million
last year, and satellite manufacturing declined from $248 million in last year's
first quarter to $201 million. SS/L's sales decline in this quarter was due in
part to lower launch sales versus last year. We expect revenue for Loral to
increase slightly on a year-over-year basis.
Loral ended the quarter with a net funded backlog of $3.1 billion, up slightly
from $2.9 billion a year ago. FSS backlog before eliminations rose 26 percent to
$2.4 billion. Manufacturing backlog of $1.6 billion before eliminations,
representing approximately 18 months of sales, held steady with backlog at the
same time last year.
Net bookings were $209 million in the first quarter, a decline from an unusually
strong first quarter last year when the FSS segment was booking newly available
capacity and SS/L booked several new orders, leading to an especially robust
quarter of bookings. Opportunities for additional satellite bookings this year
remain robust but characteristically lumpy quarter by quarter.
At the end of the first quarter Loral had cash and available unused bank credit
totaling $269 million. The company this year is funding the construction of
three Loral Skynet satellites, which will become engines of additional growth
and cash flow when they are launched in 2002. In the first quarter, EBITDA
generated $58 million in cash and is expected to climb in successive quarters of
this year. Furthermore, cash from working capital, which was negative in the
first quarter, should turn positive for the remainder of 2001. Interest payments
are expected to decline during this year, as are preferred dividend payments due
to Loral's recently completed offer to exchange preferred stock for common stock
resulting in the annual elimination of $17 million in dividend payments and $279
million in future mandatory redemptions. A combination of all of these factors
will result in a stronger cash performance for the balance of the year.
The current carrying value of our investment in Globalstar totals $43 million.
We are currently spending approximately $13 million per quarter that is expensed
as incurred for our four Globalstar franchises. This will continue until
Globalstar is restructured.
Business Unit Review
Fixed Satellite Services (FSS)
The ten satellites in the Loral Global Alliance continued to deliver excellent
performance in the first quarter. Segment revenue of $129 million climbed 27
percent from the first quarter of 2000.
Segment EBITDA reached a record $84 million, up 35 percent from the first
quarter of 2000. The EBITDA margin also improved, hitting 65 percent of sales
compared to 61 percent a year earlier. The margin on incremental revenue as the
fleet expands and capacity utilization increases is 90 percent. Operating cash
flow generated as satellites are added to the fleet will fund the addition of,
on average, one new satellite annually for Loral. Capital expenditures for
satellites currently under construction for Loral are expected to total $240
million this year. Given the stable nature of this business, its high margins
and long-term contracts, the company expects continued growth in EBITDA as 2001
progresses.
Launches scheduled to begin in 2002 will add five more satellites to the Loral
Global Alliance fleet: Telstar 8, Telstar 13, Loral Skynet do Brasil's Estrela
do Sul, France Telecom/Europe*Star's Stellat 5 and Satmex 6.
Demand for fixed satellite services remains steady for broadcast and Internet
backbone connectivity despite some weakness in the end-user Internet market.
Specifically, demand in Latin America is strong and the Europe/Trans-Atlantic
market is steady. In Asia, demand for C-band capacity is steady, while the
demand for Ku-band is mixed depending on the region. In North America, demand
for Ku-band capacity is steady and C-band demand is soft. Typical transponder
rates on both C- and Ku-band are expected to remain stable, on average,
throughout the year.
New business in the first quarter of 2001 included contracts with Hughes Network
Sytems, Interpacket, Louisiana Educational Television, China Netcom Corporation,
Playboy Entertainment Group, Williams Communications and International Satellite
Communications.
Expected new bookings in 2001 will be lower than 2000's extremely high rate, but
with three more satellites being added to the fleet next year, bookings growth
is expected to resume. With a record backlog at the end of the first quarter of
nearly $2.4 billion and an average contract life of four to five years, the
outlook for this segment is very strong.
Satellite Manufacturing and Technology
Revenue of $201 million declined 19 percent from the first quarter of 2000 (due,
in part, to a nearly $40 million reduction in the sale of launch services to
customers). Segment EBITDA, at $19 million, also declined from the same period
last year as a result of the lower revenue. The EBITDA margin of 9.5 percent
held to our target range of eight to ten percent of revenues.
Segment bookings of $125 million in the quarter primarily included an order from
Hong Kong-based APT Satellite for Apstar V, a high-powered satellite that will
provide Ku- and C-band services to Asia
Bookings in this sector will continue to be uneven during the year but, as there
is no indication of an industry-wide softness in potential orders, Loral
currently expects to book six or more new satellite orders in 2001.
SS/L will launch five satellites during 2001, including GOES M, the fifth in the
current generation meteorological satellite for North America; three of the next
generation Intelsat international communications satellites, and DirecTV-5 which
will serve the U.S. direct-to-home market. Loral also will continue to deliver
critical components, such as, batteries and power electronics for installation
on the International Space Station.
There have been no further incidences since January 1st of solar array problems
or the minor power losses associated with them on some of the satellites built
in recent years by SS/L. The only effect observed so far is some minor
electrical power loss, reducing by a small percentage the amount of surplus
power built into the satellites, beyond what they need to function at full
capacity. All customers have been briefed and all 2001 deliveries and launches
are proceeding as planned.
Data Services
Revenue in the data services segment was $29 million, down 12 percent from the
first quarter of 2000, while the EBITDA loss, at $10 million, held at last
year's level. Loral CyberStar is focused on achieving positive EBITDA in the
fourth quarter. CyberStar's heritage businesses - Internet access for ISPs and
enterprises, corporate data networking and business television - will be EBITDA
positive for the year but the segment is expected to post a modest EBITDA loss
due to investment in our streaming media initiative.
Growth at Loral CyberStar was hampered by the competitive build-out of the fiber
infrastructure. Internet service demand continues to grow, however, in the
Indian Ocean region, the Pacific Ocean region and the Middle East where fiber is
not as ubiquitous as in the West. The company debooked $ 21 million in the first
quarter due to business failures on the part of some of CyberStar's Internet
start-up customers.
Loral CyberStar announced the launch of several new IP (Internet Protocol)-based
products for customers in both its corporate data networking and business media
services groups. These new products, branded ClearStream(TM), comprise a suite
of services for enhanced video and streaming media applications directly to the
desktop.
Loral CyberStar added a number of new customers during the quarter, including
Wipro.Net, one of India's leading ISPs, RACSA, Costa Rica's primary voice and
data carrier, and RAW Communications. RAW will use CyberStar's ClearStream
service to deliver RAW Financial, its premier broadband service, directly to the
desktops of thousands of leading fund managers across Europe and the United
States.
Outlook
Loral's growth in revenue and EBITDA will continue to be fueled primarily by the
FSS segment. As EBITDA doubles this year to an anticipated $260 million, it is
expected to double again over the next two years driven by increased utilization
of our current fleet and realized revenues from satellites currently under
construction which are substantially funded to date.
Loral expects to continue to fund its capital programs with cash on hand and
with cash generated from operations this year.
Loral Space & Communications is a high technology company that concentrates
primarily on satellite manufacturing and satellite-based services. For more
information, visit Loral's web site at www.loral.com.
This document contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. In addition, from time to time, Loral Space &
Communications Ltd. or its representatives have made or may make forward-looking
statements, orally or in writing.
Such forward-looking statements may be included in, but are not limited to,
various filings made by the company with the Securities and Exchange Commission,
press releases or oral statements made with the approval of an authorized
executive officer of the company. Actual results could differ materially from
those projected or suggested in any forward-looking statements as a result of a
wide variety of factors and conditions. These factors and conditions have been
described in the section of the company's annual report on Form 10-K for the
fiscal year ended December 31, 2000, entitled "Certain Factors That May Affect
Future Results," and the company's other filings with the Securities and
Exchange Commission. With regard to forward-looking statements concerning Loral
CyberStar, Inc. and its business, financial condition, results of operations and
prospects, the factors and conditions which could materially affect these
statements are described in the section of Loral CyberStar's annual report on
Form 10-K for the fiscal year ended December 31, 2000, entitled "Certain Factors
That May Affect Future Results." The reader is specifically referred to these
documents regarding the factors and conditions that may affect future results.
LORAL SPACE & COMMUNICATIONS LTD
INCOME STATEMENTS
(In millions, except per share data)
Three Months Ended March 31,
--------------------------------
2001 2000
-------- --------
Segment Revenues:
Satellite manufacturing
and technology $ 201.1 $ 248.2
Fixed satellite services (1) 129.2 102.0
Data services 28.7 32.5
----------- ------------
Operating segment revenues 359.0 382.7
Intercompany and
affiliate eliminations (97.9) (64.6)
----------- ------------
Operating revenues as reported $ 261.1 $ 318.1
=========== ============
Segment EBITDA:
Satellite manufacturing
and technology $ 19.2 $ 26.4
Fixed satellite services (1) 83.9 62.0
Data services (10.0) (10.4)
Corporate expenses (9.4) (9.5)
----------- ------------
Segment EBITDA
before eliminations 83.7 68.5
Intercompany and
affiliate eliminations (25.5) (21.4)
----------- ------------
EBITDA as reported 58.2 47.1
Depreciation and amortization (54.3) (53.1)
----------- ------------
Operating income (loss) 3.9 (6.0)
Interest and investment
expense, net (42.0) (29.5)
Gain on investments - 15.2
----------- ------------
Pretax loss (38.1) (20.3)
Income tax benefit (provision) 1.9 (5.0)
---------- -----------
Loss after taxes (36.2) (25.3)
Loss applicable to GlobalStar (13.0) (88.3)
Equity in affiliate
losses and other (9.8) (9.4)
---------- -----------
Net loss (59.0) (123.0)
Preferred dividends (16.1) (19.4)
---------- -----------
Net loss -
common shareholders $ (75.1) $ (142.4)
========== ===========
Weighted shares outstanding -
Basic and Diluted 298.7 293.3
========== ===========
Loss per share -
Basic and Diluted $ (0.25) $ (0.49)
========== ===========
(1) Includes 100% of Europe*Star's and Satmex's revenues and
EBITDA (Europe*Star commenced revenue service in 2001).
LORAL SPACE & COMMUNICATIONS LTD.
Supplemental Financial Data
(In millions)
Three Months Ended March 31,
------------------- ----------------
2001 2000
------------------- ----------------
BOOKINGS
Satellite manufacturing
and technology $ 124.8 $ 506.1
Fixed satellite services (1) 162.4 562.8
Data services 4.8 28.8
------------------- ----------------
Total bookings 292.0 1,097.7
Intercompany and
affiliate eliminations (82.8) (251.9)
------------------- ----------------
Net bookings $ 209.2 $ 845.8
=================== ================
March 31, 2001 March 31, 2000
------------------- ----------------
FUNDED BACKLOG
Satellite manufacturing
and technology $ 1,576.8 $ 1,559.8
Fixed satellite services (1) 2,445.2 1,942.8
Data services 166.9 232.2
------------------- ----------------
Total funded backlog 4,188.9 3,734.8
Intercompany and
affiliate eliminations (1,072.5) (810.5)
------------------- ----------------
Net funded backlog $ 3,116.4 $ 2,924.3
=================== ================
March 31, 2001 March 31, 2000
------------------- ----------------
CASH & UNUSED BANK CREDIT $ 268.9 $ 565.9
TOTAL DEBT (2) 2,438.2 1,989.2
EQUITY 1,509.8 3,033.0
(1) Includes 100% of Satmex and Europe*Star.
(2) Total debt includes $1.0 billion and $974 million of Loral
CyberStar debt as of March 31, 2001 and 2000, respectively,
which is non-recourse to Loral.
CONTACT: Loral Space & Communications, New York
Jeanette Clonan / Tony Doumlele
212/697-1105
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INDUSTRY KEYWORD: AEROSPACE/DEFENSE
TELECOMMUNICATIONS
EARNINGS
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