Eutelsat Communications SA · EURONEXT:ETL
Eutelsat Communications SA — H1 2019-20 Earnings Presentation
39 slides from Eutelsat Communications SA's earnings presentation, Feb 14, 2020
Slide 1: First Half 2019-20 Results
FIRST HALF 2019-20 RESULTS 14 February 2020
Slide 2: Disclaimer
Disclaimer This document contains figures from the consolidated half-year accounts, prepared under IFRS, and subject to a limited review by the Auditors. They were reviewed by the Audit Committee on 12 February 2020 and approved by the Board of Directors of Eutelsat Communications on 13 February 202
Slide 3: Agenda
Agenda 1 Highlights 2 Operational performance 3 Financial performance 4 Outlook 3
Slide 4: Key financial data
Key financial data First Half Underlying €m REVENUES 2019-20 performance Operating Verticals €636m -4.9%1 Revenues EBITDA margin at 77.9%2 -0.9 pts constant currency Cash Capex (€189)m (€59)m Discretionary €108m -56%3 Free Cash Flow Net Debt / EBITDA 3.2x +0.1x 1 YoY variation at constant currency a
Slide 5: Recent Highlights
Recent Highlights First Half in line with expectations Improving revenue trends for Operating Verticals in Q2 versus Q1 High profitability: EBITDA margin at 78% despite revenue decline Launch of LEAP 2 cost-savings plan to generate €20-25m opex savings by June 2022 High level of shareholder remunera
Slide 6: Improving trends in the Second Quarter
Improving trends in the Second Quarter Q1 Q2 YoY LFL1 YoY LFL1 QoQ LFL1 Broadcast -1.7% -1.5% -0.2% Data & Professional -19.6% -14.9% +3.3% Video Government -10.7% -4.6% -1.7% Services Fixed Broadband -3.3% -5.5% -3.8% Mobile Connectivity -7.8% +7.1% +8.2% Total Operating Verticals -6.2% -3.7% +0.4%
Slide 7: Successful Launch of EUTELSAT KONNECT
Successful Launch of EUTELSAT KONNECT ► Launched on January 16 ► Entry into service in Q4 2020 ► 75 Gbps of incremental Ka-Band HTS capacity ► Enabling provision of high-speed Broadband services ► Two-fold objective: • Europe: Offload congested beams in zones of high demand • Africa: Enhance coverag
Slide 8: Progress in Mobility and IoT
Progress in Mobility and IoT MOBILITY: PROCUREMENT OF EUTELSAT 10B IOT: DEVELOPMENT OF TWO COMPLEMENTARY WITH FIRM PRE-COMMITMENTS INITIATIVES ADDING A GROWTH LEVER ► Identified shortage of Ku-Band ► Roll-out of ‘IoT FIRST’ for mobility in EMEA • End-to-end managed service ► Multi-payload satellite
Slide 9: Agenda
Agenda 1 Highlights 2 Operational performance 3 Financial performance 4 Outlook 9
Slide 10: First Half 2019-20 revenues
First Half 2019-20 revenues H1 20 Y-O-Y REVENUE BRIDGE (€M) ► Total revenues of €637m, down 3.3% 3 -4.9% ► Slightly negative perimeter 10 impact (2) (33) • Carry-forward of deconsolidation of ETL 25B in August 2018 ► Positive currency effect 658 637 • €/$ rate of 1.11 vs 1.16 last year ► Revenues fr
Slide 11: H1 2019-20 revenues by application
H1 2019-20 revenues by application REVENUE REVENUES LIKE-FOR-LIKE2 CONTRIBUTION1 (€m) CHANGE Broadcast 61% 389 -1.6% Data & Professional 14% 10% 88 -17.3% Video Government 12% 78 -7.8% Services Fixed Broadband 6% 39 -4.4% Mobile 6% 41 -0.6% Connectivity Total Operating Verticals 636 -4.9% Other Reve
Slide 12: Broadcast
Broadcast 61% REVENUES (€M) ► H1 Revenues of €389m, down 1.6% like-for-like1 • Return of a couple of transponders in Russia • Contract termination in SSA 394 389 ► Q2 revenues stable Q-o-Q Q2 196 Q2 195 ► Commercial highlights • Multi-year capacity contract at Hotbird to broadcast RTVE content • Mul
Slide 13: Long term resilience of Core Broadcast revenue
Long term resilience of Core Broadcast revenue Core Broadcast quarterly revenues (€m) Loss of Russian transponders and SSA platform 197 197 198 197 196 195 197 197 193 192 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY 18 FY 19 FY 20 At constant currency and accounting standards Excluding Fransat Converted at FY1
Slide 14: Channel count
Channel count CHANNEL COUNT HD PENETRATION MPEG-4 7,067 1,605 4,858 4,737 6,879 1,500 +7% -2% -98 -20 -45 -25 Penetration 21% 23% Penetration 69% 69% SSA Russian One-off Net Dec 18 platform txps element channel Dec 19 Dec. 2018 Dec. 2019 Dec. 2018 Dec. 2019 loss ► Channel count reflecting ► HD conti
Slide 15: HOTBIRD channel count
HOTBIRD channel count CHANNEL COUNT HD PENETRATION MPEG-4 978 stable 975 +13% 392 635 346 584 +9% 35% 40% 60% 65% Penetration Penetration Dec. 2018 Dec 2019 Dec. 2018 Dec. 2019 Dec. 2018 Dec. 2019 ► Stable channel count ► HD ramp-up ► MPEG-4 considerably outpacing MPEG-4 more advanced adoption than
Slide 16: Data & Professional Video
Data & Professional Video 14% REVENUES (€M) ► H1 Revenues of €88m, down 17.3% like-for-like1 ► Continuing to reflect: 104 • Highly competitive environment • Ongoing pricing pressure 88 Q2 51 ► Data volume losses in Q1 in Q2 45 LATAM ► Improving volume trends in Q2 Q1 52 Q1 43 ► Comparison basis to e
Slide 17: Government Services
Government Services 12% REVENUES (€M) ► H1 Revenues of €78m, down 7.8% like-for-like1 82 78 ► Carry forward impact of USG renewal campaigns of past 18 Q2 39 Q2 39 months ► H2 to benefit from: • The contribution of the EGNOS Q1 42 Q1 39 payload on ETL 5 West B • The relocation of EUTELSAT 7A H1 2018-
Slide 18: Fixed Broadband
Fixed Broadband 6% REVENUES (€M) ► H1 Revenues of €39m, down 4.4% like-for-like1 ► Mixed trends in Europe • Continued ramp-up of PPP, gradually 40 extended to new countries 39 • Business constrained by lack of capacity in high demand markets Q2 20 Q2 19 ► Still modest contribution from African Broad
Slide 19: Mobile Connectivity
Mobile Connectivity 6% REVENUES (€M) ► Revenues of €41m, down 0.6% like-for-like1 reflecting: • Carry-forward of the end of a 41 temporary wide-beam contract on ETL 40 172B in FY 19 • Contribution of UnicomAirNet from January 2019 Q2 19 Q2 22 • Ongoing ramp up of capacity contracts on KA-SAT and mar
Slide 20: Backlog and Fill Rate
Backlog and Fill Rate BACKLOG (€BN) OPERATIONAL AND UTILIZED TRANSPONDERS 1,419 1,387 1,387 4.6 4.4 4.3 970 960 966 Broadcast 74% 72% 68% 31 Dec. 2018 30 June 2019 31 Dec. 2019 31 Dec. 2018 30 June 2019 31 Dec. 2019 Fill 68.3% 69.2% 69.7% rate ► 3.3 years of revenues Operational transponders Leased
Slide 21: Agenda
Agenda 1 Recent highlights 2 Operational performance 3 Financial performance 4 Outlook 21
Slide 22: Profitability
Profitability EBITDA (€M) ► EBITDA margin of 77.9% at 518 496 constant currency vs. 78.8% in H1 2018-19 • Lower revenues • Higher costs associated with Margin at Broadband activities constant 78.8% 77.9%1 currency • Strong cost discipline in core 77.4 77.4 77.5 businesses • No ‘LEAP 2’ benefits at t
Slide 23: Net income
Net income Extracts from the H1 H1 2019-20 Change consolidated income statement in €m1 2018-19 Revenues 658 637 -3.3% EBITDA2 518 496 -4.4% Operating 297 225 -24.0% ► Capital gain related to EUTELSAT 25B income disposal in FY 19 Financial result (53) (41) -22.2% ► Reflecting the benefit of the refin
Slide 24: Discretionary Free Cash-Flow reflecting capex phasing
Discretionary Free Cash-Flow reflecting capex phasing In €m 353 1 (189) (1) 108 (3) FX & perimeter (56) impact 105 (1) Net cash Flow from Cash Capex Interest and Other Discretionary Free operations fees paid net of Cash-flow interest received Change at constant (39) (59) (33) (132) FX & perimeter Re
Slide 25: Evolution of Net Debt
Evolution of Net Debt In €m +€162m 9 3,235 (108) (55) 316 3,073 Net Debt at Discretionary Acquisitions/ Dividend paid Other Net Debt at end-June 19 Free Cash-Flow Disposals end-Dec. 19 25
Slide 26: Financial structure
Financial structure NET DEBT / EBITDA RATIO1 ► Net Debt/EBITDA ratio at 3.2x • vs 3.1x at 31 Dec 2018 ► Average cost of debt after hedging 3.2x reduced to 2.4% 3.1x • vs 2.8% in H1 2018-19 ► Average weighted maturity of 4.2 years • vs 2.7 years at 31 Dec 2018 ► Strong liquidity • €373m cash 31 Decem
Slide 27: Agenda
Agenda 1 Recent highlights 2 Operational performance 3 Financial performance 4 Outlook 27
Slide 28: Reminder: Our strategic roadmap
Reminder: Our strategic roadmap Step 1 Step 2: return to growth GROW TOPLINE MAXIMIZE EXTRACT VALUE CAPTURE THE FREE CASH-FLOW FROM THE CONNECTIVITY GENERATION BROADCAST OPPORTUNITY BUSINESS 28
Slide 29: Update on our key priorities for FY 2019-20
Update on our key priorities for FY 2019-20 Execute on LEAP 2 Launched November 2019 Maximize cash Relocate Paris HQ On track to move in June 2020 generation Maintain all levers of FCF Full materialization of cash interest generation under tension and tax savings Extract value Exploit growth pockets
Slide 30: H2 to benefit from easing revenues comps and identified tailwinds
H2 to benefit from easing revenues comps and identified tailwinds EASING COMPS IN GOVERNEMENT SEVERAL TAILWINDS TO SERVICES AND DATA & PV SUPPORT H2 PERFORMANCE Half-Year revenues at 1.14 €/$ rate 663 ► Incremental capacity on ETL 7C 651 41 40 in SSA 40 40 83 79 ► EGNOS Payload on E5WB 105 96 ► Relo
Slide 31: Financial outlook confirmed
Financial outlook confirmed OPERATING VERTICALS REVENUES1 ► FY 2019-20: between €1,270m and €1,315m2 ► FY 2019-20 to FY 2021-22: average of CASH CAPEX €400m3 per year DISCRETIONARY FREE CASH FLOW4 ► FY 2021-22: around €500m ► Maintain investment grade rating LEVERAGE ► Net debt / EBITDA below 3.0x ►
Slide 32: Highly secured dividend
Highly secured dividend SECURED ELEMENTS UNDERPINNING FY 22 DFCF SUBSTANTIAL HEADROOM TO DIVIDEND COVER OBJECTIVE OF c. €500M 600 1.4x 1.5 ~20 ~515 1.0x ~35 500 1 ~50 410 400 0.5 408 115 295 0 300 247 -0.5 200 DFCF to -1 revenues 16% 29% ratio 100 -1.5 0 -2 FY 3y average Headroom Dividend 1 FY 19 DF
Slide 33: Targeted growth capacity to progressively support topline trends
Targeted growth capacity to progressively support topline trends Incremental Key capacity markets 2020 2021 2022 2023 Video June January EUTELSAT 7C 19 Ku Sub-Saharan Africa January Q4 65 Ka spotbeams Broadband KONNECT 75 Gbps Europe/Africa Q3 Q4 EUTELSAT 8 “QUANTUM” Government QUANTUM beams Flexibl
Slide 34: Limited maintenance capex requirement beyond FY 22
Limited maintenance capex requirement beyond FY 22 providing flexibility to further support cash generation TOP 15 ORBITAL POSITIONS BY FY 19 REVENUE ► 15 heritage orbital positions generating c.90% of total Orbital position Launch between revenues FY 23 and FY 28 13°E (Hotbird) No ► Replacement of
Slide 35: To Sum Up
To Sum Up Second Quarter fully in line with expectations and showing improving revenue trends Sequential stability of Broadcast Robust EBITDA margin despite lower revenues and higher Broadband Costs Confirmation of Financial Objectives for FY2020 and beyond Secured DFCF providing substantial headroo
Slide 36: Appendix
APPENDIX
Slide 37: Future launches
Future launches KONNECT EUTELSAT EUTELSAT EUTELSAT 10B Name VHTS HOTBIRD 13F HOTBIRD 13G Orbital TBD TBD 13° East 13° East 10° East Position Launch date1 Q3 2020 H2 2021 H2 2021 H2 2021 2022 Manufacturer Launcher TBD TBD TBD TBD Flexible Europe Europe Europe EMEA, Atlantic & Coverage Indian Ocean Go
Slide 38: Key Financial Data
Key Financial Data 6M to Dec. 6M to Dec. Key Financial Data Change 2018 2019 P&L Revenues - €m 658.1 636.6 -3.3% “Operating Verticals” revenues - €m 660.4 635.8 -3.7% “Operating Verticals” revenues at constant currency and perimeter - €m 658.7 626.1 -4.9% EBITDA1 - €m 518.4 495.5 -4.4% EBITDA margin
Slide 39: Disclaimer
Disclaimer This presentation does not constitute or form part of and should not be construed as any offer for sale of or solicitation of any offer to buy any securities of Eutelsat Communications, nor should it, or any part of it, form the basis of or be relied on in connection with any contract or
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