Inmarsat — FY2016 Earnings Presentation
29 slides from Inmarsat's earnings presentation, Mar 8, 2017
Slide 1: Full Year Results 2016
INMARSAT > Preliminary Results 2016 Full Year Results 2016 8 March 2017
Slide 2: Business Review 2016 & Key Priorities for 2017
INMARSAT > Preliminary Results 2016 Business Review 2016 & Key Priorities for 2017 Rupert Pearce Chief Executive Officer
Slide 3: Sound core business and material growth potential
Sound core business and material growth potential Strong L-band franchise Growing additional Broadband capability $800m revenue per annum I-5 F-1, F-2 and F-3 satellites Launched 8 satellites currently in orbit I-5 F-4 satellite launch expected in Q2 2017 One of only two global L-band satellite oper
Slide 4: 2016 Operational Highlights
2016 Operational Highlights Continuing to deliver the foundations for long-term growth ˃ 2016 Group revenue up 4.3% to $1,329.0m, with EBITDA, up 9.5% to $794.8m ˃ GX gaining market traction, generating revenue of $78.5m in 2016 ˃ Strong performance in Government, both US and RoW, despite budgetary
Slide 5: 2016 Operational Highlights by Business Unit
2016 Operational Highlights By Business Unit Maritime Government Aviation Enterprise Market remains challenging Underlying environment remains Core business growing - Key markets under pressure, in difficult 16,000 aircraft installed for particular Oil & Gas VSAT growing strongly BGA & SOS GX take-u
Slide 6: Q4 2016 Operational Highlights
Q4 2016 Operational Highlights Performance ahead of expectations ˃ Group revenue up 7.0% to $358.1m, ˃ Maritime supported by VSAT revenue with EBITDA up 9.2% to $221.8m growth and ARPU accretion in FleetBroadband, but offset by continued ˃ Significant impact from GX in Government, revenue decline fr
Slide 7: Maritime: The market opportunity
Maritime The market opportunity Maritime satcoms market expected to nearly double in next 8 years Wholesale airtime revenue forecast by technology Future milestones: 1,200 Total MSS Total VSAT Inmarsat share Column1 1,000 Major distribution • VSAT CAGR 2017-20: 17% agreements 800 commitments • MSS C
Slide 8: Aviation: The market opportunity – BGA & SOS
Aviation: The market opportunity – BGA & SOS Continued growth expected in both legacy sectors Business and General Aviation market: Safety & Operations Services Future Number of connected business aircraft in 2025 vs 2015 milestones: Europe North America CAGR: 12% ˃ Cockpit satcom market to grow CAG
Slide 9: Aviation: The market opportunity – IFC
Aviation The market opportunity – IFC In-flight connectivity remains a significant opportunity Connected aircraft1 IFC revenues2 2016 to 2025 Future 25 100 milestones: 2015 base ~20k aircraft Retrofit 2025: $4-6b @ $300k ARPA 20 Linefit 80 IFC Aircraft penetration (%) deals signed and Connected airc
Slide 10: Government: The market opportunity
Government The market opportunity Mobile HTS government satcoms spend expected to continue to grow Government funded in-service terminals by region Future milestones: 1,400 North America Latin America Europe Middle East & Africa Asia Pacific CSSC delivered In-Service Terminals (000s) 1,200 1,000 ToP
Slide 11: Enterprise: The market opportunity
Enterprise The market opportunity Short term environment is challenging, but medium to long term outlook remains strong Future milestones: IoT opportunities grasped: Agritech Fintech Energy Media Connected car Smart agriculture Smart cities Transportation Aid & Mining & Oil & Gas Development Constru
Slide 12: Key priorities for 2017
Key priorities for 2017 First steps off new growth foundations Maritime Government Asset base Drive FleetBroadband ARPU Internationalise, diversify and Maintain high service and and value, progress Fleet Xpress innovate to deliver further value to connectivity levels for L-band and migration from Xp
Slide 13: Financial Review
INMARSAT > Preliminary Results 2016 Financial Review Tony Bates Chief Financial Officer
Slide 14: Group Income statement
Group Income statement $m 2016 2015 Change Q4 2016 Q4 2015 Change Revenue 1,329.0 1,274.1 54.9 358.1 334.8 23.3 Operating costs (534.2) (548.1) 13.9 (136.3) (131.7) (4.6) EBITDA 794.8 726.0 68.8 221.8 203.1 18.7 Depreciation & Amortisation (349.4) (311.2) (38.2) (87.1) (85.1) (2.0) Other 1.7 11.6 (9
Slide 15: Revenue & EBITDA
Revenue & EBITDA $m 2016 2015 Change % Q4 2016 Q4 2015 Change % Wholesale MSS revenue 904.5 832.8 71.7 8.6% 245.9 215.3 30.6 14.2% Other revenue & terminals 305.1 352.7 (47.6) (13.5%) 81.7 83.8 (2.1) (2.5%) Ligado 119.4 88.6 30.8 34.8% 30.5 35.7 (5.2) (14.6%) Total Revenue 1,329.0 1,274.1 54.9 4.3%
Slide 16: Business Unit Cost Summary
Business Unit Cost Summary Maritime ($m) 2016 2015 Government ($m) 2016 2015 Aviation ($m) 2016 2015 Revenue 575 593 Revenue 330 287 Revenue 143 127 Direct Costs 80 86 Direct Costs 41 52 Direct Costs 3 1 Gross Margin 495 86% 507 85% Gross Margin 289 88% 235 82% Gross Margin 140 98% 126 99% Indirect
Slide 17: Maritime business model
Maritime business model FleetBroadband Fleet Xpress Margin Accretion ARPU accretion New 0 Legacy New Existing services & XpressLink Services services markets Services L-band VSAT N.B. Sizes of images on this slide are not indicative of value 17
Slide 18: Maritime Business Unit Results
Maritime Business Unit Results ˃ Growth in VSAT revenue +12% to $102.9m $m Fleet Xpress full commercial launch More ships, substantial backlog (unchanged) 700 ARPU lower 600 Marlink, SpeedCast, Navarino deals 593.2 575.3 500 ˃ Growth in FleetBroadband revenue +2% to $368.2m 400 459.4 454.8
Slide 19: Maritime Key product dynamics
Maritime Key product dynamics FleetBroadband VSAT 15% 12% 9% 13% 8% 18% 19% 12% 2% 7% -1% 2% 13% 11% 24% 17% Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 FB backup* XL FX Revenue ($m) Vessel count Monthly ARPU ($) Other 2016 -17% 2016 2015 2016 2015
Slide 20: Government Business Unit Results
Government Business Unit Results ˃ Growth in the US $m Revenue up 20% (down 13% in 2015) Budgetary pressure continues 350 Increasing GX uptake 330.5 300 One-off Q4 transaction 286.6 US Navy contract win impacts in 2017 250 244 ˃ Growth outside the US 200 Revenue up 10% (down 7% in 2015)
Slide 21: Enterprise Business Unit Results
Enterprise Business Unit Results ˃ Markets continue to be tough $m Revenue down 9% (down 4% in 2015) 180 ˃ BGAN -21% 160 Continuing decline (particularly energy & media) 159.5 140 144.6 ˃ GSPS +8% 120 Airtime flat, terminal sales +22% (2015 issue) 100 113.1 105.9 ˃ FleetBroadband -12% 80 Oil
Slide 22: Aviation Business Unit Results
Aviation Business Unit Results Growth in BGA and SOS* $m ˃ Revenues up 11% (25% 2015) 160 ˃ SwiftBroadband up 9% 140 142.6 ˃ Classic Aero up 24% 120 126.8 100 Investment in In-Flight Connectivity 103.7 97.4 80 ˃ First $2m of revenues : DLH installation 60 ˃ Additional investment (opex and capex) 40
Slide 23: Aviation Changing Financial Profile
Aviation Changing Financial Profile 2015 2016 Beyond Global Xpress EAN IFC* Installation and service Revenue Jet ConneX BGA, SOS EAN cost Direct IFC Installation and service Costs BGA, SOS Indirect IFC Costs BGA, SOS *Excludes transitional L-band cabin services 23 NB The various elements on this gra
Slide 24: Group Cash Flow
Group Cash Flow US$m 2016 2015 Change Q4 2016 Q4 2015 Change EBITDA 794.8 726.0 68.8 221.8 203.1 18.7 Working capital/non-cash items 10.7 (9.0) 19.7 (28.2) (56.4) 28.2 Operating cash flow 805.5 717.0 88.5 193.6 146.7 46.9 Capital expenditure (412.9) (493.6) 80.7 (173.9) (177.8) 3.9 Interest paid (82
Slide 25: Capital Expenditure
Capital Expenditure US$m 2016 2015 Change Q4 2016 Q4 2015 Change Major infrastructure projects 279.2 354.1 74.9 139.4 128.9 (10.5) Success-based capex 78.8 29.1 (49.7) 33.2 11.3 (21.9) Other 92.1 78.6 (13.5) 40.4 23.5 (16.9) Cash flow timing (37.2) 31.8 69.0 (39.1) 14.1 53.2 Total cash capital expen
Slide 26: Net debt
Net debt ˃ Refinancing completed H2 1,985.8 Net debt 1,894.8 $650m new convertible, 3.875% 2,500 $400m new Bond, 6.5% +394.4 394.4 131.8 -131.8 $400m 2017 Convertible retired 2,000 +1.2 993.9 $107m EIB Bond retired 1,500 992.7 ˃ $1,236m liquidity at 31 December 1,000 330.0 +211.5 541.5 Cas
Slide 27: Guidance
Guidance New guidance (in line with current market expectations) ˃ 2017 revenue, excluding Ligado, of $1,200m to $1,300m ˃ 2018 revenue, excluding Ligado, of $1,300m to $1,500m Higher outcomes continue to be possible, depending on the results of Aviation and Government noted above Unchanged guidan
Slide 28: Forward looking Statements
Full Year Results 2016 8 March 2017 Forward looking Statements This announcement contains “forward-looking statements” within the meaning of the US Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks, uncertainties and other factors that may cause our act
Slide 29: Q&A
INMARSAT > Preliminary Results 2016 Full Year Results 2016 Q&A