Inmarsat — H1 2018 Earnings Presentation
25 slides from Inmarsat's earnings presentation, Aug 2, 2018
Slide 1: Interim Results 2018
INMARSAT > Interim Results 2018 Interim Results 2018 2 August 2018
Slide 2: Overview
INMARSAT > Interim Results 2018 Overview Rupert Pearce Chief Executive Officer
Slide 3: Operational Review – H1 2018
Operational Review – H1 2018 Solid progress against diversified growth portfolio ˃ Robust results, ahead of market expectations ˃ Good operational progress across the Business Units ˃ Delivering against diversified & resilient growth portfolio ˃ Outlook and future guidance reiterated 3
Slide 4: Our differentiated market position & diversified growth portfolio
Our differentiated market position & diversified growth portfolio Compelling Highly differentiated Long-standing Diversified growth market opportunity proposition market presence portfolio Significant future growth in • 39 year track record in Base Case Specialised in mobility demand for data “on
Slide 5: Maritime H1 2018 performance
Maritime H1 2018 performance Continued solid delivery H1 2018 progress Future roadmap Fleet Xpress • 1,500+ vessels installed in H1 Further build material market share: • Consistently strong new business record, • Deliver on Take-or-Pay commitments with 1 in every 4 installations being a new custome
Slide 6: Government H1 2018 performance
Government H1 2018 performance Another strong performance from US Government business H1 2018 progress Future roadmap Contractual wins with major USG customers Broader footprint in key markets, sectors and niches Material reduction in Boeing ToP breakage CSSC and FirstNet contracts fully established
Slide 7: Aviation IFC H1 2018 performance
Aviation IFC H1 2018 performance Revenue doubled, with initial airtime revenue generated H1 2018 progress Future roadmap Aircraft 1600 Further contract wins from pipeline of c.3,000 aircraft 1400 1200 Aircraft under contract & commercially Bring contracted customers into service, generating 1000 act
Slide 8: Aviation Core H1 2018 performance
Aviation Core H1 2018 performance Further strong revenue growth in each product line H1 2018 progress Future roadmap Business and • Increased usage in SwiftBroadband • New growth opportunities for enhanced General aviation SwiftBroadband with I-6 launches from 2020 • 125 installed with JetConneX in
Slide 9: Enterprise H1 2018 performance
Enterprise H1 2018 performance Driven by strong growth in satellite phone revenues H1 2018 progress Future roadmap • Key legacy product lines stabilised, in particular, • Further develop M2M product set for future IoT satellite phones applications • New commercial distribution agreements • Develop n
Slide 10: Robust growth outlook
Robust growth outlook Diversified growth portfolio supported by moderating capex profile Multiple paths to additional Ligado Double digit growth growth & value creation – Spectrum China & India off a solid base Digital services Govt Internet Strategic deals of Things & Op tempo In-Flight Connectivit
Slide 11: Financial Review
INMARSAT > Interim Results 2018 Financial Review Tony Bates Chief Financial Officer
Slide 12: Group Income statement – H1 & Q2 2018
Group Income statement – H1 & Q2 2018 $m H1 2018 H1 2017 Change Q2 2018 Q2 2017 Change Revenue 717.2 683.7 33.5 371.8 354.2 17.6 Direct costs (118.2) (86.5) (31.7) (65.2) (50.4) (14.8) Gross margin 599.0 597.2 1.8 306.6 303.8 2.8 Indirect costs (226.0) (217.5) (8.5) (108.5) (107.2) (1.3) EBITDA 373.
Slide 13: H1 2018 Business Unit Summary
H1 2018 Business Unit Summary Maritime ($m) 2018 2017 Government ($m) 2018 2017 Aviation - IFC ($m) 2018 2017 Revenue 282.1 279.8 Revenue 183.1 187.5 Revenue 41.2 19.6 Direct Costs (43.6) (40.6) Direct Costs (32.6) (27.2) Direct Costs (21.1) (1.1) Gross Margin 238.5 84.5% 239.2 85.5% Gross Margin 15
Slide 14: Maritime Results – H1 2018
Maritime Results – H1 2018 ˃ VSAT revenue up $12.9m, 21.6%, to $72.6m: H1 Revenue ($ in millions) − VSAT ships up 1,801 to 5,364 (including 4,121 on FX) − FX net installation rate ramping up: c.1,500 in H1 2018 (H1 2017: c.1,00) 1.9 42.5 3.7 42.6 − c.26% of installations from completely new customer
Slide 15: Government Results – H1 2018
Government Results – H1 2018 ˃ US revenue up 2.8%: − Contract renewed on revised terms $m − One-off airtime leasing revenue and equipment sales 200 − Underlying growth in Boeing ToP 180 ˃ Continues to reduce to normalised levels 187.5 183.1 160 ˃ Revenue down 11.6% outside the US: 140 − Mainly refle
Slide 16: Aviation Results H1 2018
Aviation Results H1 2018 ˃ Aviation revenue up $32.3m, (38.8%) to $115.5m $m ˃ Total Core revenues up $10.7m, (16.8%) to $74.3m 80 − SwiftBroadband up $3.3m to $40.6m 70 74.3 − JetConneX revenue up $7.2m to $8.3m 68.6 60 − Classic Aero up $2.3m to $21.6m 63.6 58.5 − Direct and indirect costs little
Slide 17: Aviation – IFC revenue and Cash Flow trajectory - Illustrative
Aviation – IFC revenue and Cash Flow trajectory - Illustrative ˃ High margin airtime revenues grow and increasingly to dominate the revenue mix $m − More aircraft 400 − More consumer uptake − But falling price per bit 300 Range of ˃ Low margin installation revenues fall away outcomes − Move to line
Slide 18: Enterprise Results – H1 2018
Enterprise Results – H1 2018 H1 Revenue ($ in millions) ˃ Revenue up $1.7m, 2.7%, to $64.0m BGAN ˃ BGAN flat at $12.2m GSPS 12.3 12.7 12.2 15.4 F2M ˃ Satellite phones up 68.3% to $20.7m Other FB H1 2017 H1 2018 9.9 − Several new distribution partnerships 12.3 9.9 M2M 2.7 20.7 3.2 5.8 ˃ Fixed to Mobi
Slide 19: Group Cash Flow – H1 & Q2 2018
Group Cash Flow – H1 & Q2 2018 US$m H1 2018 H1 2017 Change Q2 2018 Q2 2017 Change EBITDA 373.0 379.7 (6.7) 198.1 196.6 1.5 Working capital/non-cash items (61.6) 22.0 (83.6) (34.7) 17.9 (52.6) Operating cash flow 311.4 401.7 (90.3) 163.4 214.5 (51.1) Capital expenditure (257.8) (308.2) 50.4 (116.5) (
Slide 20: Capital Expenditure
Capital Expenditure US$m H1 2018 H1 2017 Change Q2 2018 Q2 2017 Change Major infrastructure projects 149.7 203.5 53.8 95.0 127.3 32.3 Success-based capex 74.9 60.8 (14.1) 19.2 26.6 7.4 Other 51.9 58.8 6.9 25.0 29.0 4.0 Cash flow timing (18.7) (14.9) 3.8 (22.7) (9.1) 13.6 Total cash capital expenditu
Slide 21: Net debt
Net debt ˃ $876m liquidity at 30 June − Cash and short term deposits $376m 2,078.6* Net debt 2,139.5* − Revolving Credit Facility $500m 2,500 395.1 395.5 2,000 ˃ Revolving Credit Facility increased to $750m in July 2018 1,500 990.4 991.5 − Substantially same terms as previous facility 1,000 555.0 56
Slide 22: Future Guidance
Future Guidance Unchanged from 9 March 2018 Medium term revenue, Revenue (excluding Ligado): Capex: EBITDA & Free Cash Flow (all excluding Ligado): > 2018 revenue of $1,300m to > Capex of $500m to $600m pa $1,500m over 2018 to 2020 > Targeting mid-single digit % increase in revenue growth on > Annua
Slide 23: Q&A
INMARSAT > Interim Results 2018 Interim Results 2018 Q&A
Slide 24: Q2 2018 Business Unit Summary
Q2 2018 Business Unit Summary Maritime ($m) 2018 2017 Government ($m) 2018 2017 Aviation – IFC ($m) 2018 2017 Revenue 140.1 140.0 Revenue 104.8 101.5 Revenue 21.9 10.8 Direct Costs (21.5) (21.3) Direct Costs (18.4) (17.1) Direct Costs (13.6) (0.4) Gross Margin 118.6 84.7% 118.7 84.8% Gross Margin 86
Slide 25: Forward looking Statements
Interim Results 2018 2 August 2018 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 actu