Inmarsat — FY2017 Earnings Presentation
29 slides from Inmarsat's earnings presentation, Mar 9, 2018
Slide 1: Full Year Results 2017
INMARSAT > FY 2017 Results Full Year Results 2017 9 March 2018
Slide 2: Strategic overview and 2017 performance review
INMARSAT > FY 2017 Results Strategic overview and 2017 performance review Rupert Pearce Chief Executive Officer
Slide 3: The market opportunity
The market opportunity Surge in data utilisation on the move and around the world Significant demand for global mobile High resilience satellite connectivity to satellite broadband services support IoT applications Maritime Government Aviation Enterprise Industry drive for Structural shift towards S
Slide 4: Inmarsat is well positioned to deliver on these opportunities
Inmarsat is well positioned to deliver on these opportunities > Unique, long-standing focus on delivering mobile connectivity services globally Targeting mid-single digit % revenue > Unrivalled & diversified presence in key end markets growth (excluding Ligado) over next five > Long-standing and sus
Slide 5: Inmarsat is well positioned in attractive mobility markets
Inmarsat is well positioned in attractive mobility markets No. 1 No. 1 No. 1 No. 1 in Commercial in Government in Safety & in Business Maritime satellite Operational Airline Aviation Ŧ communications Satcomms*** Competition is fragmented, 40,000+ connected, $360m+ revenue 9,000+ Classic Aero 4,000+
Slide 6: The IFC opportunity in Aviation
The IFC opportunity in Aviation Key market dynamics & Inmarsat’s progress and current market position The market Roadmap for Our progress, 2016 - 2017 Our market position today opportunity 2018 & beyond > 2016: 6,000+ connected > 30% market share > Unique seamless global > Win additional new airline
Slide 7: Maritime – the market opportunities
Maritime – the market opportunities Key market dynamics & Inmarsat’s progress and current market position The market opportunity Our progress, 2016 - 2017 Roadmap for 2018 & beyond Addressable markets for Inmarsat Smaller Vessels Market share gains > Internal capability established > Increase number
Slide 8: Other areas of major opportunity and optionality
Other areas of major opportunity and optionality Key market dynamics & Inmarsat’s progress and current market position The market opportunity Our progress, 2016 - 2017 Roadmap for 2018 & beyond for Inmarsat > Growth in spend on satellite comms > Significant contract wins and implementation, > Furthe
Slide 9: The future of Global Xpress within our technology roadmap
The future of Global Xpress within our technology roadmap From investment to market capture to long term growth 2010-2017 2015-18 2019 onwards Phase 1: Initiation Phase 2: Delivery Phase 3: Augmentation Cutting edge, agile, fast-response Design and build Commercial service introduction new capacity
Slide 10: FY17 results summary
FY17 results summary A solid year, with revenue growth Organisational Maritime Government Aviation Enterprise Infrastructure Expansion into VSAT Strong growth, reflecting Accelerating traction in M2M growth continues Continuing to develop our segment, opportunity to major contract wins IFC, continue
Slide 11: Our growth prospects - summary
Our growth prospects - summary Multiple paths to additional growth & value creation – off a solid base Double digit Ligado Spectrum growth China & India Digital services Govt Internet Strategic deals of Things & Op tempo In-Flight Connectivity GX & EAN Base Case High growth in GX services to incumbe
Slide 12: Financial Review
INMARSAT > FY 2017 Results Financial Review Tony Bates Chief Financial Officer
Slide 13: Group Income statement – FY & Q4 2017
Group Income statement – FY & Q4 2017 $m 2017 2016 Change Q4 2017 Q4 2016 Change Revenue 1,400.2 1,329.0 5.4% 353.7 358.1 (1.2%) Direct costs (207.0) (145.6) (42.2%) (61.5) (33.4) (84.1%) Gross margin 1,193.2 1,183.4 0.8% 292.2 324.7 (10.0%) Indirect costs (441.8) (388.6) (13.7%) (108.6) (102.9) (5.
Slide 14: 2017 Business Unit Summary
2017 Business Unit Summary Maritime ($m) 2017 2016 Government ($m) 2017 2016 Aviation ($m) 2017 2016 Revenue 564.7 575.3 Revenue 366.7 330.5 Revenue 195.0 142.6 Direct Costs (86.4) (79.5) Direct Costs (54.4) (41.2) Direct Costs (26.1) (3.2) Gross Margin 478.3 495.8 Gross Margin 312.3 289.3 Gross Mar
Slide 15: L-band and GX revenue trajectory
L-band and GX revenue trajectory 800 700 Target of $500m in revenue by end of 2020 600 500 I-4 revenue, from 2007 400 GX revenue, from 2016 300 200 100 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 YEAR 11 Cumulative revenue of $2bn from I-5’s Cumulative revenue of $2bn fr
Slide 16: Maritime Results – 2017
Maritime Results – 2017 ˃ VSAT revenue up $21.5m, 20.9%, to $124.4m: Full Year Revenue ($ in millions) − 4,332 ships on VSAT, including 2,614 on FX, up 1,304 from end of 2016 − FX net installation rate ramping up : 651 in Q4 (Q3: 626, Q2: 529, Q1: 473) 101.0 5.0 86.1 3.2 − 25% of installations from
Slide 17: Government Results – 2017
Government Results – 2017 ˃ Continued success in building longer term contractual foundations $m ˃ US revenue up 21.4%: − 9 months contribution from CSSC contract 400 − Material new business win in Q2 – initial high revenue contribution 350 − FirstNet contract win – no revenue impact in 2017, little
Slide 18: Aviation Results 2017
Aviation Results 2017 ˃ Aviation revenue up $52.4m, (37%) to $195.0m $m ˃ Total Core revenues up $19.2m, (17%) to $132.5m − SwiftBroadband up $10.5m, (16%) to $75.3m 160 − Classic Aero up $5.5m (15%) to $41.8m − 165 JetConneX terminals installed, generating $4.4m in revenue 140 − Direct and indirect
Slide 19: Aviation - IFC
Aviation - IFC Operating models, financial dynamics and revenue models in IFC Operating models: Revenue models: Per passenger session Full service Airtime + Service Airtime only Typical financial dynamics: Per MB to aircraft Passenger based Usage or Subscription Usage or subscription revenues cover
Slide 20: Aviation - IFC
Aviation - IFC Free Cashflow model – an illustration of the financial dynamics Year 1 Year 2 Year 3 Year X Pure airtime revenue* 15 30 40 150 Service revenue* 0 0 0 50 Installation revenue 0 5 25 0 Direct costs 0 (5) (25) (40) Gross margin 15 30 40 160 Indirect costs (10) (30) (60) (60) EBITDA 5 0 (
Slide 21: Enterprise Results – 2017
Enterprise Results – 2017 ˃ Revenue down $12.0m, 8.3% Full Year Revenue ($ in millions) ˃ BGAN down 7.9% to $27.8m 31.6 30.2 33.1 27.8 2016 2017 ˃ GSPS down 9.9% to $30.8m 16.8 34.2 18.3 30.8 8.3 6.0 23.5 16.6 ˃ FB Fixed to Mobile revenues down 29.4% to $16.6m − Structural migration to VOIP BGAN GSP
Slide 22: Group Cash Flow – FY & Q4 2017
Group Cash Flow – FY & Q4 2017 US$m 2017 2016 Change Q4 2017 Q4 2016 Change EBITDA 731.5 794.8 (63.3) 163.7 221.8 (58.1) Working capital/non-cash items 42.9 10.7 32.2 32.5 (28.2) 60.7 Operating cash flow 774.4 805.5 (31.1) 196.2 193.6 2.6 Capital expenditure (598.7) (412.9) (185.8) (200.7) (173.9) (
Slide 23: Capital Expenditure – FY & Q4 2017
Capital Expenditure – FY & Q4 2017 US$m 2017 2016 Change Q4 2017 Q4 2016 Change Major infrastructure projects 423.5 279.2 144.3 179.3 139.4 39.9 Success-based capex 96.6 78.8 17.8 14.8 33.2 (18.4) Other 115.2 92.1 23.1 20.1 40.4 (20.3) Cash flow timing (36.6) (37.2) 0.6 (13.5) (39.1) 25.6 Total cash
Slide 24: Net debt, at the end of 2017
Net debt, at the end of 2017 ˃ $987m liquidity at 31 December 2017 − Cash $487m 1,894.8 Net debt 2,078.6* − Revolving Credit Facility $500m 2,500 +0.7 394.4 395.1 2,000 ˃ Leverage 994.9 993.9 +1.0 1,500 − Net Debt to normally be <3.5x EBITDA 1,000 − 2.8x at 31 Dec 2017 (2016: 2.4x) 541.5 +13.5 555.0
Slide 25: Future Guidance
Future Guidance* Revenue, EBITDA, Capex and Free Cash Flow Revenue (excluding Ligado): EBITDA (excluding Ligado) : Capex: > 2018 revenue of $1,300m to > Expected to steadily improve > Capex of $500m to $600m pa over $1,500m (unchanged) (new) reflecting : 2018 to 2020 (unchanged 2018, − Growing reven
Slide 26: Future Guidance: Dividend and leverage
Future Guidance Dividend and leverage Dividend: Leverage: > Annual dividend now 20 cents per share > Leverage to normally remain below 3.5x − 12 cents for 2017 final dividend (unchanged) > Expected to stay at these levels until cash flows re-builds sufficiently to make an increase appropriate having
Slide 27: Q&A
INMARSAT > FY 2017 Results Q&A
Slide 28: Q4 2017 Business Unit Summary
Q4 2017 Business Unit Summary Maritime ($m) 2017 2016 Government ($m) 2017 2016 Aviation ($m) 2017 2016 Revenue 143.6 142.8 Revenue 90.8 105.0 Revenue 51.0 42.1 Direct Costs (24.4) (18.3) Direct Costs (14.8) (9.3) Direct Costs (8.5) (1.3) Gross Margin 119.2 124.5 Gross Margin 76.0 95.7 Gross Margin
Slide 29: Forward looking Statements
Full Year Results - 2017 9 March 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 a