Inmarsat — FY2012 Earnings Presentation
24 slides from Inmarsat's earnings presentation, Mar 7, 2013
Slide 1: Inmarsat plc Q4 & preliminary results 2012
Inmarsat plc Q4 & preliminary results 2012 7 March 2013
Slide 2: Forward-looking statements
Forward-looking statements Certain statements in this presentation constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks, uncertainties and other factors that may cause our actual result
Slide 3: Preliminary results 2012
Preliminary results 2012 Andrew Sukawaty Executive Chairman 3
Slide 4: 2012 highlights
2012 highlights Core wholesale MSS business returned to growth in 2012 Total Inmarsat Global MSS revenue up 2.5% Established growth momentum in key services On track to deliver two-year target revenue growth LightSquared agreement suspended until 2014 Global Xpress (GX) programme begins deployment t
Slide 5: Dividend
Dividend Final 2012 dividend increased US$ by 10% cents 2011 2012 Growth Three-year commitment to annual 10% dividend growth Final * delivered Dividend 24.96 27.45 10.0% Board committed to sustainable dividend increases Interim in line with performance Dividend 15.40 16.94 10.0% Board will consider
Slide 6: Q4 & preliminary results 2012
Q4 & preliminary results 2012 Rick Medlock Chief Financial Officer 6
Slide 7: Group revenue
Group revenue US$m 2012 2011 Inmarsat Global: Wholesale MSS 738 720 2% LightSquared 60 204 (70%) Other 38 34 10% Total Inmarsat Global segment 836 958 (13%) Inmarsat Solutions segment 810 758 7% 1,646 1,717 (4%) Intercompany eliminations and adjustments (308) (308) Total revenue 1,338 1,409 (5%) 7
Slide 8: Income statement
Income statement Financial year US$m 2012 2011 Revenue 1,337.8 1,408.5 (5.0%) Operating costs (643.1) (554.1) 16.1% EBITDA 694.7 854.4 (18.7%) Depreciation & amortisation (255.2) (245.8) Impairment (94.7) (141.5) Other 1.6 (0.6) Operating profit 346.4 466.5 (25.7%) Net interest payable (52.8) (99.6)
Slide 9: EBITDA bridge
EBITDA bridge 900 854.4 850 800 140.7 192.6 750 US$ millions 700 694.7 33.1 21.1 4.4 51.9 10.0 7.4 650 600 661.8 642.8 550 500 2011 EBITDA LightSquared IS net margin Increase in GX Non recurring IG opex IG revenue 2012 EBITDA net margin change costs opex reductions growth 9
Slide 10: Free cash flow
Free cash flow Financial year US$m 2012 2011 EBITDA 694.7 854.4 Working capital/non-cash items 32.2 136.8 Operating cash flow 726.9 991.2 Capital expenditure (484.0) (531.0) Cash interest (95.7) (76.7) Cash tax (69.2) (112.6) Free cash flow 78.0 270.9 (71%) 10
Slide 11: Net debt and liquidity
Net debt and liquidity US$m Net debt and leverage 1,600 1,484 3.0x 1,361 1,400 2.5x Remain fully-funded for 1,200 1,102 2.0x foreseeable future 1,000 800 2.1x 1.5x 1.6x 1.6x $1.38b of available liquidity 600 400 1.0x 0.5x • Including cash of $332m 200 0 0.0x • $200m incremental bond funding 2010 201
Slide 12: Expected capex profile - updated
Expected capex profile - updated US$m Cash capex guidance for 2013: Note to cover 2013 capex 700 between $575-$625m guidance 600 Total programme costs unchanged 500 • Some phasing into 2014 400 300 200 100 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Core maintenance Solutions maintenanc
Slide 13: Q4 revenue – Inmarsat Global MSS
Q4 revenue – Inmarsat Global MSS US$m +3.8% 200 Maritime data revenue driven 184.4 177.7 by strong ARPU and continued 180 -28% 20.1 FBB subscriber growth 160 27.9 +12% 27.1 Land impacted by Afghanistan, 140 24.3 but BGAN sales robust 120 -7% 31.9 34.4 Land voice revenue driven by 100 IsatPhone Pro,
Slide 14: Q4 revenue - Inmarsat Solutions
Q4 revenue - Inmarsat Solutions US$m Improved MSS performance from 250 +6.2% maritime revenues 208.2 196.1 MSS offset by: 200 • Disproportionate share of +16% 150 110.3 Afghanistan and Leasing 95.0 revenue • Some price increases absorbed 100 Broadband/Other driven by: -3% 50 101.1 97.9 • Growth in G
Slide 15: Operating costs
Operating costs YoY IG costs YoY down 6% US$m QoQ • Lower network and lower 300.0 LightSquared costs 158.5 163.1 177.2 IG costs up 5% QoQ 250.0 • Phasing of employee costs 200.0 • Provision for limited 181.4 189.0 150.0 164.3 redundancies 100.0 IS cost YoY up 15% 50.0 • Increase govt. business 68.2
Slide 16: Operations review and outlook
Operations review and outlook Rupert Pearce Chief Executive Officer 16
Slide 17: Key organisational focus in 2013
Key organisational focus in 2013 Maintain our predominantly indirect/wholesale focus Improve quality/speed of product & service innovation Deliver more efficient enterprise & business processes Clarify the roadmap for the Global Xpress product launch Proximity • Get closer to our channel & customers
Slide 18: FleetBroadband
FleetBroadband $ 600 FBB ARPU/m* FleetBroadband remains the market leading maritime 500 service 400 Successful transition to 300 subscription packages driving 200 ARPU growth 100 ~50% of FBB revenue from 0 recurring customer 11 Q1 11 Q2 11 Q3 11 Q4 12 Q1 12 Q2 12 Q3 12 Q4 subscriptions 3,000 FBB net
Slide 19: XpressLink
XpressLink 1400 XL/VSAT Subscribers 1200 XpressLink has gained rapid 1000 132 183 260 333 market acceptance in first year 800 600 >330 XL installed, backlog adds 400 >150 200 • Existing VSAT customers 0 12 Q1 12 Q2 12 Q3 12 Q4 upgrading to XL VSAT XL Total XL/VSAT installed base 5 March 2013 – Press
Slide 20: BGAN
BGAN BGAN Subscribers 60,000 50,000 Strong BGAN subscriber 40,000 growth in 2012 30,000 Contribution from events 20,000 has reduced while 10,000 underlying revenue has 0 grown YoY 45 11 Q1 11 Q2 11 Q3 11 Q4 12 Q1 12 Q2 12 Q3 12 Q4 Land Data Revenue $m Exposure to Afghanistan 40 and currents events n
Slide 21: IsatPhone Pro
IsatPhone Pro 90,000 Cumulative net adds 2011/12* 80,000 IsatPhone Pro >84,000 70,000 60,000 active subscribers 50,000 40,000 >10% market share by units 30,000 20,000 Strong Q4 with >13,000 net 10,000 0 adds 11 Q1 11 Q2 11 Q3 11 Q4 12 Q1 12 Q2 12 Q3 12 Q4 Iridium Inmarsat IsatPhone outsold market La
Slide 22: SwiftBroadband
SwiftBroadband $ SBB ARPU/m 900 Strong subscriber and 800 700 ARPU growth – very 600 strong Q4 500 400 300 Subscriber base now 200 100 exceeds Swift 64, little or 0 no migration 11 Q1 11 Q2 11 Q3 11 Q4 12 Q1 12 Q2 12 Q3 12 Q4 • Overall aviation base is Swift 64 and SBB terminals 7,000 growing 6,000
Slide 23: Global Xpress status
Global Xpress status 20% of business plan revenues through first 5 years of service either on network or contractually committed Strategic partnership with Cisco for service and applications enablement, plus integrated L-/Ka- networks Business aviation agreement and pre-capacity commitment from Hone
Slide 24: Outlook and Summary
Outlook and Summary Growth momentum in key MSS services across market sectors Subscriber growth & ARPU growth Expect organic growth to outstrip reduced revenue from Afghanistan Expect revenue growth in 2013 and to meet two- year revenue targets High conviction for Global Xpress business case