Inmarsat — FY2013 Earnings Presentation
28 slides from Inmarsat's earnings presentation, Mar 6, 2014
Slide 1: Inmarsat plc Q4 & preliminary results 2013
Inmarsat plc Q4 & preliminary results 2013 6 March 2014
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 2013
Preliminary results 2013 Andrew Sukawaty Executive Chairman 3
Slide 4: 2013 highlights
2013 highlights Completing a platform for future growth Core wholesale MSS business growth sustained in 2013 Total Inmarsat Global MSS revenue up 3.3% Outperformed two-year target revenue growth Dividend increased by 5% Growth momentum across key L-band services Two successful launches: Alphasat and
Slide 5: Dividend
Dividend Eighth straight year of dividend growth since IPO Final 2013 dividend increased US$ by 5% cents 2012 2013 Growth Final * Full year 2013 dividend up 5% Dividend 27.45 28.82 5.0% Board remains committed to Interim sustainable dividend increases Dividend 16.94 17.79 5.0% in line with performan
Slide 6: Board of Directors
Board of Directors New Directors and CFO Simon Bax Independent Dr Abe Peled Independent Tony Bates Non-Executive Director Non-Executive Director New Chief Financial Officer • Former CEO, Encompass • Former Chairman/CEO NDS, • Former CFO at Hibu Plc Digital Media Inc • Former SVP CISCO, • Former CFO
Slide 7: Q4 & preliminary results 2013
Q4 & preliminary results 2013 Simon Ailes Acting Chief Financial Officer 7
Slide 8: Group revenue
Group revenue Solid wholesale MSS revenue growth US$m 2013 2012 Inmarsat Global – MSS revenue 762.4 738.0 3.3% Inmarsat Global – Other income (inc Lightsquared) 44.6 97.9 (54.4%) Inmarsat Solutions 765.5 810.3 (5.5%) 1,572.5 1,646.2 (4.5%) Intercompany eliminations and adjustments (310.6) (308.4) To
Slide 9: Income statement
Income statement Profit for year impacted by non-cash impairment charges Financial year US$m 2013 2012 Revenues 1,261.9 1,337.8 (5.7%) Operating costs (613.1) (643.1) (4.7%) EBITDA 648.8 694.7 (6.6%) EBITDA (excluding LightSquared) 639.8 642.8 (0.5%) Depreciation & amortisation (232.0) (255.2) Impai
Slide 10: Net operating costs
Net operating costs Tight cost control, while supporting investment in GX Inmarsat Inmarsat Global Solutions US$m 2013 2012 2013 2012 Employee benefit costs 127.3 109.4 16.4% 117.5 123.6 (4.9%) Network and satellite ops 37.8 39.6 (4.5%) 541.3 555.6 (2.6%) Other operating costs 94.5 108.7 (13.1%) 34.
Slide 11: Free cash flow
Free cash flow Most capital-intensive year in our history Financial year US$m 2013 2012 EBITDA 648.8 694.7 Working capital/non-cash items (34.0) 32.2 Operating cash flow 614.8 726.9 Capital expenditure (580.5) (484.0) Cash interest (98.0) (95.7) Cash tax (20.3) (69.2) Free cash flow (84.0) 78.0 Cash
Slide 12: Net debt and liquidity
Net debt and liquidity Remain fully-funded for foreseeable future Over >$1bn of available liquidity Peak leverage expectations 3.3x to 3.5x (Q4 2014) • Including funding for 4th Inmarsat-5 satellite and M&A impact Net debt and leverage US$m Liquidity - $1.05bn 2,000 3.0x 1,802 1,800 2.8x 2.5x 1,600
Slide 13: Expected cash capex profile
Expected cash capex profile Nearing end of capex cycle US$m 600 Cash capex guidance for 2014: between $500-525m 500 400 300 200 100 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Core maintenance Solutions maintenance Alphasat Inmarsat-6 GX As at 6 March 2014. Based on current expectations as t
Slide 14: Q4 revenue – Inmarsat Global MSS
Q4 revenue – Inmarsat Global MSS Strong Q4 MSS performance US$m 250 Strong Q4 – combination of +5.4% positives 194.3 200 184.4 Maritime growth from +0.5% 20.2 FleetBroadband offset by 20.1 +14% 30.8 ‘older’ services 150 27.1 35.1 Land mobile strong 31.9 +10% contribution from IsatPhone 100 and BGAN
Slide 15: Q4 revenue - Inmarsat Solutions
Q4 revenue - Inmarsat Solutions Impacted by US Govt revenues and change of MSS mix US$m 250 -7.5% 208.2 200 192.6 Inmarsat MSS disproportionately -10% affected by weaker leasing and 150 110.3 BGAN revenues, particularly 99.4 relating to Afghanistan/other movement 100 Broadband/Other reflects US Gove
Slide 16: Operations Review & Outlook
Operations Review & Outlook Rupert Pearce Chief Executive Officer 16
Slide 17: Our Strategy
Our Strategy Complementary growth through innovation L-band growth via Inmarsat- Empower a high-value solutions 4, Alphasat & Inmarsat-6 ecosystem centred on Inmarsat Further growth & diversity via Reorganise for proximity, agility Inmarsat-5 & GX & efficiency Solutions Ecosystem - driving value-add
Slide 18: GX - programme status
GX - programme status Commercial Service Introduction on track for early Q3 Orbital Payload Service testing Alpha test Beta test CSI deployment testing (6 weeks) (4-6 weeks) (4-6 weeks) (52 days) (30 days) F1 ISAT & End ~July 14 F1 launch Feb 28 VARs customers Dec 8 F2 & F3 launches on track for 201
Slide 19: GX – market readiness
GX – market readiness Looking good across all target markets • Government • VARs appointed to • Boeing partnership all target market • US DoD GX tests Q2 verticals •Astrium/Airbus signed • Maritime •18 VAR agreements signed • XpressLink, Globe Wireless • Channel & customer • Energy feedback supports
Slide 20: L-band growth innovation
L-band growth innovation Alphasat into service & renewed service innovation Significant L-band service development • Many new L-band products in 2014 • Deliberate geographic & channel expansion Alphasat successful launch 25 July 2013 • Now carrying substantial commercial traffic • Expands our capaci
Slide 21: Maritime
Maritime Market leadership in MSS and maritime VSAT FleetBroadband over 41k terminals, net adds 7,200 in 2013, up 21% • >50% market share for FB, ARPU growth ~3% • FB 150 >1.4k net adds, ARPU growth ~20% • FleetOne launch – aimed at leisure, small fishing Fleet (18k terminals) price increase on 1 Ja
Slide 22: Maritime: Acquisition of Globe Wireless
Maritime Acquisition of Globe Wireless accelerates strategy Acquisition completed 2 Jan 2014 • Steps up VSAT engineering & installation capability at crucial time • Brings established network-level value added solutions & platform to Inmarsat channel • EBITDA and cash flow positive in 2014 • Strong
Slide 23: Enterprise
Enterprise Product innovation for diversification & growth Split out high growth Aviation into new business unit from 2014 M2M leadership • Major product development completed (IDP & BGAN M2M) • Strategic partnership with ORBCOMM • Important channel development • Early signs of success – terminal sa
Slide 24: Government
Government When the going gets tough… US Government retail outlook • Declines seen in 2013 to slow & flatten by end of 2014 • Afghanistan optempo - revenue expected to be negligible by year end Political volatility easing & DoD visibility to improve • There is a 2014 budget (!) but spending decision
Slide 25: Government
Government …the tough get going Inmarsat recovery strategy • Defend & rebuild legacy programmes • Diversify customer base • Develop innovative new products (HDR, Converge, L-TAC) GX outlook remains excellent - strong customer interest • Ka-band strategy dovetails USG investment in WGS ecosystem • US
Slide 26: Aviation
Aviation Strong growth, ‘Nose to Tail’ Active terminal base up 10%, ~17k terminals SwiftBroadband subscriber adds up 1.5k, up>40% • SBB 2013 revenue growth >70%, ARPU growth 17% • Strong growth from business aviation and airline connectivity • Cabin connectivity services provided on 2,150 aircraft M
Slide 27: Summary
Summary Entering 2014 with confidence after strong Q4 2013 Expect continued growth in wholesale MSS revenues Retail business: full-year impact of 2013 US Government spending reductions & competition increase Expect recent M&A to be EBITDA accretive GX is here! GX revenue contribution from Q3 regiona
Slide 28: Questions & Answers
Questions & Answers »)) 28 inmarsat